Topic: BTC vs CC for ecommerce, advantage CC. (Read 3812 times)

Kids borrow their parents credit cards anyway. But I don't see anything wrong with kids buying stuff online. Anyone who wants to watch porn can watch for free. Nobody pays for that, so that's not an issue. If someone has money (bitcoins), let them buy what they want. Freedom!

Which means:

• People with bad credit or who are recently bankrupt can buy things online
• Underage kids can buy things online (this may or may not be a good thing since many people assume "credit card=18 years old", but it does change things)

Bitcoin has plenty of advantages (e.g. you don't need a credit card to use it) to make it a great alternative to credit cards right now. Just because many merchants choose to convert to fiat immediately doesn't negate those benefits.

This is excellent.  Thanks.

I think that cryptos won't be an serious alternative as payment, as long as they have to be supported by the dollar to fight against the volatility issues. Right now, the only way to do business with cryptos, is with intermediate support services, that directly converts coins received to dollars, so you can have some stability in your calculations. These intermediate services want to earn profit as well and paying with bitcoin won't be much more effective then paying with a credit card. I hope that maybe in the future, cryptos get big enough, so they start supporting each others value. Only then there can be price stability that removes the necessity of intermediate support services, and then payment can be truly efficient. But to get big enough, cryptos HAVE to develop some market integrity. With the current level of integrity, cryptos won't grow bigger from being an innovative gambling platform.

It is most of the best aspects of many things -- commodities, currency, stocks. Really it's most like a stock, tbh. The main difference is the issuance. Instead of splits or dividends which go to holders (which, BTW, describes Proof-of-Stake mining exactly), in Bitcoin there is something you'd not find in a stock. Instead of periodic issuance of new shares, leading to a very discrete stairstep, Bitcoin issues shares algorithmically at a mostly fixed rate based on the mining activity, and while it too is technically a stairstep, it is much finer-grained and the steps decrease in height until the year 2140 (Minus the bit where miners get ahead of the block retargeting, so we may be done in 70 - 80% of time if this keeps up. Which is also okay: if we are still on an iteration of the protocol that is that close to what we have now, the protocol will -- I'm betting -- require added precision to the decimals, at which point mining can also continue, and probably should. Notable, no matter how precise the decimals, it will never quite reach fully 21 million.).

Can BTC really be viewed as a currency though?

It seems like it's more of a commodity these days because the price of 1BTC is so high compared to all the other fiat currency. Plus the price is so volatile compared to more stable fiat currencies, I don't see this benefiting the every-day purchases people make in any way other then speculation.

I mean gold is a commodity, but you'd have a tough time using it to purchase every-day items. Idk

An online merchant cannot afford to directly take credit cards until he is doing a couple of thousand dollars per month. Until then it's Paypal, which is about a 6% transaction fee, and scarily unreliable.

So a 5% discount for Bitcoin is a win. A few cents more cash, and a lot less pain in the anatomy.  For the immediate future, neither conversion cost nor inflation are relevant: There are already a few monthly expenses, hosting was the first, that I can pay in Bitcoin.

Until you have been an extremely small (like, supporting one family, small) retail merchant, you have no idea how horrid credit cards and Paypal are, and thus how much it is worth to avoid them.

Highly relevant:

http://seekingalpha.com/article/1933351-why-target-must-accept-bitcoin-like-zynga-and-before-walmart-or-amazon

From an investing standpoint, which is where I am, it doesn't matter why or how a currency is maintained, all that matters is the bottom line cost. Centralized, decentralized, all things considered, which is the cheaper way to do business? That is my question.

To simplify things, lets imagine that we are in 2040 and that there are no more Bitcoins entering the market. Will the market cost of solving these algorithms on the Bitcoin network be less than that of centralized systems doing the same work? I honestly don't know but the next question to ask is this:

As transaction volume goes up on the BTC network, is the average transaction cost (after 2040) going to look like a negative exponential curve, will it be linear, or will it be exponential? Would love to hear anyone's response on this one. **

On the other hand when looking at CC's, will fraud become more or less prevalent in the future? I read that fraud prevention accounts for 40% of CC company costs. If fraud declines because cyber security improves over time, or if the general population becomes more educated on identity protection, then this will lower the cost of CC transaction fees.

Other things to consider are: Electricity cost in the future, precious metal costs in the future, Moore's law, and open internet to name a few. BTC is more sensitive to these variables than conventional means of transaction processing.

P.S.


The chart shows BTC payout per volume, I don't see how an increase in efficiency would change anything on this chart. To my understanding it is simply 3600/daily volume. Please explain.

** I have read a bit on how the blockchain works and how solving these algorithms works, but I do not know what determines increase or decrease in complexity of these algorithms, particularly how the difficulty is expected to change over time per transaction

Lots of merchants offer discounts for bitcoin purchases already, and I'm sure many more will in the future, for exactly the reason you state

before btc go mainstream merchants should offer a lot of discount to take btc reasons is

merchant will get that discount back as btc grow at least 10x every year until saturation

Didn't know that rule, but you make a good point. Credit cards can get declined for "random reasons". hard to think of a reason for bitcoins to be declined

I not only don't pay an annual fee but I also get free Disney dollars with every purchase.  So why would I rather use bitcoin?

My daughter just got her debit card and went to the movies and it was declined.  She was with a friend who paid but she was angry.  Who was the bank to tell her she couldn't spend HER money?  I told her, "This is why I like bitcoin.  Nobody can tell me that I can't spend my money."  My wife had to take her back to the credit union to fix it.  Apparently, there's an "unwritten rule" that you should just know that an ATM card MUST be used at an ATM once before using it as a MASTERCARD.  Would have been nice to know.

Also, the other day I didn't have cash so I texted some money to my bitcoin-buddy co-worker to pay my share.  Technically, I only paid 42 cents for lunch.  That's a good reason right there.  (Yeah, someday it might be worth $400, but by then I won't care.)

Bingo - so do I - www.thaidomains.com

This ^

I had a card once that charged an annual fee, but fees in the UK were largely abandoned due to increased competition.

up to 1,5% cash back but you forgot to mention the annual fee that they charge you. Credit card companies take up to ~4% from the merchant on each transaction, and charge the customer an annual fee. How cool is that?

Also to be able to use a CC you need to have money in the bank and all the taxes that are involved in the process. So you pay a CC annual fee plus an account maintenance fee (at least here in Brazil).

But the whole point is, with BTC you don't need to put money in the bank system to begin with. It's not like you buy BTC to use it. You receive BTC and use it and avoid the banking system altogether. But I agree that right now most people would have to buy BTC. This is just because we are in the beginning of the process(transition).

Let me tell you another scenario that happens here in Brazil. If you use your CC to purchase abroad, you are taxed 6%!!! So I'm here in Brazil and want to purchase something on Ebay, whhaammm , 6% tax! I travel abroad and use my CC for my expenses (food, hotel, etc) whhaaam another 6% gone. Not to mention the dollar to brazilian money conversion rate that the bank uses.

When you see the big picture, it's easy to spot the advantages of using BTC.

Assumption 1:  People will spend bitcoin on goods and not just see it as an investment vehicle

I don't believe e-commerce would be where it is today without the element of consumer protection that Credit Cards and Paypal provide.  I have had no qualms making big purchases on the web knowing that if the merchant goes bust or fails to deliver the goods I am protected and I get my money back.  I understand merchants may not like it, but the fees serve a purpose. 

Holding assumption 1 to be true then for small value goods I certainly believe that bitcoin could be useful, even in transactions that do not require anonymity, but then we get to the second major hurdle in that you have to purchase something to purchase something.  This is fine if the goods can't be bought in any other way, but most of the time it is too much hassle even with a discount.  I have seen quite a few schemes over the years that have tried to complement or replace credit cards with digital cash and cards that can be topped up electronically but for whatever reasons they never seem to take off *.
 
I will be keen to see some real data from Zynga and others showing the consumer's willingness to buy using bitcoin.  I admit that I only have my own experiences to draw from and my own reluctance to use my coins to actually buy anything with. None of this says anything about the usefulness of crypto currencies for other purposes though, such as international transfers, gambling or even web tipping. I just don't believe that Visa has anything to worry about.

* The first time I encountered such a product touting itself as a global alternative to cash and self standing store of value was in 1997 and was called Mondex.  Its failure to reach wider adoption is an interesting case study that some of you might like to read - http://wings.buffalo.edu/academic/department/som/isinterface/is_syllabus/mondex/mondex.html

Bitcoin is good as a "Alternate payment system" but it can't replace CC system as people are using it from a long time.  Both have some advantages and disadvantages for merchant and consumer.



Well no, they will only get disappointment if they will start accepting "Bitcoins" Only. If they will chose to aceept BTC on their sites along with other payment methods, they will get more consumer traffic. (Bitcoiner).

It's true but isn't that's comman sense? If someone have Only Bitcons (Or extra btc) he will obviously use bitcoins for payment and if someome have CC (and good cash in his bank acc) he will use that.