7 ms·

How eBay Could Rescue Bitcoin From the Feds

41 points by sk2code 13y ago

chatman 13y ago
This is just speculation. I don't see any concrete signs of EBay integrating bitcoins support in PayPal in the near term.
- ars 13y ago
  It's not even speculation (i.e. guessing what might be), it's a wish.
- jamoes 13y ago
  This blog post: http://deals.ebay.com/blog/whats-the-deal-with-bitcoins-anyway/ http://deals.ebay.com/blog/whats-the-deal-with-bitcoins-anyw... is a concrete sign that ebay has at last some interest in bitcoin.
drill_sarge 13y ago
I think the concept of (anonymous, decentralized) Bitcoin transactions and PayPal is self defeating.
- oleganza 13y ago
  It is not. Bitcoin gives you an option of transacting irreversibly which you can use as-is, or with a mediator (e.g. PayPal). Traditional banking does not give you such option. All transactions are mediated and always reversible (even wire transfers, see my reply in a parallel thread). As a side effect of irreversibility, anyone may build their own "PayPal" or "eBay" on Bitcoin in any jurisdiction and compete freely. Customers will have much more options than with traditional highly controlled and restricted banking system.
PeterisP 13y ago
A licenced money transmitter can handle Bitcoins only if they handle them in a rather non-bitcoin-ish way - i.e., if the participants are not anonymous, and fraudulent transactions can be reversed. This can be done - bitcoin itself doesn't provide these features technically, but it can be done by paypal; the question is why would they - it probably is less profitable than their current transactions.
- rlpb 13y ago
  > ...and fraudulent transactions can be reversed. Is this strictly true? What do foreign currency exchanges and Western Union do?
  - walden42 13y ago
    Wire transfers aren't reversible.
    - oleganza 13y ago
      Wire transfers are harder to reverse than paypal or CC, but they are still based on mere agreement between banks. Bitcoin-central.net exchange had some fraud instances when wires were actually reversed after withdrawing BTC. Only two things are irreversible for real: 1. When you take a tangible thing in your own hands and go away. This can only be "reversed" by another party running after you. 2. Bitcoin transaction. See also: http://www.quora.com/Wire-Transfers/Can-wire-transfers-be-reversed http://www.quora.com/Wire-Transfers/Can-wire-transfers-be-re...
      - maxerickson 13y ago
        The bitcoin network can conspire to reverse a transaction. The accidental block chain fork demonstrated that the plurality of participants will do so when it is convenient for them.
        oleganza 13y ago
        The accidental fork in March demonstrated that all transactions were included in both chains. One guy attempted a double-spend attack against OKPay (but then returned money). Only people who could have been hurt are those accepting transaction during the fork. Everyone else's money was just fine. Everyone should simply listen for alerts and simply stop trusting new transactions until the fork is resolved. To reverse some old transaction would require enormous amount of computing power and some serious motive. It's not even close to two banks disputing a wire transfer between each other.
oleganza 13y ago
All the difficulty of buying/selling Bitcoins for cash online only highlights how inflexible it is to move money with legacy technologies. Everyone who touches fiat currency must comply with tons of costly regulations, allow reversal of transfers and verify identities of people involved. This not only increases costs for everyone, but also reduces competition. The only stuff that can be irreversibly transferred is either physical commodity (including paper cash and precious metals) or Bitcoin. But, luckily, once you buy yourself some bitcoins, you may do whatever you want with them. Buy stuff, gamble, donate, pay freelancers, or anonymize as much as you want. There are only two ways eBay can possibly "embrace" Bitcoin: 1. By promising non-reversible transfers of USD when exchanged for Bitcoin. This may be problematic if there are some "customer protection" regulations that demand possibility to return funds. 2. By separating USD payments from BTC payments completely. E.g. you can sell/buy stuff on eBay for BTC without converting it to USD on eBay, but elsewhere. This is much more doable without triggering FinCEN regulations or chargebacks.
- Nursie 13y ago
  Many people (myself included) don't think irreversible transactions are a good idea. People like the protections afforded them by credit cards, and by financial regulation. Many financial regulations exist to stop the public being screwed over by the unscrupulous. If they increase costs a little, well that's the insurance cover for when we inevitably run into people who want to take us for a ride.
  - oleganza 13y ago
    I see what you mean, but you miss an important point. Reversible transactions must be reversed by a human intermediary. An insurance company, a financial institution, someone who you must trust this way or another. In addition to obvious value (that you described), this also creates all sorts of issues we all know about: fraud, regulatory hassle, spying, freezing of accounts etc. Bitcoin as a protocol (or any alternative money-moving protocol for that matter) itself cannot reverse anything. It's just a protocol. Anyone can set up their own BitcoinPayPal and mediate Bitcoin transactions and reverse them as they like. The value of Bitcoin is that you can opt in insured reversible transactions based on trust if you want to. But that's not necessary. USD is limited precisely because you have no other way to move it across the internet without trusting intermediaries that might reverse the transaction. Bitcoin simply gives you all possibilities, USD gives you less. There's nothing impossible in having eBay to act as an escrow for BTC transactions just like with USD. But the power of BTC is that you can ultimately own it, while USD must be always stored in someone else's hands.
gesman 13y ago
The only solution to bitcoin transactions is either trust-based (no strangers involved) or irreversible cash-based payments for bitcoins, possibly supported by trusted escrow service in the middle.
Grue3 13y ago
Bitcoin must be scrapped and engineered from scratch to fix its inherent flaws (if it's even possible).
- oleganza 13y ago
  Why not taking the source code, improving it and releasing your own genesis block to prove your point? Or pointing out an existing altcoin with higher (or faster growing) market cap for that matter?
  - Grue3 13y ago
    Your failure of logic is remarkable. My point was not that it's possible to make a better bitcoin (indeed, I even pointed out that it might be impossible). The point was that the flaws of bitcoin make its usage impossible for any serious purpose.
    - oleganza 13y ago
      Could you elaborate on that? I myself write a lot on how Bitcoin can be used for not only "serious" purposes, but also for purposes impossible without Bitcoin (blog.oleganza.com). Since Bitcoin is at very least is just an asset, any money business that exists today can use Bitcoin and enjoy lower costs of handling it. Then, there are special properties that make possible entirely new business models. Of course, Bitcoin itself is not without risks of crypto failure or miners' attack, but so is any other asset: gold can be stolen, govt money can be inflated or confiscated, milk can be spoiled etc.
quattrofan 13y ago
Ok so at the moment its only a potential problem in the US, not the rest of the world.
- ars 13y ago
  And the EU http://www.hmrc.gov.uk/mlr/your-role/EU-payments-reg.htm http://www.hmrc.gov.uk/mlr/your-role/EU-payments-reg.htm And almost everyplace else in the world.
surge 13y ago
I've used Bitcoin intentionally to get away from PayPal. So for me, the more PayPal stays away from Bitcoin, the happier I'll be. I'd much rather deal with a new company, like coinbase, who can jump through the necessary hoops.
conductr 13y ago
I would think the free aspect of Bitcoin would be appealing to eBay/Paypal, assuming the bulk of the ~3% fee goes to a bank/Visa/MC. The users are accustomed to paying the fee, so eBay has an opportunity to keep it all to themselves
csense 13y ago
> develop[ing] a way to facilitate transfers without risk of widespread fraud...may be a tall order for eBay No it isn't. The bitcoin seller transfers the bitcoins to a bitcoin address controlled by Paypal. Paypal sends USD from the buyer's Paypal balance to the seller's Paypal balance, and BTC from the Paypal-controlled bitcoin address to the buyer's bitcoin address. Paypal knows the dollars and the bitcoins both exist, and can deliver them to the right party itself, so the parties don't have to trust each other to complete the transaction; they just have to trust Paypal. There is a problem, I guess, if the USD comes from a source like a credit card that may eventually be reversed, or if the buyer claims a hacked account. But you could get around that with some waiting period, requiring a Paypal balance/bank transfer for Bitcoin transactions (credit cards can't fund Bitcoin purchases), and/or requiring 2-factor auth for large transactions / Bitcoin transactions. Processing an eBay transaction is actually harder to prevent fraud, because it's hard for Paypal to tell that physical goods were as described, and delivered to the right party. (AFAIK eBay basically has humans reading what both parties wrote and using their judgment to deal with disputes about product delivery.)
deleted 13y ago
[deleted]

41 points by sk2code 13y ago

This is just speculation. I don't see any concrete signs of EBay integrating bitcoins support in PayPal in the near term.

ars 13y ago
It's not even speculation (i.e. guessing what might be), it's a wish.
jamoes 13y ago
This blog post: http://deals.ebay.com/blog/whats-the-deal-with-bitcoins-anyway/ http://deals.ebay.com/blog/whats-the-deal-with-bitcoins-anyw... is a concrete sign that ebay has at last some interest in bitcoin.

drill_sarge 13y ago

I think the concept of (anonymous, decentralized) Bitcoin transactions and PayPal is self defeating.

oleganza 13y ago
It is not. Bitcoin gives you an option of transacting irreversibly which you can use as-is, or with a mediator (e.g. PayPal). Traditional banking does not give you such option. All transactions are mediated and always reversible (even wire transfers, see my reply in a parallel thread). As a side effect of irreversibility, anyone may build their own "PayPal" or "eBay" on Bitcoin in any jurisdiction and compete freely. Customers will have much more options than with traditional highly controlled and restricted banking system.

PeterisP 13y ago

A licenced money transmitter can handle Bitcoins only if they handle them in a rather non-bitcoin-ish way - i.e., if the participants are not anonymous, and fraudulent transactions can be reversed. This can be done - bitcoin itself doesn't provide these features technically, but it can be done by paypal; the question is why would they - it probably is less profitable than their current transactions.

rlpb 13y ago
> ...and fraudulent transactions can be reversed. Is this strictly true? What do foreign currency exchanges and Western Union do?
- walden42 13y ago
  Wire transfers aren't reversible.
  - oleganza 13y ago
    Wire transfers are harder to reverse than paypal or CC, but they are still based on mere agreement between banks. Bitcoin-central.net exchange had some fraud instances when wires were actually reversed after withdrawing BTC. Only two things are irreversible for real: 1. When you take a tangible thing in your own hands and go away. This can only be "reversed" by another party running after you. 2. Bitcoin transaction. See also: http://www.quora.com/Wire-Transfers/Can-wire-transfers-be-reversed http://www.quora.com/Wire-Transfers/Can-wire-transfers-be-re...
    - maxerickson 13y ago
      The bitcoin network can conspire to reverse a transaction. The accidental block chain fork demonstrated that the plurality of participants will do so when it is convenient for them.
      - oleganza 13y ago
        The accidental fork in March demonstrated that all transactions were included in both chains. One guy attempted a double-spend attack against OKPay (but then returned money). Only people who could have been hurt are those accepting transaction during the fork. Everyone else's money was just fine. Everyone should simply listen for alerts and simply stop trusting new transactions until the fork is resolved. To reverse some old transaction would require enormous amount of computing power and some serious motive. It's not even close to two banks disputing a wire transfer between each other.

oleganza 13y ago

All the difficulty of buying/selling Bitcoins for cash online only highlights how inflexible it is to move money with legacy technologies. Everyone who touches fiat currency must comply with tons of costly regulations, allow reversal of transfers and verify identities of people involved. This not only increases costs for everyone, but also reduces competition. The only stuff that can be irreversibly transferred is either physical commodity (including paper cash and precious metals) or Bitcoin. But, luckily, once you buy yourself some bitcoins, you may do whatever you want with them. Buy stuff, gamble, donate, pay freelancers, or anonymize as much as you want. There are only two ways eBay can possibly "embrace" Bitcoin: 1. By promising non-reversible transfers of USD when exchanged for Bitcoin. This may be problematic if there are some "customer protection" regulations that demand possibility to return funds. 2. By separating USD payments from BTC payments completely. E.g. you can sell/buy stuff on eBay for BTC without converting it to USD on eBay, but elsewhere. This is much more doable without triggering FinCEN regulations or chargebacks.

Nursie 13y ago
Many people (myself included) don't think irreversible transactions are a good idea. People like the protections afforded them by credit cards, and by financial regulation. Many financial regulations exist to stop the public being screwed over by the unscrupulous. If they increase costs a little, well that's the insurance cover for when we inevitably run into people who want to take us for a ride.
- oleganza 13y ago
  I see what you mean, but you miss an important point. Reversible transactions must be reversed by a human intermediary. An insurance company, a financial institution, someone who you must trust this way or another. In addition to obvious value (that you described), this also creates all sorts of issues we all know about: fraud, regulatory hassle, spying, freezing of accounts etc. Bitcoin as a protocol (or any alternative money-moving protocol for that matter) itself cannot reverse anything. It's just a protocol. Anyone can set up their own BitcoinPayPal and mediate Bitcoin transactions and reverse them as they like. The value of Bitcoin is that you can opt in insured reversible transactions based on trust if you want to. But that's not necessary. USD is limited precisely because you have no other way to move it across the internet without trusting intermediaries that might reverse the transaction. Bitcoin simply gives you all possibilities, USD gives you less. There's nothing impossible in having eBay to act as an escrow for BTC transactions just like with USD. But the power of BTC is that you can ultimately own it, while USD must be always stored in someone else's hands.

gesman 13y ago

The only solution to bitcoin transactions is either trust-based (no strangers involved) or irreversible cash-based payments for bitcoins, possibly supported by trusted escrow service in the middle.

Grue3 13y ago

Bitcoin must be scrapped and engineered from scratch to fix its inherent flaws (if it's even possible).

oleganza 13y ago
Why not taking the source code, improving it and releasing your own genesis block to prove your point? Or pointing out an existing altcoin with higher (or faster growing) market cap for that matter?
- Grue3 13y ago
  Your failure of logic is remarkable. My point was not that it's possible to make a better bitcoin (indeed, I even pointed out that it might be impossible). The point was that the flaws of bitcoin make its usage impossible for any serious purpose.
  - oleganza 13y ago
    Could you elaborate on that? I myself write a lot on how Bitcoin can be used for not only "serious" purposes, but also for purposes impossible without Bitcoin (blog.oleganza.com). Since Bitcoin is at very least is just an asset, any money business that exists today can use Bitcoin and enjoy lower costs of handling it. Then, there are special properties that make possible entirely new business models. Of course, Bitcoin itself is not without risks of crypto failure or miners' attack, but so is any other asset: gold can be stolen, govt money can be inflated or confiscated, milk can be spoiled etc.

quattrofan 13y ago

Ok so at the moment its only a potential problem in the US, not the rest of the world.

ars 13y ago
And the EU http://www.hmrc.gov.uk/mlr/your-role/EU-payments-reg.htm http://www.hmrc.gov.uk/mlr/your-role/EU-payments-reg.htm And almost everyplace else in the world.

surge 13y ago

I've used Bitcoin intentionally to get away from PayPal. So for me, the more PayPal stays away from Bitcoin, the happier I'll be. I'd much rather deal with a new company, like coinbase, who can jump through the necessary hoops.

conductr 13y ago

I would think the free aspect of Bitcoin would be appealing to eBay/Paypal, assuming the bulk of the ~3% fee goes to a bank/Visa/MC. The users are accustomed to paying the fee, so eBay has an opportunity to keep it all to themselves

csense 13y ago

> develop[ing] a way to facilitate transfers without risk of widespread fraud...may be a tall order for eBay No it isn't. The bitcoin seller transfers the bitcoins to a bitcoin address controlled by Paypal. Paypal sends USD from the buyer's Paypal balance to the seller's Paypal balance, and BTC from the Paypal-controlled bitcoin address to the buyer's bitcoin address. Paypal knows the dollars and the bitcoins both exist, and can deliver them to the right party itself, so the parties don't have to trust each other to complete the transaction; they just have to trust Paypal. There is a problem, I guess, if the USD comes from a source like a credit card that may eventually be reversed, or if the buyer claims a hacked account. But you could get around that with some waiting period, requiring a Paypal balance/bank transfer for Bitcoin transactions (credit cards can't fund Bitcoin purchases), and/or requiring 2-factor auth for large transactions / Bitcoin transactions. Processing an eBay transaction is actually harder to prevent fraud, because it's hard for Paypal to tell that physical goods were as described, and delivered to the right party. (AFAIK eBay basically has humans reading what both parties wrote and using their judgment to deal with disputes about product delivery.)

deleted 13y ago

[deleted]