Hacker News Reader

Comment by analog31 | Hacker News Reader

Do you mind if I ask how? I ask as one who is still quite bewildered by the whole Bitcoin thing, but would love to better understand how it works.

View on HN

Imagine you live in Nigeria and happen to be the one actual honest to god legit well to do Nigerian prince. You want to go shopping online for a iPhone with your credit card. Problem is no one in their right mind on planet earth will sell you that iPhone because the chances of a fraudulent transaction originating from Nigeria are close to 100%.

With Bitcoin on the other hand when you transfer someone bitcoin that payment is as good as giving them cold hard cash there is no way to reverse that without the seller agreeing to do so so there is no risk of a charge back. The seller can ship the good and the poor guy who just wants to buy an iPhone can buy his phone w/o having to fly to a foreign country.

Bitcoin is like Cash that works over the Internet. The same way email is a letter over the Internet. Same result w/o physical presence.

Couldn't you just demand a debit card instead of a credit one? Having had the pleasure of trying to pay with an empty debit card I can confirm that it does not work.

This problem was already solved by Western Union.

Have you seen their fee structure?

Thanks. To me, it seems like bitcoin solves the problem of the buyer being bogus, but doesn't solve the problem of the seller being bogus. For instance the Nigerian prince might order an iPhone with bitcoins, and never see his iPhone.

There's probably no such thing as a risk free commercial transaction. The next best thing is if somebody assumes the risk and charges an amount that covers the risk plus makes it worth their while.

Bitcoin does not support chargebacks, which moves most of the risks associated with fraud from the merchant to the customer. This means it's no longer insane for merchants to sell to places with a lot of fraud.

Reply on news.ycombinator.com