Nice idea. I've gone through their website and even watched the explanation video.
One thing they don't mention is how buyers come into possession of bitcoins. Buying bitcoins is currently a hassle for an average consumer and has transactional fees that are paid to bitcoin exchanges - enterprises of unknown origin and reputation that don't have household level brand name recognition (ask your aunt Sally or uncle Kamal about Mt. Gox).
I assume that chargebacks that are offloaded to bitcoin exchanges. These exchanges are the weakest point of the bitcoin ecosystem at the moment - this is where bitcoins touch the real world.
Contact with the real world makes them susceptible to the control of the authorities (regulators, law enforcement, criminals and etc), easy target for malicious parties meaning harm (yes, don't want to use the word hackers) as well as financial manipulators.
Success of BitPay and the like depends on the health and stability of the whole ecosystem, which is still quite immature, so if I were a merchant I'd approach this cautiously.
+1 Coinbase, although I wished they offered next day ACH withdrawals to bank accounts for a small premium ($0.25 is is what Balanced Payments charges).
While I'd love to recommend a YC startup, Coinbase charges much more in fees than MtGox or CampBX, for example. Yeah, they provide more features and a cleaner UI, but if you want to just buy some bitcoins, stick with lower fees from established players.
Whoever will be the first to create a shopping platform, as Coinbase plans to, will very likely get a nice boost and probably become the #1 player.
I've never understood the cost to buying bitcoins to begin with. You need to use a credit card I imagine, which will say have a 2.9%+ fee associated with it?
I've got other projects filling my time, but I think there's a great opportunity for someone who isn't opposed to working on an adult-themed idea using bitcoin. Selling sex toys for bitcoin, specifically. I think the anonymity of it is a huge selling point. Yes, there is still shipping to be concerned with, but in exchange for no worries about line items on credit card statements or your neighbors seeing your car at the sex shop; it might be the lesser of all evils.
If you do this and get rich, please email me to tell me it worked!
Except that Bitcoin isn't actually anonymous. If you have a wallet address, you can trace the blockchain, and most (if not all) exchanges that transfer BTC to dollars, or vice versa, require a lot of personal information that can be tied to that wallet.
I'm not too sure where the "bitcoin is anonymous" misinformation comes from, sadly.
> I'm not too sure where the "bitcoin is anonymous" misinformation comes from, sadly.
Saying that "bitcoin is anonymous" is indeed misleading.
But bitcoin does make it possible to stay anonymous, if you are very careful. For example, you can generate a new address and use it to receive bitcoins without revealing anything about yourself at the time of payment, and without revealing to any third party that you were paid.
Making payments without leaking any information is much more difficult. You would have to pass your bitcoins through a third party which you trust not to reveal the link between deposits and withdrawals. If you don't fully trust any such service, you can pass through multiple independent ones. Even then, somebody could correlate deposits and withdrawals by their size and timing. There exist Mixer Services (https://en.bitcoin.it/wiki/Mixing_service) which are designed to make this difficult.
Bitcoin is anonymous if you aren't an idiot about it. I mean seriously, all you have to do is generate a new address everytime you send or receive coins. Which is a click of a button.
If anything, this "Bitcoin isn't actually anonymous" is the real misinformation.
The problem still remains when you want to aggregate or split funds.
Imagine you receive small payments in 100 different addresses and then want to buy a new computer. If you create a single transaction with all those addresses as inputs, you make a big trace of a single owner of all of them.
I myself not worried about that at all - if you have to hide your stuff from someone, then the problem is not in the hiding techniques, but in the threat. Today the biggest threat is the govt, not some thieves whom you don't want to tell when you go to vacation.
Except that's still traceable. It makes it a pain in the ass, sure, but any point where you need to deal with an exchange to get money out is a point where you lose your anonymity. So it's fair to say "Bitcoin can be anonymous IF you have a way to get bitcoins without exchanging dollars for bitcoins, and IF you're only exchanging said BTC for non-physical goods that don't need to be shipped somewhere", but that's about it.
If address #1 received a coin, and then address #2 transfers the coin out, and there are no mentions of that coin in-between, then can someone be sure that address #1 and address #2 are actually the same address?
Just playing devils advocate... the only person who sees my CC statement other than me is my girlfriend. So I don't really care what is on it as long as it isn't causing a domestic problem... :-)
Using your logic that you could use Bitcoin to hide things on your CC statement I am guessing the use case for most people is hiding things from their spouses.
Playing devil's advocate re CC bills, one of my friends has always maintained that the only reason he hasn't paid for porn online is because he doesn't want his bank manager to know he's gay. (Regardless of what would appear on his bank statement, it's just not something he wanted to risk - I've never asked for an in depth reason as to why it's a risk).
I worked in IT at a bank. No one ever just reads account details for fun. If you call about a question on your account then maybe they will. But by and large employees really don't care at all. Besides, most transaction names are pretty cryptic, especially from sex sites, who often use a 3rd party service.
I've seen it happen where a couple would be sitting down together working out some account fraud with one of the branch managers and some dubious charges would come up. In my four years working there, saw probably 3-4 couples storm out in anger related to something the other found on the account related to pornography
I get that this is, in fact, a real problem - but it's hardly one related to banking or finance. Sounds more like relationship trouble to me.
I'd be more concerned about the bitcoin conversion services showing up in some sort of record than porn since it's so easy to connect with far more questionable services. Yes, a lot of people want to be off the grid (especially financially), but the reality is that a lot of people buy into the "why do you need privacy if you have nothing to hide" mantra. Even spouses.
When I bought some bitcoins, I did it with cash. I took money to a bank teller, and wired it to an account; then the service sent me the bitcoin via email. I never showed ID, so there was no way to track it to me. I suppose if someone cared enough to track a cash withdrawal they could do that, but in no way was my bank account connected with a bitcoin transaction at any time.
I'm amazed that anybody thinks the dude behind the desk is sitting around perusing people's statements, but if that's your concern, just get a credit card from a bank in another state.
Have you ever seen the movie Middle Men? It's about some Internet entrepreneurs who setup a payment processor for porn sites. The transaction would show up as "24/7 billing" on your credit card statements. Definitely worth watching.
I think that hiding things on a CC statement is a feature. There's a reason so many "adult websites" advertise the fact that they'll bill you with a nondescript name when they charge you.
> I think that hiding things on a CC statement is a feature. There's a reason so many "adult websites" advertise the fact that they'll bill you with a nondescript name when they charge you.
Bank employees learn to associate these merchants with their products pretty quickly though, as customers call up querying charges on their credit cards (read: didn't read the small print when ordering the item).
Until there is an easy mainstream way to fund a bitcoin wallet then I think bitcoin payment gateways are kind of pointless and will struggle to get any real adoption.
Because security is hard, and when you are storing untraceable money you become an attractive target way before you get big enough to invest heavily in security.
That said, Coinbase has raised some cash, so perhaps they can avoid this fate.
I have tried to use that website, but I'm too lazy to get out of the house to go wire case to some place I've never heard of in hopes that my bitcoins come to me. Other methods of aquiring bitcoin that I have seen is to find a local dealer who will meet you in some public place where you give them cash and the give you bitcoin. This latter method seems more like I'm buying some kind of black market commodity, and hence, very sketchy.
Easy is going to a website, putting your credit card number in, accepting a transaction fee, and receiving bitcoin. Until aquiring bitcoin is easy, bitcoin will stagnate.
You will never be able to buy cash or cash equivalents with a credit card without paying a hefty fee; the credit card company will count it as a 'cash advance'. (And of course it's unlikely you'll ever be able to buy bitcoin with a credit card for other reasons as well.)
I don't see any evidence on the web or in that airy press release other than its headline to support that they have 2,100 real world businesses accepting payments.
Does anyone have the list? I'm not trying to be negative it's just that I would like to have some basis in fact before I inadvertently spread someone else's mistake in my advocacy!
For those who are interested, Cups and Cakes Bakery in San Francisco uses Bitpay to allow customers to buy cupcakes with Bitcoins instantly. Here's an article and video showing what it's like:
The more mainstream Bitcoin becomes, the greater the likelihood that it will be shut down. As an alternate currency, it's a direct threat to the dollar. That threat is miniscule at present, but as Bitcoin gains traction, through services like Bitpay that reduce friction, it will be targeted for elimination by the economic powers that be.
I suspect a number of strategies will be used. First, they'll say it's being used for drug transactions. (Which is of course already the case.) Then they'll say it's being used for terrorist funding.
Once it's thoroughly demonized, they'll start going after people with bitcoin balances, and seize them through existing asset forfeiture laws. (Which allow the government to seize whatever they want; and if you want it back, the burden of proof is on you.)
They'll probably also focus on methods for converting Bitcoin back into mainstream currencies. In the end, those massive NSA databases that record everything that everyone is doing will probably be used to crack down on larger numbers of individuals. While this wouldn't be a "technical" shut-down, it would have a chilling effect as these "examples" will be publicized as a warning to other Bitcoin users.
> Once it's thoroughly demonized, they'll start going after people with bitcoin balances
How do you determine that someone has bitcoin balance?
> They'll probably also focus on methods for converting Bitcoin back into mainstream currencies.
This sounds more viable strategy: attack the exchanges. After all, the value of bitcoins comes from the fact that it is liquid - easily convertible to existing currencies and back.
However even shutting the exchanges down would require global cooperation from goverments and probably heavy internet censorship as well. That is because many exchanges don't even need any ties to the existing banking infrastructure, and can operate from any country.
"Yep. But then the question is how will they shut it down?"
They don't need to stop the internet underground using it to have a severe impact. Simply declare that any business accepting payment in bitcoins is liable to prosecution and punitive damages. This makes it very unlikely that any IRL store will accept it, and puts a severe limit on the economy as a result.
In some ways I'm surprised that they haven't already gone after people running BTC gambling sites.
They accept bitcoins, they pay in local currency. Where are they acquiring their local currency? Are they:
- Selling bit coins to consumers?
- Selling bit coins on open exchanges?
- - If they are selling on open exchanges, are all the local currencies currently available? I'd guess not, so they must have currency reserves in all outbound countries?
- Paying their staff in bit coins? :-D
This would be a huge multi-national operation. Not least in running the bank accounts in outbound countries, and managing ForEx reserves and bids. Let alone dealing with money laundering laws in respective countries, commercial operations expatriating or repatriating profits/revenues, etc. etc. Not for me!
Is Bitpay the "Paypal for Bitcoin" only from a merchant point of view, or from a user's point of view, too? I haven't looked at it much, but I think their web page was more oriented towards merchants not users, while Coinbase seems to be more oriented towards users, and sending money to each other and whatnot.
BitPay is essentially bitcoin arbitrage. A buyer wants to purchase something with bitcoins. A seller wants to receive payment in USD (or EUR, etc). BitPay buys the bitcoins and gives the seller conventional currency. They're left hanging on to bitcoins. I don't know what they do with the bitcoins once they have them, but I bet they're sitting on them and waiting for their value to increase.
Buying them outright would be easier, but you wouldn't get the 1% transaction fee that BitPay enjoys.
Thanks for the link. It sounds like they buy more bitcoins than they can sell off without crashing the market, so they're probably holding on to most of it. Interesting risks there.
No, see, when the price goes down it's "volatility" but when it goes up it's an "investment". Also, people think a higher exchange rate "validates" Bitcoin and will encourage more trade.
Yeah I am Canadian so neither Coinbase or BitInstant work for me. As far as I can tell my best option is adding a Bitcoin payment site as a "Bill Payee" in my online banking and paying it like a bill. Not exactly mainstream... :-)
Even BitInstant and Coinbase are kind of clunky and require the user to have an understanding of how Bitcoins work. (e.g. understand wallets, etc). That is the nice thing about Paypal...you can either login and pay with your paypal account or use them as a CC processor if you don't have an account.
As a Canadian, you can walk in any branch of 3 banks and deposit cash to get Bitcoins through Canadian Virtual Exchange, see https://www.cavirtex.com/methods
When I read that headline I ask myself is that $510k real money or is it the Bitcoin-equivalent of that sum?
And the fact that I ask that, as a techie - an enthusiast in the know about stuff like this, probably means Bitcoin still has some way to go before it can hope to achieve any sort of mainstream success.
You weren't sure if they were talking cash or cash equivalent, and therefore concluded that Bitcoin still has a way to go?
I'm confused, because to me that reads as "I allowed for the possibility of this to have all been done in BTC, and therefore BTC still has a long way to go..."
Very glad to hear this. I went with BitPay about a month ago and the Bitcoin orders are starting to roll in now that the community has gotten wind. Anyone looking to expand their audience should consider offering Bitcoin payments, regardless of which processor you go with (BitPay, CoinBase, etc.).
I was really surprised they were asking for my and my company's personal information during the registration process. Bitcoin is supposed to anonymous. So I went with Coinbase instead, they don't do that.
Well, not for me. I only want to be able to receive payments as a merchant. At the moment I don't care about exchanging bitcoins and bank accounts. BitPay, on the other hand, wants all the information before I can start receiving payments using their gateway.
Maybe obvious but you can get most of this benefit with Liberty Reserve. Non-reversible transactions and you can fill your liberty reserve account with bitcoins.
There's nothing particularly central about it. It's a payment intermediary for merchants (I would say it's more like Stripe than Paypal). Nobody has to use it.
BitPay is for merchants who want to accept bitcoins transparently, without having to deal with or interface with Bitcoin.
So, you can see BitPay as a first step to bringing Bitcoin's advantages at least to the clients. The second step would be for merchants to implement Bitcoin directly in their shopping cart, so that they can benefit from Bitcoin's decentralization.
One thing they don't mention is how buyers come into possession of bitcoins. Buying bitcoins is currently a hassle for an average consumer and has transactional fees that are paid to bitcoin exchanges - enterprises of unknown origin and reputation that don't have household level brand name recognition (ask your aunt Sally or uncle Kamal about Mt. Gox).
I assume that chargebacks that are offloaded to bitcoin exchanges. These exchanges are the weakest point of the bitcoin ecosystem at the moment - this is where bitcoins touch the real world.
Contact with the real world makes them susceptible to the control of the authorities (regulators, law enforcement, criminals and etc), easy target for malicious parties meaning harm (yes, don't want to use the word hackers) as well as financial manipulators.
Success of BitPay and the like depends on the health and stability of the whole ecosystem, which is still quite immature, so if I were a merchant I'd approach this cautiously.