But with Bitcoin, if you trust the merchant/recipient you can opt out of using escrow and transfer the money directly to him. With Paypal it's impossible.

This merchant offered Bitcoin. The vast majority of payors chose to use PayPal with its built-in buyer protection instead.

The fact that the vast majority of payors used PayPal rather than Bitcoin certainly has nothing to do with PayPal's buyer protection and everything to do with Bitcoin being obscure and more complex to use.

I rarely use cash when I buy anything in person mainly because of the buyer protection a credit card offers me.

Online it's the same thing. I'd pick credit card or Paypal over bitcoin just like I pick credit cards IRL over cash. It has nothing to do with obscurity.

I can mail money directly to someone if I don't want to deal with a bank or payment processor. FedEx/UPS/USPS are the Internet in this analogy.

Just send a money order or cash through the mail. After all, you trust the recipient, so you don't need all that customer protection stuff that Paypal offers.

I do that all the time. I live in Poland and bought hundreds of things from the Internet. Buyer always pays first, and there are no such things as chargebacks. And yet most people are okay with that. Only US people take chargebacks for granted.

I live in the Czech Republic and by far the most used payment method here is 'cash on delivery' - you send something and the postal service collects the money for you and than just sends you the cheque. It can hardly get simpler and it's safe. I wonder why this solution is apparently so rarely used in western countries.

I can still send someone cash in the post.

The difference is you have the option to offer buyer protection or not offer it with Bitcoin.

With Credit Card companies and their proxies, Stripe, PayPal, etc. there is no option of choosing a buyer protection service provider which meets your needs (unless you consider strict to extremely strict a choice).

Buyer protection isn't always a good thing. Often it is a hindrance to progress. Merchants should be able to chose the level of buyer protection they want to offer.

> At which point the Bitcoin enthusiasts will say "but you can use a third party escrow service," which is true, and puts us right back into the same situation we are with PayPal.

Bitcoin escrow doesn't work that way. Escrow cannot decide by itself to freeze your money. There are three parties in the transaction and you'd need the consensus of at least two of them to move the money. It's either the buyer and seller (in ideal transaction), or the escrow and seller or the escrow and buyer in a situation where transaction is disputed. The bitcoin escrow cannot behave like paypal do in this case.

> If I send my bitcoins to someone to buy something, I have no protection if they decide not to deliver.

To be more precise, you have no protection from the money transmission service. This is no different from cash.