Bitcoin Forum

The reason PayPal are embracing bitcoin is because they are currently unable to serve the market of digital asset vendors.
http://en.wikipedia.org/wiki/Chargeback#Reason_codes

Check out this "Quality" reason code. It essentially allows blatant theft of digital products. Take this scenario:
1. I buy a digital asset from you (some Photoshop design files) for $100
2. I claim the files are of poor quality and open a Paypal dispute
3. Paypal sides with you and stating digital assets cannot be returned, the dispute is closed in your favour
4. I escalate the dispute to my credit card company
5. The CC company says "Did you return the product?"
6. I say "hurr durr Yes... I sent it (the files) back" (Digital assets cannot be returned)
7. The CC company approves the chargeback and forcibly takes the money from Paypal
8. Paypal says "So sorry, it's the banks not us" and takes your money
9. Now I have my $100 and your Photoshop files.
10. Enter bitcoin

Paypal loves bitcoin because they hate CC companies, not necessarily because they think it's cool.

Sorry, but I'm missing something here. I'm confused at how bitcoin is a solution for Paypal and digital goods? How does bitcoin solve this problem?

What happens if the files are actually of poor quality?

It eliminates steps 4 through 9 in the Original Post of this thread?

It's your responsibility to verify the quality before making the purchase. There are heaps of ways to do this without taking possession of the files.

I disagree.  I think Paypal HATES Bitcoin.  I think they are only starting to accept it because as the old saying goes "if you can't beat em, join em."  A bunch of smart business men got into a room, and thought..."what would happen if people start to adopt Bitcoin, and realize that they can send money for goods without using our service and paying a 3% fee?" 

Paypal smartly decided to hedge their bets.  If they didn't adopt Bitcoin, and Bitcoin really took off...especially amongst younger people, more likely to sell things online, Paypal could crumble and disappear in a very short amount of time.

They did a smart thing by accepting Bitcoin.

like what?

watermarks are the best way. or only send half of the files/pictures (lower half blanked)

or one could show the buyer other projects that you have worked on and the buyer can now make his or her own judgement on whether to hire you for the job or not

You ask for a return from a seller, good reputation for a seller and a buyer is important to be able to trade.

After all the trouble paypal has had, Lol.

Finally accepting it, Why couldn't they see this in the first place.

That's so true. Considering more and more stuff is going digital, Paypal are simply taking an obvious step in the right direction.

Totally agree - but I can't shake the following:
If you accept btc, then you probably know a bit about it already. Why then even use paypal? I've seen the old: Num_Paypay_Users > Num_Btc_Users; therefore, bigger base of potential customers.
Still though - buyers/sellers of purely digital goods - if there was any group that I'd expect to be able to get bitcoins, it would be this one...

I agree, paypal is pointless if you are using bitocoin.

Paypal largest risk is chargebacks on credit card funding against PayPal as the merchant. Then on top of this they have to pay the credit card companies fees which could easily approach over 50% what they collect in fees from the merchants. Ever wonder why PayPal deliberately makes it as awkward as possible to fund your account when making a payment using a credit card rather than using a bank account? Bitcoin eliminates both of the above risks and can actually allow PayPal to position itself as a consumer friendly add on to Bitcoin that protects against fraudulent merchants.

yeah PayPal loves bitcoin and guess what? Bitcoin price after PayPal announcement is the worst since very long time. What is going on?

Paypal stands to gain NOTHING by supporting bitcoin.
What are they going to do with bitcoin?
Provide a feedback system for bitcoin trades?

What part of the OP didn't you understand? Paypal gains by not being caught up in questionable chargebacks with bitcoin.

Bitcoin in general is a SELLER FRIENDLY payment system while Paypal has traditionally been BUYER FRIENDLY.  One of the main advantages of Bitcoin is to replace outmoded legacy payment systems like Paypal and credit card. No wonder Paypal is embracing it; either that, or they will eventually be completely eclipsed by Bitcoin.

My take is that Paypal understood that Bitcoins were what Peter Thiel and Elon Musk were originally envisioning for Paypal, and they know that in the future they won't be able to compete against it.
Besides that, only with a descentralized technology they will be able to achieve their new vision: http://www.telegraph.co.uk/technology/news/10146108/PayPal-Galactic-launches-to-plan-space-payments.html

Can you clarify, since when is "Paypal embracing bitcoin"?
As of now, they are tolerant of bitcoin at best.

Bitcoin has no means of security to the buyer, because it lacks anti-fraud chargebacks.
Therefore bitcoin will always be limited and never capable of eclipsing paypal.

It is true BTC is seller friendly, and PP is buyer friendly.
With PP at least you have a means to debate and prove a case.
With BTC you have no recourse even if you have evidence to support a dispute.

BTC is great for it's no charge backs, and apparently untraceable nature, but that attracts bad people and makes it dangerous for sellers.

I think it has nothing to do with the decline in the price of bitcoin.
 :-\

I also think so. That is just a coincidence.

If the exces and bigwigs at Paypal are smart they'll see the potential and threat in bitcoin and realise its best to try work with it than against it. If bitcoin doesn't make certain money transmitters like Paypal and Western Union etc obsolete it'll be something like it. At least bitcoin will likely force them to change their ways or at least lower fees.

I don't think Paypal loves bitcoin. I don't think Paypal necessarily hates CC companies.  I think it is all about the bottom line. There are no chargebacks with bitcoin.  I suspect Paypal is threatened by bitcoin in the long term, but immediate profits are more important.  This should be seen as a positive for bitcoin, since it highlights the function, security and usefulness of bitcoin.

Here's a slightly different take on it I haven't seen on here, so will toss it in the ring.

I think it's D) None of the above.

I think it's more a case of PayPal "legitimizing" bitcoin and then stabbing it in the back. PayPal is major, like Western Union, but more "hip" than WU...but both of them adopting bitcoin, or accepting/exchanging it will be more aligned with turning around and pushing for legislation to regulate the shit out of it to the point PayPal has it in a stronghold. Govs will listen to paypal/ebay before they listen to coinbase or bitpay.

If they adopt it, it will go mainstream quickly...and that's when PayPal will have enormous leverage to get government regulation as its bitch and if it pushes, it could get bitcoin regulated to illegal status so "only criminals use bitcoin" and PP wins by eliminating the competition.

https://bitcointalk.org/index.php?topic=666770.0

I get it. Paypal hates that credit card companies, by law, have to give consumers rights that PayPal doesn't. Bitcoin makes it easier for Paypal to screw you.

Why does anyone need paypal for anything in a bitcoin transaction?  Feedback?  Transaction history logs?  Why would anyone agree to pay paypal a fee when bitcoin is involved?

I don't think that PP hates credit card companies. In the past CC have helped PP reach the market share that they have and have allowed PP customers to spend their money more quickly then if they had used an ACH bank transfer. PP also has very easily been able to pass along the CC fees to their merchants.

Also from what I can see, PP actually gives more consumer protections then a CC company will as PP will (somewhat) often "freeze" the account of a merchant suspected of fraud while CC companies can only attempt to take their money back after a fraud has been reported

Maybe paypal is thinking that with bticoin they are going to act as an escrow so to speak. Buyer pays Paypal, buyer receives product, buyer confirms product is in working order, Paypal releases funds to seller. This would be the first large scale escrow company and Paypal would be justifying their existance and their right to skim a couple percent off the purchase. Without Paypal doing the escrow, it would leave them vulnerable to customers simply skipping them completely as they have no value to add. For Paypal to succeed with bitcoin they need to make it the first and biggest way to pay with bitcoin on ebay before any other company accomplishes that task. Once it is the new norm, people will use paypal only for bitcoin transactions and nothing else.

So paypal just transfer the rick of charge back to bitcoin users? I agree this is a good reason why PP start accept bitcoin.

Sounds good and everything. Honest people will use Bitcoin. Dishonest people will content to use credit cards and follow steps 1 through 10.
Unless paypal is planning to stop accepting credit card payments for digital goods (which I'd say is about as likely as a snowball's chance in hell), then they haven't really improved their position at all. What they have done, though is reduced the fees they'll pay to the credit card companies.

Honest buyers will use Bitcoin, not necessarily sellers. For instance, you can sell a fake digital product with Bitcoin (various ways I'm sure you know, outside of just not delivering the product), scam the buyer and the buyer is SOL.
This already used to happen with Liberty Reserve before they were shutdown.

I use Paypal as it acts like an escrow service. It protects both parties.

A buyer can at least open a dispute with paypal. In case the seller depends on paypal for future sales, he might not take a "To Hell with you" stand.
In case the buyer purchases the digital product directly using bitcoin, he is on his own.

This would be the only reason for a merchant to adopt paypal. An official wordwide rechonized scroll so you don't get scammed in your ebay business. Hopefully ridiculous fees are not on their intentions otherwise it will fail.

I'm convinced PayPal HATES bitcoin. However I think the real issue is they fear that Apple Pay is going to do some serious damage to them so they have to explore how to stay in the competition.

Paypal deals with money. BTC is a kind of money. Why should Paypal hate BTC?

Paypal is neutral with Bitcoin. If Paypal can get enought fees from Bitcoin to compensate any trouble/work to add Bitcoin to Paypal system, why not... Paypal just want some revenue from fees, Paypal does not care if Bitcoin fails or replace fiat or just stay as is now.

No, not this at all and I'll explain why. You have the option to pay with a PayPal balance. This can't be charged back either. By your logic allowing people to send a PayPal balance is just as good as Bitcoin. If I'm a scammer I'm not going to use Bitcoin but I'm going to use a credit card. Therefore PayPal has gained absolutely nothing. Maybe one day they'll shoot themselves in the foot and decide against credit cards altogether and go exclusively Bitcoin. Until that day they have not received the benefit you are describing.