One of the things I'm really looking forward to is USD/EUR denominated sidechain assets eg. https://tether.to
At present, arbitrage between different exchanges is easy if you are moving bitcoins, but moving USD is very time consuming and requires all sorts of verification. When the exchanges start accepting certain dollar denominated crypto assets you will be able to move USD between exchanges as easily as moving bitcoins. Liquidity and market efficiency and prices will all become extremely similar across markets. Any bad exchange will rapidly be shown up as a fraud as they will collapse within hours as any price differences or manipulation will be attacked by speculators. If anyone stops paying out deposits they will be called out within hours (vs. months and months when mtgox stopped paying out USD) and will rapidly lose credibility and collapse.
I once looked into a pegged side chain type coin to make trading easier and it's impossible to do with certain currencies, especially USD. You become responsible for all trades with your token/coins, so if you sell 20,000 USDcoins to user A and they sell the coins to User B without following KYC/money laundering rules the feds come after you demanding ID for User B.
Same goes for CADcoin or GBPcoin, maybe EURcoin would be different but unlikely. You would have to set it up as a centralized service where all transactions req proven identity paper trail which in the end is just as cumbersome as using regular banks.
There's tons of other regulations like preventing your USDcoin from being used for online gambling, which is why Paysafecard must sell crippled PINs in US.
> The problem is the complete lack of benefits for customers.
Costs of acquisition and spread will decrease as bitcoin adoption rises as it is a competitive market. And then low margin merchants will actively encourage bitcoin usage with discounts.
Why would they encourage bitcoin usage with discounts? They want people to use bitcoin to improve margin so why would they turn around and immediately cut into that?
Also with cash back on so many cards now the discount would have to be >2%. Probably more like 3-5% for people to switch. The savings from not accepting credit cards won't make up for that.
Side note. Why did you create a throw away account just to comment on this topic?
Many other businesses have incredibly slim margins and chargebacks hit them hard. Airlines where I live in australia charge big extra fees for credit card payments, but no transaction internet banking payments are free. These payments are actively encouraged. These don't work for international payments and are clumsy even for australians. If bitcoin becomes mainstream enough to offer a minimal fee alternative to credit cards (and over time the 1% bitcoin processor fee will get smaller and smaller as it is a competitive market) then it will get widespread acceptance on many low margin merchants.
At this point, a number of people will adopt bitcoin to avoid the obvious extra credit card charges.
At that point, my stash of bitcoins will suddenly be worth $10000+ each, and THAT is why bitcoin supporters are obsessed with getting rid of credit card fees.
Can you explain more about the fees they charge? As we have been discussing, usually transaction fees are 5% or less. Obviously for the airlines this is significant to their small margins, but isnt the fee they charge for using a credit card nearly equal to the 5%?
Surely no one wants to pay a surcharge for using a credit card, but if Im buying a $500 plane ticket, is a $25 extra fee really "large"? and is it the number one priority for cost cutting? If the fee is much larger than $25 then its not in relation to how much the transaction fee is.
Also, chargebacks are discussed here as if they happen often. If you are providing good service they should never happen. While it is an undesirable expense for businesses, it is a very important feature for consumer protection. At my company around 1/10,000 transactions is charged back. I would guarantee the number of sales lost if customers knew they had no ability to dispute payments would be much greater than 1/10,000.
At present, arbitrage between different exchanges is easy if you are moving bitcoins, but moving USD is very time consuming and requires all sorts of verification. When the exchanges start accepting certain dollar denominated crypto assets you will be able to move USD between exchanges as easily as moving bitcoins. Liquidity and market efficiency and prices will all become extremely similar across markets. Any bad exchange will rapidly be shown up as a fraud as they will collapse within hours as any price differences or manipulation will be attacked by speculators. If anyone stops paying out deposits they will be called out within hours (vs. months and months when mtgox stopped paying out USD) and will rapidly lose credibility and collapse.