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.

[kickme444]

@matin I think the idea is cool in theory but we've got a lot of priorities that are higher than this.

[matin]

@kickme444 no worries. I should have checked with you with a draft of the blog post before releasing it.

[timmyg]

@steveklabnik I would like to try out the beta/help with testing. What should I do? Our product is pre-launch so still using test marketplace at the moment.

[zekesonxx]

I think this is a cool aspect but I take issue with the fact that end users have to actually link their Coinbase account.
I'm not okay with linking my irreversible CB account to merchants

[matin]

@zekesonxx the permission is revokable through your Coinbase account.

[colindean]

Alas, a fraudulent cryptocurrency transaction is not revokable. What security measures are in place to ensure that doesn’t happen?

Colin Dean
[email protected]

On Thursday, February 20, 2014 at 8:37 PM, Matin Tamizi wrote:

@zekesonxx (https://github.com/zekesonxx) the permission is revokable through your Coinbase account.

—
Reply to this email directly or view it on GitHub (#204 (comment)).

[zekesonxx]

@colindean Indeed. I would much prefer it if instead I was given a address to send to, or redirected to a Coinbase payment page.

[steveklabnik]

@timmyg a prerequisite is to be on the API v1.1. We haven't released final docs for it yet. I'll be looking to get together an actual guide for trying things out soon.

[steveklabnik]

@colindean @zekesonxx remember that all of these transactions are off-blockchain, first of all. Secondly, we underwrite all of our sellers and marketplaces, so we know exactly who the money would actually go to, by law.

[matin]

@colindean That depends on what you mean by "fraudulent". In the credit card world, consumers file typically file chargebacks for one of three reasons:

1. Unauthorized transaction. This can either happen because the card was stolen and used by a fraudster or a merchant accidentally or maliciously charged the card when not authorized to do so
2. Unhappy. The merchant didn't deliver as promised
3. Confusion. This happens when the description on your bank statement doesn't make sense. Some card holders just default to disputing the transaction

@zekesonxx The merchant not delivering is a problem whether your using OAuth with Coinbase and Balanced or sending from your own personal wallet.

Connecting your Coinbase account does add the problem of merchants accidentally or maliciously debiting your Coinbase account. This is one of the reasons we're rolling it out with vetted customers.

Regardless, I think the concepts of disputes need to be added by hosted cryptocurrency wallets. If anything, it will become a big reason why you would want to use a hosted wallet instead of your private wallet.

[colindean]

Thanks, guys.

Connecting your Coinbase account does add the problem of merchants accidentally or maliciously debiting your Coinbase account. This is one of the reasons we're rolling it out with vetted customers.

This is the target of my concern.

If transactions through Balanced+Coinbase are off-blockchain and can be reversed in either of the above events, then my security brain is satisfied for now. It should be up to a user, then, to decide how much they want to keep readily available in their Coinbase account.

Colin Dean
[email protected]

On Thursday, February 20, 2014 at 9:07 PM, Matin Tamizi wrote:

@colindean (https://github.com/colindean) That depends on what you mean by "fraudulent". In the credit card world, consumers file typically file chargebacks for one of three reasons:
Unauthorized transaction. This can either happen because the card was stolen and used by a fraudster or a merchant accidentally or maliciously charged the card when not authorized to do so
Unhappy. The merchant didn't deliver as promised
Confusion. This happens when the description on your bank statement doesn't make sense. Some card holders just default to disputing the transaction

@zekesonxx (https://github.com/zekesonxx) The merchant not delivering is a problem whether your using OAuth with Coinbase and Balanced or sending from your own personal wallet.
Connecting your Coinbase account does add the problem of merchants accidentally or maliciously debiting your Coinbase account. This is one of the reasons we're rolling it out with vetted customers.
Regardless, I think the concepts of disputes need to be added by hosted cryptocurrency wallets. If anything, it will become a big reason why you would want to use a hosted wallet instead of your private wallet.

—
Reply to this email directly or view it on GitHub (#204 (comment)).

[steveklabnik]

This is just one of the reasons/advantages that it's Coinbase only, and not raw BTC.

[zekesonxx]

...remember that all of these transactions are off-blockchain, first of all. Secondly, we underwrite all of our sellers and marketplaces, so we know exactly who the money would actually go to, by law.

This works.

It should be up to a user, then, to decide how much they want to keep readily available in their Coinbase account.

This doesn't. I should be able to use bitcoin at a merchant without having to worry about them nabbing unauthorized funds from my Coinbase wallet.

[colindean]

Does the workflow not include an option to fund the transaction at the time of purchase if the Coinbase account has insufficient funds? Or must the sufficient funds already exist in the Coinbase account?

Colin Dean
[email protected]

On Thursday, February 20, 2014 at 9:37 PM, Zeke Sonxx wrote:

...remember that all of these transactions are off-blockchain, first of all. Secondly, we underwrite all of our sellers and marketplaces, so we know exactly who the money would actually go to, by law.

This works.

It should be up to a user, then, to decide how much they want to keep readily available in their Coinbase account.

This doesn't. I should be able to use bitcoin at a merchant without having to worry about them nabbing unauthorized funds from my Coinbase wallet.

—
Reply to this email directly or view it on GitHub (#204 (comment)).

[mahmoudimus]

@colindean @zekesonxx this is one of the reasons we're choosing to put this in a private beta for now since we're trying to understand all the concerns. This discussion definitely highlights some potential issues.

[steveklabnik]

I've blogged in some more detail about how this feature works: http://blog.balancedpayments.com/more-details-about-bitcoin/

[colindean]

That's a great write-up. Thanks for that.

🍻

Steve Klabnik [email protected] wrote:

I've blogged in some more detail about how this feature works:
http://blog.balancedpayments.com/more-details-about-bitcoin/

---

Reply to this email directly or view it on GitHub:
#204 (comment)

[tedpower]

@matin any chance you could add Abacus to the beta? I'm chatting with Roger Gu at Coinbase about this tomorrow

[matin]

@tedpower Of course!

ping @steveklabnik

[the-swerve]

Any ideas what kind of fees we be involved in this solution, and what's the advantage over working directly with the ultra easy existing Coinbase api?

[steveklabnik]

The fee is 1%, same as Coinbase's existing fees.

If you're a Balanced customer, than it's actually easier to integrate with us than it is through Coinbase, even though their API is pretty easy. In addition, everything goes through us, rather than splitting up your payments between two solutions.

[the-swerve]

Same as coinbase's existing fees = 👍 Right on! Looking forward to using this for international nonprofit orgs.

[tedpower]

Have you guys considered adding bitcoin (coinbase) as a payOUT option? i.e. someone hooks up their bitcoin wallet, and we issue a credit to that wallet, instead of an ACH credit to a bank account? We would use that at Abacus.

[steveklabnik]

Eventually, we will allow you to pay out to Coinbase yes, but there are lots of issues around it.

[tedpower]

cool, keep us posted!

[analytically]

+1

[jamespeerless]

+1 Hope to see bitpay integration as 0% fees is much better than the 1% coinbase charges :)

[flintmedia]

+6 (Reppin the flint team)

[kevinl05]

+1 PLEASEEEEEEEEEEEEEEEEEEEEEE! Love you guys

[tenthirtyone]

+1 would pay in bitcoin