But ultimately smarter people than me will figure out the right model. That's the beauty of software platforms.

1) You say "You'll converts to and from USD occasionally but not on every transaction" . Sure you wouldn't need to exchange on every transaction, but when you do the conversion, the 1% applies to $ amount not the number of transactions. So if I convert $200 into BTC, I pay the 1% (+ exchange spread) on $200. It doesn't really matter if I do this over 1 transaction or many small ones. Am I missing something here? Are BTC transactions really cheaper?

2) Whats the actual advantage for the average consumer to pay with BTC? Do you see merchants offering discounts if you pay them with BTC? If not, whats the mechanism that compels me, the average consumer, to pay with BTC over say Visa?

It's also worth noting that many of the exchanges have fees that get lower if you trade larger amounts in a given time frame. If you're a high volume trader, the difference can be significant.

I think I have read that if you are a merchant and establish a merchant account that you can get the first 1 Million Dollars (USD) free of fees. I am not sure what bar you must pass to earn merchant status, but I do have a link[1] to back this up. Presumably it's not more complicated than "accept payments for services" -- you could probably fudge it if you were simply in the business of cashing out bitcoins up to $1M. I haven't looked into it further because I'm not a merchant and I have been more interested in buying than selling at Coinbase.

Are the Chinese exchanges still bringing money in and out? I thought I read this was forbidden, and that was the reason for the great dump of $1000USD prices a few weeks back.

[1]: http://blog.coinbase.com/post/59417545262/your-first-1-000-0...

The main thing that happened a few weeks ago was that 3rd party processors were forbidden from dealing with bitcoin. The transfers from banks to exchanges were handled by 3rd party processors, so for a few days there was no way to get money into the exchanges.

The Chinese exchanges are then adopting the practice of Coinbase, the situation sounds much the same (Coinbase initiates ACH transactions with your bank and makes you wait the 5 days until it clears to actually receive and withdraw your Bitcoins.) Mt.Gox works the same way now, except last I heard their Japanese bank was limiting them to some absurdly low number of ACH transactions to USA, like on the order of a maximum of 10 per week. Coinbase, being a US company with their choice of banks, obviously does not have this restriction.

[0] http://www.usv.com/posts/bitcoin-as-protocol

I don't keep my savings in cash, but I can withdraw as much cash as I could reasonably want at zero cost from my bank. How can I do this (i.e., USD->spending money conversion for free) with Bitcoin?

Also, are you making an assumption that the volatility of Bitcoin<->USD will go away at some point in the future? If that happens, keeping Bitcoin around instead of USD will become reasonable.

> But ultimately smarter people than me will figure out the right model. That's the beauty of software platforms.

Sounds like wishy-washy thinking which I hear a lot of from bitcoin advocates.

And once you are over a certain amount, the government finds out.

Besides the obvious problem of the volatile exchange rate there is just no trust in any of the Bitcoin institutions, if I can't trust anyone else to manage my Bitcoins I need to do it myself. I can do that, but it takes time and effort to maintain secure systems. The real kicker is if something goes wrong, its my problem. If someone hacks my netbanking details the bank will cover my losses.

So what does Bitcoin offer? it opens up transactions that would have otherwise been too risky. Irreversible electronic transactions are Bitcoins niche. However that fact makes it very difficult to acquire Bitcoins with reversible payment methods. This slows down the process of entering and exiting the Bitcoin market leaving you vulnerable to the volatile exchange rate.

I really want Bitcoin to succeed but at this stage there is no way I would use Bitcoin for a transaction unless it was the only option.

Bitcoin allows a merchant to recognizing a transaction without considering fraud/KYC. I've sold items on a forum with an escrow moderator and paid 0% in fees. You just cant do that with paypal.

Good to hear you using Bitcoins for something other than dark markets, we should try to brainstorm other niches where Bitcoin has an edge. I think taxi drivers might warm to it, they definitely hate credit cards.

Let's say you accidentally type in the wrong BSB (which my father actually did once) and it happens to line up with an account number in that bank (fortunately for him it did not). Even if you send say, $150,000 to that person....it's not legal for that person to accept it. Nor spend it.

See, while they could claim to have spent a portion of it unknowingly the courts would probably view that as fair, they couldn't go "hey I'm rich!" and buy a house that they would be allowed to keep.

I mean, you might not get all the 150k back in the end, but they would definitely not be keeping any of it. And through this process, you'd generally find your bank would be fairly enthusiastic about getting that money back, since as long as it's not on their ledgers they can't lend against it.

I'm interested in Bitcoin because of its stated goal to disrupt the banking system. Banks suck.

Maybe this is an issue for you

Are you a US citizen, or a resident of one of the Five Eyes countries? If so, it's an issue for you whether you like it or not. You commit crimes all the time without knowing it, just like the rest of us do. Your government wouldn't have it any other way.

BTC is no different. In fact, all transactions are public in BTC due to the nature of the public crypto system.

In what cases will bitcoin be better for small transactions online than a credit card? I'm at a loss for examples.

To pay online right now, you have to decide: 1) do I trust this vendor 2) do I want to fill out this form with all my info

Generally this (plus transaction fees) only make sense for transactions above $10.

The vendor responds by trying to build a relationship with you- by building brand trust and by pushing you toward an ongoing relationship (recurring payments, creating an account etc). This is why "cards on file" is considered a major business asset online.

As a result, any online service that doesn't make the cut is forced to resort to an advertising based business model.

You can see this with the tipping culture on Reddit. It's helped Dogecoin really take off, because it's pretty trivial to send a small, casual payment to someone.

Also, this exposes you to crazy risk because of price fluctuation. Bitcoin has fluctuated over 3% today, and today is a relatively flat day for it.

Or as I like to put it: why do you think you should get wealthy for doing literally nothing? Not investing, not loading, not accepting any risk, not working?

You are not getting wealthy for nothing, you get wealthy for restraining your consumption, which is major problem of todays world, trust me im homeless(for proof can check me on youtube channel AngriestCat) and amounts of good food i find in supermarket trash is ridiculous.

But wealth in a deflationary currency does.

The rest of your argument about curtailing consumption is an irrelevant tangent here.

My point with computers was that hording currency will not affect the markets, same as computer market is not crashing because everyone is waiting for better computer for same price next year! Essential expences must be done and environment factor comes in and is important, because inflation currency lose value all time so big merchant is less afraid to just stock himself with huge amounts of items, even they get outdated he still will make profit selling them cheaper, compared to if he had just stored value in cash and lost that value to inflation.

The time-computing-cost output of a given computer decreases with each new model released. Each new model of CPU does more calculations using less power, or does more calculations over a previously unobtainable timespan.

Your computer, sitting in front of you, does the same, but the amount you spent on it, it now does less.

Computers are massively inflationary - it's why people only buy them when they absolutely need them. It's why you have 1, not 20 as an investment. It's why the second hand market for PCs is terrible - because they're worth far less each month after you buy them then they are new from a manufacturer who is constantly producing more.

And of course more importantly to all of this: computers have value! They do things! They produce value for people by owning them. "Money" does not. Just having it does absolutely nothing!

If a currency is deflationary, there's no point to investment - investment is risky, whereas simply holding it gives it more value (this presumes a stable store of value and no alternative currencies).

This tanks economic growth, because beyond a certain quantity of wealth your savings appreciate in value faster then you need to spend them to stay alive. Whereas below a certain value of wealth, no matter how hard you work or how much you save, you will never reach that point - because you have to reduce your savings to buy the necessities of life.

Of course, its not a stable situation because the economy that goes into a deflationary spiral soon collapses, the rich get murdered, and everyone moves back into a currency which supports a proper debt-system and doesn't doom people to servitude for an actual idle rich.

Even it is true inflation pumps nonstop growth of economy - it is not practicaly possible to depend on nonstop growth or die. Hence all the crisis and ridiculousness in current economies.

There is no difference if rich people are idle because they have stocks or because they have currency. That is what richness is about - the lack of need.

Ofcourse bitcoin or other similar currency wont solve all the problems, but it is a better version of currency than the curent one for sure!

Taking things a bit further, we are optimistic about bitcoin as a payment form with our suppliers as the volatility stabilises. As an example, one of our suppliers is Belgium based and we'd be able to save on the currency exchange with those payments. We've discussed it and they didn't turn their nose up to the idea.

We do educate how the currency functions and the risks there may be.

So VISA can be thought of as a Protocol. Wether I'm a VISA Debit or Credit user doesn't really matter. I give money to my Bank, the Processor is going to (indirectly) get USD for my transactions. Then they're going to take a cut and give the money to a Merchant Bank, who in turn credits the Merchant.

So what if there was a "BTCP" Card that ran on the Bitcoin protocol? I see something I want priced in USD. I want to give them USD. My bank has issued me a BTCP card. So I ring up the charge. The bank sends the money to the Merchant Bank. Without a Processor. Merchants still carry an escrow with their bank for "chargebacks" and fraud. The two banks can sort out the rest of the details between themselves.

The Exchange price doesn't really matter. The Bank deals in USD. They can just agree to peg their debits/credits against the daily value of BTC. Or a Satoshi. Or whatever. It doesn't really matter since it's not like you're forced to sell your Bitcoin holdings at a particular offer price. You can send it to whomever you want for whatever you want.

So even if Bitcoin doesn't find success in replacing Paypal (and I think there's a good chance it will), the truly disruptive idea is that it's a simple standard that could replace Processors. (Though wow, that would be the fight of the century and I'm not sure I'd bet on the scrappy little guy there.)

Bitcoin isn't the missing piece of this puzzle. In fact I suspect Bitcoin would be an obstacle, due to lack of public confidence.

Credit cards are an incredible business for VISA etc. I agree with the article that circumventing it in some way, esp for micro-transactions, would be great. They probably should stop gouging, to deflate interest in alternatives.

It's a pity the press for bitcoin all bubble and crime. OTOH it is press, and niche adoption works.

I'm seeing a lot of parallels between dotcom era payment systems like PayPal and even Flooz. Paypal's original concept was paying friends for things like splitting lunch.

The hook that's different here is that once you deposit legal tender and covert to bitcoin, you're basically trading something that is commodity-like. Basically, it's no different than bartering shares of gold.

My question is, when the regulatory system catches up, is bitcoin better than a commodity?

I don't think most people are interested in Bitcoin primarily because of the utility it currently provides and the infrastructure that has so far been built.

There is merit to the system, but a lot of people just don't care.

At any rate, there need not be any point to what I'm saying. Sometimes, a comment is just a comment.

Before you get too gleeful though, I would wager only a small percentage of people who have ever bought Bitcoins have sustained a loss as of today. Besides, there's nothing wrong with putting money behind a technology and then reaping either a gain or a loss based on how successful it becomes.

My actual point was that you can't look at what the fee structure / usability / etc is today and conclude there's nothing useful there.

This is especially true with the more common argument of, "Sure, I can see why someone would find it mildly useful for use a, b, or c; but I don't think it's useful today for more mainstream purpose x, y, or z, so I think it's worthless." Especially when (so far) the abc list keeps growing and the xyz list keeps shrinking. I'm not sure where that trajectory ends, but I personally think there's a lot of interesting problems that will be solved with crypto-currency.

So while Bitcoin's transaction fees may not be zero, it does seem like it's trending towards zero, much like the price of everything else on the web trends towards zero.