Chapter

Chapter 1

From chapter 4 by Bitcoin

Concepts

1. Conventional Card

   "When a customer swipes a card, the card's account number, expiration date, billing ZIP code, and security code are sent to a front-end processor working for the merchant and acquiring bank. The proce

2. Many Intermediaries

   "After a transaction is authorized, the merchant submits receipts to its acquiring bank, which requests reimbursement from the issuing bank through an automatic clearinghouse network. The issuing bank

3. Pays Hidden

   "Seven entities besides the customer and café can participate in a card transaction, and several of them gain access to identifying information stored on the card. Their combined fees generally amount

4. International Payments

   "A purchase made abroad can involve foreign-exchange banks and brokers, currency settlement and clearinghouse operators, and messaging services such as SWIFT. The customer may pay explicit foreign-tra

5. Centralized Payment

   "Payment-card operations and fraud impose substantial costs on merchants and create friction that can hinder growth, efficiency, and commerce. Banks and payment networks remain necessary because digit

6. Bitcoin Reduce

   "Bitcoin payment processors such as BitPay and Coinbase offered merchants a way to accept bitcoin while receiving dollars in their home currency, with the processors managing exchange-rate risk throug

7. Security Risks

   "Bitcoin functions much like cash: once a payment is sent, it cannot be reversed, and stolen coins cannot normally be recovered. A person can lose bitcoin by exposing a private key, allowing hackers t

8. Bitcoin Less

   "Bitcoin has suffered repeated thefts and exchange hacks, including major losses associated with Bitcoinica and Mt. Gox, which damaged public confidence in the technology. Traditional card and banking

9. Bitcoin's Price

   "A currency must provide reasonable price stability in addition to serving as a medium of exchange, a store of value, and a unit of account. Bitcoin's exchange rate moved dramatically during 2013 and

10. Could Trading

    "Bitcoin supporters argued that volatility could attract traders, whose buying and selling would increase market liquidity and eventually make prices more stable. The growth of sophisticated exchanges

11. Bitcoin Technology

    "Payment processors can immediately convert bitcoins received from customers into dollars, shielding merchants from exchange-rate risk. A corresponding system could allow consumers to pay in dollars w

12. Events Drove

    "The Cypriot banking crisis helped establish bitcoin as a potential refuge from government confiscation, sending its price sharply higher as depositors feared that bank accounts could be frozen or red

13. Regulation Business

    "Government agencies increasingly treated bitcoin as a significant financial system rather than a lawless curiosity, creating conflict between advocates of unrestricted decentralization and entreprene