EFT is much higher overhead in many cases. Sending 20 cents makes sense with bitcoin. Also bitcoin can be used with trusted third parties. That is cryptographic trust, not exchanges holding private keys. That means a higher value transaction can be finalized when two our of three parties agree that it should be.
Good posts. Thanks.
... and have been doing this well before bitcoin's ecosystem and its expensive hi-tech magic and wizardry of "mining" the final e-product which was supposed to appreciate simply because of artificially limited quantity (The Number) "mined", which was bestowed to us by some superior yet unknown being / body.
So again, where is any advantage of Bitcoin over what already has long been done cheaply and efficiently with various forms of EFT (Electronic Funds Transfer)?
I will address some of the technological differences and issues re advantages and disadvantages of EFT vs Bitcoin, but just to make it clear, these / my quoted responses were addressing the issue and the question of Bitcoin being "just like the US dollar" in the sense of being "backed by nothing" as in a "currency based on nothing, accounted for by nobodies, misrepresented as anonymous, and ultimately worth zero." In other words, it was a response to a specific political argument for a Bitcoin, not a technological one.
Most of the advantages and disadvantages of Bitcoin economy are already well known to you, which is why you emphasize micropayments and microservices, which is what Bitcoin was originally developed for, as a method of generally small online payments over distant and disparate economic systems and currencies, and financial services, that otherwise would have to be either free or, more likely, unavailable.
You can pay or tip anyone online instantly, whether or not they know anything about bitcoin and support an economy of micropayments for microservices.
Of course, transactions are limited to online payments only, while most people shop locally or transact online with shops that have no problems accepting credit or debit cards in local currency that won't need to be immediately exchanged if they deem their local currency stable, i.e, they are not using Bitcoin as a store of value to manage their local currency risk. Debit transaction cost is much cheaper than credit cards since there is no credit risk and approval / acceptance / debit is instant, while Bitcoin transaction delivery may depend on priority (to prevent "penny-flooding" DoS on the network) - it's not necessarily real-time.
EFT is much higher overhead in many cases. Sending 20 cents makes sense with bitcoin.
I think one of the most common and perpetuated misconception is that Bitcoin transactions are cheaper than EFTs. Few of BTC transactions are "free" because it would defeat the financing mechanism, especially when "mining" is exhausted or inadequate as income source and transaction fees (just like in the banks) are needed for ecosystem to exist. And with the rising cost of "mining", both by original design due to increasing complexity and electricity cost, and with with the immense inflation of the BTC since the "early days," the transaction fees will represent higher proportion of ecosystem than originally projected. That particularly hurts the primary reason for BTC — micropayments — that "sending 20 cents" in BTC/satoshis transaction may become very expensive. By contrast, it may cost nothing to send it over the phone or computer (EFT) depending on type of your account at the bank, which could be very flexible and customizable, depending on your needs. Also, with the rise of newer EFT services (like Square and bank deposit / debit apps) the "conventional" EFT systems are becoming cheaper and more transparent.
Links to BTC transactions' costs and time:
Bitcoin Is an Expensive Way to Pay for Stuff - FR, post #21, 2014 January 05
The Case of the Disappearing Dollar Bill - FR, post #26, 2014 January 05
Bitcoin Price... to $1 Million? - FR, post #56, by Greysard, 2014 April 04
Debit vs Credit Card Charge / Offline Debit Vs Online Debit Vs Credit Card Charges - FR, post #57, 2014 April 06
So the article's conclusion — that Bitcoin (or other altcoin) will be mostly limited to libertarians (to simplify, "because US dollar is a fiat currency, backed by nothing, manipulated / devalued by the Fed, used to track your purchases and at some point may be confiscated by Government from your savings accounts") and the hi-tech geeks who feel comfortable with it, think it gives them some sense of privacy, Bitcoin's "cool factor" or because they really have a legitimate need to pay some people (mostly software coders) for services in regions like Asia and Europe where "normal" EFT could be either difficult or undesirable — seems very logical.
Micropayments, while useful, is a minuscule segment of world economy so, while theoretically interesting, inventing a relatively complex (mashing several existing technologies - P2P, cryptography, database) and relatively useless / resource-wasting (e-coin "mining" is a resource-consuming activity as opposed to most resource-creating or resource-transforming activities - like "work" - which is what usually done to get paid) system with the great potential of abuse when scaled up and misrepresented, may not be the best way to serve it.
Of course, the anonymity aspect is a double-edge sword. In fact, it doesn't need Bitcoin to be accomplished, but anonymous EFTs have some of the same dangers, if not done properly.
From Green Dot's Decision to Stop Selling MoneyPak Cards Will Take a Toll - Dealbook/NYT , by Matthew Goldstein, 2015 February 03:
The decision by Green Dot to stop selling MoneyPak, its popular prepaid card, will take a bite out of the company's projected revenue and bottom line this year, and that has taken a toll on the company's share price over the last several days. Green Dot, the nation's largest seller of prepaid debit cards, has estimated that its decision last year to discontinue MoneyPak, partly because it had become a popular method of payment for online swindlers, could shrink operating revenue by $10 million to $40 million. The company, based in Pasadena, Calif., has also estimated its operating cash flow, or earnings before interest, taxes, depreciation and amortization, may be $2 million to $10 million lower without sales of MoneyPak this year. ..... < snip > ..... The company said last week that it would stop shipping MoneyPak cards to stores that sell them this month. It anticipates that most MoneyPak cards will be gone from store shelves by the end of March. Last summer, Green Dot announced it intended to stop selling MoneyPak as it moved to a newer technology. It is replacing MoneyPak with a product that will enable customers to add money to existing prepaid cards by swiping them at a special machine at the registers of stores that used to sell MoneyPak. The company said its decision to discontinue the paper MoneyPak card was also prompted by growing concern about the ease with which swindlers were using MoneyPak to conduct both online and telephone scams. Scams involving prepaid debit cards have been on the rise for the last few years and have resulted in dozens of warnings to consumers from the F.B.I., state law enforcement agencies and even a congressional committee. The cards allow for quick and easy money transfers, often done with a great deal of anonymity, a feature that has attracted scam artists. ..... < snip > ..... MoneyPak cards have a unique numerical code, or PIN, on the back of each paper card. Anyone with that code has access to the money stored on the card. Scam artists who use MoneyPak as a method of payment persuade unsuspecting victims — often the elderly — to voluntarily give them the code.
MoneyPak had become a popular method of payment for online swindlers.
Another publication (paywalled) points out that MoneyPak was sold at nationwide stores like Wal-Mart, where customers could load cash from $20 to $500, on a deposit certificate "card" (which was really just a peace of cardboard with a printed 14-digit PIN) after which money could be transferred to a prepaid debit card through Green Dot's website or automated phone service. This was very convenient, for example, to several members of Baltimore's branch of national prison gang Black Guerilla. In fact, it became the gang's main financial instrument, where prisoners use a slang "dot" referring to PIN codes. (Baltimore... does "Wire" come to mind?) New procedure will load the prepaid debit card at the register, eliminating codes. Here's the kicker - Green Dot projects significantly lower revenue from the new method, because the demand is lower than for the product that is easy for criminals to use anonymously.