
How eBay Could Rescue Bitcoin From the Feds - sk2code
http://www.wired.com/wiredenterprise/2013/09/ebay_bitcoins/
======
PeterisP
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
> ...and fraudulent transactions can be reversed.

Is this strictly true? What do foreign currency exchanges and Western Union
do?

~~~
walden42
Wire transfers aren't reversible.

~~~
oleganza
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-
re...](http://www.quora.com/Wire-Transfers/Can-wire-transfers-be-reversed)

~~~
maxerickson
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
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.

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

~~~
jamoes
This blog post: [http://deals.ebay.com/blog/whats-the-deal-with-bitcoins-
anyw...](http://deals.ebay.com/blog/whats-the-deal-with-bitcoins-anyway/) is a
concrete sign that ebay has at last some interest in bitcoin.

------
csense
> 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.)

------
oleganza
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
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
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.

~~~
Nursie
I'm not sure it's correct to say BTC gives you all possibilities yet, though
those services could be built. It may be a while before they are built because
the bitcoin community in general seem to be violently against reversible
transactions as a concept.

As for 'owning' BTC, the concept is entertaining. BTC is an entry in a public
ledger, you own the private key to access it, but it's very hard to say where
exactly a BTC is at any given time.

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

~~~
oleganza
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.

------
conductr
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

------
surge
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.

------
gesman
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.

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

~~~
ars
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.

------
Grue3
Bitcoin must be scrapped and engineered from scratch to fix its inherent flaws
(if it's even possible).

~~~
oleganza
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
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
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.

