> solve merchant fraud with irreversible payments

Irreversible payments will help merchants, not solve merchant fraud. If anything they will cut down on consumer fraud but they actually enable merchant fraud.

It solves the kind of fraud where a customer receives irretrievable goods or services in exchange for a bounced check or credit from a stolen credit card.

Yeah that would be consumer fraud against merchants. No?

But what about the fraud where a merchant screw over the customer? That will easily affect more people.

Yes. Bitcoin certainly shifts the risk from the receiver of money to the payer of money.

Which is in my opinion dangerous, the payer of the money is your average consumer who are regularly falling for spam mail from nigerian royalty.

You can build an irreversible payment system that uses less energy and requires a much smaller transaction fee on a plain old transactional database. For everything you listed, there are better options.

No, you cannot build a system like that without foregoing decentralization.

Who said we need decentralization? Adding that requirement drastically increases costs without providing any practical gain. Card networks provide near instant payment processing with very low fees. Need irreversible payments? Simply use the same architecture without implementing chargebacks.

how exactly do you build a centralized system that is irreversible?

Just don't implement chargebacks. Done. What made you think reversible payments are easier than irreversible?

What if a new CEO comes in and decrees that they add chargebacks?

Take your money before anybody asks for their money back. As a merchant, you will have signed a contract with the payment processor agreeing to certain terms, and they cannot change those terms unilaterally. That scenario is as useless as imagining the main mining groups deciding to roll back to an earlier block.

Mining groups can't roll back an earlier block.

They can if they control a majority of mining resources. They simply start mining new blocks from an earlier block. This happens all the time when there is a race. The loser has to discard their block and start mining off the winner.

The only thing that is stopping this is the miners' incentives, which is the exact same thing that stops contract violations.

Mining isn't exactly that centralized and even if it were they'd only really be able to roll back the most recent block. That's nothing like general chargebacks, as it would be one-off thing and only be in effect for 10 minutes, and is heavily disincentivized as it would destroy the reputation of the miner.

The difference with legal contract enforced systems is they aren't. No one is going to build a system that restricts it's owner legally, and furthermore legal rules are leaky abstractions that have workarounds and spotty enforcement.

You nailed it! I wish others can understand this. Most importantly, media needs to understand this concept as they seem to be spreading a lot of fear as well as fomo around Bitcoin.

But why arbitrarily limit its potential in this way?

If we could run the economy on blockchain, why not?

Like you say, blockchain as a concept has many desirable traits that make it superior to a fiat currency. But if Bitcoin in particular were designed in a way that allowed it to avoid rapid fluctuation, I could see it slowly rising in use, until after many years it's powering a lot of commerce instead of the US dollar. As it is, it's going to reach a ceiling of usefulness that a differently architected blockchain wouldn't have.

If we could run the economy on blockchain, why not?

One potential obstruction to this is probably the speed of transaction confirmation. I believe it takes about an hour for a transaction to be confirmed. If we equate that to a current fiat currency based transaction confirmation which takes just a fraction of a second, we are way off. I may be wrong in this comparison. What I do understand is that, you can't have the blockchain and also the speed of a fiat currency based transaction confirmation. What I don't understand is - Is this confirmation so crucial. I see blockchain as more amenable to existing workflows that takes eons to complete, such as an approval in an organization.

I agree with SomeStupidPoint that at the current speeds it blows away both ACH and wire transfers if you need the transfer to happen pretty quickly but don't want to pay usurious fees.

Every major blockchain is trying to shard or find other solutions to increase scalability of confirmations. Most coins have it on the 2018 roadmap to deliver lots of these improvements which will bring the transaction times way down. If some coins stay slow, then others will be used instead for situations where you need to compete with the speed of a wire transfer.

Aren't the bitcoin transaction fees actually higher than what you would get with banks? I don't know how it works in the US, but I can do free almost-instant transfers inside Germany with no problems at all, including for online transactions (like Amazon).

For transfers under 500$ (roughly) the fees from a proper bank transfer will be more expensive.

SEPA has basically no fee and is usually next day, with SEPA SCT Inst it'll soon be 15 seconds (and no more than 20 seconds) with the same fees, after which bitcoin can't compete on that anymore.

You can transact using Ethereum in a couple of seconds. Multiple block confirmations are important to be sure you are in the longest chain. With big amount transactions you should wait for multiple blocks, being 6 enough to be extremely sure.

Digital currency isn't competing with credit card networks, it's competing with ACH.

ACH transfers take days; wire transfers take minutes to hours and cost tens of dollars. There's ever possibility of running a digital currency that can clear transactions on the order of minutes with minimal cost. Bitcoin isn't well suited to that, partially because it hasn't been managed well.

A credit card would still pre-authorize against a balance at an institution, but it would settle between the customer and merchant bank on the same schedule (when the merchant cleared their transactions for the week) or faster (eg, on the order of minutes). That makes credit cards considerably closer to cash (fast) than what they are now, like checks (slow).

And for people who wanted it to settle immediately or treat it like cash, they could make a direct transfer, and have it clear on the order of minutes. (Not great for coffee, but something like buying a car.)

Digital currencies can be those things, they're just not.

And for people who wanted it to settle immediately or treat it like cash, they could make a direct transfer, , and have it clear on the order of minutes.

Can you please elaborate on this a bit more. What is direct transfer and how is it different from bitcoin /ethereum payments. From what I understand, they are the same.

That was connecting on to the previous paragraph, and contrasting with pre-authorization through a payment network -- I meant a direct transfer of currency from customer to merchant, instead of using a financial institution as an intermediary to vouch for you having money.

> If we could run the economy on blockchain, why not?

Because we can't. Given that there are trade imbalances between countries (and assuming we want the economy to actually continue to run, as opposed to transfer all the wealth in the world to first one country, then one person, and then stop alltogether)

That means trade imbalances must be forgiven. Our current system does that through credit creation and crashes (bankruptcies). Bitcoin simply ignores the problem. Therefore bitcoin economic model is designed to transfer all the wealth to the rich and stop.

As opposed to the current model where newly printed money is given straight to the rich (banks)? I don't see how Bitcoin is in any way worse than that.

Limiting makes sense to me. Just like you cannot mine infinite gold on this planet, you are not allowed to mine infinite amounts of bitcoin or else it would lose value. Will gold be as values as what it is now if it available in abundance.

It’s never going to be useful if it doesn’t get adopted/get traction. The raise has attracted a LOT of people. We’re at a point where even my grand mother is starting to hear/read about it in the news. We’re at a point where my parents are thinking of investing in bitcoin.

At some point. When this hype and unstability will have allowed for tools and bridges to be built, it will be not be welcome anymore.

I think you are saying that the publicity of Bitcoin will have created awareness of blockchain concepts, and from the ashes of Bitcoin will rise a blockchain that could be a good currency, and that new blockchain couldn't get awareness without BC's headline-grabbing hype that clears the way.

That makes sense. Maybe BC is just the sacrificial starter we needed to ultimately result in adoption of a blockchain that works better. And some people will make a lot of money from BC, some people will lose a lot, and in the end we'll get something better.

I'm not saying that this will happen for a different blockchain since the tools are mainly buing built for bitcoin.

There are more than 1000 cryptocurrencies. One of them must have the properties you're looking for.

Not a single one of them has the ability to scale. At least nothing close to production ready.

You have the PoS folks, IOTA's got an interesting strategy and some other paradigms but for now its still conjecture. Decentralized distributed technologies will likely always be slower than centralized monoliths.

Its on the 2018 roadmap for pretty much every (non-ICO-pump-and-dump) coin.

Really? 1000+? That's crazy.

There is a great irony in the fact that cryptocurrencies are designed to be finite in size to ensure their value, yet the number of potential cryptocurrencies in the world is pretty much infinite.

Just because 1000 of something exists doesn't mean they have every property among them.