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one of the major pain points that bitcoin is trying to solve is the 2% transaction fee. However bitcoin is not necessarily free, even if it gets mass acceptance (say the entire USD is replaced by bitcoins). There will be additional transaction costs such as 1. generation of bitcoins 2. storage of bitcoins 3. apps that enable people to transact in bitcoins 4. credit history monitoring services etc. Some of these will be paid directly while exchange of value for currency (such as through transcation fees in bitcoin based credit cards), some of them may be indirect (such as an app which allows you to store/monitor bitcoins, but then uses ads to support itself. The ads inturn increase the price of the commodities that are being bought or sold. So you are paying for the bitcoin indirectly).

I am curious to know whether any study has been done to calculate the net % that will be lost in transcation fees (paid directly or indirectly by the purchaser of the goods) as compared to that of credit cards (~2%)?

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I am curious to know whether any study has been done to calculate the net % that will be lost in transcation fees (paid directly or indirectly by the purchaser of the goods) as compared to that of credit cards (~2%)?

  1. Credit cards don't support all types of transactions. For example, say you wanted to pay me to fix your computer. You can't do that with a credit card, because I don't have a merchant account, and it's not worth the trouble for me to get one. There are other ways to accomplish this (bank wire, mailed check, PayPal) but they have different fee structures. The economy doesn't run entirely on credit cards.

  2. #1 will cost as much as the block reward plus the transaction fees - if miners spend more than that, they will lose money. #2 would cost $100 to $200 per person, for secure, tamperproof devices. #3 is likely to be the same amount spent to develop phone apps as is spent currently.

  3. People won't have the same incentives in a Bitcoin world. Suppose that when everyone uses Bitcoin, it's harder to force someone to pay a court judgement. Because of this, a car manufacturer becomes slightly less careful about the safety of their cars, and an extra 40 people die in the US every year. How are we supposed to convert that into an equivalent transaction fee?

    You mention credit monitoring services, which I don't think would exist in a Bitcoin economy; I don't think you'd be able to get any loans. How could you give someone a mortgage, if they could secretly start socking away money where you can't get at it?

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