Secretive Bitcoin Startup 21 Reveals Record Funds, Hints at Mass Consumer Play(blogs.wsj.com)
blogs.wsj.com
Secretive Bitcoin Startup 21 Reveals Record Funds, Hints at Mass Consumer Play
http://blogs.wsj.com/digits/2015/03/10/secretive-bitcoin-startup-21-reveals-record-funds-hints-at-mass-consumer-play/
86 comments
It sounds like some variant of the hardware Bitcoin bank idea that has been floating around the valley.
The rough sketch of the idea is
-Hardware device runs a full security bitcoin node in your house -Provides a multisig for your mobile wallet. -Automatically moves savings into cold storage -Provides a basic environment for implementing crypto banking features
The rough sketch of the idea is
-Hardware device runs a full security bitcoin node in your house -Provides a multisig for your mobile wallet. -Automatically moves savings into cold storage -Provides a basic environment for implementing crypto banking features
yeah, another bitcoin pipe dream...
what's needed is probably something like integrating a wallet+bitreserve+exchange+payment processor in a single business. And then forking/enhancing btc itself. Some of the top btc companies have got ridiculous investment rounds that could be used towards that goal, easily.
The blockchain ends up being useful as a public secure ledger, so perhaps it's going to be used in that way somehow.
Otherwise, I don't know of many companies who've actually worked into the space of the less well-known features of bitcoins that can be used via the embedded pseudo-language.
Otherwise, I don't know of many companies who've actually worked into the space of the less well-known features of bitcoins that can be used via the embedded pseudo-language.
> "These two things don't seem to obviously go together."
That actually makes a lot of sense: if you consider some of the security challenges associated with IoT, e.g. an IoT door lock, then a smart contract where you have m of n signatures needed to unlock it (think of them like a modified escrow with policy side, too), then you can see the play here. The transaction to open the door gets signed only if that policy is met at each of the m signatures. You might have a lock device signature, a home signature, and a home owner signature. There are lots of microtransactions in IoT (good and potentially bad). Smart contracts can mitigate / isolate risk and ultimately reduce attack surface vulnerabilities. Block chain is a necessary part of this to work. For more info check out "bitcoin 2.0".
The vision is to use bitcoin to enable automated micropayments between devices. One example that Marc Andreessen has talked about is sharing your network connection with neighbours:
http://www.wired.com/2015/03/opinion-bitcoin-may-gets-us-rea...
21 aims to provide the tools and build the full stack infrastructure to make that happen.
http://www.wired.com/2015/03/opinion-bitcoin-may-gets-us-rea...
21 aims to provide the tools and build the full stack infrastructure to make that happen.
Their jobs page provides some hints as to what they're up to: https://21.co/#jobs
They do if they allow you to do seamless software installs and payment chains. More than obvious, if you've been thinking about it.
With this kind of investment capital on the line, I sure hope that they are focusing their efforts outside of the consumer payments area. I think the fact that consumers must purchase Bitcoin in advance, with no clear advantages that average consumers would appreciate (consumers generally don't care about privacy), makes mass-adoption of Bitcoin for payments incredibly unlikely to ever happen.
The biggest question in my mind is whether or not they have developed a realistic revenue model. The whole point of the Bitcoin protocol is to relinquish control of the blockchain to the network's participants, which makes it hard to monetize. They could license whatever software/hardware they manage to build for various applications of the technology (voting, research, etc), but $116 million seems like a big bet on a company building solutions on top of open source software.
Edit: It appears that they are building both software and hardware, and more interstingly, intend to operate their own datacenters. One of the job descriptions from https://21.co/#jobs :
"21 is seeking a Datacenter Operations Engineer to travel to our datacenters and keep them up and running smoothly. You should like big iron, cutting edge equipment, and firmware. The job description says you will be responsible for "day-to-day operations of 10,000+ server installations". I guess we know where $116M is going.
The biggest question in my mind is whether or not they have developed a realistic revenue model. The whole point of the Bitcoin protocol is to relinquish control of the blockchain to the network's participants, which makes it hard to monetize. They could license whatever software/hardware they manage to build for various applications of the technology (voting, research, etc), but $116 million seems like a big bet on a company building solutions on top of open source software.
Edit: It appears that they are building both software and hardware, and more interstingly, intend to operate their own datacenters. One of the job descriptions from https://21.co/#jobs :
"21 is seeking a Datacenter Operations Engineer to travel to our datacenters and keep them up and running smoothly. You should like big iron, cutting edge equipment, and firmware. The job description says you will be responsible for "day-to-day operations of 10,000+ server installations". I guess we know where $116M is going.
21 Inc was previously 21E6 https://bitcointalk.org/index.php?topic=334759.0 who was in the news back in 2013
What percentage of that funding is just buying and holding Bitcoins? Many of these large rounds have that business model baked into the amount they raise. There's much more profit to be had from buying at current prices and selling at a consumer inflection point than there is in actually building a Bitcoin service.
It's idiotic to assume an investor will invest in a company to buy coins, rather than coins directly.
Maybe if it was expensive art, exotic animals or something difficult and tricky to buy and store without having specialized knowledge, yes then you'd invest in a company to buy and manage these assets.
But storing bitcoin is storing private keys... a password. Anyone can buy it and store it. Hell you can even buy it on registered exchanges, or as a security from SecondMarket's bitcoin fund.
No. These guys raised money to hire software and hardware engineers, they're looking to build a product.
Does that mean the investors aren't buying bitcoin? No, they do so, but outside the company. It's well known that there are a number of VCs (e.g. Chamath) who have bought a few million worth of bitcoins besides their investments in bitcoin companies.
I don't any evidence that many of the 'large rounds' have this business model. There are some companies that bought bitcoin, but that's for liquidity, not investments. Circle, Coinbase or exchanges all need bitcoin to sell as they're brokers/exchanges. But they didn't buy it as an investment, they could just buy bitcoin as individuals, as could investors.
Maybe if it was expensive art, exotic animals or something difficult and tricky to buy and store without having specialized knowledge, yes then you'd invest in a company to buy and manage these assets.
But storing bitcoin is storing private keys... a password. Anyone can buy it and store it. Hell you can even buy it on registered exchanges, or as a security from SecondMarket's bitcoin fund.
No. These guys raised money to hire software and hardware engineers, they're looking to build a product.
Does that mean the investors aren't buying bitcoin? No, they do so, but outside the company. It's well known that there are a number of VCs (e.g. Chamath) who have bought a few million worth of bitcoins besides their investments in bitcoin companies.
I don't any evidence that many of the 'large rounds' have this business model. There are some companies that bought bitcoin, but that's for liquidity, not investments. Circle, Coinbase or exchanges all need bitcoin to sell as they're brokers/exchanges. But they didn't buy it as an investment, they could just buy bitcoin as individuals, as could investors.
I spent 2014 trying to get a Bitcoin derivatives exchange off the ground and had a lot of intimate conversations about business models with large players, I am not speculating here.
Consider that Bitcoin has return characteristics that are highly desirable to a VC's risk profile, yet the restrictions of their limited partnership agreements precludes VCs from directly buying Bitcoin.
Consider that Bitcoin has return characteristics that are highly desirable to a VC's risk profile, yet the restrictions of their limited partnership agreements precludes VCs from directly buying Bitcoin.
So you're saying Coinbase, Bitpay etc or likewise have bought bitcoin purely for speculation (not as necessary liquidity as part of the product they're offering) with VC money and directed by VC orders to act as an investment vehicle for bitcoin, while using the tens of engineers etc and products as a front? While simultaneously lying to the VC funds' investors who have set restrictions that they're actively circumventing?
It's not idiotic, that's why there is a Bitcoin fund, and soon there will be a Bitcoin ETF.
If being an expert in computer security isn't "specialized knowledge", I don't know what it is.
If being an expert in computer security isn't "specialized knowledge", I don't know what it is.
You're not following.
I'm not arguing whether investors right now buy bitcoin directly or through a fund. Obviously they do both.
I'm arguing that NOBODY buys bitcoin through a non-fund bitcoin company that has actual products, like payment processing, consumer brokerage, wallet etc, which is what this new company is about. It's not a fund, it's a company with a product.
i.e. nobody invests in jet fuel by investing in an airline, despite the fact that all airlines trade in jetfuel. They either buy jetfuel (rare considering its properties) or buy into a jetfuel fund, etf, index.
It's just completely ridiculous and not true and unsupported by any evidence, that investors would want exposure to the price of bitcoin by investing in say Coinbase or Circle or Bitpay. They're two completely separate investments.
This is a company that will build hardware and software. It has engineers, management, marketing people, customer service, offices, warehouses, factories, supply chains. It has a product and it has costs. To invest in all of those costs to get exposure to the bitcoin price is ridiculous, again you either buy bitcoin directly, or you buy through a fund like I mentioned in my last post.
As for needing to be an expert in computer security to buy and store bitcoin, hardly, but that's another discussion.
I'm not arguing whether investors right now buy bitcoin directly or through a fund. Obviously they do both.
I'm arguing that NOBODY buys bitcoin through a non-fund bitcoin company that has actual products, like payment processing, consumer brokerage, wallet etc, which is what this new company is about. It's not a fund, it's a company with a product.
i.e. nobody invests in jet fuel by investing in an airline, despite the fact that all airlines trade in jetfuel. They either buy jetfuel (rare considering its properties) or buy into a jetfuel fund, etf, index.
It's just completely ridiculous and not true and unsupported by any evidence, that investors would want exposure to the price of bitcoin by investing in say Coinbase or Circle or Bitpay. They're two completely separate investments.
This is a company that will build hardware and software. It has engineers, management, marketing people, customer service, offices, warehouses, factories, supply chains. It has a product and it has costs. To invest in all of those costs to get exposure to the bitcoin price is ridiculous, again you either buy bitcoin directly, or you buy through a fund like I mentioned in my last post.
As for needing to be an expert in computer security to buy and store bitcoin, hardly, but that's another discussion.
I think building Bitcoin services is the only way to make Bitcoin _reach_ that consumer inflection point.
It may be coincidental, but Qualcomm just announced a massive stock buyback.
My best guess is this is an IoT play targeting embedding cheap cell chips into devices which will carry their own wallets. The cell chips connections to the network can be funded with cryptocurrencies the devices carry, but the ultimate goal is likely enabling software delivery into the devices. Devices pay for the software downloads. Users fund devices using credit cards, etc. Think of it as a fancy licensing engine for the trillions of devices that will be hooked up.
My second guess would be a decentralized cell network, powered by cryptocurrencies.
Either of those is a massive market.
My best guess is this is an IoT play targeting embedding cheap cell chips into devices which will carry their own wallets. The cell chips connections to the network can be funded with cryptocurrencies the devices carry, but the ultimate goal is likely enabling software delivery into the devices. Devices pay for the software downloads. Users fund devices using credit cards, etc. Think of it as a fancy licensing engine for the trillions of devices that will be hooked up.
My second guess would be a decentralized cell network, powered by cryptocurrencies.
Either of those is a massive market.
How much Bitcoin do the founders, employees, or investors own? Curious to see what real gains they could realize if they succeed in making people see Bitcoin as a legitimate means of payment.
hopefully, they take me up on the advice I gave Bitpay: http://cointelegraph.com/news/113255/keeping-score-at-the-20... (see "The solution")
Since they're looking for ASIC engineers, I guess they're a mining hardware company.
I've been hoping someone will design a bitcoin cash voucher reader/printer, like you see in the casinos.
(For use in small retail business and vending machines.)
I've been hoping someone will design a bitcoin cash voucher reader/printer, like you see in the casinos.
(For use in small retail business and vending machines.)
Are there ways to reduce the size of the block chain? Or will we get to the point where only large service providers can hold the block chain?
I ask because I was maintaining my own wallet for awhile but stopped because the block chain database was getting unwieldy - it would take up to a week to resync if I ever turned my wallet software off for a significant amount of time.
You know though... I actually don't care. Bitcoin was an interesting curiosity and useful in some situations (transferring money to people in rural areas of 3rd world countries, for example), but it's slow (up to 15 minutes for the transaction to be approved?), has high fees in its transactions and even higher to convert from/to cash, it's unwieldy...
To use it from consumer devices would require someone else managing the wallet, and at that point I'll instead just use cash or a credit card.
I ask because I was maintaining my own wallet for awhile but stopped because the block chain database was getting unwieldy - it would take up to a week to resync if I ever turned my wallet software off for a significant amount of time.
You know though... I actually don't care. Bitcoin was an interesting curiosity and useful in some situations (transferring money to people in rural areas of 3rd world countries, for example), but it's slow (up to 15 minutes for the transaction to be approved?), has high fees in its transactions and even higher to convert from/to cash, it's unwieldy...
To use it from consumer devices would require someone else managing the wallet, and at that point I'll instead just use cash or a credit card.
There are a couple of good options for working with truncated blockchains to a checkpoint without reducing the security of the blockchain. Likely one or the other with settle out as the common practice, and the blockchain growth problem will be solved.
Power consumption, on the other hand, may not be solvable even in theory, and it also seems likely to drive mining to just large service providers. The current pools aren't a solution in this case because the startup cost to even participate meaningfully will grow too large.
Maybe this could be solvable with a different proof mechanism. A few have been suggested and tried (PPC etc.), but I don't think it's solvable for BTC as it's currently defined. I'm happy to be proven wrong.
Power consumption, on the other hand, may not be solvable even in theory, and it also seems likely to drive mining to just large service providers. The current pools aren't a solution in this case because the startup cost to even participate meaningfully will grow too large.
Maybe this could be solvable with a different proof mechanism. A few have been suggested and tried (PPC etc.), but I don't think it's solvable for BTC as it's currently defined. I'm happy to be proven wrong.
"Hi everyone, I just heard about Bitcoin... And I'm here to fix it"
This is an important question since the focus of the article's speculation is on the Internet of things. Obviously embedded devices are not going to be lugging around gigabytes of blockchain any time soon. Even with pruning you're not going to get the size down to a realistic number for devices with little to no hard drive capacity.
I imagine in any IoT scenario, a fleet of sensors talks to a trusted central hub. If Bitcoin is involved then the hub could run the wallet and the sensors could delegate transactions to it.
I imagine in any IoT scenario, a fleet of sensors talks to a trusted central hub. If Bitcoin is involved then the hub could run the wallet and the sensors could delegate transactions to it.
There is an iOS wallet that connects directly to the network that downloads the necessary info in seconds:
https://itunes.apple.com/us/app/breadwallet-bitcoin-wallet/i...
https://itunes.apple.com/us/app/breadwallet-bitcoin-wallet/i...
This uses Simplfied Payment Verification (SPV).
SPV helps with some scalability issues, but doesn't solve them all.
From http://bitcoin.stackexchange.com/questions/4649/what-is-an-s...:
> SPV: A Bitcoin implementation that does not verify everything, but instead relies on either connecting to a trusted node, or puts its faith in high difficulty as a proxy for proof of validity. BitCoinJ is an implementation of this mode.
See also:
http://bitcoin.stackexchange.com/questions/11054/understandi...
SPV helps with some scalability issues, but doesn't solve them all.
From http://bitcoin.stackexchange.com/questions/4649/what-is-an-s...:
> SPV: A Bitcoin implementation that does not verify everything, but instead relies on either connecting to a trusted node, or puts its faith in high difficulty as a proxy for proof of validity. BitCoinJ is an implementation of this mode.
See also:
http://bitcoin.stackexchange.com/questions/11054/understandi...
Wouldn't this be really power draining? Having to sync and download constantly.
Yes, it's called pruning, it's in development and not finished.
The basic idea is that bitcoins are actually units of money that are in your wallet. Rather bitcoin works by chaining transactions (put into blocks, hence the blockchain).
Thus if you give me $1, I don't have $1, I actually have a record that you gave me $1 so that must mean I have $1 to spend. That's the simplistic idea.
That is the reason why instead of storing account numbers with money numbers in them, bitcoin stores transactions.
By now it's probably obvious to you that the vast majority of those transactions don't need to be stored. If I give you $1 and you give it back, repeat 1 million times, we end up with exactly the same amount of money. And all but the last few transactions can be reasonable deleted. (pruning)
As for syncing, syncing up a wallet is much, much faster now that it's headers first. But most users never sync, they either use 3rd party wallets like Coinbase, or they use wallet software that plugs into various nodes and APIs, so that no blockchain has to be present on-disk. The blockchain is really stored mostly by nodes, dedicated servers, businesses, a few enthusiasts.
That doesn't mean someone else manages the wallet by the way, like you mentioned for 'consumer devices', it just means that someone else manages the node. But the node doesn't control your money, your private keys do, and those are just a few bytes of storage. And as there are thousands of nodes and many APIs, trust of nodes isn't any different as when running your own node (which gets and sends data to other nodes, requiring the exact same amount of trust which is zero when it comes to controlling your money).
As for transaction fees being expensive, they're extremely cheap? Pennies to send thousands or millions, and as it's an open protocol anyone can build free centralized payment networks on top of it, like Changetip. Conversion with other currencies is also cheaper than most fiat conversions (e.g. dollar to euro), and in fact some companies already offer it for free (e.g. bitcoin/usd is completely free and pretty much instant with Circle, founded by Jeremy Allaire who founded Coldfusion).
The 15minute thing might be a deal-breaker for some. There are lots of solutions though that can remove that timer, built on top of bitcoin. Sidechains, treechains, payment channels etc. Anyway time will tell if these things work well but there don't seem to be any dealbreakers yet on the horizon.
The basic idea is that bitcoins are actually units of money that are in your wallet. Rather bitcoin works by chaining transactions (put into blocks, hence the blockchain).
Thus if you give me $1, I don't have $1, I actually have a record that you gave me $1 so that must mean I have $1 to spend. That's the simplistic idea.
That is the reason why instead of storing account numbers with money numbers in them, bitcoin stores transactions.
By now it's probably obvious to you that the vast majority of those transactions don't need to be stored. If I give you $1 and you give it back, repeat 1 million times, we end up with exactly the same amount of money. And all but the last few transactions can be reasonable deleted. (pruning)
As for syncing, syncing up a wallet is much, much faster now that it's headers first. But most users never sync, they either use 3rd party wallets like Coinbase, or they use wallet software that plugs into various nodes and APIs, so that no blockchain has to be present on-disk. The blockchain is really stored mostly by nodes, dedicated servers, businesses, a few enthusiasts.
That doesn't mean someone else manages the wallet by the way, like you mentioned for 'consumer devices', it just means that someone else manages the node. But the node doesn't control your money, your private keys do, and those are just a few bytes of storage. And as there are thousands of nodes and many APIs, trust of nodes isn't any different as when running your own node (which gets and sends data to other nodes, requiring the exact same amount of trust which is zero when it comes to controlling your money).
As for transaction fees being expensive, they're extremely cheap? Pennies to send thousands or millions, and as it's an open protocol anyone can build free centralized payment networks on top of it, like Changetip. Conversion with other currencies is also cheaper than most fiat conversions (e.g. dollar to euro), and in fact some companies already offer it for free (e.g. bitcoin/usd is completely free and pretty much instant with Circle, founded by Jeremy Allaire who founded Coldfusion).
The 15minute thing might be a deal-breaker for some. There are lots of solutions though that can remove that timer, built on top of bitcoin. Sidechains, treechains, payment channels etc. Anyway time will tell if these things work well but there don't seem to be any dealbreakers yet on the horizon.
Yes there is a solution. The reason it took you days to resync was because you ran the reference implementation, Bitcoin Core, which is meant for "full nodes" running 24/7. Simple users like you should instead run "thin client" or SPV wallets (Simple Payment Verification) which do not need to store the whole block chain, allowing your wallet to resync pretty much instantly. For a list of SPV wallets see https://bitcoin.org/en/choose-your-wallet and look for those labelled "simplified validation".
You also very likely ran into the problem that older versions of Bitcoin Core were slow to download blocks. For example version 0.10.0 released in February 2015 introduces parallel block download, which makes resyncing faster. Numerous other optimizations were made over the last 12-24 months (eg. better detection of stalled downloads). From your description it sounds like you were running a significantly older version of Bitcoin Core, so you were missing out on all these optimizations.
I would like to point out that despite the block chain growing continuously, we are still very far from the point where only large service providers can hold the block chain. The average block size is currently ~400 kB (https://blockchain.info/charts/avg-block-size?showDataPoints...), this means the block chain grows by ~20 GB every year. This is only 1% the size of an average desktop hard drive (2 TB), and would take only 4.5 hours to download (once a year, mind you) assuming a steady common residential Internet download speed of 10 Mbit/s.
Heck, a dedicated computer on a common residential Internet connection could still run as a full node and handle an average block size 100x larger that today (~40 MB per block, 2 TB growth per year = 0.5 Mbit/s continuous download). I would hardly describe something an enthusiast can do as a thing that "only large service providers can do". And keep in mind by the time 100x growths happens, CPUs/HDDs/Internet speeds will be much faster than today. Bitcoin's scalability has already been benchmarked pretty well: https://en.bitcoin.it/wiki/Scalability - no immediate bottlenecks are in sight.
"high fees in its transactions"
Fees are optional, and typically 0.0001 BTC (3 cents).
"up to 15 minutes for the transaction to be approved"
No, transactions are typically "received" instantly within seconds, and take 10-60 minutes on average to "settle" (be confirmed by 1 to 6 blocks). This is a lot faster than credit cards or ACH which both take 24h (or more if this is a weekend) to be received (ie. dollars available in the recipient's account), or bank wires which take days (or end-of-business-day if your are lucky).
You also very likely ran into the problem that older versions of Bitcoin Core were slow to download blocks. For example version 0.10.0 released in February 2015 introduces parallel block download, which makes resyncing faster. Numerous other optimizations were made over the last 12-24 months (eg. better detection of stalled downloads). From your description it sounds like you were running a significantly older version of Bitcoin Core, so you were missing out on all these optimizations.
I would like to point out that despite the block chain growing continuously, we are still very far from the point where only large service providers can hold the block chain. The average block size is currently ~400 kB (https://blockchain.info/charts/avg-block-size?showDataPoints...), this means the block chain grows by ~20 GB every year. This is only 1% the size of an average desktop hard drive (2 TB), and would take only 4.5 hours to download (once a year, mind you) assuming a steady common residential Internet download speed of 10 Mbit/s.
Heck, a dedicated computer on a common residential Internet connection could still run as a full node and handle an average block size 100x larger that today (~40 MB per block, 2 TB growth per year = 0.5 Mbit/s continuous download). I would hardly describe something an enthusiast can do as a thing that "only large service providers can do". And keep in mind by the time 100x growths happens, CPUs/HDDs/Internet speeds will be much faster than today. Bitcoin's scalability has already been benchmarked pretty well: https://en.bitcoin.it/wiki/Scalability - no immediate bottlenecks are in sight.
"high fees in its transactions"
Fees are optional, and typically 0.0001 BTC (3 cents).
"up to 15 minutes for the transaction to be approved"
No, transactions are typically "received" instantly within seconds, and take 10-60 minutes on average to "settle" (be confirmed by 1 to 6 blocks). This is a lot faster than credit cards or ACH which both take 24h (or more if this is a weekend) to be received (ie. dollars available in the recipient's account), or bank wires which take days (or end-of-business-day if your are lucky).
Hey mrb, I miss your blog posts.
(For those curious: http://blog.zorinaq.com/ )
(For those curious: http://blog.zorinaq.com/ )
[deleted]
What are you talking about?
Blockchain is now 30GB. A 4TB drive costs around $120. So it literally costs you 90 cents to store that data.
If 30GB bothers you, use MultiBit or Electrum.
Blockchain is now 30GB. A 4TB drive costs around $120. So it literally costs you 90 cents to store that data.
If 30GB bothers you, use MultiBit or Electrum.
I'm in India and I can't even buy it easily. Paypal hates it, as does India's Reserve Bank.
Too much effort for too little reward. Right now, the only thing I'd actually want to buy with BTC is illegal stuff off the darknet. There is virtually nothing else I need that bad that normal cash can't do.
Too much effort for too little reward. Right now, the only thing I'd actually want to buy with BTC is illegal stuff off the darknet. There is virtually nothing else I need that bad that normal cash can't do.
> Paypal hates it, as does India's Reserve Bank.
I can't believe this doesn't immediately make you think that maybe, just maybe there is something good about Bitcoin. Are you 0K with the central bank stealing wealth from you and your family through the debasing of your currency? Are you 0K with working your ass off so that bankers and other powerful people can live a life of wealth and pleasure? How can you take advise from such people?
"Bitcoin is bad, don't use it! It's a drug currency... very shady... also, terrorism!"
That is basically what every central bank said to the people in their country.
I can't believe this doesn't immediately make you think that maybe, just maybe there is something good about Bitcoin. Are you 0K with the central bank stealing wealth from you and your family through the debasing of your currency? Are you 0K with working your ass off so that bankers and other powerful people can live a life of wealth and pleasure? How can you take advise from such people?
"Bitcoin is bad, don't use it! It's a drug currency... very shady... also, terrorism!"
That is basically what every central bank said to the people in their country.
I'm from Bangalore, I have used localbitcoins quite a few times actually, all the trades went smoothly. The only issue I have with LBTC is you have pay a small premium compared to other exchanges for added convenience.
https://localbitcoins.com/
https://localbitcoins.com/
unocoin seems to make it quite easy to buy /sell in India.
SPV or ultimate blockchain compression can reduce storage requirements significantly.
Blockchain pruning would drastically reduce the size and it could be implemented relatively easily but it's not on the standard client(or any other afaik). You only need to keep unspent transactions (after you're confident a block reorganisation wouldn't go as deep as the block where you're pruning old tx).
I believe there are proposals to allow pruning the blockchain, but I'm not 100% sure on the details.
To guarantee a transaction goes through you have to wait for it to be confirmed, but most transactions really aren't that important/high risk, so beyond checking that the address does actually have the money, it's instantaneous. Many payment processors (I know Bitpay has this option) actually take the 0 confirmation transaction risk, allowing customers to pay instantly.
Transaction fees are not high, with a typical fee of .0001 bitcoin (3 cents), which is small compared to credit card fees. While work needs to be done converting to/from cash, actually using bitcoin (that you already have) to buy things is a better experience than using credit cards. You simply grab your phone, scan the QR code, and hit send. This is much better than entering your credit card for the thousandth time on another website, or being redirected to paypal, entering your password, and choosing your preferred payment option for the thousandth time (stop asking me to use Paypal Credit!).
Using an Android wallet such as Mycelium, or a desktop wallet like Electrum doesn't require you to download the entire blockchain, and although that comes at the cost of some trust, I personally don't find that problematic.
Basically, bitcoin has some problems, but I think some of your criticisms are no longer applicable to most everyday usage of it.
To guarantee a transaction goes through you have to wait for it to be confirmed, but most transactions really aren't that important/high risk, so beyond checking that the address does actually have the money, it's instantaneous. Many payment processors (I know Bitpay has this option) actually take the 0 confirmation transaction risk, allowing customers to pay instantly.
Transaction fees are not high, with a typical fee of .0001 bitcoin (3 cents), which is small compared to credit card fees. While work needs to be done converting to/from cash, actually using bitcoin (that you already have) to buy things is a better experience than using credit cards. You simply grab your phone, scan the QR code, and hit send. This is much better than entering your credit card for the thousandth time on another website, or being redirected to paypal, entering your password, and choosing your preferred payment option for the thousandth time (stop asking me to use Paypal Credit!).
Using an Android wallet such as Mycelium, or a desktop wallet like Electrum doesn't require you to download the entire blockchain, and although that comes at the cost of some trust, I personally don't find that problematic.
Basically, bitcoin has some problems, but I think some of your criticisms are no longer applicable to most everyday usage of it.
> actually using bitcoin (that you already have) to buy things is a better experience than using credit cards
It's just not. It's not easier than swiping a magnetic strip and signing something, or typing in sixteen digits (or using autofill or the site's previously saved CC info) and pressing buy.
It's not good that I can't demand a return or have recourse in the event of fraud. And it's not a benefit that with bitcoin I have to spend the money first (to buy bitcoin) and wonder if it will hold its value, versus just buying stuff when I feel like it on credit and covering the transaction within 30 days at no interest cost.
I know there are a lot of people who really want your above quoted statement to be true. But, for now and the forseeable future, it isn't.
It's just not. It's not easier than swiping a magnetic strip and signing something, or typing in sixteen digits (or using autofill or the site's previously saved CC info) and pressing buy.
It's not good that I can't demand a return or have recourse in the event of fraud. And it's not a benefit that with bitcoin I have to spend the money first (to buy bitcoin) and wonder if it will hold its value, versus just buying stuff when I feel like it on credit and covering the transaction within 30 days at no interest cost.
I know there are a lot of people who really want your above quoted statement to be true. But, for now and the forseeable future, it isn't.
> It's just not. It's not easier than swiping a magnetic strip and signing something, or typing in sixteen digits (or using autofill or the site's previously saved CC info) and pressing buy.
It's much easier to take your phone, open an app, and scan a QR code, than to take out your credit card, transcribe a 16 digit number, check the expiration date, and enter the CSC (or is it CVC?).
Sure, for websites where your information is already saved, or if you leave all your credit card information saved in the browser, then this isn't easier, but they're still pretty comparable in my opinion. Even if it was slightly more work (which I personally disagree with), I would find that worth not having my credit card information saved by who knows how many third parties.
> It's not good that I can't demand a return or have recourse in the event of fraud.
I've never had to go to my credit card company for a refund, since most places I buy from will take refunds with a receipt or proof of purchase (and if they don't, why would I buy from them?). Fraudulent purchases are another issue, but the risk of fraud is lower with bitcoin versus credit cards (no single number that allows access to all funds, a properly secured wallet is impossible to steal, although I know wallet security is still not the easiest thing to have).
> And it's not a benefit that with bitcoin I have to spend the money first (to buy bitcoin) and wonder if it will hold its value, versus just buying stuff when I feel like it on credit and covering the transaction within 30 days at no interest cost.
This is a very real problem, and what I think will truly determine whether bitcoin gains anything near a large following.
It's much easier to take your phone, open an app, and scan a QR code, than to take out your credit card, transcribe a 16 digit number, check the expiration date, and enter the CSC (or is it CVC?).
Sure, for websites where your information is already saved, or if you leave all your credit card information saved in the browser, then this isn't easier, but they're still pretty comparable in my opinion. Even if it was slightly more work (which I personally disagree with), I would find that worth not having my credit card information saved by who knows how many third parties.
> It's not good that I can't demand a return or have recourse in the event of fraud.
I've never had to go to my credit card company for a refund, since most places I buy from will take refunds with a receipt or proof of purchase (and if they don't, why would I buy from them?). Fraudulent purchases are another issue, but the risk of fraud is lower with bitcoin versus credit cards (no single number that allows access to all funds, a properly secured wallet is impossible to steal, although I know wallet security is still not the easiest thing to have).
> And it's not a benefit that with bitcoin I have to spend the money first (to buy bitcoin) and wonder if it will hold its value, versus just buying stuff when I feel like it on credit and covering the transaction within 30 days at no interest cost.
This is a very real problem, and what I think will truly determine whether bitcoin gains anything near a large following.
> It's much easier to take your phone, open an app, and scan a QR code, than to take out your credit card, transcribe a 16 digit number, check the expiration date, and enter the CSC (or is it CVC?).
> Sure, for websites where your information is already saved, or if you leave all your credit card information saved in the browser, then this isn't easier, but they're still pretty comparable in my opinion. Even if it was slightly more work (which I personally disagree with), I would find that worth not having my credit card information saved by who knows how many third parties.
This is the crux of the disagreement though. It's really just not easier to use bitcoin on a practical level. I use Paypal all the time for online business purchases when it's allowed, and it's as simple as clicking on the paypal button, seeing my email address already in the field, and then typing in a memorized password.
For a CC sure I might have to grab the card out of my wallet and punch it in, but my numbers are pretty much memorized by now and it's beyond simple. And I'm one of the anal ones who doesn't like my browser keeping my CC info, many people just autofill in seconds. And the number of times I have to enter the information for the first time is pretty low, I usually use Amazon and various other regular places that have my CC info saved, like everyone else does.
As for having my credit card information saved by third parties, aren't you yourself describing a situation where you have your bitcoin information saved by a third party? Are you really keeping your entire wallet and its keys in your phone and settling the transaction yourself? I assume not.
Difference is if your third party implodes you're totally screwed. If one of my merchants blows their security I might have to be sent a new CC number, or worst case scenario spend some time on the phone disputing a few charges or something, with no real economic risk.
> a properly secured wallet is impossible to steal
Yes. In related news an immovable object is impossible to move.
> Sure, for websites where your information is already saved, or if you leave all your credit card information saved in the browser, then this isn't easier, but they're still pretty comparable in my opinion. Even if it was slightly more work (which I personally disagree with), I would find that worth not having my credit card information saved by who knows how many third parties.
This is the crux of the disagreement though. It's really just not easier to use bitcoin on a practical level. I use Paypal all the time for online business purchases when it's allowed, and it's as simple as clicking on the paypal button, seeing my email address already in the field, and then typing in a memorized password.
For a CC sure I might have to grab the card out of my wallet and punch it in, but my numbers are pretty much memorized by now and it's beyond simple. And I'm one of the anal ones who doesn't like my browser keeping my CC info, many people just autofill in seconds. And the number of times I have to enter the information for the first time is pretty low, I usually use Amazon and various other regular places that have my CC info saved, like everyone else does.
As for having my credit card information saved by third parties, aren't you yourself describing a situation where you have your bitcoin information saved by a third party? Are you really keeping your entire wallet and its keys in your phone and settling the transaction yourself? I assume not.
Difference is if your third party implodes you're totally screwed. If one of my merchants blows their security I might have to be sent a new CC number, or worst case scenario spend some time on the phone disputing a few charges or something, with no real economic risk.
> a properly secured wallet is impossible to steal
Yes. In related news an immovable object is impossible to move.
> For a CC sure I might have to grab the card out of my wallet and punch it in, but my numbers are pretty much memorized by now and it's beyond simple.
"beyond simple", really? A lot of people would disagree with you. The inconvenience of typing in the CC billing info is the number one reason why fewer sales take place on mobile than on desktop.
And it is one of the main reasons why people stick with a store they know have their CC saved (eg. Amazon) as opposed to buying on some random site where they know it is going to be a PITA to type in all the billing info.
Bitcoin solves this payment friction for a first-time shopper at a given shop, and that's a big deal. You should know this. This is why you yourself admit preferring using Paypal over CC because Paypal also solves first-time shopping friction.
"beyond simple", really? A lot of people would disagree with you. The inconvenience of typing in the CC billing info is the number one reason why fewer sales take place on mobile than on desktop.
And it is one of the main reasons why people stick with a store they know have their CC saved (eg. Amazon) as opposed to buying on some random site where they know it is going to be a PITA to type in all the billing info.
Bitcoin solves this payment friction for a first-time shopper at a given shop, and that's a big deal. You should know this. This is why you yourself admit preferring using Paypal over CC because Paypal also solves first-time shopping friction.
I'm not sure you are me are using the same definition of simple.
Typing 16 digits plus four digits on the front and three digits from the back of a card in your pocket is incredibly simple. I just described it in one short declarative sentence.
In addition it is mildly tedious, and slightly inconvenient. But extremely simple it remains.
In contrast, bitcoin requires typing in an extremely long and essentially random sequence of alphanumeric characters.
Except that it doesn't you say? Because an app can automate it? Oh wait.
Typing 16 digits plus four digits on the front and three digits from the back of a card in your pocket is incredibly simple. I just described it in one short declarative sentence.
In addition it is mildly tedious, and slightly inconvenient. But extremely simple it remains.
In contrast, bitcoin requires typing in an extremely long and essentially random sequence of alphanumeric characters.
Except that it doesn't you say? Because an app can automate it? Oh wait.
> I just described it in one short declarative sentence.
Except you forgot: you have to type the expiration date, the cardholder's name, and sometimes the full billing address. I will repeat again: typing the CC billing info is not simple enough and this is the number one reason e-commerce sales conducted on mobile are not as high as sales conducted on the desktop.
> bitcoin requires typing
No. It sounds like you have never made a Bitcoin purchase. Typically the merchant's site launches your local wallet app via a "bitcoin:" URI pre-populated with an address and an amount -> click OK to confirm transaction -> done.
Except you forgot: you have to type the expiration date, the cardholder's name, and sometimes the full billing address. I will repeat again: typing the CC billing info is not simple enough and this is the number one reason e-commerce sales conducted on mobile are not as high as sales conducted on the desktop.
> bitcoin requires typing
No. It sounds like you have never made a Bitcoin purchase. Typically the merchant's site launches your local wallet app via a "bitcoin:" URI pre-populated with an address and an amount -> click OK to confirm transaction -> done.
One of the reasons I stick with Amazon is, yes, they have my payment info saved. But they also have other things like Amazon Prime, and their reputation. People don't stick with Amazon just because they have payment info saved. They trust Amazon is going to keep their info secure, and if they're unhappy with the purchase, Amazon is going to make them whole.
I don't have that trust and security using Bitcoin with a site I've never used before. I don't know if the site is on the up and up, or if they'll just take my BTC and run.
I don't have that trust and security using Bitcoin with a site I've never used before. I don't know if the site is on the up and up, or if they'll just take my BTC and run.
Your comment reveals something often overlooked by the crowd shouting "OMG Bitcoin doesn't have chargebacks". Most people shop from merchants they trust, most merchants are honest, most disputes are resolved without chargebacks. Therefore chargebacks aren't really that needed or that important for most transactions.
IOW: you would have no problem paying Amazon in bitcoins, because you trust them.
IOW: you would have no problem paying Amazon in bitcoins, because you trust them.
One thing most people who claim chargebacks are needed overlook is the impact the availability of chargebacks has on reducing the types of actions merchants take which might require one. The existence of the chargeback mechanism itself means merchants are more likely to ensure customer satisfaction to avoid them. That doesn't mean they aren't needed it could also mean they are incredibly effective at limited merchant fraud or laziness in dispute resolution.
Chargebacks are just one of many methods that customers can use to maintain uprightness among merchants: legal actions (eg. small-claims courts), complaints to FTC or BBB, online reviews, etc.
Legal action is far too time consuming and expensive, writing to the FTC or BBB is completely worthless as it will do absolutely nothing, and online reviews are limited in their ability to do anything, and might not have any impact.
A chargeback is simple, easy, and fast. And it puts the onus on the merchant to prove they didn't do anything wrong.
A chargeback is simple, easy, and fast. And it puts the onus on the merchant to prove they didn't do anything wrong.
None of those are really comparable in effort, cost, or effectiveness compared to just calling my credit card and having the charge reversed and the threat that I have the option to do that if they don't deal with my orders or issues appropriately.
> None of those are really comparable in effort, cost, or effectiveness
Does it matter? Some defrauded users WILL be persistent and WILL go through the effort of using these recourses, so they do keep merchants in check.
The fraud world is not as simplistic as you think it is ("oh crap customers can issue chargebacks against us, I guess we have to be honest now").
Fraudulent merchants will act fraudulently, regardless if chargebacks exist or not. Honest merchants will act honestly, regardless if chargebacks exist or not.
Does it matter? Some defrauded users WILL be persistent and WILL go through the effort of using these recourses, so they do keep merchants in check.
The fraud world is not as simplistic as you think it is ("oh crap customers can issue chargebacks against us, I guess we have to be honest now").
Fraudulent merchants will act fraudulently, regardless if chargebacks exist or not. Honest merchants will act honestly, regardless if chargebacks exist or not.
P.S. it's been a long time since we chatted how have you been?
>Fraudulent purchases are another issue, but the risk of fraud is lower with bitcoin versus credit cards
The CC companies have full control over the transactions. They can stop and/or reverse charges. As far as the consumer is concerned, there is very little risk of fraud.
The CC companies have full control over the transactions. They can stop and/or reverse charges. As far as the consumer is concerned, there is very little risk of fraud.
You can get fraud protection with Bitcoin (if you want it) by using two-of-three multisig transactions with an escrow agent of your choosing.
The "no recourse for fraud" meme about Bitcoin is simply wrong. There are not many dispute-resolution mechanisms right now because the technology is young and because most existing users don't particularly want (and don't want to pay for) the second-order services that credit-card companies provide. If Bitcoin catches on among a wider demographic, dispute resolution and most other things that Bitcoin "can't do" will get built.
The technology is very flexible and can accommodate just about everything that existing payment mechanisms (and monetary systems) offer; the reverse is not true.
The "no recourse for fraud" meme about Bitcoin is simply wrong. There are not many dispute-resolution mechanisms right now because the technology is young and because most existing users don't particularly want (and don't want to pay for) the second-order services that credit-card companies provide. If Bitcoin catches on among a wider demographic, dispute resolution and most other things that Bitcoin "can't do" will get built.
The technology is very flexible and can accommodate just about everything that existing payment mechanisms (and monetary systems) offer; the reverse is not true.
> The "no recourse for fraud" meme about Bitcoin is simply wrong.
OK, but wait:
> There are not many dispute-resolution mechanisms right now... If Bitcoin catches on among a wider demographic, dispute resolution... will get built. The technology is very flexible and can accommodate just about everything...
Ah, OK. So the fact that there's no recourse for fraud is actually correct. But because, in theory, there could be fraud detection, then there's no reason to worry about fraud.
Reminds me of: https://www.google.com/search?q=assume+a+ladder
OK, but wait:
> There are not many dispute-resolution mechanisms right now... If Bitcoin catches on among a wider demographic, dispute resolution... will get built. The technology is very flexible and can accommodate just about everything...
Ah, OK. So the fact that there's no recourse for fraud is actually correct. But because, in theory, there could be fraud detection, then there's no reason to worry about fraud.
Reminds me of: https://www.google.com/search?q=assume+a+ladder
Are you asking me about the capabilities of the techology, or are you asking me to predict the future? I'm giving you the former.
I don't know what Bitcoin will look like in ten years. I do understand the technology and am interested in having a discussion about it. But on Hacker News, in threads like this one, a great many of the comments demonstrate fundamental technical misunderstandings or seem to regard Bitcoin as a mature ecosystem. So I think it's appropriate to try to dispel the ignorance and to emphasize that Bitcoin is actually a nascent technology, one that offers far more than the rudimentary sort of magic Internet money that we see today. Bitcoin is a base layer for permission-lite financial innovation in whatever direction the market demands. You can build all sorts of stuff on top of it.
That means that if Bitcoin's still around in a decade, the ecosystem will likely look very different from today's. "Assume we will never have a ladder," you seem to be saying. Meanwhile, plenty of capable people are hard at work building ladders.
I don't know what Bitcoin will look like in ten years. I do understand the technology and am interested in having a discussion about it. But on Hacker News, in threads like this one, a great many of the comments demonstrate fundamental technical misunderstandings or seem to regard Bitcoin as a mature ecosystem. So I think it's appropriate to try to dispel the ignorance and to emphasize that Bitcoin is actually a nascent technology, one that offers far more than the rudimentary sort of magic Internet money that we see today. Bitcoin is a base layer for permission-lite financial innovation in whatever direction the market demands. You can build all sorts of stuff on top of it.
That means that if Bitcoin's still around in a decade, the ecosystem will likely look very different from today's. "Assume we will never have a ladder," you seem to be saying. Meanwhile, plenty of capable people are hard at work building ladders.
I find the fundamental disconnect to be that people are pushing the lower-cost transactions as a bit motivation for Bitcoin. The less enthusiastic point out all of the good anti-fraud infrastructure credit cards have from a consumer perspective. Then the proponents point out you can build that on Bitcoin, which is true; but it doesn't come for free, thus I expect mostly negating the transaction cost advantages that Bitcoin is potentially offering.
I can give you a sense of the future: Bitcoin will become completely unusable because the blockchain is growing at an increasing rate.
https://blockchain.info/charts/blocks-size?timespan=all&show...
https://blockchain.info/charts/blocks-size?timespan=all&show...
>It's much easier to take your phone, open an app, and scan a QR code
These steps have nothing to do with BitCoin though.
>a properly secured wallet is impossible to steal
Define "properly secured wallet"? And whose responsible for securing wallets? "The consumer is responsible" is not the right answer.
These steps have nothing to do with BitCoin though.
>a properly secured wallet is impossible to steal
Define "properly secured wallet"? And whose responsible for securing wallets? "The consumer is responsible" is not the right answer.
> Define "properly secured wallet"?
Cold Storage[0] done right, that's a properly secured wallet. I think this is the best, and cheapest security (minus fiat currency conversion expenses) available atm.
> And whose responsible for securing wallets?
With cold storage, you are.
[0] https://en.bitcoin.it/wiki/Cold_storage
Cold Storage[0] done right, that's a properly secured wallet. I think this is the best, and cheapest security (minus fiat currency conversion expenses) available atm.
> And whose responsible for securing wallets?
With cold storage, you are.
[0] https://en.bitcoin.it/wiki/Cold_storage
This is a digression though. The subject came up in the context of a claim that bitcoins were "just as convenient as credit cards".
Cold storage is essentially isomorphic to keeping treasure in a safe, and needless to say very much not equivalent to making a credit card transaction.
Cold storage is essentially isomorphic to keeping treasure in a safe, and needless to say very much not equivalent to making a credit card transaction.
> This is a digression
Two things make currency work: usability and security. How can this be a digression?
> Cold storage is essentially isomorphic to keeping treasure in a safe
I'll admit the wiki is a bit tl;dr .. (I guess you didn't read it). Using your "keeping treasure in a safe" quote: Cold storage is like keeping a treasure in a safe, at the bottom of the deepest ocean of another earth-like planet in a solar system which we cannot even assume (knowing about it is impossible;) that exists.
Two things make currency work: usability and security. How can this be a digression?
> Cold storage is essentially isomorphic to keeping treasure in a safe
I'll admit the wiki is a bit tl;dr .. (I guess you didn't read it). Using your "keeping treasure in a safe" quote: Cold storage is like keeping a treasure in a safe, at the bottom of the deepest ocean of another earth-like planet in a solar system which we cannot even assume (knowing about it is impossible;) that exists.
What? No, no, no. Cold storage is exactly as secure as the physical storage used to keep it. Unless that physical safe (or deposit box, or mattress) in which you put the printout or USB stick was launched on an interstellar rocket, then no.
It's true that it's inaccessible to the internet. It's not true that it's more secure than physical storage, because ultimately it is physical storage.
I await your "But you can memorize a key such that the attacker can't use it!" response and am presently googling the XKCD link to zing you with.
It's true that it's inaccessible to the internet. It's not true that it's more secure than physical storage, because ultimately it is physical storage.
I await your "But you can memorize a key such that the attacker can't use it!" response and am presently googling the XKCD link to zing you with.
Well regarding bitcoin theory obviously you skimmed through the basics, but I'll make an effort to counter your arguments.
A (public) bitcoin address is useless without the private key. Suppose you do find one, you'd just knew the transactions referring to it(by looking up the blockchain).
One can easily have thousands of addresses. Many people generate a different address for each transaction, so good luck finding the one that looks like a safe.
A safe will be opened up without a key, eventually, a bitcoin address never: [0]The private key is mathematically related to the Bitcoin address, and is designed so that the Bitcoin address can be calculated from the private key, but importantly, the same cannot be done in reverse.
[0]https://blockchain.info/wallet/bitcoin-faq
A (public) bitcoin address is useless without the private key. Suppose you do find one, you'd just knew the transactions referring to it(by looking up the blockchain).
One can easily have thousands of addresses. Many people generate a different address for each transaction, so good luck finding the one that looks like a safe.
A safe will be opened up without a key, eventually, a bitcoin address never: [0]The private key is mathematically related to the Bitcoin address, and is designed so that the Bitcoin address can be calculated from the private key, but importantly, the same cannot be done in reverse.
[0]https://blockchain.info/wallet/bitcoin-faq
I don't have the foggiest idea what you're on about. The subject was bitcoin "cold storage", which is the idea of storing the private keys to a walled offline, out of the reach of network-enabled attackers.
You're just saying that recovering a private key is mathematically hard, but that's not the attack vector in question. You still need to store the private key somewhere, and that storage is subject to attack. Network-attached storage is subject to lots of attacks, thus there's interest in storing this stuff offline.
You're just saying that recovering a private key is mathematically hard, but that's not the attack vector in question. You still need to store the private key somewhere, and that storage is subject to attack. Network-attached storage is subject to lots of attacks, thus there's interest in storing this stuff offline.
OK my bad, having just read myself this morning I'll admit I got confused along the way.
But still: > Cold storage is essentially isomorphic to keeping treasure in a safe
Though I don't like this analogy, if we must use it then it's the key that you keep in a safe[0]. As previously mentioned, one can have many keys and simply stealing one doesn't mean their "treasure" is stolen, whereas a safe is easier to be found and opened.
[0]:https://en.bitcoin.it/wiki/Cold_storage
A simple example of deep cold storage is opening a safe deposit box and putting a USB stick containing an encrypted wallet file in it. The public (sending) addresses can be used any time to send additional bitcoins to the wallet, but spending the bitcoins would require physical access to the box (in addition to knowledge of the encryption password).
But still: > Cold storage is essentially isomorphic to keeping treasure in a safe
Though I don't like this analogy, if we must use it then it's the key that you keep in a safe[0]. As previously mentioned, one can have many keys and simply stealing one doesn't mean their "treasure" is stolen, whereas a safe is easier to be found and opened.
[0]:https://en.bitcoin.it/wiki/Cold_storage
A simple example of deep cold storage is opening a safe deposit box and putting a USB stick containing an encrypted wallet file in it. The public (sending) addresses can be used any time to send additional bitcoins to the wallet, but spending the bitcoins would require physical access to the box (in addition to knowledge of the encryption password).
> Define "properly secured wallet"
A properly secured wallet is a true Scotsman.
A properly secured wallet is a true Scotsman.
For a number of reasons, for some banks doing a pilot in Eastern Europe, I prototyped a card-interoperable system that does something like this. From the user's point-of-view.
If the merchant doesn't have the QR-code thing, you can still manually key-enter your one-time PAN virtual card details like you do today, knowing that you don't care about the number past its use right now.
There are a lot of weird details about how it all works if some party or another isn't an active full cooperating member of the system, but the idea is to:
1) Limit card number exposure
2) Get a user's explicit pre-auth for a specific merchant, amount and date
3) Get the usability factor you are talking about
4) Leverage the existing bank card consumer protection rules already in place
Which is not to say that Bitcoin isn't cool. But I'm not sure that it is useful enough for consumers to replace the thin-veneers like this that the existing payment infrastructure players will inevitably roll out.
There may be (and probably are) lots of uses for the blockchain. Consumer payments may not ultimately be one of the big ones.
*EDIT: I apparently am an idiot that can not figure out how to convince the system to let me wrap "bullets".
- You shop and check out
- You are presented a QR that you scan
- The "app" asks you to sign into your bank.
- The bank issues you a virtual card with your billing address details, but a one-time-PAN (credit card number), CVV and expiry.
- There is a sub-account created that is the amount you are about to auth with the merchant. The merchant about to be doing the authorization is linked.
- The "app" presents the merchant "POS" with the virtual card details
- The merchant "POS" authorizes it using any gateway they happen to be using. Which in turn does the Brand-Net auth dance with the issuer.
- On positive auth, the sub-account balance is transferred to the merchant (thanks, VisaNet!), and the OTP (one-time PAN) is tossed in the recycle bin.
If the merchant doesn't have the QR-code thing, you can still manually key-enter your one-time PAN virtual card details like you do today, knowing that you don't care about the number past its use right now.
There are a lot of weird details about how it all works if some party or another isn't an active full cooperating member of the system, but the idea is to:
1) Limit card number exposure
2) Get a user's explicit pre-auth for a specific merchant, amount and date
3) Get the usability factor you are talking about
4) Leverage the existing bank card consumer protection rules already in place
Which is not to say that Bitcoin isn't cool. But I'm not sure that it is useful enough for consumers to replace the thin-veneers like this that the existing payment infrastructure players will inevitably roll out.
There may be (and probably are) lots of uses for the blockchain. Consumer payments may not ultimately be one of the big ones.
*EDIT: I apparently am an idiot that can not figure out how to convince the system to let me wrap "bullets".
The bar is not physical credit cards but e-wallets like Apple Pay.
It's definitely easier than typing in sixteen digits (plus expiration and security code), assuming you have a device with your Bitcoin wallet handy but no credit card autofiller. If your device has both your Bitcoin wallet and a credit card autofiller, I would say both methods are equally easy.
Comparing bitcoin to credit cards is not quite correct. If you want to compare it to traditional payment instrument, the closest one will be probably cash.
And as for credit cards - product can be built on top of bitcoin to provide similar service I believe.
And as for credit cards - product can be built on top of bitcoin to provide similar service I believe.
I run an E-Commerce shop, with inexpensive products and I get fraudulent purchases all the time. If I don't detect a fraudulent transaction, ship the product, when the chargeback comes in not only am I out of the money, I'm out of the product as well. Losing over 200% on that transaction, plus there's usually associated chargeback fees that could be $35-70. Credit Cards are shit for retailers.
You attach too much importance to CC chargeback mechanisms. I am a typical American consumer and in 20 years doing about 5,000 credit card transactions I have never had to issue a single chargeback at all. So I know for a fact that I would be willing to use Bitcoin for all its advantages if that meant giving up the ability to charge back. Consider this: credit card fees which are passed to customers by inflating prices by ~2% probably indirectly cost me north of $20,000 over my 20 years of use. I could have saved $20,000 and I would have been totally fine with the lack of chargeback mechanisms in Bitcoin. Even if I end up being scammed one day by a non-reversible $1000 Bitcoin transaction, I would still be $19,000 financially ahead with Bitcoin.
Also, CC chargebacks are far from being perfect. In many cases the customer has no recourse for fraud. For example you cannot chargeback a transaction made more than 60 days ago. Some fraudulent merchants stall shipping (eg. claim delays, issues, ship the wrong thing, etc) for 60 days specifically to exploit this fact and exploit the fact customers don't know about this 60-day chargeback limit. Or if your PIN code is stolen and a fraudulent transaction is made with the PIN code, you will typically be held liable (check your CC fine print, for example: "If your Password or PIN is used in such a transaction, you will be liable for the full debt" from http://www.scotiabank.com/ca/common/pdf/borrowing/revolving_...)
Don't forget that despite the lack of chargebacks, you still have all the other usual recourses available to you if you are defrauded after paying in bitcoins: small court claims, send a complaint to the FTC or BBB, etc. But the fact chargeback mechanisms are rarely needed in the first place, and have various limitations (60-day, PIN stolen, etc) indicates that Bitcoin doesn't need them to be reasonably successful as a payment technology.
Also, CC chargebacks are far from being perfect. In many cases the customer has no recourse for fraud. For example you cannot chargeback a transaction made more than 60 days ago. Some fraudulent merchants stall shipping (eg. claim delays, issues, ship the wrong thing, etc) for 60 days specifically to exploit this fact and exploit the fact customers don't know about this 60-day chargeback limit. Or if your PIN code is stolen and a fraudulent transaction is made with the PIN code, you will typically be held liable (check your CC fine print, for example: "If your Password or PIN is used in such a transaction, you will be liable for the full debt" from http://www.scotiabank.com/ca/common/pdf/borrowing/revolving_...)
Don't forget that despite the lack of chargebacks, you still have all the other usual recourses available to you if you are defrauded after paying in bitcoins: small court claims, send a complaint to the FTC or BBB, etc. But the fact chargeback mechanisms are rarely needed in the first place, and have various limitations (60-day, PIN stolen, etc) indicates that Bitcoin doesn't need them to be reasonably successful as a payment technology.
There is the concept of pruning in the original paper[1] which basically removes all fully-spent transaction trails.
That does not yield a reasonable upper bound on the size though[2]. Beyond pruning, it seems you need to trust another network component (external wallet, server).
[1] https://en.bitcoin.it/wiki/Scalability#Storage [2] http://bitcoin.stackexchange.com/questions/4650/upper-limit-...
[1] https://en.bitcoin.it/wiki/Scalability#Storage [2] http://bitcoin.stackexchange.com/questions/4650/upper-limit-...
If they raised over $100M, why do they need Bitcoin? I'd assume they intend to have their own coin. Fewer headaches.
It would be very difficult to get another coin to the level of adoption that bitcoin has. Many have tried, and none have come close.
They possibly could if they create a more secure cryptocurrency
What are concrete security shortcomings of bitcoin that could be solved with a new coin?
That's not really a possibility, it's just your desire to see Bitcoin go down. I don't know why there are so many people so salty about Bitcoin.
Yeah really, the only other time I saw a group of people so salty about something is Google glass. There is just something about bitcoin and glass that makes people go NaCL.
A solution in search of a problem.
I'm also still not clear what 21 does. According to the article they are building out the blockchain into the internet of things (IoT). That sounds really vague. Plus, the article mentions a contractual twist - like smart lawyer contracts. These two things don't seem to obviously go together.