MasterCard's duopoly (with Visa) of all electronic payment systems in the world is so well-known it is often used as the first example of such a market in economics courses. "Legacy" payment systems such as cheques and cash are being slowly replaced by systems very much controlled by MasterCard or Visa.
This is troublesome for two reasons.
The first is political; both companies are American. This gives the American government way too much control over such critical infrastructure. Even if they do not overtly mess with the system, they most certainly are passing all this information on to their intelligence agencies. Even a single worthy competitor from somewhere else would be a huge improvement.
The second is that it stifles innovation. Because of the lack of a well-established competition, the only innovation these companies are interested in is new products that make use of their existing infrastructure. Contactless payments on mobile phones could have been reality five years ago, but MC and Visa have to jump through several hoops and require special SIMs to have it all run over the infrastructure they sell instead of the internet. And the banks are happy to wait instead of innovating themselves.
I'm all for killing cash by digital means. But not if these two companies are doing it.
What does the fact that I can pay with Bitcoin in a very narrow selection of web shops have to do with the vast network of debit and credit card systems that I can pay with anywhere I want (web and brick-and-mortar) without any effort whatsoever? The suggestion that cryptocurrencies are competition to MasterCard's and Visa's duopoly is ridiculous. Cryptocurrencies, due to their intrinsic online nature, are a very limited payment solution.
Note that I do support cryptocurrency efforts, use them, and follow the news with interest. But cryptocurrencies are not even close to mainstream enough to have this duopoly worried.
Every Bitcoin-derived cryptocurrency has to keep in sync with the blockchain in order to participate in payments. That is what I mean with "online in nature".
Ok now I got what you meant. thanks for the explanation.
Having said that your consideration about "on line nature" applies also to my mastercard in almost all the shops I usually buy stuff be it on line or off line. Without me providing the OTP and the payment processor verifying it I can't buy anything.
A little bit OT but worthy IMHO. There are quite a few SPV (1) client implementations that remove the need to have all the blockchain stored locally. The things are moving even further in these field with the implementation of the payment protocol (2)
As if cards are not "online in nature"? Bitcoin is, by the way, much ahead of cards in that regard. You can have bitcoin radio and have PoS (coffee machine, ticket machine, shop's PoS) that does not have Internet connectivity for months.
Is there a way to practically keep in sync with the blockchain on a battery constrained device? Because at the moment, I don't think you can make the equivalent of a debit card for bitcoin. Even a mobile app would be impractical with it keeping in sync with the blockchain on battery.
Debit cards are only online in the sense that the shop must provide a connection to a trusted third party, which is a far easier problem to solve. The cryptocurrency equivalent would be to present the blockchain on the spot; if that's not insecure it is at best very unpractical.
You don't need the entire blockchain on your phone. To answer the question:
practically keep in sync on a battery constrained device
Simply don't, and have it be an app for blockchain.info (ie, someone else hosts the wallet and sends the money) or for your own personal wallet (that you have hosted somewhere).
But in practice, all you need to initiate a bitcoin transaction is the signing key of your address and someone to send your transaction to in the swarm. You never need the blockchain itself to do anything - if you forge illegal transactions where you say "give 50 bitcoin to X, but I only have 5" the chain will disregard it as false. You don't have to know your own balance to do that. And you don't need the blockchain to know your own balance - plenty of web services provide APIs to query the balance in a wallet.
And common retail works just fine here. The store is an entry point into the blockchain, and it is in their interest to provide a valid entry point to submit transactions through. They can't modify your transaction because they don't have your private signing key to authorize it, but if they don't broadcast it and have it confirmed in the swarm they can't get paid. It doesn't get quite as simple as "swipe a card" because you need some transistors that construct a valid transaction that requires your private signing key, thus you can't use a public terminal to generate it. But it doesn't need to be complex, have internet access, or have a complete blockchain to work.
There are practical Bitcoin wallets for Android phones. I use one on every day basis. It does not have a copy of blockchain because I don't need one to be able to use Bitcoin.
You're right, but for the wrong reason. Crypto currencies are a canary highlighting general anxiety over the fiat currency model that has served us for many years.
End of the day, the irresponsibility associated with currency management and the harsh controls over capital at the individual/small business level are what fuels demand for bitcoin.
Comments
MasterCard's duopoly (with Visa) of all electronic payment systems in the world is so well-known it is often used as the first example of such a market in economics courses. "Legacy" payment systems such as cheques and cash are being slowly replaced by systems very much controlled by MasterCard or Visa.
This is troublesome for two reasons.
The first is political; both companies are American. This gives the American government way too much control over such critical infrastructure. Even if they do not overtly mess with the system, they most certainly are passing all this information on to their intelligence agencies. Even a single worthy competitor from somewhere else would be a huge improvement.
The second is that it stifles innovation. Because of the lack of a well-established competition, the only innovation these companies are interested in is new products that make use of their existing infrastructure. Contactless payments on mobile phones could have been reality five years ago, but MC and Visa have to jump through several hoops and require special SIMs to have it all run over the infrastructure they sell instead of the internet. And the banks are happy to wait instead of innovating themselves.
I'm all for killing cash by digital means. But not if these two companies are doing it.
Bitcoin called, its having beers with Dell atm and invited you over.
What does the fact that I can pay with Bitcoin in a very narrow selection of web shops have to do with the vast network of debit and credit card systems that I can pay with anywhere I want (web and brick-and-mortar) without any effort whatsoever? The suggestion that cryptocurrencies are competition to MasterCard's and Visa's duopoly is ridiculous. Cryptocurrencies, due to their intrinsic online nature, are a very limited payment solution.
Note that I do support cryptocurrency efforts, use them, and follow the news with interest. But cryptocurrencies are not even close to mainstream enough to have this duopoly worried.
You sure really do know a lot about cryptocurrencies.
I'm particularly interested in their "intrinsic on line nature", care to elaborate a little bit further?
Every Bitcoin-derived cryptocurrency has to keep in sync with the blockchain in order to participate in payments. That is what I mean with "online in nature".
Ok now I got what you meant. thanks for the explanation.
Having said that your consideration about "on line nature" applies also to my mastercard in almost all the shops I usually buy stuff be it on line or off line. Without me providing the OTP and the payment processor verifying it I can't buy anything.
A little bit OT but worthy IMHO. There are quite a few SPV (1) client implementations that remove the need to have all the blockchain stored locally. The things are moving even further in these field with the implementation of the payment protocol (2)
(1) http://bitcoin.stackexchange.com/questions/4649/what-is-an-s... (2) https://github.com/bitcoin/bips/blob/master/bip-0070.mediawi...
Thanks for the links, I'll check them out.
As if cards are not "online in nature"? Bitcoin is, by the way, much ahead of cards in that regard. You can have bitcoin radio and have PoS (coffee machine, ticket machine, shop's PoS) that does not have Internet connectivity for months.
Is there a way to practically keep in sync with the blockchain on a battery constrained device? Because at the moment, I don't think you can make the equivalent of a debit card for bitcoin. Even a mobile app would be impractical with it keeping in sync with the blockchain on battery.
Debit cards are only online in the sense that the shop must provide a connection to a trusted third party, which is a far easier problem to solve. The cryptocurrency equivalent would be to present the blockchain on the spot; if that's not insecure it is at best very unpractical.
You don't need the entire blockchain on your phone. To answer the question:
Simply don't, and have it be an app for blockchain.info (ie, someone else hosts the wallet and sends the money) or for your own personal wallet (that you have hosted somewhere).
But in practice, all you need to initiate a bitcoin transaction is the signing key of your address and someone to send your transaction to in the swarm. You never need the blockchain itself to do anything - if you forge illegal transactions where you say "give 50 bitcoin to X, but I only have 5" the chain will disregard it as false. You don't have to know your own balance to do that. And you don't need the blockchain to know your own balance - plenty of web services provide APIs to query the balance in a wallet.
And common retail works just fine here. The store is an entry point into the blockchain, and it is in their interest to provide a valid entry point to submit transactions through. They can't modify your transaction because they don't have your private signing key to authorize it, but if they don't broadcast it and have it confirmed in the swarm they can't get paid. It doesn't get quite as simple as "swipe a card" because you need some transistors that construct a valid transaction that requires your private signing key, thus you can't use a public terminal to generate it. But it doesn't need to be complex, have internet access, or have a complete blockchain to work.
There are practical Bitcoin wallets for Android phones. I use one on every day basis. It does not have a copy of blockchain because I don't need one to be able to use Bitcoin.
You're right, but for the wrong reason. Crypto currencies are a canary highlighting general anxiety over the fiat currency model that has served us for many years.
End of the day, the irresponsibility associated with currency management and the harsh controls over capital at the individual/small business level are what fuels demand for bitcoin.