Touche.

Although, a BTC exchange + BTC merchant together have to only beat out on Paypal's charges. BTC seems to be stable enough that Paypal's 2.9% charge per transaction makes BTC a useful competitor.

That said, now you have to trust both the BTC exchange and Merchant. But that is a bit easier if you can put up with the downsides to BTC (no chargebacks, etc. etc.)

It's not just about fees, Paypal has banned half the world from using their services (India, China) and dictates what you're allowed to sell, arbitrarily seizes money for months on end, and can be easily frauded with no protection for merchants.

You also don't have to trust any exchange, you can walk to your local coffee shop and trade for cash off the books with anybody from localbitcoins.com

In a common scenario where the customer pays 1% to Coinbase and the merchant pays 2.6% to BitPay, Bitcoin comes out worse than Paypal or credit cards.

In a common scenario where Paypal freezes your account for dubious reasons and then refuses to answer your telephone calls or emails, Bitcoin comes out ahead.

In another common scenario where a Senator named Lieberman makes a press release accusing Wikileaks of criminal activity, and other payment processors simply refuse to conduct transactions for you, Bitcoin also comes out ahead.

Don't worry, from what I've heard Coinbase are quite capable of freezing accounts for dubious reasons, along with causing purchases to fail by delaying outgoing payments for days and other similar fun activities.

In the common scenario where my supplier screws me over on Ebay, I can put a "cancel order" on my credit card. I have no such recourse to do that with Bitcoins.

Bitcoins offer no consumer protection right now. Once exchanged, the other party holds the money.

OTOH, if you're the supplier, there is no risk for you to go ahead and send the stuff if you were paid in bitcoin.

Precisely. No risk at all. You don't even have to send your stuff to your client, because you've already been paid.

Bitcoins right now puts the consumer / supplier relationship upside down. The supplier is already right... not the customer. I wonder if any customers will prefer to paying BTC over Paypal, especially after they've been defrauded a few times.

Nobody said it was perfect. It's a shame that a decent escrow service doesn't exist.

Bitcoin is now regulated in the US, so it's only a matter of time until Coinbase, CoinLab, and BitPay get Lieberman'ed.

You can also earn bitcoins, which will become more prevalentover time.