I've heard there was a proposal to support some form of chargeback in an upcoming release of the Bitcoin Protocol. My first question is this rumor factually accurate and if so how will it be implemented?
QuantumQrack: the answer is no, it's supporting the "payment protocol", which is a way of attaching some extra data to a transaction, such as a refund address. however, the refund is still up to the merchant to agree to give you; once you've given money to the merchant, you can't take it back without them giving it back to you.
Asked in #bitcoin on freenode. This is the reply.
A 'bitcoin chargeback' is defined at http://www.bitcoinchargeback.com/ as: A mechanism to facilitate the reversal of a prior outbound transfer of bitcoin funds, so it sounds like somebody may be working on it; however surely such a system would require some form of arbitration / adjudication, possibly distributed or else the chargeback would always be at the discretion of the merchant.
Right, reduced risk. Even when you count the occasional drop in bitcoin price, we're still looking at an average, consistent, 300% stable increase in the value of Bitcoin over the last year, all things considered. The majority of merchants are extremely risk averse, and use Bitpay, which absorbs both the risk and the reward for the transaction. Adding chargebacks to the protocol, would accomplish the same thing it's done with credit cards. It'll make merchants more reluctant to take it, and it will create a new class of fraud. This is established historic precedent. It's not like we don't know what will happen if we do this.