The part about bitcoin entirely as a payment system makes no sense, because both the consumer and the merchant need an existing payment system, to convert into and out of bitcoin for this to work, in which case bitcoin is just a middleman doing no work. I suppose some payment systems are localized and bitcoin can work as a global bridge, but that seems like a trivial legal hack that will be shut down soon.
The merchant needs a payment system that they trust, and the customer needs a payment system that they trust. But the payment systems don't really need to know or trust each other. He's saying that Bitcoin turns payment from a many-to-many problem, into a one-to-many problem.
Except, you're not getting around the problem here either - I need to find a real money payment system that the bitcoin exchange and I both trust and and the merchant needs to find a real money payment system that they and their bitcoin exchange both trust. You're doubling the problem no matter how you look at it, because the problem of you sending money to the bitcoin exchange is the exact same problem as you sending money to the merchant.
You're doubling the problem no matter how you look at it, because the problem of you sending money to the bitcoin exchange is the exact same problem as you sending money to the merchant.
No, because we've introduced loose coupling. I need to figure out how to turn USD into BTC. My wordpress guy needs to figure out how to turn BTC into UAH. Either of us can swap out our solution and the other doesn't care.
Suppose we used Paypal instead. If Paypal decides they hate Ukraine, we can't transact anymore.
Similarly, if you build your company's internal architecture using JSON over HTTP with a common json schema, you have doubled the problem. The Scala side needs to turn java data structures into JSON, and the Python side needs to turn them into python objects. Doesn't mean it's a bad way to go.
No, you haven't introduced anything, because sending money to a bitcoin exchange is exactly as hard as sending money to a merchant.
I already conceded the global bridge argument, but that's just a legal loophole. Authorities can easily legally treat depositing money into a bitcoin exchange as sending money abroad and make it just as hard.
If armed men want to stop you from using bitcoin, they can. On the other hand, if Paypal doesn't do business in Cambodia, I can still hire a web designer there.
Except that's exactly the problem that existing payment systems solve that bitcoin fails to solve. What problem do you see bitcoin solving as far as payment system goes for people who are not using bitcoin otherwise? People can buy from untrustworthy merchants quite easily right now. And bitcoin costs more - you pay the bitcoin exchange and the payment system and your merchant pays the bitcoin exchange and his payment system.
This is my issue with A16Z's claim also. So Bitcoin eliminates one of the failure modes of digital transactions -- namely, confirming that a particular ID indeed is associated with a particular account value -- in a way that avoids the need for intermediaries. That's great, but that's not the most important failure mode, and only part of what is needed to solve the Byzantine Generals' Problem. The generals need not only to authenticate the sender and content of the message, but confirm receipt and intent to act based on that content to the sender. It's that second step that I don't see Bitcoin solving. We still need intermediaries to handle chargebacks that result from fraud by either buyer (I didn't authorize this) or seller (this isn't what I agreed to pay for).
> in which case bitcoin is just a middleman doing no work
So you're saying that, pessimistically, all Bitcoin could do is disrupt the credit/debit card companies? That's very pessimistic, and still a very big deal.
It sounds to me like what we need is a single place where I can deposit my credit card info, which I trust is secure, and then all the merchants transact with me by doing some version of auth against that web service/api without ever exchanging any credit card numbers. For consumers this is great, since they never have to update their credit card info on 10 million places. It's good for businesses, too. That kind of service would undercut one of the main premises behind bitcoin usefullness.
No that doesn't work either because you need an existing payment system to deposit money into a bitcoin account at an exchange. You can't disrupt something by requiring your customer to use it.
