I see people doing exchanges using MoneyPaks.
What exactly is a MoneyPak?
You probably see a lot more failed attempts of people
trying to do exchange using MoneyPak.
The problem is no commercial service can accept MoneyPak as payment for the purchase of bitcoins. Green Dot doesn't want that happening. They only allow you using the MoneyPak codes with authorized merchants or for loading funds to your own debit card. So the only ones where trading MoneyPak for bitcoins is happening is with individuals who accept MoneyPak for payment when selling bitcoins person-to-person and are small enough to operate below Green Dot's radar. The person that accepts MoneyPak then uses it to load a PayPal account to to add funds to a reloadable debit card.
Cashing out your bitcoins to MoneyPak is not a problem, and there are a couple of commercial services which offer this:
-
http://www.BTCPak.com -
http://www.FastCash4Bitcoins.com [Update: Discontinued cash-out to MoneyPak]
While you will see individuals offering this as well, you would only want to trade with someone with an established trust history. The reason is that a MoneyPak is a bearer instrument -- anyone that knows the code can spend it. There are a few ways these MoneyPak codes can end up in the hands of theives and criminal hackers who then trade them with you. After a trade you might see the funds loaded to your account but then later they get reversed after the rightful owner reports the theft. To regain access to the funds, you need to provide to Green Dot a copy of the receipt used to purchase the MoneyPak, using cash. Even with that, if there is someone else with the same receipt reporting the theft, you would lose the dispute as you weren't the party that bought the MoneyPak from the store.
Essentially, MoneyPak is a decent method for cashing out bitcoins if you can trust the party who is providing the code to you. They are almost never a good way for you to buy bitcoins either -- again, unless the seller can be trusted or sends the bitcoins to you first, and the transaction confirms.
To know if a counterpary is trustworthy, the #bitcoin-otc Web of Trust (WoT) will show trust history of the trader. If you are trading your bitcoins for someone else's MoneyPak, that is something you only want to do after reviewing that history and even then proceed with caution.
-
http://en.bitcoin.it/wiki/MoneyPak
