Support cryptocurrency (Bitcoin, Litecoin, Dogecoin) as a payment method

[matin]

Jon Matonis has requested that Balanced support Bitcoin as a payout method.

EDIT by @steveklabnik:

Because there has been a cambrian explosion of cryptocurrencies, and they're all basically forks of bitcoin, supporting any of them has basically the same issues that supporting bitcoin does. And since supporting Bitcoin inherently means multi-currency support, I'm broading this issue to any cryptocurrency, though obviously Bitcoin is the most important.

[mahmoudimus]

Interesting to see what the community thinks of Bitcoin as a payout method strategy. Interesting to explore the opportunities, would love to hear your comments.

We're also trying to understand the risk with operating bitcoins. For example, with ACH we can reverse a direct deposit, however, how does pulling back money work with Bitcoin?

[jkwade]

Someone posted Jon's article on HN: http://news.ycombinator.com/item?id=4832780

[sebicas]

I really support Bitcoin as a payout option... +1 for Bitcoin

[pelle]

@mahmoudimus Bitcoin does not do reversals. See my post here on the dangers of mixing bank related payments with BitCoin. http://stakeventures.com/articles/2012/03/07/the-may-scale-of-money-hardness-and-bitcoin

It could be done using a delayed payout schedule, where Balanced sits on all or part of the funds for certain amount of time.

[mahmoudimus]

@sebicas What's your use case for Bitcoin?

[mahmoudimus]

@pelle Balanced offers an implicit escrow solution where the marketplace can hold the funds for a time of their choosing.

So, the delayed payout schedule is something already supported by Balanced.

Going to read your article now.

Thanks!

[JulianTosh]

+1 for bitcoin payouts!

[sebicas]

@mahmoudimus I am working in a project for a client who wants to accept Bitcoin into his Shopping Cart. For that we decided to use BitPay.com, which is it simple, but the problem is that we were limited just to Bitcoin.

The client also needs to accept credit cards, implement payments to affiliates, etc... so we ended up having to also integrate with a CC Merchant Account and a ACH Payment Procesor too.

In short we need to integrate with 3 different providers... it you would give us the option of Bitcoin I would have solved the problem with just one integration.

Does that answer your question?

[mahmoudimus]

Interesting - FBI internal risk assessment of Bitcoin

How authentic is this file?

Most importantly is this section: (U) Outlook and Implications.

(U//FOUO) Although Bitcoin does not have a centralized authority, the FBI assesses with medium confidence that law enforcement can discover more information about, and in some cases identify, malicious actors, if the actors convert their bitcoins into a fiat currency. Third party bitcoin services may require customers to submit valid identification or bank information to complete transactions. Furthermore, any third-party service that qualifies as a money transmitter, and therefore a MSB, must register with the FinCEN and implement an anti-money laundering program.

[pelle]

@mahmoudimus that sounds like a good base for it. I'm a big fan of BitCoin but don't want to see merchants, consumers or payment processors get burnt. I'd be happy to discuss this further offline.

[kirillzubovsky]

Would be really useful for us, in order to pay international merchants. As long as there is an easy way to set it up on the merchant side. So far, bitcoin is a bit confusing for people. Make the "virtual money" into "real money" transition easy, and we are definitely using it!

[pelle]

I believe the file is authentic. As long as you provide the same level of KYC you do for your regular customers for bitcoin customers there shouldn't be any issue from a regulatory point of view. BitCoin is completely transparent with a public transaction history. I'm confident the FBI or NSA already have a full real time bitcoin database.

[ajsharp]

We're also trying to understand the risk with operating bitcoins

Understanding the risk of supporting bitcoin is fairly straightforward -- bitcoin is a speculative investment masquerading as a currency.

@mahmoudimus You hit the nail on the head with your last comment, and is one of the primary reasons that bitcoin should be considered as speculative as say, gold -- "Although Bitcoin does not have a centralized authority...". Having a "centralized authority", e.g. a central bank, is a key property of a modern currency.

Personally, I'd much prefer balanced support international currencies before bitcoin.

[kirillzubovsky]

Check out http://coinbase.com - maybe they can do all the operating, while you can plug into the API.

[mahmoudimus]

Referencing #44

[jkwade]

@kirillzubovsky interesting suggestion. Wonder if we can get @barmstrong on here to discuss.

@mahmoudimus, coinbase seems to use oauth ;) Also would require creating a Coinbase account for the recipient, something that our customers so far haven't been to keen on

[sebicas]

Multi-currency is a must in order to been able to accept Bitcoin... is that in the pipeline?

[Jackten]

+1 for bitcoin integration. It shouldn't be very difficult to add and it would start you out with an enthusiastic user-base from the get-go.

[smickles]

@sebicas Why is multi-currency a must to be able to accept Bitcoin? In other realms, bitcoin is often traded against just a single currency.

[sebicas]

@smickles just because you can not mix your Bitcoin balance with our US Dollars balance... so for that you will need multi-currency support.

[smickles]

@sebicas ah, it had completely slipped my mind.

[jkwade]

@matin Per twitter comment, Jon has pointed out the original article was to use bitcoin as a two-sided payment option, not just payouts.

Would people prefer bitcoin on both sides of the transaction or just payouts via bitcoin?

[sebicas]

@jkwade I would prefer to been able to accept incoming bitcoin and also been able to do outgoing payout as well.

If you don't mix US Dollars balances with bitcoin balances, you should not have any issues...

I think Balanced should NOT get involved into exchange US Dollars for bitcoins ( and viceversa ) but it should allow merchants to do so. I think that will be a huge inovation...

[themorgantown]

I agree with @sebicas above...

Using Bitcoin for either payouts or payments would of course require a huge restructuring of legal language for Balanced, but it removes the risk for Balanced since they no longer would need to bother themselves with chargebacks. (@pelle's suggestion to use a delayed payout schedule seems to be a good solution for mitigating risk )

If you couple that reduced risk with the lower transaction fees, Balanced has a better chance of turning a profit on their escrow & processing service even if their transaction fees are as low as 1%. Risk decreases even further if received BTC is converted to USD as it is received (via Bitpay, which charges .99% for this service). This is how Wordpress avoids getting their hands dirty with Bitcoins.

I'm confused why some consider Bitcoin only a speculative investment and not an investment and currency. One doesn't have to look very hard to find it being used as a medium of exchange for goods and services.

[pmarreck]

+1 to BTC support, the tools are out there and being used right now, as evidenced by bitcoin-only or bitcoin-primary online stores such as bitcoinstore.com, bitcoinblaster.com, bitcoincoffee.com, bitcoinin.com, etc. Wordpress is merely the best-known name (at least currently), but some of tomorrow's knowns are today's unknowns. https://en.bitcoin.it/wiki/How_to_accept_Bitcoin,_for_small_businesses I've used BTC to pay for things, it's astoundingly easy, requires zero credit (opening you up to an entire market of people, such as children, who cannot get credit), is secure, extremely low-fee, untaxable (yet) and decentralized (unlike the big credit card companies). Good luck.

[AlexMtGox]

Working for Mt.Gox the largest Bitcoin exchange may biased a bit what I am going to say, however the more point of entry you offer to buyers and merchants alike the more opportunity you will offer them.

However, and we could definitively help you on this one, make sure to opt for "free" solution, offering Bitcoin Payment and add Fees on top of each transaction where normally there isn't any is a really weird to us.

We at Mt.Gox we be delighted to work with you guys if needed and we can secure like for the rest of our merchant a 0 fee structure on Bitcoin Payments. Anyway feel free to contact us if needed and do not hesitate to check what can be done here https://mtgox.com/merchant

[osmosis79]

+1, fully with Jon Matonis. He has been covering internet payments for a while now on is right on. The possibilities for what can be done with, and the number of other innovators in the bitcoin payment space is not only huge right now, but is only growing.

[bitpay]

Bitcoin is great, there's no reason you guys shouldn't support it. Just grab the code and start hacking. Managing payouts to sellers in a marketplace would be a great fit for Bitcoin.

[jkwade]

You guys mind helping me gather some demographic information here:

Who on this thread -- besides @kirillzubovsky and @ajsharp -- is running or building a marketplace?

[sebicas]

@jkwade I would is you can offer the option of bitcoin.

As I mention before having the option to do just one integration instead of several ones, is very convenience for me.

[jkwade]

@sebicas I don't mean who would use Balanced to build their marketplace, I'm wondering who on this thread is currently running a marketplace or in the process of building a marketplace using any payment solution.

Are you saying you would build a marketplace if Balanced offered bitcoin as a payment option?

[sebicas]

@jkwade exactly

EDIT: At the time I am building a Marketplace... I am not using Balanced because doesn't support bitcoin.

[colindean]

Bitcoin as a payout method from Balanced would solve https://github.com/whit537/www.gittip.com/issues/310 and https://github.com/whit537/www.gittip.com/issues/126. I think Gittip counts as a marketplace.

[chadwhitacre]

What @colindean said. :)

[chadwhitacre]

Well, except that I'm not sure it would solve whit537/www.gittip.com#126, unless it could be transparently converted to local currency for those who are anti-bitcoin.

[therealplato]

+1

If you get an early start on the Bitcoin payments market, you stand a chance of great profit if adoption increases. Worst case the currency fails but you get a lot of experience with digital currencies - giving you a headstart on whatever comes after Bitcoin

[sebicas]

@whit537 independent marketplaces can be created from MtGox or other provider to exchange bitcoin for USD and viceversa.

[sebicas]

@therealplato if they prepare the system for Digital Currencies from the beginning, they will have a huge advantage over competitors and even if bitcoin fails, new digital currencies will arrise and they will be able to integrate them with the experience acquired.

[barmstrong]

Hi all, glad to see the discussion here - I'm the founder of Coinbase. We've got an OAuth2 api that is coming together nicely https://coinbase.com/api/doc But trying to understand exactly what would need to happen for payouts from balanced.

It sounds like balanced has payouts to U.S. bank accounts. And Coinbase can debit U.S. bank accounts for people who want to buy bitcoin. So there is a two step process which already works today.

For a one step process I'm assuming we'd need to expose an API where balanced sends USD to us, and we pass the bitcoin on to a bitcoin address of the user's choosing.

This is actually fairly doable, although we don't have it set up today through an API. @sebicas let's follow up offline (I'll send you an email).

[kirillzubovsky]

@barmstrong it would be even more awesome if Balanced could set up bank accounts in various countries, such that our merchants don't even have to get bitcoin. You guys send money back and forth with each other, and on the customer side, the merchants just see money (in their local currency) get deposited in their accounts. Possible?

In other words, all the benefits of international money transfer, without the hassle of currency exchange. We'd love you very much if this was possible (and legal).

p.s. Now that I see the light, is it too late to invest in you?

[barmstrong]

@kirillzubovsky yup that is a longer term goal of ours - cheap/fast/international payments where bitcoin is just an underlying transport mechanism, not something the end user ever has to see prices in (of course the fees will be a lot lower if they do decide to keep it in bitcoin). I imagine this one is still a ways off though.

[quellhorst]

Supporting payouts in Bitcoins from would be very high risk since stolen cards could be used and Bitcoin transactions are not reversible. There have already been millions of $ lost in stolen bitcoins.

[sebicas]

@quellhorst I think the problem is the other way around... Credit Card Payment are easily reversed... if Balanced want to add more payment methods they should not fund secure payment methods (bitcoin) with unsecured one (credit cards)

Anyways since Balanced business is not currency exchange, they should not even mix different currencies balances but leave that to merchants & exchangers.

[pmarreck]

@quellhorst If you're talking about this: http://arstechnica.com/business/2012/03/bitcoins-worth-228000-stolen-from-customers-of-hacked-webhost/ I will quote: "Palatinus said he kept his $15,000 worth of BTC that was stolen in what's known as a "hot wallet" that was stored unencrypted on Linode's servers so it would be available for automatic payments." The wallet could have been stored encrypted on the drive and the password to decrypt it could have been cached in memory (I suppose, if the hacker rooted the device he could do a full memory scan of running processes, but that is far trickier). You'd have to re-enter the password manually whenever you started up the server or a new server node but the point is that there are already ways to mitigate this risk, even before the "double signing" solution proposed by a bitcoin programmer in that article. Bitcoin is like cash. If someone steals your real-life wallet, you lose your cash. Fortunately you can encrypt your e-wallet, though. All the examples I've seen of stolen BTC were with wallets that were stored unencrypted. This is foolish and unnecessary.

[zealoushacker]

I think the key discussion should be around which 3rd party method balanced may use to easily send money to off-shore merchants, without the merchant having to sign up for that 3rd party service.

One of my clients is a group payment platform, with a white-label API, which I have built for them. They are getting interest from the UK. The folks interested in an integration with the white-label API would not want to deal with bitcoin, neteller, or anything like that. To them, they want to receive money in their currency, in their bank account. If balanced leverages neteller or bitcoin as a 3rd party transaction partner to avoid the headaches of sending money directly to UK (insert country of choice here) bank accounts, that's all fine and well... even if the fees are higher.

I think balanced needs to make some strategic partnerships with 3rd parties, and make this as smooth as possible... or, solve the hurdles, when and if the cost benefit analysis is in balanced's favor :)

[therealplato]

I'd like to see Balanced and a few other wallets/exchangers/transaction providers form an Open Transactions Alliance. This would essentially create a DIGEX digital cash market.

Anyone can issue OT assets. So I would pay 5BTC to Balanced and in return get 5 newly minted BAL-BTC certificates. (Balanced would handle the OT keys and just show me a web UI.) My BAL-BTC certificates can be traded across the OT network, to any payment hubs that recognize the BAL-BTC asset type.

Perhaps I trade my 5 BAL-BTC for 6 GOX-BTC certificates. Both parties digitally sign a contract formalizing the exchange. Now Gox recognizes my ownership of the certificates. I can turn them in and redeem 6 hard BTC from Gox. My counterparty can turn in the BAL-BTC certs and redeem 5 BTC from Balanced .

Or more likely, one of us will cash out. I might trade my 6 GOX-BTC to another Gox user in exchange for 280 GOX-USD, which Gox would convert into USD in my bank account after raking a small fee.

[quellhorst]

A bitcoin crash like the one right now is why accepting CC for bitcoins is risky... People will dispute the charges with their bank after their gamble turns into a loss.

[sebicas]

Agree, the only safe way will be BTC to USD, and not the other way around.

[pmarreck]

If/when the BTC network continues to grow (which it currently appears to be doing, rollercoaster notwithstanding), the speculation side should be toned down in relative intensity considerably. This is still the bootstrapping phase. But I have to agree unfortunately with the "BTC to USD... for now" assessment.

Speaking of more rollercoasters incoming: http://www.businessinsider.com/the-winklevoss-twins-bitcoins-2013-4

[eblanshey]

+1. I would love to see bitcoin integration.