Thanks ATC, got it. Good luck with your future endeavours on this!
No prob, and thanks again!
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The problem doesn't come from accepting Bitcoin as a payment... of course when looked at in that light, Bitcoin is the safest of all: basically it's digital, password-protected cash and doesn't have your name or any personal info attached. The problems come when we need to exchange Bitcoin for other currencies, such as the US dollar. We can't exactly stuff cash in our computer and send it to someone. Of course, you can make wire transfers but that's not so convenient (many banks require you to appear in person). It sucks, but Paypal and credit cards are about the only instant online payment options for fiat currencies. And Bitcoin needs liquidity to grow and survive... people need to have easier access to Bitcoin and merchants need safe, instantaneous ways of accepting payment in fiat currencies -- especially when selling Bitcoins. This is going to require a lot of change...
Anyhow, I'm still working on my approach to Paypal about this. I drafted out a lot of what I wanted to say about all of this, but I'm struggling a bit with a good introduction to the whole thing. It needs to come off right, so that its importance comes across and catches their attention. But I still haven't figured out the best way to pitch this to them... I scratched something out earlier, and I'd like to have it subjected to peer-review and get some suggestions/corrections. It will lose its formatting when I post it here, but this is it:
Why should Paypal care about Bitcoin?
Bitcoin, created in 2009, is one of the world's first highly successful crypto-currencies to gain widespread support and a large community of passionate users. It's advantages as a medium of exchange and unit of account are many, but among its most important features are:
High level of anonymity -- protection of users' privacy
Secure, irreversible payments -- no risk of charge-backs
Decentralization
A powerful and stable p2p network
Ease of use
Instantaneous digital transactions, to/from anywhere in the world
As the Bitcoin community grows, the demand for accessibility and liquidity continues to rise. Though thousands of merchants now accept Bitcoin as payment for goods and services (and that number continues to grow) there is a growing need for safe and secure exchanges between Bitcoin and other currencies such as the US dollar or the Euro.
Paypal, the world-leader in digital payments and processing, finds itself in a unique position to capture a portion of this growing market which has already reached a capitalization of nearly $150M USD. However, the nature of Paypal's payment system and many of its out-dated and archaic policies have frightened many Bitcoin users away. Paypal has, to some extent, perceived Bitcoin as a potential threat to their position in the digital payments and payment processing market. But instead of seeing Bitcoin as a threat to its business model or attacking it, Paypal could benefit greatly from embracing this new technology and positioning itself in such a way as to encourage Bitcoin commerce and the growth thereof.
Unless fiat currencies like the US dollar were to completely disappear, there will always be a need to exchange Bitcoin for other currencies (and vice-versa). And in this "digital age" there will always be a need to make fast and safe online transactions. Needless to say, if Paypal were to update its system and policies to properly facilitate safe Bitcoin transactions amongst its users it would dually benefit from an immediate boost to earnings and rapid growth of its Bitcoin revenue base.
The problem with Paypal: Seller beware!
There are several problems with Paypal's system and policies which frighten the majority of Bitcoin users away from using Paypal's services, and Paypal should indeed view this as potential revenues forfeited. The most widely acknowledged problems include:
High levels of fraud and wide-spread abuse of Paypal
Lack of payment option based on secured deposits
Extremely high charge-back risks for merchants and traders
Excessively "buyer-friendly" policies
Little to no protection or support for Paypal merchants
Lack of proper collaboration with eBay to eliminate buyer scams
No proper policy in place to facilitate the trade of intangibles or "digital goods"
Due to the nature of Bitcoin transactions, sending Bitcoins to another person is irreversible -- there is no such thing as a charge-back in the Bitcoin world. It is like making a cash payment; you cannot "reverse" a cash transaction and take the money back (unless the other party agrees to give it to you). Likewise, you cannot take back the Bitcoin you sent to another party unless they agree to refund you.
In contrast, Paypal allows charge-backs or disputes on payments often up to 180 days from the time payment is made. The problem with this is that it puts a tremendous amount of risk into the equation for anyone who sells Bitcoins or any type of valuables for a Paypal payment. Because of this, there is now an infestation of charge-back scammers who buy Bitcoins or other valuable items with Paypal and then reverse the payment -- thus not only taking the item but also stealing the seller's money. It is the policies Paypal uses for charge-backs and disputes which facilitates this crime. Paypal often neglects to protect its merchants and leaves them liable for the charges, which can often be too much to bear and have ruined more than a few honest people's credit. Scammers are aware of Paypal's faulty approach to this problem and their eagerness to almost always come down on the buyer's side of a dispute. Some like to point the finger at Bitcoin itself, but this is an incorrect interpretation of things. Charge-back fraud can target anyone, but especially those selling valuable items which are easy to convert to cash (whether it's gold, a Rolex watch or Bitcoins); Bitcoin just happens to be popular and convenient and scammers know about Paypal's unwillingness to protect sellers or Bitcoin commerce.
Both eBay and Paypal have failed to adapt policies to suit a rapidly changing technological landscape. The trade of digital goods (e.g., software, digital media, eBooks) and now digital currencies is growing at an ever quickening rate. But eBay and Paypal implicitly assume that all transactions made through their systems are for physical goods which must be placed in a box and shipped. This has held back the trade of things like 3D models, software, independent movies and music and even Bitcoin. To make matters worse, Paypal does not extend any protective benefits to those who sell intangible or digital goods, creating yet another reason for not only Bitcoin users but software developers, artists, musicians and many others to avoid Paypal.
(NOTE :: Unfinished rough draft)
If anyone can make some suggestions or criticisms I definitely appreciate the effort!
--ATC--
