Pay 1% more(or 3%-8% more if you have a cash back card and depending on where you bought your coins) to save them 2% and lose all consumer protections in the deal.
It's no wonder there is almost no consumer growth in the bitcoin world while new merchants are announced every other day.
You are wrong, there is tremendous consumer growth happening. The two biggest US processors (BitPay and Coinbase) release numbers every once in a while. One example:
Wow, that's amazingly low. Especially because I'm guessing most of these transactions are just mixing services. I wonder how much represent actual transfers of wealth between individuals? I would guess less than 1K per day, which would make it incredibly low compared to all the hype bitcoin has got.
Indeed. In searching around to find something to compare these numbers with, I found that Walmart alone processed 10 million register transactions in 4 hours on Black Friday in 2012[1]. Even if all 70k bitcoin transactions every day were actual purchases (rather than shifting money around), it'd take 5 months to do what Walmart did in 4 hours.
Absolutely, but the numbers are still incredibly low. The customer adoption is only at a few thousand transactions per day. Those numbers would have to go up at least hundredfold for Bitcoin to be taken seriously as a currency.
Bitcoin is only 4 years old. Maybe it just takes a little longer to take over Visa in transaction volume? I really don't know what people like you expected.
If it proceeds to double in size every year then the numbers will stop being 'incredibly low' very soon.
That's true, and every time a new company begins accepting it, there is a slurry of stories about it in tech publications.
I'm surprised more retailers, particularly those specializing in tech, haven't begun accepting bitcoin. They can accept it on terms they dictate and it's easy publicity.
You don't the publicity is more important than the amount of commerce transacted on it? Every one of these companies get the press when they indicate they accept bitcoin. I remain skeptical as to how many are doing any sort of volume in bitcoin transaction
The biggest problem with Bitcoin being taken seriously as a currency is its investment value. If there is anyone using it to pay for goods and services, then they are most likely buying back the amount they spent. So there is not much reason to use this on sites like newegg.
A crucial missing data point is that Coinbase does all their transactions off-chain. If you send Bitcoin via Coinbase to a friend, it doesn't get reported on this chart. They have their own accounting system.
Bitcoin at its current stage cannot handle many transactions, as you point out. However, this doesn't mean there isn't a plan to make it handle many more transactions. See https://en.bitcoin.it/wiki/Scalability for more.
And coinbase stopped reporting their volume after they were caught out fudging the numbers. I think people vastly overestimate how much off block chain stuff they do.
Note that many Coinbase/Bitpay/whatever transactions will be off-chain - much like PayPal, you can have an account balance that is just transferred in Coinbase's ledger but doesn't actually appear to be transferred on the block chain.
I thought transactions like that weren't supported by the bitcoin protocol. Are there any resources that explain how this works with the general blockchain?
It doesn't work with the general blockchain. If I have 1btc in my coinbase account and I send it to your coinbase account then it never shows up on the block chain.
I think people hugely overestimate how much volume is happening with this though.
It's hard to accurately measure adoption level mostly because of the decentralised nature of Bitcoin, but looking at the transaction volume is a really bad approach. One individual sending money back and forth can generate tremendous volume (similarly with exchange moving their funds between hot wallet and cold storage). Same goes for transactions count (if you are moving big enough funds you don't have to pay fee), plus there are things like satoshidice or reddit tip bot that tend to move towards off-blockchain transactions now.
Yeah, it's a very nice metric. But I don't think it's related to adoption. I mean if bitcoin is used as a currency and quickly changing hands you wouldn't expect many "bitcoin days destroyed" (as opposed to when e.g. exchange is reorganizing its funds)
Where are you seeing it? Overstock the most regularly promoted name as a retailer has only seen dropping numbers since they started.
Notice bitpay stopped reporting 7 months ago?
Coinbase has also been called out on posting contradictory numbers on their blog posts in the past which lead to them deleting most of their posts related to numbers.
Your source is a link to a story which sources some random bitcoin news blog which sources...nothing but their own claim that they were told that. Every other news source references it or doesn't give a source for the claim. This is common in bitcoin reporting. One blog makes something up, misunderstands something, or makes a mistake and the rest report it as fact.
I'll believe it when I see numbers for multiple days over multiple months. Both bitpay and coinbase have been caught in the past using spikes and holiday volume to make their overall volume look much higher than it is.
BitPay processed $5k/day in May 2012 [3], $18k/day in Sep 2012 [3], $160k/day in March 2013 [1], $300k/day average through 2013 [2], and now $1.0M/day [4].
BitPay had 1k merchants in Sep 2012 [3], 10k by Sep 2013 [5], 30k by May 2014 [6].
BitPay raised $2M in May 2013 [7], and $30M in May 2014 [4].
They had a single office in Atlanta in 2012, now they have 8000 sq ft in Atlanta [8], plus offices in Amsterdam, San Francisco, New York City.
BitPay had 7 employees in April 2013 [9], and 40 by May 2014 [8], and plans to have 100 by end of 2014 [8].
You can bury your head in the sand as much as you want, but their growth is obvious... Have you been to any Bitcoin conference? The number of new startups, flury of projects, funding rounds, etc, is mind-boggling. You belong to the super-minority who believes that "Bitcoin is seeing no consumer growth" (!)
I'd like to see a source for your claim that "Overstock ... has only seen dropping numbers since they started." I think you're probably getting it from the FOX Business interview in May, but that's not really as cut-and-dried as you're making out.
Yes it is! The numbers I posted ($1M/day today, up from $300k/day in 2013) are transactions made on BitPay's platform for services and goods sold by BitPay's merchants, 99% of which are B2C companies (see https://bitpay.com/directory). Real stuff sold to real customers, in bitcoins.
I think you are confused and thought I was talking about transaction volume on the Bitcoin p2p network.
Bitcoin is still mostly a speculative vehicle. 9/10 links about bitcoin are not real news and are just propped up by people with a stake in it. Nobody else cares.
I wonder this too - I rarely use cash right now, because I get:
1) Cashback (1-3%)
2) Chargebacks if needed
by using a credit card. Bitcoins are basically like cash in my mind - very easy to move around, but no protections in case of it being stolen, and no cashback. I think Bitcoin is very neat technology, and has some useful features (transferring money between people quickly and easily with basically no fees), but I fail to see the incentive for me to use it to replace my credit card. The business receiving it receives all of the benefits.
If stores passed the savings onto the consumer with 2 or 3% cashback, I could potentially see people using it. Especially if this was returned as points or something, similar to how it's treated for credit cards.
Please consider using cash at small and local businesses when possible. You pay the same amount either way, and the extra 2-3% goes to the local business instead of to Visa.
Additionally, I've been to one or two stores that will actually give a small discount on cash purchases. I hope that trend continues.
I do tend to somewhat favor cash when using food trucks, and other small stores - I figure it's a little faster than waiting for them to fiddle with their phone, and it saves them a little bit of money.
Yeah but the other night I stopped at a Mexican food truck and was without cash. They didn't have Square or anything. I drove 3 blocks to the ATM only to buy something next to the ATM vs go back. So for my family of 4 I put $50 into one store vs the food truck. So a $50 lost sale is a lot of 2-3% to make up by not accepting cards at all.
It's not like they were selling digital copies of something, that they lost all of it. It all depends upon how much is their margin? Maybe they go home every night after selling all their stock. How long did they have to wait to sell that $50 worth of stock that you didn't buy? 5 minutes? 10 minutes? Were those 10 minutes worth $1.50 they saved on fees?
It's a great point to add that it's nuanced. But a lost sale is a lost sale and should be avoided if you're in the business of selling things. Unless your margins are under 3% (the reason why Overstock is say an early Bitcoin champion)
I'm wondering why Coinbase doesn't offer a cashback program where they would charge the merchant the typical 2-3% and pass it on to the payer as a discount. This would hugely incentivize paying with BTC. The merchant should be indifferent about this fee since he has to pay it already 95% of the time.
Well I don't care about the ability to do chargebacks from newegg, and I care a lot about the ability to not get my financials stolen by hackers, so the "consumer protection" Bitcoin offers here looks pretty good to me.
True there's no advantage to paying with bitcoin currently and most people are just using it for the novelty value. But enough growth and merchants will just have to offer discounts with bitcoin purchases to stay competitive.
If the numerous and massive data breaches, and subsequent credit card theft and fraud events of the last few years have taught us anything, it is that yes paying in bitcoins has one fundamental advantage: you are never handing the store your full billing info which can be stolen and reused by fraudsters.
Now, Bitcoin also has its own security challenges (eg. how to secure a wallet), but there are solutions (hardware wallets) making it a fundamentally more secure way of transacting online.
I would much rather spend 10 minutes on the phone with my credit card company once every couple years contesting fraudulent transactions than have the potential for all of my money to be stolen if I make one security fuck up ever.
The number of "I had all my bitcoins stolen, here is the list of 25 security precautions I've taken, where did I fuck up" articles is terrifying. I'm willing to sacrifice the 1% savings or whatever it is I'd theoretically get from bitcoin for that peace of mind.
See, people are used to, and are already pretty good at securing valuables such as cash (in a safe, at home, or on themselves). A paper backup presents to additional complexity to store securely. And Bitcoin offers extra advantages: losing your paper backup does not affect you ability to use the wallet, and you can have multiple backups, etc. So a hardware wallet is at least better than or equal to cash in terms of security.
Because we've evolved a hell of a lot of ways for people to offload responsibility over the last hundred or so years, particularly where money is involved.
Sure, the bank/CC company will take responsibility for fraudulent charges. In return, they:
1. Randomly cancel your cards and mail you new ones to limit their risk. (No explanation other than 'security')
2. Refuse to let you use your cards to deposit on gambling sites (which are legal in Canada). They also charge extra fees for 'cash-like' transactions on things like forex sites.
3. Reject large purchases that are 'out of the ordinary' making you look like a jackass. This one happened to my dad while he was booking flights.
4. Skim 2-3% or more of each transaction.
5. Maintain onerous requirements for merchants. Square has helped a lot with this in the first world but in the rest of the world they don't even bother taking electronic payments because it's such a hassle to get approved, lease the machines, maintain a security deposit, etc.
Sometimes it makes more sense to just take the risk of getting scammed than deal with all of the above.
So what happened when credit cards went toe-to-toe with bitcoin? Bitcoin got its ass handed to it. http://pando.com/2013/08/27/an-expensive-lesson-against-sell... Ebay had to ban bitcoin sales because sellers were getting ripped off so often by credit card owners.
How so? The whole scam was predicated on abusing the chargeback feature of credit cards. This just proves that credit cards are terrible at cash-like transactions (buying cash/gold/bitcoins/gambling).
Of course they don't - there's no such thing as a hardware wallet yet. It's irrelevant to the discussion to say that a theft might not have happened if the victim had been using a fictional technology.
>you are never handing the store your full billing info which can be stolen and reused by fraudsters.
And you have to use a hard to obtain (bureucratic nightmare to exchange), volatile, dealing with shady "institutions" with no real history or assurances behind them (MtGox anyone?), and use a novelty currency for that?
There are "one use" recharchable virtual credit cards used all over the world, you can "fill up" one from your online banking and have it handle as much or as little money as you want (e.g just for one transaction).
This can be done wholly online, and takes like 1 minute.
If someone steals my credit card and runs up $8000 in charges on it, I'm not out $8000. There is a piece of paper somewhere that says I owe $8000, but that's not being out the money.
One might have a model of "net worth" as "total assets minus total debts," and normally it's a decent model, and this makes net worth go down. But illegitimate debts put a wrinkle in that model.
Never underestimate the advantage of having money versus being owed money. (This is a start-up lesson, too.)
I recognize this is an extreme story, but you cannot claim that CC info theft "does not matter". When it happens, there are many ways in which it can turn in a big pile of hassle for you.
For better or worse MRB there are literally millions of cards stolen and compromised each year. And the biggest inconvenience 99% of these people suffer is waiting 4 days for a new one in the mail and having to remember to update their various subscriptions. So there might always be a horror story or two like the above but it's not really an effective rebuttal against the main point which is credit card fraud is not borne by the individual.
No. The point is that Bitcoin does not require you to share your billing info with the merchant. Therefore no info shared = no data leak possible = higher security.
Understand this is an issue in the merchant's processes, not with Bitcoin.
Your argument is like saying "seat belts in cars don't always make drivers safer, for one people may forget to buckle up and not benefit from increased safety".
>Understand this is an issue in the merchant's processes, not with Bitcoin
Sure, but the end result is the same. It's irrelevant whose fault it is.
Or, reversely, nothing prohibits buying with credit cards online to be done differently and be safe from such fraud (e.g one-off credit card numbers with token generators).
But in the real world, credits cards are used the way we know, and merchants accepting bitcoin still ask for those details.
No it is not: with Bitcoin, an attacker knowing your billing info cannot steal your coins. With your CC info, he can make fraudulent purchases (obviously).
Even virtual credit cards are not safe from fraud. Some transactions over the maximum spending limit or expiration date might still go through [1]. This makes none of them truly single-use since multiple charges can go through. Also, they are a PITA to use especially if you want to regenerate a one-off CC number for every transaction (which nobody does - there is no such thing as a "token generator" as you claim). For these reasons banks have been in fact discontinuing virtual CC services over the last few years, eg. see [2].
By contrast, a Bitcoin transaction is truly a one-time payment that is cryptographically authorizing a specific payment amount to a specific address, and nothing more.
Credit card fraud is a problem for credit card companies, but as a user I couldn't care less. The last time someone copied my credit card I've got a call from Amex within a few days, they reversed the transactions and sent me a new card.
Of course Bitcoin would be more secure (I own some myself). But from a users point of view this additional security doesn't really matter too much. I rather pay with my credit card and get 1% cashback.
>> If the numerous and massive data breaches, and subsequent credit card theft and fraud events of the last few years have taught us anything, it is that yes paying in bitcoins has one fundamental advantage: you are never handing the store your full billing info which can be stolen and reused by fraudsters.
This is also the case with ICC/EMV cards, though the USA hasn't caught up to that for some reason.
--edit-- of course this only applies to physical transactions, online transactions are still vulnerable, yes.
> paying in bitcoins has one fundamental advantage: you are never handing the store your full billing info which can be stolen and reused by fraudsters
That's not true, it's cheaper for me to buy things on Amazon with Bitcoin via Gyft (3% cashback) than using my credit card (1% cashback) or debit card (nada).
You're ignoring the cost of acquiring bitcoins in that 3%.
Also cheaper still to buy gift cards via raise, cardpool, giftcardgranny, hundreds of other results for "discount gift cards" which are 3%-6% off AND get your 1% cash back.
Please link me to a site that has Amazon gift cards at a greater than 3% discount. I tried searching last time someone gave me that reply and couldn't find one.
Your own specious arguments also ignore the cost over exchange quoted prices in acquiring Bitcoin, and make a lot of incorrect assumptions to boot. You seem very vested in making this sound like bad news. I guess your job as a shill is in jeopardy? Better post more.
Citation please. I've been charged extra at my favorite Chinese restaurant for using a card, so it's not that I don't believe you, but I would really like to know the relevant decision. (Upvoted)
1) You don't have to provide private info like CC number.
2) If you bought bitcoins at X and now they are valued at 10X you may effectively enjoy 90% discount on all purchases.
All these mythical user-protecting chargebacks are almost never used by consumers for refunds (companies who care about brand help them settling refunds) and almost always for the cases when you CC details got stolen and used by someone else. Of course, bitcoin payments do not leak your private keys, so the entire class of problems goes away.
The vast majority of Bitcoin purchases happened at below the current market value. Which I guess is what makes people so bitter they didn't buy earlier?
>> All these mythical user-protecting chargebacks are almost never used by consumers for refunds (companies who care about brand help them settling refunds) and almost always for the cases when you CC details got stolen and used by someone else.
Companies who don't care about brand and companies who have not yet established a brand are, however, somewhat indistinguishable.
The chargeback facility (among others) provides a cushion and safety net to allow consumers to transact in cases where they are less than 100% certain who they are dealing with.
Removing it would kill the ability of smaller businesses to transact as people like me would never give them any cash, and I would advise my non-technical friends and family to behave similarly.
I know this disagrees with your view on the world, sorry.
1) You're ordering something to be delivered you have to provide the same info.
2) True, but now once you've spent them does it make sense to buy them back and do it again?
Because most companies are afraid of chargebacks and will take steps to avoid them. Bitcoin payments don't but any minor lapse in personal computer security likely will.
For 2), surely you would have to pay capital gains tax on the increase in value. To be fully compliant with the law, it may be hard to enforce in reality.
Of course. It does vary on a country to country basis. I believe most countries consider BTC an asset rather than a currency, thus incurring the capital gains tax.
That never happened since 2011. Consider also investing for at least a year or two: in such case you have a 99,9% chance to be in a big fat profit. Wishing to buy BTC and get rich quick is a huge gamble. Or if you are not interested in holding BTC at all and only buy it to access certain markets (e.g. where CC do not work), then it's stable enough on an hourly basis. You'd waste more money on exchange fees anyway.
"Consumer protections" - not "Consumer protection laws" - All of the "consumer protections" I have actively used were given to me not by law, but by the credit card company. (some of those are mandated by law, of course.)
Of course, I have been passively protected by consumer protection laws, and yes, I would receive the same passive protections when paying via cash or bitcoin.... but when those laws are violated, it's almost never worth it to bring up a legal case. If I pay cash, and I get screwed, I complain to the vendor. However, if the vendor does not give me satisfaction, it's usually just not worth paying a lawyer.
It /is/ however, often worth it for me to call my credit card and get them to take the charge off.
While the credit card might not get me many (or any) more legal rights, it certainly gives me rather a lot more practical power if I have a dispute with a retailer (vs. using cash or bitcoin)
In the UK part of your protection is the fact that there is a third party involved (your credit card issuer) who has a variety of responsibilities to the consumer over and above the responsibilities of the retailer. In practice this means you get better protection as the money can be taken back from the retailer by a third party with a big stick.
Credit card chargebacks have nothing to do with consumer protection laws. It is just a feature of the credit card payment system (good or bad, depending on point of view).
Here in the UK the credit card company, as a party to an incurred debt, has a legal responsibility to the consumer that encompasses various things like product quality and returns/refunds. If the retailer does not live up to their responsibilities then the CC provider has a legal responsibility to return the money.
This is under section 75 of the Consumer Credit Act.
You get no additional protections regarding quality/returns/refunds when paying by credit card, that you wouldn't have if paying by bitcoin, or cash.
You get the option of pulling the payment back unilaterally, but this is subject to those same consumer protection laws, so the merchant can still come after you if you do so without a valid reason as stipulated by the law.
>> You get no additional protections regarding quality/returns/refunds when paying by credit card, that you wouldn't have if paying by bitcoin, or cash.
I'm sorry, this is just not true here in the UK (which is what I originally said, it's not the same everywhere), you get assurances from another party in case the merchant disappears, goes bust or just finds a way not to play ball.
This goes well beyond chargebacks and can include things like the CC company being on the hook for repair charges etc. if the goods are not up to scratch, long after the original transaction.
If you need further information then try looking up Section 75 of the Consumer Credit Act. It's all in there and there are loads of consumers' rights guides on the net that will give you the layman's interpretation of the law.
Yes, chargebacks are the usual method a CC company uses in a variety of circumstances, but that doesn't change the validity of my statement - in some places some payment methods will get you a whole load of extra rights compared to BTC or cash.
The Bitcoin scripting language actually does provide a great foundation for payment reversibility and solutions for this do exists. I'm working on one such solution, https://www.bitrated.com/.
Edit: We're about to re-launch Bitrated in about a month, with a new system that's been written from the grounds up. If anyone reading this is interested in seeing what we've been working on and would like to provide some feedback before the public launch, please contact me (email in my profile). </shameless-plug>
I think a lot of the merchant adoption is driven more by marketing than anything; newegg will get a spike of sales from enthusiastic bitcoiners because of this.
Until one day it all goes wrong, or management change and don't care about service so much.
And that also acts as a barrier for new entrants into the market, stifling competition. When you have to just trust that a new market entrant won't run off with your cash, why would you ever risk it?
There's a hell of a lot that consumer protections and existing payment instruments give us.
So use Bitcoin where you trust the seller or the amount is small enough that you don't care and pay the 2-3% credit card insurance premium everywhere else. Win-win.
Agreed. I've had to return things, replace damaged shipments, etc. Newegg has always been extremely helpful. I guess dishonest people can't imagine a scenario where merchants behave that way to, I don't know, retain customers instead of being forced to because their payments are being held hostage.
>> I guess dishonest people can't imagine a scenario where merchants behave that way to, I don't know, retain customers instead of being forced to because their payments are being held hostage.
There are literally thousands of years of history to look at that will show you how naive and ridiculous this view is. Try doing a quick web search on "Caveat Emptor".
And for more recent examples, well try reading anything much about the last few years of bitcoin.
It's no wonder there is almost no consumer growth in the bitcoin world while new merchants are announced every other day.