Why would anyone use bitcoin when paypal or visa work
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The fact, however, is that Bitcoin is more than money, as I recently explained in Reason. Bitcoin is better thought of as a payments system, or as a distributed ledger, that for technical reasons happens to use a new currency called the bitcoin as the unit of account. As Tim Lee has pointed outBitcoin is therefore a platform for innovation, and it is this potential that makes it so valuable. Eric Posner is one of these smart skeptics. He answers his own question, in part, by acknowledging that Bitcoin is censorship-resistant.
Cowen was one of the first to make this argument. But this is not true. There are tens of thousands of merchants accepting bitcoins for payment today and growingand the number of transactions accepted by those merchants has been exploding as well, setting a record on Black Friday.
Can it be that even with the necessary hedging, Bitcoin is cheaper? At least for some types of transactions I think the answer is unquestionably yes. Sending money to Kenya using Western Union MoneyGram or some other traditional money transmitter costs around five to ten percent of the amount being sent, and can take days for the deposit to take place. A new startup, BitPesa, is looking to charge only three percentand to why would anyone use bitcoin when paypal or visa work out transfers virtually instantaneously.
So hedging costs would have to be more than five to ten percent to make this not worthwhile. Well then, so far I count two things why would anyone use bitcoin when paypal or visa work Bitcoin can do that traditional payments systems cannot: I actually mentioned another one: Traditional wire transfers can take days or even weeks to clear, while Bitcoin takes minutes.
As Eli Dourado just pointed out in a previous postbuilt into Bitcoin is a facility for decentralized arbitration. Essentially, Bitcoin allows for transactions that require two out of three signatures to verify a transaction, thus allowing payer and payee to turn to an arbitrator if there is a dispute about whether the payment should go through. Paypal and credit card companies essentially provide this service today, but as Eli points out, decentralized arbitration would likely be cheaper and would certainly enjoy much more competition.
Make that data stream your arbitrator and, voilayou have a decentralized predictions market. Ed Felten at Princeton is working on executing the concept.
First of all, because bitcoin transactions can be cheap, you can send incredibly small amounts say five cents or half a cent that would be cost-prohibitive using traditional payments systems. Now, believe me, I know all the arguments for and against micropayments for content. My only point is that Bitcoin has the potential to further reduce the friction of such payments. More interesting are really, really small microtransactions. But the thing is, you can, using the micropayments channels feature of the Bitcoin protocol.
What this means is that you can now offer metered services based on microtransactions. One good example of how this would be useful is Wi-Fi access, which Mike Hearn explains in this video. When you can pay to use a wi-fi hotspot, it usually entails creating an account with the provider and then purchasing a block of time, perhaps more than you need. Now imagine if you could connect to any open hotspot, without first creating any kind of account, and paying your way why would anyone use bitcoin when paypal or visa work the second or the kilobyte.
And think of all the other as-yet unimagined ways that this ability to meter could be put to use! Hearn discusses a bunch in the video. These are all very real in the sense that why would anyone use bitcoin when paypal or visa work are all technically possible today, but certainly speculative in that there remain regulatory and market hurdles ahead.
He also serves as adjunct professor of law at GMU. His web site is jerrybrito. Reforming Telecom and the FCC. Why would anyone use Bitcoin when PayPal or Visa work perfectly well? The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology. What the Experts Have Found.