I find the project really interesting, and I'd be glad to invest time and/or money on it. Thanks for the exhaustive list of questions of Ben Walsh and its answers. I would like to add just a few more

I've seen that in your previous project you used Zen-Cart. I wonder what infrastructure and procedures you have in mind to keep customers' and merchants' money in a secure way.

If I may ask... how? Fraud prevention is a very sensitive subject and there are very complex, proprietary algorithms to detect it: do you work directly on them or do you have outsourced it?

The competitors are not only in the Bitcoin community, but in people/companies that provide a similar service an can easily switch to Bitcoin. If Amazon decided to offer Bitcoin payments as a BETA, wouldn't it be a competitor? Anyway, I don't think it will happen in a near future.
But what do you think of:

http://forbitcoin.com?
http://www.bitcoinharbor.com/
http://www.bitcoinworldmarket.com/default.aspx
http://www.bitcoinz.ca/shop/
http://cheaperinbitcoins.com/

Or (these could add Bitcoin support at any moment)

http://www.buysell.com
http://www.nlbuysell.com/
http://www.buyandsell.ie/
http://www.sell.com/


I have seen that sometimes you write in singular and sometimes in plural (I/We). From your posts I guess that at the moment you are the only person directly involved in the project (of course with many services outsourced). That makes highly relevant your background, which leads me to the question. What are you studying? Analytical, hard sciences, like computer science or mathematics? Something more business-oriented, like economics or management? Something artistic that gives you a new insight of the market, like fine art? (an artist and at the same time a hacker, really interesting profile!), or something completely unrelated but which leaves you enough free time to focalize on the project?

Anyway, how have you reached a current valuation of 10,000 BTC for BZ ? And how much will you be investing on your poject?


I've googled your name but it is too common. Are you from the US?

And just a last question:
A merchant comes to your site and posts his item in your Bazaar for, let's say, 10 BTC. Then you post a similar item (actually exactly the same) in eBay and you sell it for... 10 BTC * 5 EUR/BTC = 50 EUR (you take advantage of the great community of clients at eBay). Once it's sold, you take the money, convert it again to BTC and give them to the user. Wouldn't it be a way to bootstrap this business, at least in the firsts steps?


Again, I find it a really interesting project which could set a landmark. It's now the time to accomplish great things for Bitcoin! ;-)

Thanks for your comments!

Indeed, much easier. Now the backend deals with 00, +, +00 and any other combination (and of course with the current format). Thanks for the advice!  


Good point. While I wait for the new Bitcoins to arrive I'm going to start a HowTo, in order to explain how the fact of being in the "Hall of Fame" implies that the Bitcoins have been sent.

In the meanwhile I encourage you to make your first purchases in order to increase your day-limit. At this moment here is how the purchase limit is increased (I did not make it public in the webpage since it might be adjusted depending on its effectivity to prevent fraud):
nº purchases // Max Bitcoins per 24 hours
1 // 0.1 BTC
2 // 1 BTC
4 // 1.5 BTC
6 // 2.0 BTC
8 // 3.0 BTC
10 // 5.0 BTC
>10 // 10 BTC

One of the advantages of selling BTC with Paypal is that the user does not need to trust the seller. If things go wrong, he can request a chargeback and have his money back. Anyway, if you have any problem with the delivery of Bitcoins (for example, an exceptional delay that makes you feel unconfortable) please contact me (to my email or publicly in this forum) before complaining to Paypal. It will be solved much faster and I prefer not to bother Paypal with honest chargebacks.

I am also working on the reverse service (i.e. sending a Paypal donation to whoever sends BTC to a particular address), but I am having a hard time trying to automate the entire process, and in addition it will require trust on the side of the user. This service would allow spending BTC wherever Paypal is accepted, and will encourage newcomers to use Bitcoin. If you are interested in such a service tell me and I'll work harder on it  

I've explicitly set the language to English in the "Buy now" button, so from now on all the process should be in English.

Thanks for using the service!

If you are interested in getting instant BTC with credit card you might be interested in the thread I open in the newsbies section
https://bitcointalk.org/index.php?topic=38873.0

Thanks for your purchases so far!
I've added some coins to the balance (I expect many more before the end of the week), and the limits are increased faster with each purchase. In order to avoid problems with Paypal you will see that the expression "Buy BTC" is omitted. Instead of that, the user pays to enter the "Hall of Fame", where the Bitcoin will be shown with a link to the transaction (Blockexplorer). This is just a measure to defend agains fraudulent chargebacks.


Thanks for the advice! Since it's true that Bitcoins transitions are not instantaneous, the user should (in normal situations) be able to see the transaction with 0 confirmations some seconds after the purchase. After talking to my server's tech support I realized that it was an exceptional case and in the unlikely case that it happened again I'd prefer the user to contact me directly (and then I will absolutely change of server ^^).

Don't worry for that, it just sends one SMS. On the second click it will say "Your PIN has already been sent"

I changed the language in my Paypal account, and now in the tests the whole process seems to be in English. Tell me if the language keeps changing.

5 hours??! Wow, thanks for your patience, really    When I receive the payment notification I often check if the balance has decreased, and it has. Sometimes it takes a while for the receiver to see its balance increased (it happens to me when I move money between wallets). But still, 5 hours... it must have been an exceptional case...

Correct, but anyway if you tried to ask for a new PIN you'll see the message "Your PIN has already been sent. Use the same of your last purchase. If you did not receive it, please contact me".

Thanks for your commentaries!

The second version is now ready. I invite you to continue testing  http://btc.donotcompare.com
This time, once you have the PIN sent, it will be the same for future purchases.
Since the backend is mostly the same as the previous version, now prices are closer to the market (still a bit lower).

For those who have already bought coins, can you tell me if the Paypal interface was all the time in English?


I don't think Paypal has explicity forbidden the sell of Bitcoin. They forbid the currency exchange, and whether Bitcoin is a currency is still subject of debate. I am aware of the actions against Coinpal and I am being as cautious as possible in order to avoid the same fate. This is why I implemented my own system of identification and I set limits on the purchases.

Thaks for the article, it's very interesting. But I hope it won't get that bad to need that:
That is the opposite of what I am trying to do, be as transparent as possible.

When it founds a number it says from which country it thinks it is. Make sure that the country listed is correct. If not, put the county code without the '00' and without '+'

Not at all. That would be a hell with data privacy strict regulations. I'll just tell Paypal to send the item to the address of the user's Paypal profile, and thus I won't even see it. I'm going to start with it tomorrow morning. If it is not possible I'll find a workaround, but I don't consider handling private data, at least in a near future.

I understand your point, but well, there are very strict regulations concerning the storage and use of personal data (database encrypted and the people who has access to the key must be identified, a in-depth terms of service explaining what I will do with that, provide a way to access, modify and rectify your data, etc.). Of course, if in a future it is required to decrease the scam ratio, it may be a solution, but at this stage of the process I prefer not to deal with sensitive data.

When I have the new BETA version I'll upload it with another coin (or a little more). It should be matter of days.

That happens when it cannot retrieve the balance from the wallet, but it seems to be working fine here. Try Ctrl+F5 to reconnect with the server.
There are 0.3445 BTC available at the moment

In some cases it takes some time to arrive. Please make sure that the number you wrote is properly detected at http://www.donotcompare.com/btc/existsNumber.php


The identification by phone is to identify unique users. When a scammer makes a chargeback, it more effective to block his access by his phone number (he might have several phones, but a limited number after all) rather than by his bitcoin address (which can -and should- vary with each purchase), or even his IP.
When I pass from the BETA state to the production mode, phone numbers will be encrypted with a secret key.


In order to better fit the policy of Paypal and to avoid a fraud rate too high I am implementing an automated deliver of a physical good to the user's Paypal address. Which object to choose is not obvious, since I has to comply with the following:
  - It has to be cheap, in order to avoid increasing the price too much
  - It can be sent cheapily worldwide
  - It can only be delivered in case I have sent the Bitcoins
  - The user doesn't need it to cash his coins (i.e. the transaction will still be instantaneous)
  - It has to prove that the coins were sent, even to a person with no knowledge of Bitcoin and no mathematical background.
  - If a scammer uses the system he would not want that object to be delivered to the real owner's address.
  - The user has no way to forge the object, and to say that what he received was not what he expected.

Many criteria but I think I got it. I will also avoid sending the PIN at each purchase. It is expensive for me and a source of troubles for users.

In matter of days I expect to have the BETA2 ready. Thanks again for your support!

At this moment I am negotiating with Paypal and Moneybookers the conditions. I expect to reach a conclusion soon and start in production mode. These will be the features:

 - An initial limit higher than 10 cBTC (slightly higher)
 - Faster limit increase with purchases
 - Prices slightly higher than market
 - More coins to sell
 - Daily limit on PINs sent (so please make sure you write your number correctly).

And of course a better layout ^_^

Thanks for your testing and I invite you to keep using the BETA!

The server is online again. The PIN you received is still valid. In case you didn't receive it or you want to ask for a different one, please write me a PM with the SHA1 of you mobile phone http://www.tools4noobs.com/online_php_functions/sha1 and I will provide you with the PIN (or allow you to ask for a different one).


Although when you click "Get PIN" you should see a message saying "PIN sent" or "Invalid number", maybe your browser has javascript blocked, and thus you see nothing. In that case, and to be sure you number is accepted by the SMS Gateway, visit this link http://www.donotcompare.com/btc/existsNumber.php

In some cases the SMS takes more time than usual. Once the server is up again I'll provide you a link to let you check if the SMS gateway does not understand the format, does not support the country or it's just slow delivering SMS's.
The server appears to be down. I'm handling that right now with the technical support. Once the server is up again your PIN will still be valid.

Anyway, for those who the SMS arrived and made the payment, the coins have been sent.

Thanks for your patience



I see that you have thought about the main problems. Good luck! But just one more thing. Imagine the following scenario:

The Paypal fraud responsible receives an chargeback request from a buyer who claims that the seller sent him a physical bitcoin, but when he opened it and tried to recover the funds, it was empty (or there were less than half the advertised funds). On the other hand, the seller claims that the card was unmodified and that the buyer is trying to scam him. How could the person in charge of fraud prevention at Paypal find out who is right?

Are you talking about Bitbills (bitbills.com)?
I have been thinking about it before starting this project, but I finally decided not to do so for several reasons (I write as if I were a potential buyer):
  - If I bought a bitcoin and I have to wait until it arrives, I can also go to the bank and make a wire transfer. It can even be faster.

  - Once you have the physical coin, it's not easy to make it digital again (sure there are tutorials, but it is far more complicated that a common electronic transfer).

  - The buyer can still say that the bitcoin was fake, and you have no way to prove it is not true.

  - In case you are not talking about bitbills, nothing prevents the buyer to keep a copy of the private key (in case of bitbill they claim that the card becomes useless after the private key has been read. Well, it's a matter of trust).

Those are the drawbacks I have found before starting such a business. I'm almost sure you have thought about them and many others, but just in case it could help you to find solutions!


I really appreciate your enthusiasm and I share your idea, but at this stage of the project I cannot allocate money to the layout. With 'not a priority' I meant during the BETA stage, before it start to generate money (if it does). Anyway, times passes fast in this world and if it succeeds, after some days running, layout will be the first thing I will tackle.



Hmm, interesting, in the DB says it has been sent. Did you write your number in the international format, without 00 and without the +? Anyway, I'm sending your PIN by private message in order to to allow you finish the purchase. Oh, by the way, can you tell me if your SMS finally arrives? Thanks!

I guess I gave too much information in the main post and the core aspects were not remarked enough. During the BETA stage, while the backend is being tested (the integration with Paypal and the SMS gateway, the database, etc.) I am offering Bitcoins below their market price. This is to stimulate potential buyers and to make them more understanding with potential issues or delays.

This measure had a side effect I hadn't foreseen; people will think that it's too good to be true, and since they cannot explain where is my business model. My business model is, once the infrastucture has proven to be solid, go to production mode, and then sell Bitcoins at a higher pricer. But for now I consider it as another expense, like the server or the SMS gateway. (see that there are less than 1 BTC to sell).

This service had existed for some time, for example http://www.btcnow.net or http://1209k.com/bitcoin, and it was precisely because they were not working (they have sold all their Bitcoins and are waiting to check the fraud rate) that I've decided to implement my own, and automatizing it as much as possible. In addition, I am doing it as transparent as possible, in order to protect agains fraudulent chargebacks.


Sure the layout is important, but again, I think users will accept simpler designs and an efficient service (of course they would love an efficient service with a lovely design ;-) but for the moment this is not a priority). Paypal should give the user the confidence that "satisfied or you money back".

Thanks for your answers!


for the buyer Paypal is the safest option. They can give a try, since the chargeback option is always possible.


it's just during the BETA. In this way you will be more understanding in case of delay. As I said, consider this as a 'premium' for testing the service


Good point. Even though this is only to protect the database in case it's compromised, I am implementing encryption of the hash. Anyway, after the number is hashed, encrypted and clearly stated in the main page that it will not be used, consider that nobody is interested in a bunch of numbers with no other personal information. It is as useful as generating random phone numbers. Anyway, I am going to encrypt the hash.

EDIT: I've added some coins to the balance (I expect many more before the end of the week), and the limits are increased faster with each purchase. In order to avoid problems with Paypal you will see that the expression "Buy BTC" is omitted. Instead of that, the user pays to enter the "Hall of Fame", where the Bitcoin will be shown with a link to the transaction (Blockexplorer). This is just a measure to defend agains fraudulent chargebacks.

---- Now the original post ;-)

I have finished my electronic Bitcoin store, which accepts payments through Paypal. In order to keep away scammers and stay in business I have implemented some security measures to avoid fraud. I believe that succeeding in distributing Bitcoins through Paypal will enormously help to spread this e-currency, and thus the battle against scammers is worth waging*.

What Bitcoin Faucet do is admirable (they give something for nothing!), but naturally now it's mostly dried up (it gave me 0.02 BTC last week, and one cannot do much with such a small amount and transaction fees). My service is mainly (but not exclusively) for people who, like me, wanted to check how Bitcoin works but do not feel very confortable with wire transfers, specially for amounts of $10.

I have tested it in the Paypal sandbox and it seems to work fine. But I could not test it with actual Paypal since I cannot purchase anything being sold with the same account. It should work, but it is not 100% sure (the worst it can happen is an error message BEFORE the payment). So, I kindly ask you to be the testers of this service. As a compensation, the prices are noticeably lower than the market prices. I am losing money with each transfer, so if you decide to test it, please give me some feedback ;-)

All the procedure should be completely automated, anyway, I will stay alert to the database and my email, if some of you have problems.

I would really appreciate your feedback in some aspects:

   1) About your answer to the hypothetical question: "If I were a scammer, how could I bypass these security measures"?
   2) Your view on the limit of BTC per user per day (the limit increases with the number of purchases).
   3) Of course, if you had any problems.
      

So I invite you to try the service at http://www.donotcompare.com and make purchases ;-)


E.


*I don't think we should blame Paypal for being afraid of scammers, I'm sure I would do the same if I were in their place. Their business is to handle payments, not to close successful stores. Of course, if they feel risk, they go out (after all it's our business, not theirs). My approach is to be to be as transparent as possible, explaining the user what is he paying for and what he acknowledge to accept as proof of delivery. In addition, in the paypal transaction will be written the address of destination.


P.S.:If you want to make a donation, please do it to this address 1F2xS8PuygQjjy3gSCy3ikSgfsZNQp5QeY (the balance will be automatically updated in some minutes).
The reason why I do not put $1 = 1 BTC is to (a) avoid running out of coins too fast and (b) to paid somehow the server and the SMS gateway. At this stage I am no earning money with the service. Not during the BETA stage and not, of course, with your donations.

I've been lurking these forums since I've heard about Bitcoins and now it's time to start participating.
I would like to introduce me with an application I made these last days. It is a jackpot-style game where the odds of winning depend on the bet size, and it's the user who chooses the type of play he wants. For example:

If the jackpot is 1 BTC and the user bets 1 BTC --> chances of winning ~50% (double or nothing)
If the jackpot is 1 BTC and the user bets 0.01 BTC --> chances of winning ~1% (like a lottery)

If you stand the 'gorgeous' ^^ design I invite you to make some free plays at
http://jackpot.donotcompare.com

All feedback will be appreciated!

S.