Comment Bitcoin not vs USD/EUR but vs. PayPal/WU and such (Score 5, Informative) 332
We don't need another currency.
The target after which bitcoin system is going, aren't the other *currencies*.
The point is not to replace USD or EUR with BTC.
Bitcoin is going after system which transfer money. They point of the bitcoin system is to displace/replace PayPal or Western Union.
The closest thing which ressembles to what bitcoin brings to the table are SEPA payment.
Bitcoin (like SEPA) brings :
- Direct end-to-end payment without any intermediate (as long as both banks support SEPA you can send money accors. As long as both end-points support bitcoin protocol, you can send BTC accross). No need to get anyone else involved (you don't need MasterCard to come in do some shit).
- Complete freedom of choice regarding what you use (The choice of the SEPA-compatible bank that the merchant use, doesn't force me to use a specific bank. The merchant might be using some banks in Germany, and I might be at Raiffeisen in Switzerland. Similarily the bitcoin merchant can be using bitpay for seamless BTC-to-EUR payment processing and conversion, whereas I might be sending my coins from my localbitcoin account). (Compare the situation when paying USD online: both end of the transaction are required to by client at PayPal, for exemple). It goes even further in that SEPA can't directly send EUR from the wallet in your pocket, you need to have an account in a bank. Whereas you can send bitcoins from your own copy of bitcoin-qt client, from an offline armory, etc.
- High speed (SEPA payment take a couple of days, a week in worst case scenario) (bitcoin are even faster payments take minutes, a couple of hours in worst case)
- Low fee (SEPA payment between two compliant bank is a couple of EUR, bitcoin payment are the equivalent of a fraction of cents).
- No charge back. SEPA transfers, money hand exchanges, and bitcoin transfers: when it's done, it's done.
- No payment or account freezing. (All the complains against paypal are gone !)
In addition bitcoin goes a bit further:
- As mentionned above: bit faster, cheaper, than SEPA and you can even be your own bank account.
- bitcoin aren't geographically restricted (SEPA is Europe only. Bitcoins are internet-wide and even a bit more).
- bitcoin aren't fixed to a specific currency like EUR (you could have obtain your bitcoin using CHF, and the merchant you're buying goods from could be converting them to USD).
- a bank account could still be seized by government or law enforcement, whereas, depending on how you setup your stuff, you can be 100% in charge of your account. (possibility for 0% risk of seizing/freezing). That's negligible in the (somewhat) stable environment where SEPA is used, but that a very useful property for people living in unstable regions.
- possible implementation of security at the payment procotol-level. using 2-out-of-3 signature scheme you can implement trusted escrow-like system, except that the escrow CAN'T run away with the money by design.
(The security model is rather different than charge-backs, where the credit-card company or paypal function as jury/judge/executionner at the same time. The model is that in case of dispute, a trusted 3rd party can be asked to arbitrate how should get the money. That trusted party by design has nothing to do with the payment processor or wallet used by the merchant and client, and is agreed upon before hand. With credit cards, the merchant just has to accept that charge-back will happen).
bitcoin has some peculiar quircks:
- banking is about trust (your bank should be trusty) and secrecy (some countries like Switzerland are very paranoid about banking secrecy).
- bitcoin is about handling payment between untrusted partners, and the security comes by the fact that anybody can check the transaction, meaning that absolutely everything is broadcast to everyone else for verification purpose. Bye-bye secrecy and privacy, only pseudonymity is possible. (you can follow all transaction by account numbers, but you won't necessarily be able to stick an exact identity to each number).