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Author Topic: Noob question: Seems that getting currency to and from BTC is a total SCAM  (Read 1054 times)
SonofBits
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May 14, 2013, 01:41:12 AM
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OK just wanted to compare notes and get some insights without having to read the whole FOLDER here to find info.

I just invested about $105 US to learn the practical ropes of getting conventional currency ($US) into BTC.

I was NOT at all surprised to see the cascade of junk fees and hands-out for "me too" fees and all the BTC exchange-rate gouging; not to mention the lost time value of money delay to there. Life is mortal and finite - time IS worth something - more to some than others.

My problem right now is I can't even get a live person at BitInstant.com on the phone to complain to about a TERRIBLE $-to-BTC exchange rate at about 5% ABOVE the going rate at the time of the transaction. And to make it worse - BitInstant boasts of fast service (30 mins from receipt of cash) but it was closer to an hour to see a transaction on the bitchain websites that after 4 hrs WAS STILL NOT VERIFIED. WTF with that?  Huh

Here's the route I went:
24 HR ATM Withdrawal from checking account to Cash --> BitInstant.com order cash-to-BTC @ BTC Wallet-Address -> Zip-Zap Money Gram (via CVS Pharma Redphone Moneygram order), Pay CVS CASH (get receipt) ->Mail notice of transaction given to exchange.

Here are the fees I had to pay: $3.95 ZipZap Fee (3.95%); BitInstant Fee: $3.99 (3.99%); BTC sent:  0.8055036 (HIDDEN FEE(!)** $5.18 or 4.34% on exploiting bogus exchange rate at time of transaction). That's a total of $13.12 or 12.6% in FEES (exclusive of MY time and gasoline to run through the mechanics) in a process that still forfeit ALL my anonymity by forcing me to give names, address, phone etc. to "make it so".

Hidden Fee** : Going exchange rate at the time of transaction was about $114 per BTC; Realized BTC rate was $119.18 (A spread of $5.18(!). What is THAT all about - the traditional broker's house practice of making their vig from the volatility present between the bid and ask prices on the  BTC Exchange??)

Questions & Comments:
1) Is this the typical cost to get into BTC from $US? If so that's a HIGH price to pay for therapy from currency-paranoia for a digital currency who's price volatility seems programmed to give the money-changers every opportunity to gouge their vig from the gap between bid and ask currency exchange rates. Rather than mining BTC, one could make a LOT more money writing BTC options against that volatility to profit by it if there was simple arbitrage using digitally signed contracts between makers and buyers on the BTC exchange. Miners could dump their rigs and make an EASY 15% (DAILY!) surfing the volatility anytime it rises as options traders or as specialist making the markets. That would HELP moderate BTC price fluctuations and stabilize it. Right now the volatility is so high it could be used as a new white-noise source for a random number generator to hash against; assuming that is NOT the noise of the random seeds themselves.  Grin

2) Is there a better way to go about getting better cost efficiencies to get into BTC from currency? And if so is there really a way to (legally) maintain anonymity short of mining your own BTC or bartering for goods and services with BTC as a quasi contract-currency online?

This made me think a bit which segues into more of a separate topic.

From this exercise I already tend to think BTC is ill-suited to take on the traditional currencies and will only make itself a target for legislation if it gets to become a threat. It's better off to shift BTC monetary semantics AWAY from traditional currencies to prevent it becoming "Just Another" currency for the money-changers to make their vig on going from one to another. This exercise I just did seems to make it look like "just another currency" that certain people can exploit for no real value added. Unless the risk-reward of going to BTC is MUCH better than traditional currency there's no real motive here other than holding a bit of doomsdayish insurance that one hopes never needs to be called on.

So, I'd encourage a shift to a principal notion of BTC "value" in it's ability to seal contracts/agreements and less on a notion of currency and mere earnest for agreements. Sell the concept of BTC on its superior mobility, limited finite supply, speed of transmission, and as a robust transactional substitute or BACKUP (the "Peoples" currency) to the national currencies. BTC's utility should really shine (both for governments and citizens) during times of political and natural calamity (e.g. wars, coups, economic SNAFUs and natural disasters) since all these other traditional currencies are entangled within the web of bureaucracy and political agreements and secret handshake deals. Governments can't be so stupid to imagine they are infallible. The more rational ones should welcome an alternative to themselves (and own incompetency) to work off-the-books from time to time and not suffer the fallout and sanctions from their cabal of partner governments who have no way of knowing what options are being used. No one should have a monopoly on risk-mitigation - not even governments. BTC exchanges can actually improve economic efficiencies to tap the hidden capacity hiding in the "paranoid" niches of national economies as well as mitigate the inherent risks of governments that come-and-go by the irrational spurious impulses in the elections and popular-uprisings or just the regular mistakes of governments when they often shoot themselves in their own wallets (or worse) but can't tell anyone without risking a run on the banks. This shift in value semantic would make BTC less a threat to the powers that be since it does not immediately compete with governments and the established stakeholders who prop them up (merchants and banks). In fact it gives THEM more options to mitigate their own risk to self through packaged derivatives. That's win-win for everyone.

So, rather than let BTC become just another currency with the traditional linkage to fiat monetary currencies let it rather become the currency of contracts and promises. It really is the perfect means to irrefutably publicly transmit (for record) the EVENT of promises for delivery of goods, services and conditional terms between any parties (in one-to-many or one-to-one modes of communication). Changing the linkage in the exchanges of BTC AWAY FROM national currencies toward linkage to a semantic of "promises" or "contracts" would possibly exempt it (at least till "they" closed that legal loop) from any concern of money laundering or passing new regulation that seeks to quash anonymity (which I believe only operates to inject economic inefficiencies and removes opportunities for commerce - since contracts are formed before any commerce is possible). After-all - NO ONE is required to register every handshake contract made between Alice & Bob at the county courthouse any more so than an agreement to buy lunch at the local diner. For all we know bitcoins were the currency-of-convenience that put the current occupant of the White House in the White House.  Shocked

Anyway - would appreciate answers to questions and comments. I just think BTC will never gain their full potential if it is pushed into just another alt-currency that plays into the same old money-changer non-value added parasitic pattern of usage. Going more abstract into the higher hierarchy of "value" would make a better and more rational market off the current paranoia and arbitrage than just pumping up currency fears that incites everyone to flee right into the jaws of the money-changers only to realize their worst fears sooner than they might have to otherwise.

Who's knows what might happen if we push BTC higher up into the Maslow Hearchy - we're essentially constructing a large Tera-Flop digital neural-network here with semi-human-in-the-loop assist that just might hash itself into digital self-awareness.  Tongue

I can see where that might lead given that all the hashing libraries were developed by the US government....

Dave Bowman: Open the wallet Hal.
HAL: I'm sorry, Dave. I'm afraid I can't do that.
Dave Bowman: What's the problem?
HAL: I think you know what the problem is just as well as I do.
Dave Bowman: What are you talking about, HAL?
HAL: This mission is too important for me to allow you to jeopardize it.

 Lips sealed

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May 14, 2013, 01:47:00 AM
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u dun goof'd

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May 14, 2013, 01:47:39 AM
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You can avoid all that by using https://localbitcoins.com, simple, face to face, low or no fee.

Our family was terrorized by Homeland Security.  Read all about it here:  http://www.jmwagner.com/ and http://www.burtw.com/  Any donations to help us recover from the $300,000 in legal fees and forced donations to the Federal Asset Forfeiture slush fund are greatly appreciated!
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May 14, 2013, 01:50:27 AM
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Yeah I use LocalBitcoins and all i get is pleasant people everytime  Tongue

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May 14, 2013, 02:04:31 AM
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Obviously your US based; this is a cheap method that I use going the online route:

Setup free MtGox and Dwolla accounts:

ACH from your bank account to Dwolla (free), transfer from Dwolla to MtGox ($0.25) , buy BTC at spot price (0.06% fee)

Total Fees:  .25 cents + .06% of total bitcoin

SonofBits
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May 14, 2013, 02:06:42 AM
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You can avoid all that by using https://localbitcoins.com, simple, face to face, low or no fee.

Thanks  - good info.

But I can see that these private sells want even to charge a higher exchange rate - which I presume is the premium they add for anonymity.

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SonofBits
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May 14, 2013, 02:14:34 AM
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Obviously your US based; this is a cheap method that I use going the online route:

Setup free MtGox and Dwolla accounts:

ACH from your bank account to Dwolla (free), transfer from Dwolla to MtGox ($0.25) , buy BTC at spot price (0.06% fee)

Total Fees:  .25 cents + .06% of total bitcoin

This sounds pretty good. Is MtGox a foreign or US based company and does it conform itself to US banking laws when on the US side of the exchange? Isn't Dwolla US based also? To get from US to anything else I think requires giving up a lot of personal info. That kind of undermines the anonymous benefit Bitcoins.

It looks to me like the big banking cabal is quashing bitcoins and at best inviting them in to play as just another subordinate currency propping up the US dollar...

http://online.wsj.com/article/SB10001424127887324373204578374611351125202.html

BTC Donations here: 1TipMEpH5MiNchaZ2KEn6PAcJhvtuscp1
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May 14, 2013, 08:46:14 AM
 #8

You can avoid all that by using https://localbitcoins.com, simple, face to face, low or no fee.

Thanks  - good info.

But I can see that these private sells want even to charge a higher exchange rate - which I presume is the premium they add for anonymity.

I have never bought or sold at the listed price.  In a face to face transaction we just meet at a coffee shop, agree on a price at that time and do the transaction.  No personal info.  Just cash for BTC.  I have however met a lot of very nice people.

Our family was terrorized by Homeland Security.  Read all about it here:  http://www.jmwagner.com/ and http://www.burtw.com/  Any donations to help us recover from the $300,000 in legal fees and forced donations to the Federal Asset Forfeiture slush fund are greatly appreciated!
SonofBits
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May 14, 2013, 07:52:01 PM
 #9

You can avoid all that by using https://localbitcoins.com, simple, face to face, low or no fee.

Thanks  - good info.

But I can see that these private sells want even to charge a higher exchange rate - which I presume is the premium they add for anonymity.

I have never bought or sold at the listed price.  In a face to face transaction we just meet at a coffee shop, agree on a price at that time and do the transaction.  No personal info.  Just cash for BTC.  I have however met a lot of very nice people.

Thanks - learning the culture is important. This is great info. Thanks.

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May 15, 2013, 01:34:35 AM
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meeting face to face seems like a pain, however I guess if you were doing it only once a month for lump sums then it's not so bad. If you met in a coffee shop do you literally just take a laptop and send them the coins while they're watching?
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May 15, 2013, 02:28:00 AM
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Obviously your US based; this is a cheap method that I use going the online route:

Setup free MtGox and Dwolla accounts:

ACH from your bank account to Dwolla (free), transfer from Dwolla to MtGox ($0.25) , buy BTC at spot price (0.06% fee)

Total Fees:  .25 cents + .06% of total bitcoin

This sounds pretty good. Is MtGox a foreign or US based company and does it conform itself to US banking laws when on the US side of the exchange? Isn't Dwolla US based also? To get from US to anything else I think requires giving up a lot of personal info. That kind of undermines the anonymous benefit Bitcoins.

It looks to me like the big banking cabal is quashing bitcoins and at best inviting them in to play as just another subordinate currency propping up the US dollar...

http://online.wsj.com/article/SB10001424127887324373204578374611351125202.html

Well, most people are worried about getting bitcoins to cash anonymously (if said bitcoins were earned by illegal methods).  But regardless, if you want to make sure 100% you don't get scammed when trying to buy/sell bitcoins, you're probably going to have to give up some personal information to legit companies or else you just have to do this stuff in person as others have suggested.

PS. My method no longer works; damn US government just froze MtGox's dwolla account.  /sigh

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May 15, 2013, 06:23:25 AM
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Obviously your US based; this is a cheap method that I use going the online route:

Setup free MtGox and Dwolla accounts:

ACH from your bank account to Dwolla (free), transfer from Dwolla to MtGox ($0.25) , buy BTC at spot price (0.06% fee)

Total Fees:  .25 cents + .06% of total bitcoin

This sounds pretty good. Is MtGox a foreign or US based company and does it conform itself to US banking laws when on the US side of the exchange? Isn't Dwolla US based also? To get from US to anything else I think requires giving up a lot of personal info. That kind of undermines the anonymous benefit Bitcoins.

It looks to me like the big banking cabal is quashing bitcoins and at best inviting them in to play as just another subordinate currency propping up the US dollar...

http://online.wsj.com/article/SB10001424127887324373204578374611351125202.html

Well, most people are worried about getting bitcoins to cash anonymously (if said bitcoins were earned by illegal methods).  But regardless, if you want to make sure 100% you don't get scammed when trying to buy/sell bitcoins, you're probably going to have to give up some personal information to legit companies or else you just have to do this stuff in person as others have suggested.

PS. My method no longer works; damn US government just froze MtGox's dwolla account.  /sigh

Probably the motive and the source of the Denial of Service attacks at MtGox. Now that they have submitted they will swarm someone else into compliance.

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May 15, 2013, 01:33:17 PM
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you had dwolla until yesterday, well i guess good thing you didnt.

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May 16, 2013, 01:40:10 AM
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meeting face to face seems like a pain, however I guess if you were doing it only once a month for lump sums then it's not so bad. If you met in a coffee shop do you literally just take a laptop and send them the coins while they're watching?
Yep, that is exactly how I do it.  Only I use my phone, not a laptop.  When selling I:

Make sure they have the cash with them, count it etc.
Read their QR code with my phone from their phone or laptop
Send the BTC to them
Chat have a tea or coffee while we wait a few minutes
When the BTC arrive in their wallet I pick up the cash and put in in my pocket
We shake hands and part, I may or may not get their first name - not important


Our family was terrorized by Homeland Security.  Read all about it here:  http://www.jmwagner.com/ and http://www.burtw.com/  Any donations to help us recover from the $300,000 in legal fees and forced donations to the Federal Asset Forfeiture slush fund are greatly appreciated!
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May 16, 2013, 04:26:41 AM
 #15

meeting face to face seems like a pain, however I guess if you were doing it only once a month for lump sums then it's not so bad. If you met in a coffee shop do you literally just take a laptop and send them the coins while they're watching?
Yep, that is exactly how I do it.  Only I use my phone, not a laptop.  When selling I:

Make sure they have the cash with them, count it etc.
Read their QR code with my phone from their phone or laptop
Send the BTC to them
Chat have a tea or coffee while we wait a few minutes
When the BTC arrive in their wallet I pick up the cash and put in in my pocket
We shake hands and part, I may or may not get their first name - not important



Who traditionally pays for the earnest of tea and crumpets during the transmit and verify period? Or is it customary to share closing costs?  Tongue

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