Topic: On a panel with MasterCard and Visa - page 3. (Read 5637 times)

Thanks for calling me on this...  it shows I didn't do a good enough job of explaining my key point.

The point I was trying to make was that the architecture of card processing has a fundamental weakness: the consumer authorises the merchant to generate and send a message to the consumer's card issuer (via the card network) to take funds from their account  However, ensuring that the amount you authorised matches the amount they request is decidedly non-trivial.  In the absence of controls, the amount they ask for could be anything.  This means that every time you use your card you are open to the risk that the merchant asks for far more than you were expecting.

To mitigate this risk, the edifice of card security grew up over time....  in the paper days, the fact that both the merchant and retailer had an identical copy of the voucher allowed the consumer to dispute a fraudulent transaction. More recently, technologies such as chip+pin try to do something similar.  But they're all really just sticking plasters on the funamental problem: card processing relies on the merchant "pulling" the funds from the consumer's card issuer.

Now sure... it works (usually) - but the cost and complexity of making it work safely is large.

The point I was trying to make was that Bitcoin (like cash, as you say) works differently.  The key communication link is from the consumer to the merchant (i.e. a "push") and the consumer has full control over how much they send.

Now this isn't perfect...  you have to solve the problem of how the consumer knows *where* to send the money and all your other objections are valid (e.g. consumer has to be online, etc, etc)

But as an opening statement, I think this characterisation could be a very effective way of destabilising/undermining any representative from the card industry who one suspects of planning to spread FUD.




Agreed... I wasn't really addressing the pain of key management, etc...  this was really just a consequence of the push versus pull observation


Hopefully my comments above helped explain what I was trying to convey - but the point I was making was that when you use a card you aren't actually "paying" the merchant and you aren't transferring funds to them.  You are *authorising* the merchant to pull.  And a huge amount of work is needed to ensure that what they actually pull from your account is what you authorised them to pull!


I was too broad... I meant "no need to trust the merchant to pull only the funds you authorised them to pull"


I think it probably *is* fair :-)    The "authorise merchant to pull and put in place controls to make sure they only pull what they said they would" is the only way you could build the system in the 60s.  They have moved in terms of architecture since then but this fundamental model is still at the heart of how cards work... and my argument is that it's not an ideal way to do things. 


Sorry - that wasn't my intention.

Bitcoin is almost laughably immature in so many respects...  but by using "push" rather than "pull" as its core funds movement philosophy, I would argue it's on the right side of history

HOw is this different from a credit card?

This will not be felt as an advantage for most people. The analogy to the "key" with a credit card would be the pin number. In both cases, they can be lost or forgotten - the key difference is if you lose the card, the bank will reimburse/restore the facility after identification. If you lose your Bitcoin keys, forget it (assuming you're using Bitcoin directly and not via a third party).

How is this different from a CC? Maybe I missed something here.

If using Bitcoin in the normal sense, this is clearly false. Making this false statement as part of the pitch is not helpful. Of course there is escrow and other third party quasi-Bitcoin setups but that doesn't change the falsity of this statement.

True, but there is need for a key and an internet connection.

Calling it "60s technology" isn't a particularly fair attack, really. It's based on a financial architecture that is indeed old, but of course it has moved on within that architecture.

The advantages of a credit card to a modern day first world consumer are easy to state: you can get your money back if someone cheats you. It has worldwide acceptance. If you lose your card, your money is not lost. You can pay for things with money you haven't yet earned.

The main disadvantage is well hidden: the slight extra cost that all buyers (credit card or not) bear because the merchant passes it on to you. The other minor disadvantages are to do with the headaches of bureaucracy and also things like charges and fees and perhaps loss of privacy.

Having said all this I will seem like an apologist for the current financial system, but actually I am anything but. My main purpose is to point out something I believe many are wilfully ignoring: Bitcoin is a replacement for cash - digital cash. It is not a replacement for the banking system. This was clearly stated by Satoshi from the beginning, and is obvious from the design.

Don't fall into either extreme: it is not a replacement for the entire financial system, but neither will it leave that system unchanged.

By changing the underlying medium of exchange (assuming it succeeds of course), Bitcoin will inevitably change the way banking, lending, commerce and so on are done. But it cannot provide all the functionality currently provided by banks, card providers, stock exchanges and so on - and pretending it can just weakens our arguments and makes us look naive.

Is there any way for us to plant bitcoin supporters in the audience so we can grumble with distrust at everything the CC companies say?  Professional promoters call this "papering the walls" but its been around since the days of Athenian democracy. 

There's noting like spontaneous cheers and applause to change people's hearts and minds.

These are problems that are unfixable with credit cards. Until they switch to a something you have + something you know + real crypto that prevents interception or reuse of a payment authorization, guarantee any authorized payment will be instantly and irrevocably paid to the merchant, and quit becoming a better-business-bureau, they will only suck.

An "Up your sleeve" retort to problems with "no central authority" or "peer to peer money downloading" type-comments: I believe it is the Mastercard transaction network that employs a peer-to-peer topology to help them keep the data transmission levels low, and ergo, costs down. I would guess they may have some type of distributed ledger too, but I've only got a faint memory of all this. Perhaps you could ask them to explain the similarities and differences for you, I'd be interested to hear what they themselves would say 

That is a one hell of an elevator pitch. Bravo!

The key difference is that the babysitter is eligible for a Bitcoin wallet but not for a merchant account. As for using a credit card or Bitcoin for that matter to get cash that ignores the whole point of the debate.

Could you put the "panel discussion" in some kind of context (e.g. overarching topic, etc.) that could make it easier to make useful suggestions?

http://privacy-pc.com/articles/how-terrorists-encrypt-5-international-anti-terror-operations.html

I'd be interested in hearing how to accomplish these with Bitcoins.  I'd imagine my babysitter is about as likely to accept a credit card as she is Bitcoins.  The credit card method here is "go to an ATM".

Here is the old people thread you mentioned:
https://bitcointalksearch.org/topic/old-people-how-did-you-protect-purchases-before-widespread-use-of-credit-cards-270898

Thanks a lot for the great input, I summarize just the points that remember me to the details.

pro Bitcoin

• lower costs for customer and merchant
• independent proof of payment
• infrastructure suitable for interbank settlement
• separates technology and dispute resolution
• auditable transaction record for ever
• assurance contracts
• complementary use (donations, kids, oversees remittance)
• be your own bank

against Credit Cards

• chance of identity theft
• chargebacks for merchants
• third party in the transaction
• geopolitical restrictions
• was not meant for the internet, card not present transactions were not intended
• fraud

Do you have a link to what "al-Qaeda learns carding" refers to?

Other useful links like below I collected from earlier forum posts?
http://www.pcpro.co.uk/news/383680/instagram-likes-worth-more-than-stolen-credit-cards

http://www.fortmilltimes.com/2013/08/19/2898687/global-credit-debit-and-prepaid.html

Just keep it really, really simple.

Visa and Mastercard operate on the basis of "merchant-pull":   you have to give the keys to your safe to the merchant and then trust them to "pull" from your account only the amount they said they will.

To create this trust in consumers, Visa and MC have spent fifty years building an ever-more elaborate edifice:  PCI-DSS, Chip+PIN, spending a fortune building globally recognised brands, chargeback, the Visa/MC authorisation switches, the merchant acquirer business model, 3-D Secure, CVV2, and more and more and more and more and more and more and more.  It's just *exhausting*.  It costs so much money, creates so much complexity and it's all because their solution to the problem is fundamentally *wrong*.   Merchant-pull is an *insane* way to build a retail payments system.... but if all you had was 1960s technology, that was pretty much your only choice.

Bitcoin turns this whole rotten carcas on its head and makes it possible to do "consumer-push" instead.

The merchant tells *you* how much they want and you then send it to them.  *You're* in control.   *You* keep hold of the keys. They only get what *you* give them.  No need to trust the merchant.  No need for chip and PIN.  No need for *any* of the barnacles that are dragging the card industry down as it attempts to make a 1960s analogue technology relevant in a digital age.

(A missing link, of course, is exactly *how* the merchant securely tells you how much to send - and to whom - but that's what v0.9 will begin to solve)

Richard

twitter.com/gendal

I would mention of situations where Bitcoin is complementary as opposed to a replacement to Visa / Mastercard

Here are some examples: Can you use Visa / Mastercard to:
Give money to a busker?
Give money to a homeless person?
Pay the kid next door to do some work in the yard?
Give an allowance to you kids? Note: See pre paid fees below.
Pay your babysitter?
Reimburse an employee for expenses as a small business person?
Pay any consumer / private individual?
Buy products or services online if you have no credit or poor credit? Note: Paying 20 USD or more in fees for a pre paid debit card to purchase a 20 USD item is not the answer.
Purchase a product or service from a merchant that does not have a merchant account?
Send money to a relative that lives in a remote village in Kenya?
Pay for high value low margin items online such as gold bullion coins for example?  
...

All of these work with Bitcoin but not with Visa / Mastercard

With Bitcoin you are the sole person to decide where you can send YOUR money, unlike Visa and Mastercard (who don't let you send money to bitcoin services, wikileaks, etc).

 

nice thread

No fraud! About 10 percent of credit-card-transactions are fraudish; the companies have accepted it due to a lack in technology, the customer / retailer pays the price.

More safety for the consumer! If I loose my EC-card everyone could go shopping with it.

Faster!

merchant benefits
no card readers required
no charge backs by dubious customers. only refunds from merchants for legit reasons
refund process is easier then credit card/debit card
using green addresses merchants can see customers balance before confirming transaction (meaning less time verifying balance to accept payment)
no having to keep transaction records (paper receipts) for X years
no dealing with customer service departments (self managed)
no merchant account monthly/yearly fee's or deductions from transaction value.

customer benefits
no application forms to fill
no credit checks
no waiting for postal service delivery of card and pin number
no postal theft of cards or pin numbers

.... just to list a few of the many benefits

Bitcoin payments are irreversible which requires that parties involved in a transaction develop alternative ways to avoid and resolve disputes including escrow and networks of trust.

Bitcoin's technology can be used as the underlying system for their network, saving them billions. They can use it as an instant payment system, functioning as a front end for the Bitcoin network providing a known secure payment service; They of course can wait for the confirmations and using the blockchain, can immediately verify that the funds were in the account at a fraction of the time it takes for the first confirmation.

Keep it positive, make Bitcoins community shine, a dedicated community of the smartest 1 percent of the population backing and supporting the cryptocurrency movement; with them all problems can be solved.

Edit: They can also access other markets that were not available before because of fraud costs... Bitcoin makes fraud impossible if the right infrastructure and a Honest business is running it.

They're kind of inflexible. Try doing assurance contracts without a middleman - not possible.

I'd expect them to make lots of FUDish complaints about terrorism, etc. If that comes up you could point out that the largest terrorist financing case in history boiled down to "al-Qaeda learns carding".