Why My Businesses Won't Be Using a Bitcoin PSP Like Coinbase

[butdabass]

“A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.” -Bitcoin Whitepaper
If you were to start working at a flea market, these days you can accept a lot of different kinds of payment. Suppose you don't trust any form of banking, though. In that case you can take cash, metals, trades, and Bitcoin. Unless, of course, you use something like Coinbase. Then you have to trust them. Bitcoin is, literally, meant to be a digital analog to cash. It's better than cash in that it's theoretically impossible to counterfeit it, something which can't be said about any “tangible” form of value transfer, such as a check or bank note.

Anyway, my point is that the protocol was built specifically to not need middlemen. This article is not meant to knock those who have incorporated Coinbase and Bitpay into their business models, but it is meant to remind the many small business owners out there of exactly how little you need such leech-tastic institutions. Honestly, what the hell? Coinbase facilitates payments for Bitcoin – what does that even mean? Oh, you have a smooth API that makes it “easy” to accept payments. Awesome. Unless I'm doing more than 10 transactions in Bitcoin per day, I can't see a need for anything more than a secure wallet.

And with my new business, and the one I'm going to fund via this business, I won't be using any such service. Even if every customer was to choose the Bitcoin option, there's no “checkout” with my kind of work. It's either cash up front or cash on delivery – invoice. I can generate a separate address for each invoice, same as Coinbase does, quite easily.

I've thought about this in a number of ways. As a consumer, I've always gone with Bitpay when it was an option, unless a direct option were available. It always bothered me that one of my favorite online stores, Overstock.com, which I've been shopping at sans Bitcoin since 2010, chose Coinbase. I wish they'd gone the route of offering both Bitpay and Coinbase. Bitpay works better, and I'd rather support them.

But now that I've finally decided to knuckle down and start the business of my dreams, I have no intention of utilizing the services of anymore “payment service providers” than I have to. Paypal is fine by me for processing credit cards. It's near-ubiquitous. As regards Bitcoin, I've got a wallet for that. And it's not an SPV wallet, as Gavin Bell Andresen would want you to believe. It's a full-fledged desktop wallet called Armory.

I grew up in the last days of an era when money wasn't “easy.” You took your paycheck to the bank, desposited it, and they stamped a little book that was your own personal record of transactions. Though it never happened, that record was my only insurance against fraud via the bank. The first bank I dealt with was called Citizens-Union Savings Bank in Fall River, MA.

Your money wasn't easy to earn, was harder to spend, and it would still take a lifetime to understand all the goings-on of the Federal Reserve.

Bitcoin has always made a lot more sense to me -- particularly the part about there only being an absolutely limited amount of it. I always think of these people's money when I think about value. Recent events have me losing faith in the project by degrees, but not in cryptocurrency as a whole. I attribute much of the strife in the “community” to competing special interests, idealistic despotism, ignorance, hyperbole, and, of course, “investors” – that is, people who's sole interest in Bitcoin is using it to make more fiat cash with which to pollute some other fresh new idea.

Woah, woah, but I digress. Point is, even when I get to the next level of my business plans, which is taking much of the proceeds from this one and funding it (nope, no VC money, thanks – seriously, you can't see how toxic that shit is?), and I have a product for sale, at that point I'd rather build out my own Bitcoin payment processing module in-house. It's not as hard as it sounds, if you read something like this developer guide.

Bitcoin is open source and open source means a lot more than free code for greedy coast-dwellers to pervert and promote. Open source means open ended, without any true authority except “does it work better than the alternatives?” Open source, for me, means community – a community of passionate people who will contribute to the things they use regardless of financial incentive. This is not to say that it's not great that people are able to make decent livings while working on open code. In fact, I think that's one of the greatest things going on right now. But to quote the Debian Social Contract:

“We will be guided by the needs of our users and the free software community. We will place their interests first in our priorities.”
Coinbase does not put the needs of the Bitcoin community first in its priorities. They have tracked user transactions two and three hops out of their wallet, punishing them for using LocalBitcoins which is, incidentally, a competitor for the "exchange" part of the whole thing. Cronyism much? Under no circumstances will I willingly support such practices. I may as well just have Bank of America process my Bitcoin transactions for me.

Thanks for reading.


P. H. Madore

[gogxmagog]

You betcha
Well said and it's been said before.
There's a giant industry growing around the basic fear people have of taking matters into their own hands. I say Stockholm Syndrome! The banking complex has trained most people to believe they absolutely cannot mange their own basic financial needs. And yes, btc is designed to work around the existing system giving everyone autonomy in the process.
Still, the masses hesitate. In time they will learn. A few more "crisis" and the balance will shift. And the shift will be for good.
That's when we will see a true leap towards the moon.

It amazes me when fairly deeply committed bitcoiners here come in and say stuff like "is there a button I can get to enable btc tips on my blog" and other users say "yeah, change tip" or "bit pay man" but not a single one says "just put your receiving address there"
And these are guys that have been here for YEARS

Too many opportunists trying to mimic the banks
Trying to be middle men
It's sad really

Good post OP
Good post!

[S4VV4S]

Indeed well said.
If only more people would realize that.
I guess to most people it takes a few re-reads of the whitepaper to actually understand it.

[Kprawn]

I could not have agreed with you more on this topic. We cannot ignore the value these guys have added in the marketting of Bitcoin  and the adoption rate they stimulated, but at what cost to the community?
 
We have given governments a tool to enforce their KYC/AML regulations and these centralized organization a method to exclude certain people from using their service. {Account Banning}
 
They also add fee's for this service, which effectively bring us closer to the margin where it's cheaper to use traditional methods than Bitcoin. It has also become clear that a group of VC investors are backing these

companies with uncertain agendas. Your adherance to specific rules or regulations, should not be a barrier between you and the use of crypto currencies.