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Author Topic: opening a bitcoin exchange site in my country  (Read 631 times)
sandaq
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September 03, 2016, 09:54:01 PM
 #1

the site will accept two ways of payment, bank wire and credit cards. For bank wire I see no problem, as I will deliver the bitcoins once I see the funds in my account. As for credit cards the users will expect to get paid instantly. I understand that I will have to keep someof the coins online on a wallet which allowes withdraws over api or something alike. Is that the correct way to do the cc transactions?  I see 2 points of failure here. One is the site I use goes under and I lose my coins, second is my site gets hacked and coin access is avilable to the wallet site. What is the best way to secure this? What sites with good reputation provide this service?

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September 04, 2016, 01:39:55 PM
 #2

It's probably the right way to do. However, unless you have the required programming knowledge to make this work I wouldn't go for it personally .
Keep in mind that even big websites (Bitfinex is an example) with skilled security experts & cryptographers gets hacked so I'm not sure how different your website would be.
Another thing would be chargebacks , If you are going to deal with hundreds/thousands of users you should expect that few of them will chargeback (contacting their credit card issuers) and there is no way to get your BTC back.

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September 06, 2016, 07:30:46 AM
 #3

it is best to have security feature on your website because as mentioned above there are lot of hacking is happening recently on lot of online sites even bitcoin sites. as you will holding lot of users money keep very high secured methods ,programming features on your website.

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September 06, 2016, 02:47:45 PM
 #4

I recommend you to process both CC and bank wire transaction manually rather than taking risk of lossing bitcoin from your hot wallet. And as you seem not to have good knowledge about bitcoin/api, script, coding better stay with manual transaction. There are many case of stolen credit cards being used to buy bitcoin so you should also consider having KYC policy for CC buyers.

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September 06, 2016, 02:59:22 PM
 #5

few points:
- This is not an exchange like bitstamp. I might not been clear. It's a place where people can buy or sell coins from/to the site, not to each other. Users won't have funds on the site, but only my bitcoins will be on a 3rd party bitcoin-supplier-per-purchase site.
- Obviously im working with a lawyer to have proper working procedures to obey by state regulations. So KYC would be part of it, specialy for cc transactions, and aworking procedure will be written.
- I'm hiring a coder to do the site and he's well aware of the security implications.
- If I want to stay compatative I must make cc payment instant. I have no other option about this, or I'll lose customers.

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September 06, 2016, 03:08:37 PM
 #6

As i see you didn't give anything about selling btc to you, i think you are comfortable with that.

Doing something immediately in response to some action always has risks, try to keep minimal btc in hot wallet(which you can afford to loose)

.
Another thing would be charge backs , If you are going to deal with hundreds/thousands of users you should expect that few of them will chargeback (contacting their credit card issuers) and there is no way to get your BTC back.

There are many case of stolen credit cards being used to buy bitcoin so you should also consider having KYC policy for CC buyers.

The above risk exist even if you get kyc from customers, because you don't have enough time to verify those details before sending bitcoins.

Set a limit in buy and sell for individual users for the first time and allow higher transaction after the same user has successfully used your service for several times. (might reduce the risk of loosing more)


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September 06, 2016, 03:09:07 PM
 #7

I don't know what country you're from, but you should consider making it material, with a brick and mortar shop on a popular street. You couldn't make it viable by buying and selling BTC only, but you would help a lot the community by giving BTC a street presence.
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September 06, 2016, 03:31:41 PM
 #8

I don't know what country you're from, but you should consider making it material, with a brick and mortar shop on a popular street. You couldn't make it viable by buying and selling BTC only, but you would help a lot the community by giving BTC a street presence.

Bitcoin is an Internet money, having a street shop instead of an online shop kind of defeats it's purpose, IMO.

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September 06, 2016, 03:34:59 PM
 #9

Quote
Quote
There are many case of stolen credit cards being used to buy bitcoin so you should also consider having KYC policy for CC buyers.

The above risk exist even if you get kyc from customers, because you don't have enough time to verify those details before sending bitcoins.


Users will first have to verify their account, once they are verifiied they could use the cc, not before.

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September 06, 2016, 03:42:35 PM
 #10

few points:
- This is not an exchange like bitstamp. I might not been clear. It's a place where people can buy or sell coins from/to the site, not to each other. Users won't have funds on the site, but only my bitcoins will be on a 3rd party bitcoin-supplier-per-purchase site.
- Obviously im working with a lawyer to have proper working procedures to obey by state regulations. So KYC would be part of it, specialy for cc transactions, and aworking procedure will be written.
- I'm hiring a coder to do the site and he's well aware of the security implications.
- If I want to stay compatative I must make cc payment instant. I have no other option about this, or I'll lose customers.
The part where you mention KYC will probly turn off some of the potential clients as many users of Bitcoin would like to remain anonymous. I know there are exchange sites out there who are still up and standing regardless if theres KYC or non. There are Bitcoin users out there who are paranoid when they hear those 3 letters.
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September 06, 2016, 05:57:54 PM
 #11

The part where you mention KYC will probly turn off some of the potential clients as many users of Bitcoin would like to remain anonymous. I know there are exchange sites out there who are still up and standing regardless if theres KYC or non. There are Bitcoin users out there who are paranoid when they hear those 3 letters.

If bitcoin wants to be more mainsteam the users have to come out of the shadows specialy when using credit cards. I see no reasone to to unvail the anonymity of bitcoin to bitcoin users, this is practicly part of the protocol. However when using fiat to buy it, it needs to complay with some regulations.

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September 06, 2016, 11:35:32 PM
 #12

Which country is this going to be operating in?
Their might be laws that you have to follow so you don't run into troubles with the financial people in that particular country.
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September 07, 2016, 06:05:51 PM
 #13

I don't know what country you're from, but you should consider making it material, with a brick and mortar shop on a popular street. You couldn't make it viable by buying and selling BTC only, but you would help a lot the community by giving BTC a street presence.

Bitcoin is an Internet money, having a street shop instead of an online shop kind of defeats it's purpose, IMO.

Well, lots of people like me want BTC to move from being Internet only. That's why some install ATMs. Ultimately, I guess it depends on your country, and its people. How do someone buys BTC where you are? Any local players already?
sandaq
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September 07, 2016, 06:16:02 PM
 #14

I don't know what country you're from, but you should consider making it material, with a brick and mortar shop on a popular street. You couldn't make it viable by buying and selling BTC only, but you would help a lot the community by giving BTC a street presence.

Bitcoin is an Internet money, having a street shop instead of an online shop kind of defeats it's purpose, IMO.

Well, lots of people like me want BTC to move from being Internet only. That's why some install ATMs. Ultimately, I guess it depends on your country, and its people. How do someone buys BTC where you are? Any local players already?

Yeah, we have 2. bitsofgold.co.il which sells online but also have atm running and bit2c.co.il which runs an online exchange. Other then that we have few atms scattered around tel-aviv.

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September 07, 2016, 06:25:22 PM
 #15

it is best to have security feature on your website because as mentioned above there are lot of hacking is happening recently on lot of online sites even bitcoin sites. as you will holding lot of users money keep very high secured methods ,programming features on your website.
Yeah this is one of the good idea as of now.. just like other exchange site they can not prevent those hackers any time they can bring your site just like bitfinex..



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September 07, 2016, 08:33:44 PM
 #16

the site will accept two ways of payment, bank wire and credit cards. For bank wire I see no problem, as I will deliver the bitcoins once I see the funds in my account. As for credit cards the users will expect to get paid instantly. I understand that I will have to keep someof the coins online on a wallet which allowes withdraws over api or something alike. Is that the correct way to do the cc transactions?  I see 2 points of failure here. One is the site I use goes under and I lose my coins, second is my site gets hacked and coin access is avilable to the wallet site. What is the best way to secure this? What sites with good reputation provide this service?

Since you have only 1 coder which is responsible for the website and for the security this is not enough if you plan to expand and have lots of users, what I would like to know is how much is this costing to you with and without the developer part. I'm thinking to create one too but I know that there are lots of risks especially with creditcards and chargebacks.


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September 07, 2016, 08:45:30 PM
 #17

I found this company: https://www.simplex.com/
which seems to negate the effects of chargeback.

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