Topic: Bitcoin credit cards? - page 3. (Read 6599 times)

I thought that what was being proposed was just a credit or debit card where you have a BTC denominated bank account. If so, then yes it would make sense (1) to solve the zero confirmation issue (2) to be used where the buyer doesn't have a smart phone.  Whether (1) and (2) will remain a problem for much longer is however doubtful.

If no bank is involved, then I can see it might solve (2) (at some potential risk) but it wouldn't solve (1). To solve (1) the merchant needs a guarantee of payment from a trusted third party such as a bank (yes I know "trusted third party" and "bank" don't always go together, but you know what I mean).

Credit cards for loans (i.e. using them to get credit rather than just making payment) are a different issue. If you want to borrow money, credit cards are a thoroughly bad way to go about it, whether you are borrowing BTC or anything else.

 

+1

If the machine isn't under my control, then I don't want it to have access to my private key.

The card itself has to do the signing. The card itself also has to display the transaction so I know that what I'm signing is what I intend to sign.  The card itself therefor needs a physical input device that allows me to tell the card that I authorize the transaction.

The terminal should send the transaction to the card, and accept in response a signed transaction that it can broadcast to the bitcoin network.

Unless you are talking about storing the bitcoins in some sort of "bitcoin bank" and the bank issuing a bank card that allows you to access your account with them, you need to stop thinking about bitcoins as just a payment network.  It is also a currency, and many of the things you think you know from your experiences with credit cards and/or debit cards simply won't apply to bitcoin due to its nature as a currency.

So the machine -- 'PCI Compliant' or not -- signs the transaction with your private key, which you have exposed to it using your PIN? No thanks.

About the day after this gets introduced, somebody is going to create look-alike terminals that send your private key to haxxors in the Ukraine. How would one be able to tell you're dealing with an actual, non-nefarious terminal?

Or, even simpler, we just use off-the-chain services that allow you to withdraw to the Blockchain whenever you want to. Most people will be using off-the-chain services in the future, anyway.

umm, this sounds awesome. please someone tell me that people are working on this for bitcoin, as we speak? 

Patience, my son.

That's what the chip debit card is for.

Once you insert your card in the terminal, the terminal prompts the customer for their PIN number. The customer inserts their PIN number into the terminal. Since all terminals are PCI compliant nowadays, the inputted PIN is encrypted and cannot be recorded by the merchant or anyone else. This is all done now with Canadian and European debit cards, this is not just theory.

To break it down, when the customer enters in the PIN number via the terminal, this "unlocks" the Bitcoin address private key to proceed with the transaction. The transaction amount displays on the terminal screen, and the customer presses OK if it is correct. Simple.

I worked for many years in the credit card processing industry, so I know about these things. To be honest, I'm surprised this hasn't already been done. If people want to join together to do this, let's go for it

I still don't understand how this will work.  The merchant can't move the bitcoins from your address unless they have your unencrypted private key.  Once they have your unencrypted private key, there is nothing that prevents them from saving it and re-using it in the future.

It seems that what is needed is a card that has a processor, display, and input interface built into it, the card would be placed with some sort of electrical contacts interfacing with the merchant's terminal.  The terminal would request the bitcoin addresses known by the card.  The terminal would then search the blockchain for unspent outputs associated with those addresses.  The terminal would build an unsigned transaction and submit the transaction to the card requesting a signature. The card would then display the transaction amount on its built in display.  The card owner would verify that the displayed amount was correct, and would use the card's built in input interface to indicate acceptance.  The card would reply to the terminal with a signed transaction.  The terminal would then broadcast the transaction to the bitcoin network.

About a year ago, there was a company that was going to release a mastercard that was tied to bitcoin. So, if you wanted to put 10 coins on your card, when you purchased gas and used your card, it would transfer(sell) the amount that you needed into fiat.. I remember they were going to give the first 1k for free, then charge like 10 bucks thereafter, Im assuming that they never got off the ground.. I cant remember their name, But yea, you would think coinbase could do this pretty easily.. At least we could use our fiat thats in our account.. There must me a lot more to it or we would see it by now...

@BitAddict and DannyHamilton:


True, I was thinking about this last night and the best solution would seem to be built in PIN like the debit cards used in Europe and Canada.
"Chip debit cards encrypt all information stored on them, increasing your safety when completing a transaction."

This will prevent merchant from having ALL your info just on the magstripe.

See pic below:




Again, no need for a central bank

Of course that means that you have to trust the bank.

I suppose eventually there could be bitcoin banks that are insured by a government (equivalent to the current U.S. FDIC), and that are under strict regulation, but we are probably a long way off from anything like that.  It isn't even clear yet if any government or major insurance underwriter would ever be willing to back any bitcoin banks.

in this situation this is not a good idea its just if we have bank for bitcoin and then do through this all its better and safe way to use these cards every where

Exactly.  It's not as easy as a credit card unless there is going to be some sort of "bank" to hold the bitcoins for you and send them to the shop.

The problem is that bitcoins can't be moved from an address without a signature from a private key.  Do you put the private key on the card?  In that case, anyone (or any device) that has ever had access to the magstripe has the potential to store that information and then steal the bitcoins later.  Of the hundreds or thousands of places that you've swiped the card, you wouldn't know which one was the thief. That's putting a LOT of trust in the merchants.  If a merchant is running into financial difficulties that you don't know about, they are going to have a huge incentive to start storing private keys that they can empty at a later date.

The problem is that bitcoin is a push system. If the shop can directly charge bitcoins in your adress if because they know your private key... so the also could charge all the money they want in the future. Makes no sense at all.
You need some kind of bank or intermediate.



This is a great idea! But only if they offer a legit change

I talked to someone on the BitCoin Convention with a great idea. You can store Gold, Silver and BTC on a credit card and it only gets converted to cash if you use the card. That way you always get the most recent price.

This is pretty simple.


Bitcoin credit card's mag stripe is encoded with your Bitcoin address.


Each merchant (brick and mortar store) has a pre-configured terminal ready to accept Bitcoin along with credit and debit cards.

Merchant rings you up on their POS System (point of sale system) with the Bitcoin enabled software, that than processes the mag stripe Bitcoin address, ringing up your scanned items.

Amount shows on the terminal for your approval (much like a debit transaction). You press Yes (green) to accept, or Cancel (red) to decline.
Perhaps a pin code could be added somehow, this would be very hard to implement universally though, and I don't think it would be feasible, at least not at first.

Customer hits OK and transaction goes through, debiting their Bitcoin address.

Receipt prints out and shows available balance in BTC and USD.

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So, right now three things are missing:

1. The physical Bitcoin card, featuring encoded BTC address on the magstripe. (Easily achieved with common Magstripe encorder, $200-250). For the MacGuyver types, you can even overwrite the magstripes of existing credit cards or even drivers licenses.

2. Software to convert the read mag stripe BTC addresses to work with existing or new POS software, which can interact with the BTC network. This is for the merchant side of the transaction.


A special build for the terminal would have to be written. Actually, a build would have to be made for every single model of terminal that would want to be used.
By focusing on the ten most popular terminals, this can be achieved without being insurmountable. Companies like TSYS specialize in writing code for terminals and regularly update existing builds.


This is a credit card terminal.

When you get to checkout the cashier asks you how you are going to pay. Right now they ask, "Cash, credit or debit?"

Tomorrow it will be: "Cash, credit, debit, or Bitcoin?"




Technically, no this is not a credit card since it does not extend credit, more a debit card if anything. It's really a representation of your BTC address in a mag stripe form, that can be carrier around and easily used for transactions the same way a credit card can be used.

Maybe something like this could work, but way more than cash than credit card:
You go with the bitcoins you want to spend in a paper, with public and private key.
You buy what you want, vendor charges all the bitcoins in your paper and gives you change in another paper you only have public key (or the private is just hidden).

That way you can spend bitcoins without a phone. But of course shop will need internet and laptop/tablet/smartphone to do it.
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Yes, that's also possible, but it would use a lot of paper.

Yes, it is just one anonymous credit card. Is great, but of course you don't pay with bitcoins, you can only deposit fiat on it.



Maybe something like this could work, but way more than cash than credit card:
You go with the bitcoins you want to spend in a paper, with public and private key.
You buy what you want, vendor charges all the bitcoins in your paper and gives you change in another paper you only have public key (or the private is just hidden).

That way you can spend bitcoins without a phone. But of course shop will need internet and laptop/tablet/smartphone to do it.

Who's in charge of this mega corporation to be? Who handles chargebacks and overdraft fees? I see no solution unless new hardware is developed to support bitcoin transaction exclusively

It's possible. I can see a Bitcoin debit card (scan card, enter PIN, info is sent to the debit card companies' server, they send a transaction from your wallet) being possible, not sure about a Bitcoin credit card though.

that would be awesome, I would have gotten 1.5BTC last time I took change in.