martes, 10 de septiembre de 2013

How eBay Could Rescue Bitcoin From the Feds

bitcoin, the world’s most popular digital currency, has a big problem. Just ask David Spitzer.
On August 20, Spitzer sold a Bitcoin on Mt. Gox, the world’s best-known Bitcoin exchange, and immediately tried to move the money to his U.S. bank account. Twenty-one days later, he’s still waiting for the cash to appear. “It’s taking an extraordinary amount of time,” he says.
Earlier this year, after the feds seized its U.S. bank accounts — and $5 million in cash — Mt. Gox temporarily suspended transfers to the U.S. At the time, the company said, it was halting transfers in order to pull off a technology upgrade, but as far as U.S. customers like Spitzer are concerned, it hasn’t been much of an upgrade. It’s seriously hampering their ability to use the Bitcoin system.
Like other Bitcoin exchanges, Mt. Gox is having a hard time with U.S. banks because there are big questions about whether it meets federal and state money transmission business regulations (the company did not respond to messages seeking comment). But there’s another operation that runs both a marketplace where Bitcoins are bought and sold and a fully compliant money-transmitting business that, observers say, could rescue Bitcoin from its biggest problem.
That company is eBay, and the money transmitter is its well-known subsidiary, PayPal.
“A licensed money transmitter who gets into the business of doing this is going to have a tremendous leg up on someone who is not a money transmitter because they have an accepted regulatory structure in place,” says Carol Van Cleef, a banking regulations expert and partner and with the Patton Boggs law firm in Washington, D.C.
The question is: Will eBay come to Bitcoin’s rescue? eBay doesn’t allow payments via Bitcoin, and the company does “not have any changes planned to our Accepted Payments Policy,” according to a note sent to WIRED last week by company spokeswoman Kari Ramirez. But you can still buy and sell Bitcoins on eBay’s marketplace and then pay for those transactions in dollars via PayPal — it’s a Bitcoin exchange by default — and eBay is showing some signs that it wants to do more with Bitcoin.
Last week, the company posted a Bitcoin explainer to one of its blogs, and it recently added a new “Virtual Currencies” section to its online marketplace, not too far down the page from “Hobo Nickels.” Hours after we asked eBay about it, the section was removed, and when we asked Ramirez to explain why, she said she’d look into it and then stopped answering our messages.
eBay recently removed this “Virtual Currencies” section from its website.
In April, eBay CEO John Donahoe said that the company was looking at ways to integrate Bitcoins into PayPal. “It’s a new disruptive technology, so, yeah, we’re looking at Bitcoin closely,” he told The Wall Street Journal. If eBay could figure out some way to become a working marketplace for Bitcoin, “they could dominate the space,” says Patrick Murck, legal counsel with the Bitcoin Foundation.
But there’s a problem, and it’s a big one: Bitcoin transactions are irreversible, but PayPal allows transactions to be reversed — something called a chargeback. That means that unscrupulous buyers could pick up a few Bitcoins on eBay and then claim that they were never delivered, initiating a chargeback that would leave the seller without Bitcoins or any money from PayPal. “You can get defrauded pretty easily selling Bitcoins on eBay,” says Murck.
That’s what happened to James Larisch when he tried to sell $225 worth of Bitcoins on eBay last month. Larisch was left holding the bag after buyers initiated chargebacks after taking his Bitcoins. “I don’t think it’s economically feasible for PayPal or eBay to announce their acceptance of digital currency like Bitcoin until they develop a way to facilitate transfers without risk of widespread fraud,” he says.
That may be a tall order for eBay, but on the other hand, if any company has the fraud-fighting experience to pull this off, they’re the one.
And there’s another good reason for eBay embrace Bitcoin. If someone solves David Spitzer’s problem, making it easy to move money between the Bitcoin world and U.S. bank accounts, PayPal could find itself up against a serious challenger. Embracing Bitcoin would be a “natural evolution” for PayPal, says the financial regulations lawyer Van Cleef. “Otherwise, they could very well find their business model outdated.”

lunes, 2 de septiembre de 2013

Open-source project links Bitcoin with publishers


Ankur Nandwani is a news junkie who keeps hitting paywalls. He would pay for content, but not for a subscription. But he found a virtual solition.
Ankur Nandwani
Ankur Nandwani
Nandwani, 27, merged his interest in news with Bitcoin, a virtual currency that many people think will change the future of payments. With co-founders Bo Li and Valerie Chao, he developed Bitmonet, an open-source tool that lets publishers accept micropayments in Bitcoin for news stories.
Bitmonet is just a side project for Nandwani, who has a day job as a senior software engineer in San Francisco. He started analyzing Bitcoin about six months ago and wanted to grow interest in the virtual currency.
"It's all about encouraging bitcoin adoption," Nandwani said. "I think in the early stages of the bitcoin ecosystem.....it's better to increase bitcoin adoption. We can think of making money later."
News publishers have struggled to strike the right balance between generating online revenue and not alienating readers—already bouncing from one free online news outlet to another—with pay walls. Many tease users with free stories and gently nudge them to paid subscriptions when they hit a limit.
But charging one-off fees for news stories is a hassle: users don't want to create an account and enter their credit card details for a single news story. It's easier just to move on.

Pay on the fly with Bitcoin

Bitmonet leverages Bitcoin's strength as a digital substitute for cash. In a demonstration on Bitmonet's website, clicking on a story brings up a pop-up window offering a news story for 10 cents, a one-hour pass for 15 cents or a day-long pass for 20 cents
The one-hour pass costs 0.0012 of a Bitcoin. Clicking the "Pay with Bitcoin" button launches Bitcoin wallet software on a person's computer. Web-based wallet software can be used by copying the payment address, Nandwani said.
The transaction is painless: users don't have to enter their financial details or create an account with the publisher.
bitmonet-1
Bitmonet is an open-source software tool that lets publishers accept micropayments for news stories or other content in the virtual currency Bitcoin.
bitmonet-2
Bitcoin's peer-to-peer network uses a system of computers called miners to cryptographically verify that a transaction is legitimate. Usually, a transaction needs to garner six "confirmations" before it is considered complete, which at times can take up to three hours.
But Nandwani said merchants can accept as low as one confirmation to let people read the story as soon as possible.
If users choose to buy time-based access to a site, they will have to remember to keep their cookies, which are information files retained by a web browser that are used by websites to remember certain user information.
It's a small sacrifice, but one to keep in mind since many people configure their browsers to delete their cookies for privacy reasons. Nandwani said "we are trying to maintain a balance between creating an account and keeping it frictionless."
Bitmonet is configured now to use BitPay as a payment processor, but it can use different ones. BitPay, based in Atlanta, specializes in processing transactions for merchants. BitPay converts Bitcoin revenue to cash and wires it daily to a merchant's bank account.
Nandwani said Bitmonet plans to add a WordPress plugin in the coming weeks for micropayments on that publishing platform. Other development plans include creating SDKs (software development kits) for Android and iOS that would allow Bitmonet to be used for other things, such as virtual goods, he said.