Bitcoin Forum

Apologies if this has been already discussed to death...

The problem

Lets consider a newcomer wannabe-btc-consumer. They come across an awesome product/service which is sold in BTC only, so they think to themselves `great! let me get $20 worth of bitcoin so I can get me this hella-cool product`.

A quick google search for `getting bitcoin` soon leads to disappointment...

• "You mean it is practically impossible to buy bitcoin with a credit card nor paypal?"
• "You want me to go to my bank and wire over some money to some random bank account number I found on the internets??"
• "Aah I can use Dwolla, brilliant .... oh no wait, I do not live in the US! damn."

Consumer is quickly put off and finds similar almost-as-cool product elsewhere and pays with paypal/cc card.

We need a frictionless way for consumers to get hold of small amounts of bitcoin so that they can buy products/services.

Since we know that paypal/cc cards are not gonna happen for this, lets make it easier to have cash based transactions by encouraging in person trades.

I see that btcnearme had a similar objective, but it does seem a little dead!
 
https://bitcointalk.org/index.php?topic=54522.0

Rough proposal

• Create a centralised service with web front end
  
  • Allow consumer to find BTC traders in their region
  • Allows traders to advertise their services for particular region, along with their exchange rate etc
  • Trades are booked online, BTC goes into escrow
  • Trader and consumer perform cash transaction in meatspace, BTC is released by trader from escrow

    This would probably be enough for a simple service, but the consumer may want to get a `receipt` from the trader to prove the fact that the cash transaction took place...

• Mobile application for performing real life offline cash transaction
  
  • Mobile app allows trader to create a digital receipt and give it to the buyer to show that cash received
  • Mobile app allows consumer to verify digital receipt is valid
• Mobile application could also serve as wallet, using some existing open source code/online wallet service

    This digital receipt could be the key that allows the BTC in escrow to be released.

Today's consumers become traders of tomorrow

• Easily allow people to set up shop as trader in their neighbourhood

Monetizing strategy

• Take small percentage of transaction for escrow fee

Possible Safeguards

• Centralised escrow service does not have private keys to do any btc transaction. Escrow is released by trader's key/receipt
• Trades with small quantities of cash to mitigate risk of being robbed!
• Reputation system for traders/consumers
• Could offer some dispute resolution service, but then again we are just doing small transactions, reputation might be enough
• Entering keys only happens using signed open source applications - e.g. applet on website, signed android app etc
  
  • To help mitigate against bad code getting private keys of users in the case of server compromise

Create a guide "how I became a millionaire by trading bitcoins to cash and backwards".

These cash exchange sites already exist, they just suck. When there isn't a good business model, you get crappy sites.

However one business could be: create optimal tools for running a cash exchange, and then sell the software to invidual cash exchangers.

In my opinion this - or something similar - would be an essential service.
I have just checked the possibilities again (in Eastern Europe) to get BTC for fiat.
They are horroristicly time consuming and expensive.

There IS an opportunity here. (Sadly, I truly lack the expertise to solve the problem.)

I would be willing to set up a cash exchange in Eastern Europe region if such service would become available!

Good Idea!

There are couple of websites where you can advertise: https://en.bitcoin.it/wiki/Trade#Local.2FIn-Hand_Exchanges

It doesn't require that special setup.

Aaah tradebitcoin.com is pretty much the service I am after, it seems like there are fair few members as well, the other related sites on the wiki are all but dead.

However they dont make it simple to join - what is the `google apps domain` it wants? why cant I just put my username and password in!?

This is one of those things that isn't easily solvable, primarily because advertising that you do money exchange (even if not at a profit) means you probably should also be registered as a money service business. [Update: In most jurisdictions.]

Hawala Network - Orange County, CA / Las Vegas, NV / Laurel, MD
 - http://bitcointalk.org/index.php?topic=82502.0

I was reading about how those doing infrequent exchange (up to 5 times per year) below the AML threshholds ($1K per day) and not at a profit are excluded from this requirement.  I would like to find out specifically where in the regulations this exclusion is described.
 - http://mcgladrey.com/pdf/review_florida_bankers_aml_conference.pdf

Depends heavily in which country you reside. I suspect that in most african countries you could just do it, and nobody would care much (unless you started moving larger sums).

Guess it depends on whether bitcoin is officially classed as a currency, not sure it is yet ... buying and selling 20bucks worth of 1s and 0s here and there is probably fine!

Even if a state wanted to prevent/regulate such activity, I am not sure how they could do it

sounds like a good idea