Coinbase Blog - Buy And Sell Bitcoin By Connecting Any U.S. Bank Account

[k]

http://blog.coinbase.com/post/34357253898/you-can-now-buy-and-sell-bitcoin-by-connecting-any-u-s

Hacker News discussion: http://news.ycombinator.com/item?id=4703443

Seems pretty good for US bitcoiners.

[kiba]

This is a bad idea. Coinbase is asking for your password when it want to access your bank account. Do not use!

[k]

Yes I see that now. Seems like a bad idea but there is a second verification method where they deposit 2 small amounts in your account and you send it back (I think that's how it works). 1st method (giving account access) is instant apparently, other method take a few days.
 

[paraipan]

Great initiative, but I think it will provide greater convenience for botnet operators, who supposedly already have the required info to confirm a bank account, with the gathered info from a victim's computer  

[franky1]

i have been speaking to a guy in the UK making a payment gateway. the problems found which bitinstant solve are chargebacks and anonymity.

the solution is things like moneygram.

the next gen version which bitinstant is developing and the guy in the UK is is also developing is prepayment cards. whch by paying at shops and post offices like moneygram does, reduces/avoids the chargeback risks and headaches.

where for instance bitinstant holds a prepaid card and gives out its 'refill' loading instructions, the money appears instantly they then do their behind the scenes stuff to give the user the bitcoin.

plus as part of that they give out prepaid cards to people wanting to withdraw and because its all dealt with direct with the same card issuer and direct payment. the fee's are better, money appears within minutes and avoidance of the banks oversight.

i think this way is much better then bank transfers that coin base talks about

[Stephen Gornick]

This is a bad idea. Coinbase is asking for your password when it want to access your bank account. Do not use!

There are two methods, the "instant" method requires that you provide username and password (and PIN, if needed) to your bank account.

The "deposit verification" method works the same way as  PayPal, Dwolla etc, all do ... they send a couple test deposits and you verify by telling them how much was in each deposit.

[kiba]

There are two methods, the "instant" method requires that you provide username and password (and PIN, if needed) to your bank account.

Guess what everyone is going to choose? The instant method.

[D.H.]

I'm confused (by the instant method).

 1. Are you really supposed to hand over your full banking credentials to a third party? What would your bank say about that?

 2. Don't banks in the US use two factor authentication?

[BlackHeartFund]

I'm confused (by the instant method).

 1. Are you really supposed to hand over your full banking credentials to a third party? What would your bank say about that?

I can't imagine why anyone would do this, or why any service would ask for it.

[MPOE-PR]

 1. Are you really supposed to hand over your full banking credentials to a third party? What would your bank say about that?

Asking for that seems a pretty good way to be tagged as "Internet scam". Suppose they manage to leak the password list somehow.

[kiba]

2. Don't banks in the US use two factor authentication?

Nonsense, an American bank probably don't even know what 2 factor authentication is.

[phantastisch]

 1. Are you really supposed to hand over your full banking credentials to a third party? What would your bank say about that?

Asking for that seems a pretty good way to be tagged as "Internet scam". Suppose they manage to leak the password list somehow.

In Germany there is a pretty popular payment gateway which asks for your banking credentials , you even login in your bank account through their site and make the purchase with your data. It is easy, fast and secure. I don't have any information about the coinbase process but if its similar and secured with ssl its no more risky than your normal online banking.

Quick edit : Most of you guys in the forum seem to have a poor sense of judgement regarding money related things. I feel often like you protect the wrong people and discredit the good guys. and i had no good experience with coinbase.

[paraipan]

 1. Are you really supposed to hand over your full banking credentials to a third party? What would your bank say about that?

Asking for that seems a pretty good way to be tagged as "Internet scam". Suppose they manage to leak the password list somehow.

In Germany there is a pretty popular payment gateway which asks for your banking credentials , you even login in your bank account through their site and make the purchase with your data. It is easy, fast and secure. I don't have any information about the coinbase process but if its similar and secured with ssl its no more risky than your normal online banking.

I wouldn't touch that gateway with a ten foot pole stick. Hearing all this, I feel a little more warm and fuzzy when thinking about bitcoin 

[D.H.]

In Germany there is a pretty popular payment gateway which asks for your banking credentials , you even login in your bank account through their site and make the purchase with your data. It is easy, fast and secure. I don't have any information about the coinbase process but if its similar and secured with ssl its no more risky than your normal online banking.

Are you sure that you are actually giving your credentials to the payment gateway? Paying using your online bank is common in Sweden too but you are redirected to a page hosted by your bank and then back, the payment provider never sees your credentials.

Quick edit : Most of you guys in the forum seem to have a poor sense of judgement regarding money related things. I feel often like you protect the wrong people and discredit the good guys. and i had no good experience with coinbase.

I'm not saying that Coinbase are "bad guys". It's just that it's common sense not to give your credentials to someone else and it's also what any serious company will tell you (including your bank I'm sure).

[justusranvier]

1. Are you really supposed to hand over your full banking credentials to a third party? What would your bank say about that?

It's actually not uncommon here. I never do it, but I've seen it before on non-scam sites.

[Stephen Gornick]

Are you sure that you are actually giving your credentials to the payment gateway?

No, Coinbase is asking for the username, password and ... whatever else is needed for them (or an automated agent) to login to your bank account (e.g., a Login PIN for some banks).

Again, that is only if you want the "instant" verification.  For the "Deposit verification" then that works the exact way that PayPal links a bank account, or Dwolla, etc.

What would your bank say about that?

They might say that was a violation of their terms of service, and if you ever lose funds because someone else logged in with your username and password you are out of luck:
 - http://www.timelessfinance.com/2012/02/16/is-mint-com-safe/

[D.H.]

Are you sure that you are actually giving your credentials to the payment gateway?

No, Coinbase is asking for the username, password and ... whatever else is needed for them (or an automated agent) to login to your bank account (e.g., a Login PIN for some banks).

In the part you quoted I was referring to the "popular payment gateway" in Germany that phantastisch mentioned.

[Stephen Gornick]

Suppose they manage to leak the password list somehow.

I'm reading their blog post further:

We felt we could do it securely.  For example we never store the bank credentials (username, password, etc) in our own database, and we take care to filter it from logs, etc.

And they are aware that consumers are sensitive to this:

We offer the second option, “Challenge Deposit Verification”, as a fallback if you aren’t comfortable with entering your bank credentials.  

But there was one statement I wasn't sure about:

It’s the default in the U.S. for services like Paypal so people are somewhat familiar with it.

So I started the PayPal sign-up process and see that it says:

After you create your PayPal Account, we'll ask you to link your bank account, debit card, or credit card. Then, you can start using PayPal right away.

So, I guess you learn something new every day.

[DeathAndTaxes]

For those freaking out about instant account verification ... PayPal has used it for over a decade now and Amazon payments does the same thing now.  The reality is that 99.9% (likely short one or two nines) of consumers have an attention span of about two minutes.  The verify by deposit and wait 3-5 business days results in profiles that are never completed.

It isn't some insane conspiracy.  If you want instant access you give up private info, if you don't you wait for the deposits to clear.  Both types of consumers win.   The major issue isn't verification it is chargebacks.  Dwolla got anhilated by charge-backs and they had both 8 figures in funding to absorb it and the ability to pawn those losses off on merchants (Tradehill, et al).  Coinbase has neither.  Will be interesting though.

[Stephen Gornick]

If you want instant access you give up private info,

So has anyone completed this process?  

I looked at it with one of my accounts, for a small credit union, and they didn't recognize the ABA number, so that now requires the Challenge Deposit method.   I won't use Instant for my other account, but I'm curious to know it others have finished the steps successfully and are just waiting on coins now?

I do see that the price is fantastic.  Like right now there was a little dip, and I would have been able to lock in coins at just 1% over Mt. Gox Last (which is what Coinbase appears to be using).  That's less than most methods for moving USD funds between exchanges (e..g, using Liberty Reserve, or a redeemable code and paying the fee).   So this service will likely come in handy for those doing arbitrage as well.