
BitPay, PayPal for Bitcoin, raises $510K – already has 2,100 businesses on board - thepumpkin1979
http://techcrunch.com/2013/01/07/bitpay-banks-500k-in-angel-investment-to-become-paypal-for-bitcoin-already-has-2100-businesses-on-board/
======
TY
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.

~~~
nym
Check out <http://howdoyoubuybitcoins.com/>

I recommend Coinbase personally, it's very easy! Come buy a cupcake at Cups
and Cakes in SF too :)

~~~
loceng
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?

~~~
nym
One word: Chargebacks.

If someone decides 60 days later that they want to contest the purchase, they
can. Usually this screws over the seller, leaving them in the negative.

~~~
flyblackbox
I am not sure I grasp your point entirely. Could you rephrase or reiterate
this idea?

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icey
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!

~~~
cmaxwe
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.

~~~
mootothemax
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).

~~~
logn
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.

~~~
sharkweek
Former bank teller here --

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

~~~
Firehed
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.

~~~
icey
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.

------
nym
If you're interested in buying bitcoins, check this out:

<http://howdoyoubuybitcoins.com/>

We have regional guides, as well as company reviews+ratings so you can buy
with trust.

~~~
coin
How many times are you going to spam this discussion with that URL? I count 3
so far.

~~~
Karunamon
Apparently it's necessary, given the number of "Nobody knows how to buy
bitcoin" posts.

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cmaxwe
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.

~~~
wmf
Coinbase has been discussed several times on HN.

~~~
cstejerean
Hooking up a bank account to a bitcoin related startup seems risky, and
waiting 4 days for funds to post seems inconvenient.

~~~
mtgx
Why do you think it's risky? In principle, is it that different than using
Facebook credits? I don't think Bitcoin is illegal in US.

~~~
JoshTriplett
> Why do you think it's risky?

Probably because every new bitcoin processor seems to rediscover the same set
of security holes and insecure practices.

~~~
garry
Coinbase is run by Brian Armstrong who used to lead anti-fraud at Airbnb. He's
a pro.

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shawn-butler
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!

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nym
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:

[http://cupsandcakesbakery.com/2012/10/buy-cupcakes-with-
bitc...](http://cupsandcakesbakery.com/2012/10/buy-cupcakes-with-bitcoins/)

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gallerytungsten
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.

~~~
jamoes
Yep. But then the question is how will they shut it down?

The powers that be hate bittorrent, but it's still alive and prospering.

The powers that be hate drugs, but the war on drugs has been an abysmal
failure.

Bitcoin will prove to be very difficult for the powers that be to shut down.
That is why it has so many fervent early adopters.

~~~
gallerytungsten
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.

~~~
jerguismi
> 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.

------
LunaSea
Isn't it a risky move to build a company around a cryptographic concept that
wasn't around for that much time ?

~~~
debacle
Yes, but often times the size of the payoff is directly proportional to the
amount of risk involved.

------
alexanderh
"PayPal for ______" is the last thing I'd want my company associated with
ever, for any reason, period.

------
Swannie
I'm sure this is on their website, but:

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!

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mtgx
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.

~~~
nym
I really think Coinbase is the Paypal for bitcoin. Paypal should be worried...
they are growing VERY quickly.

<http://howdoyoubuybitcoins.com/from/coinbase/>

------
Illychnosis
Bitcoin will be at $20 by the end of 2013. Great move on the part of all the
principals involved in this deal.

~~~
bcoates
I don't see any reason for BitPay to be long bitcoin. If you're a payment
provider currency volatility is bad both ways.

~~~
natrius
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.

~~~
wmf
If you want to go long Bitcoin, just buying them would probably be easier. And
there is some evidence that BitPay sells off their Bitcoins:
<https://bitcointalk.org/index.php?topic=89757.0>

~~~
natrius
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.

------
cmaxwe
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.

~~~
mrb
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>

------
josteink
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.

~~~
narcissus
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..."

------
coderdude
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.).

------
snitko
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.

~~~
Illychnosis
Coinbase wants a link to a bank account in order to buy bitcoins. How is that
less intrusive?

~~~
snitko
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.

~~~
Illychnosis
Ah. I see what you're saying now. Yes, Coinbase has an easier entry than
Bitpay does.

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amalag
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.

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sktrdie
I don't get this. Isn't the whole point of Bitcoin not to have any "central"
entity? BitPay sounds like precisely this?

~~~
wmf
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.

------
frozenport
This is 1/8 the money that Cherry (joke of 2012) raised. Is it becoming harder
to fund ideas?

