DWOLLA vs Paypal vs Bitcoin

[Matthew N. Wright]

I'm far from the delusional cultist that is somewhat of a norm on these forums as I can clearly see Bitcoin both succeeding and failing at the same time and appreciate (not fear) any and all healthy competitors and innovations in the payments industry brought on by Bitcoin's initial first steps.

That said, I couldn't help but snidely snicker and snort when looking at this DWOLLA spam sent to me this morning and thinking of what that infographic would look like if there were a third column, "Bitcoin". Since I'm looking up currency laws in the UK, any one else want to waste some time on photoshopping this bitch?

http://lemon.ly/work/a-tale-of-two-payment-startups-dwolla-vs-paypal

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[Matthew N. Wright]

I'll start the ball rolling with the actual text (plus some more of my own) of the infographic in a table format as well as the bitcoin column (which I want to fill out with the help of people here).

____________________________	DWOLLA________	PAYPAL________	BITCOIN________
Founded	2010	1998	2009
Cost to move a million $	< $10 = free; > $10 = $0.25	2.9% + $0.30	Free ~ $0.13
Scope of availability	USA only	190 countries (CC)	Intergallactic
Mass pay	2,000	250	Infinate
Mobile	Free app	CC Device + App with fees	Free app
Transaction limits	$5,000 (Personal) $10,000 (Business) $99,000,000 (Special case)	$10,000	$2,801,000,000* (21,000,000 @ $133.40) *This assumes liquidity available
Key Similarities	Mobile & Web Apps Guest Checkout support Send Money via the Internet Innovative API	Mobile & Web Apps Guest Checkout support Send Money via the Internet Innovative API	Mobile & Web Apps Guest Checkout support (BitPay) Send Money via the Internet Innovative API
Bigger Picture	Centralized	Federated (Centralized)	Decentralized
Regulated by	Strict US Law	Many countries' laws (strict)	Developers and free market
Backed by	US Dollar + Company assets / insurance	Multiple currencies + Company assets / insurance	Available liquidity of the free market
Donations	No restrictions (yet)	Heavily restricted	Unrestricted
Vulnerability to Force Majeure	High	Medium/High	Usage: None Liquidating: Medium
Micropayment Usability	Perfect	To/From Personal: Perfect To/From Business: Atrocious	Great (May have immense network delays if sent for free)
Ease of Daily Use	Not bad	Not bad	Perfect
Learning Curve	Not bad	Not bad	Anti-user friendly
Transactions Reversible	by Management	by Users	by Developers and free market
Transparency	Involved Parties only	Involved Parties only	Public

[acceptance2]

If someone is up to the task, how about another graphic comparing a bank transfer TT, Western Union and of course Bitcoin.

TT - WU - BTC

My personal belief is that the big kahuna for the growth of Bitcoin is the payments transfer industry.

[LiteCoinGuy]

"Intergallactic"    great!

[SamS]

If someone is up to the task, how about another graphic comparing a bank transfer TT, Western Union and of course Bitcoin.

TT - WU - BTC

My personal belief is that the big kahuna for the growth of Bitcoin is the payments transfer industry.

Here are some debatable responses:

1. Scaling: I think you could also argue that (global) micro-transactions have a real chance of being the market of choice to start. There are no competitors and the low transaction fees are Bitcoin's competitive advantage against the existing players. Of course, Bitcoin has to be able to scale to manage micro-transactions and that's where I see the main problem there -- maybe so much so that it's not even viable. Can any technically sophisticated members chime in on this issue --problems/solutions? A solution here would also address the issue of monetizing online "micro-content."

2. Bitcoin/Fiat Interface: The payment transfer industry is competitive and highly regulated. The main bottleneck that I see here is the how the bitcoin/Fiat interface resolves. To move volume, some major players are going to have to want to play -- not some itty bitty VC investments in tech development. It's probably the area where the most money is likely to be made (imo) as we're back into the exchange rate business (bid x ask spread). It's also going to be the major point of regulation.

[Its About Sharing]

First, really nice job on the breakdown.

Interesting that BTC has nothing to really compare itself to. We are comparing it to payment forms using specific currencies. Where as BTC is it's own currency, which leads me to my point:

BTC as it's own currency throughout the world is going to impact potentially all currencies as it becomes both a store of value AND easily convertible. It is in another class of
currencies - a decentralized and Stateless entity that is DEFLATIONARY. Wow, imagine that. Something that doesn't get inflated out of value. Go down that rabbit hole with some deep thinking and you will come up with some interesting possibilities (to put it mildly). This alone has got to make banks watch their backs regarding the current 0% interest experiment.

I really think the convertibility is going to catch the world by surprise. Imagine people in 3rd world countries, countries with currency problems, etc. who can
just easily keep track of BTC's value in their own land. The dollar is currently the worlds currency, but has some limitations (e.g. - See Argentina banning it's use) and so BTC can easily be
used around any walls on an Android phone (until Apple takes it's bank out of it's...). It will take a bit more time and some more infrastructure but that really looks like it is on the way.

It's about sharing

[Blueberry408]

"Intergallactic"    great!

only on IPv6.

Bitcoinnet adoption of ipv6 is unclear...

[SamS]

First, really nice job on the breakdown.

Interesting that BTC has nothing to really compare itself to. We are comparing it to payment forms using specific currencies. Where as BTC is it's own currency, which leads me to my point:

BTC as it's own currency throughout the world is going to impact potentially all currencies as it becomes both a store of value AND easily convertible. It is in another class of
currencies - a decentralized and Stateless entity that is DEFLATIONARY. Wow, imagine that. Something that doesn't get inflated out of value. Go down that rabbit hole with some deep thinking and you will come up with some interesting possibilities (to put it mildly). This alone has got to make banks watch their backs regarding the current 0% interest experiment.

I really think the convertibility is going to catch the world by surprise. Imagine people in 3rd world countries, countries with currency problems, etc. who can
just easily keep track of BTC's value in their own land. The dollar is currently the worlds currency, but has some limitations (e.g. - See Argentina banning it's use) and so BTC can easily be
used around any walls on an Android phone (until Apple takes it's bank out of it's...). It will take a bit more time and some more infrastructure but that really looks like it is on the way.

It's about sharing

The convertibility issue (Crypto/Fiat interface) is the unresolved issue that I see. What kind of functional market mechanism do you anticipate people using convert their Crypto to Fiat to make use of their funds "in-country?"

[Its About Sharing]

First, really nice job on the breakdown.

Interesting that BTC has nothing to really compare itself to. We are comparing it to payment forms using specific currencies. Where as BTC is it's own currency, which leads me to my point:

BTC as it's own currency throughout the world is going to impact potentially all currencies as it becomes both a store of value AND easily convertible. It is in another class of
currencies - a decentralized and Stateless entity that is DEFLATIONARY. Wow, imagine that. Something that doesn't get inflated out of value. Go down that rabbit hole with some deep thinking and you will come up with some interesting possibilities (to put it mildly). This alone has got to make banks watch their backs regarding the current 0% interest experiment.

I really think the convertibility is going to catch the world by surprise. Imagine people in 3rd world countries, countries with currency problems, etc. who can
just easily keep track of BTC's value in their own land. The dollar is currently the worlds currency, but has some limitations (e.g. - See Argentina banning it's use) and so BTC can easily be
used around any walls on an Android phone (until Apple takes it's bank out of it's...). It will take a bit more time and some more infrastructure but that really looks like it is on the way.

It's about sharing

The convertibility issue (Crypto/Fiat interface) is the unresolved issue that I see. What kind of functional market mechanism do you anticipate people using convert their Crypto to Fiat to make use of their funds "in-country?"

Perhaps I am ignorant but I think it is quite simple. Until stability is reached in BTC, they are going to have to have something in the way of an app on their android cell that converts their currency into BTC. I just see the solution being smart phone based for customers and store keepers alike (though the latter can of course use something larger if possible - but maybe a phone is enough? After all, we are talking 3rd world and countries with currency issues.) Just scanning QR codes as a means of exchange. Going from BTC back to their own currency, I guess that would have to be online, except for those people who wish to have some cash (for whatever reason) and then they can act as exchangers. I really see the local markets finding their own way, but it is in a sense already there. Due to the deflationary aspect it seems that most people would benefit from having BTC and not local currencies, at least once some stability is reached.

Is this what you meant? The mechanism is just some smart phones and apps.

[SamS]

First, really nice job on the breakdown.

Interesting that BTC has nothing to really compare itself to. We are comparing it to payment forms using specific currencies. Where as BTC is it's own currency, which leads me to my point:

BTC as it's own currency throughout the world is going to impact potentially all currencies as it becomes both a store of value AND easily convertible. It is in another class of
currencies - a decentralized and Stateless entity that is DEFLATIONARY. Wow, imagine that. Something that doesn't get inflated out of value. Go down that rabbit hole with some deep thinking and you will come up with some interesting possibilities (to put it mildly). This alone has got to make banks watch their backs regarding the current 0% interest experiment.

I really think the convertibility is going to catch the world by surprise. Imagine people in 3rd world countries, countries with currency problems, etc. who can
just easily keep track of BTC's value in their own land. The dollar is currently the worlds currency, but has some limitations (e.g. - See Argentina banning it's use) and so BTC can easily be
used around any walls on an Android phone (until Apple takes it's bank out of it's...). It will take a bit more time and some more infrastructure but that really looks like it is on the way.

It's about sharing

The convertibility issue (Crypto/Fiat interface) is the unresolved issue that I see. What kind of functional market mechanism do you anticipate people using convert their Crypto to Fiat to make use of their funds "in-country?"

Perhaps I am ignorant but I think it is quite simple. Until stability is reached in BTC, they are going to have to have something in the way of an app on their android cell that converts their currency into BTC. I just see the solution being smart phone based for customers and store keepers alike (though the latter can of course use something larger if possible - but maybe a phone is enough? After all, we are talking 3rd world and countries with currency issues.) Just scanning QR codes as a means of exchange. Going from BTC back to their own currency, I guess that would have to be online, except for those people who wish to have some cash (for whatever reason) and then they can act as exchangers. I really see the local markets finding their own way, but it is in a sense already there. Due to the deflationary aspect it seems that most people would benefit from having BTC and not local currencies, at least once some stability is reached.

Is this what you meant? The mechanism is just some smart phones and apps.

Not really. You are proposing a technology for a transfer but you are not answering the basic questions about how the Fiat side of an exchange plays out. In your example (third world hyper inflationary economies):

A. Commercial Issues
1. Who will "buy" the local currency for Bitcoin knowing that it is rapidly depreciating?
2. Won't everyone want Bitcoin except for their immediate day to day needs -- for which they can use their paychecks or business cash flow?
3. How will they get bitcoin if no one wants to trade for the local currency at scale?
4. In essence, isn't this going to be a one-sided market?

B. Regulatory Issues:
1. Wouldn't you expect the Government of said country to place immediate restrictions on the use of bitcoins as they don't control it -- the same way they do on USD transactions?
2. Won't  that choke off the flow of funds as well?
3. At the grass roots level, can't they can basically arrest merchants for having the "app" on their machines, randomly check phones, etc... this is third world after all?
4. Do you view the Mt. Gox/Dwolla shutdown as a paperwork oversight or a shot across the bow?
5. Isn't the need to obtain money transmitter approvals state by state enough to stop bitcoin exchangers temporarily while more permanent regulations are promulgated?

These are just off the top of my head, and I am certain that I am missing many more important economic issues surrounding the Crypto/Fiat interface. But it's a start. In the absence of significant market share, I still don't understand how Crypto really gets off the ground for Mom and Pop and those wanting to do regulated business.

[TippingPoint]

The graphic comparison method is good.

Just make sure to do comparisons that accentuate the advantages of Bitcoin, and eliminate those that do not.  Otherwise it becomes a table or a spreadsheet.

• Irreversible
• Anonymous
• Move money internationally
• Not subject to inflation
• Extremely low transaction cost

[Matthew N. Wright]

The graphic comparison method is good.

Just make sure to do comparisons that accentuate the advantages of Bitcoin, and eliminate those that do not.  Otherwise it becomes a table or a spreadsheet.

• Irreversible
• Anonymous
• Move money internationally
• Not subject to inflation
• Extremely low transaction cost

It sounds like you want me to make it lean to sound like bitcoin is better (which it isn't in some cases). Regardless, I'd agree to include more points in the list of course.

[TippingPoint]

It sounds like you want me to make it lean to sound like bitcoin is better (which it isn't in some cases). Regardless, I'd agree to include more points in the list of course.

Just offering some suggestions.  Whatever works.  Nothing succeeds like success.  If we cannot make the case for Bitcoins, who can?  

In my opinion, the relative immunity to confiscation, taxation, and inflation may ultimately outweigh all the others.  Those are the real threats to wealth.

[Matthew N. Wright]

If we cannot make the case for Bitcoins, who can?

Common sense? I'm not trying to make the case for bitcoin, I'm trying to compare DWOLLA/Paypal/Bitcoin.

Those are the real threats to wealth.

You had proposed a few more lines for the table, which was great, then you made it a fanboy rant with this last comment (who gives a shit about threatening wealth? we're comparing money services), so I'd like to outline some sensical discussion guidelines for this thread:

• how bitcoin is different from DWOLLA/Paypal
• what parts of this list need corrections
• additional points to add to the table

Please leave the fanboy/cultism at the door on this one.

Thanks

[jdbtracker]

So... why not just buy your BTC from Virtex, the canadian exchange, they are in good standing with the banks, quick exchange in and out, no need to connect to mtgox, just got to exchange your USD to CAD.

[TippingPoint]

If we cannot make the case for Bitcoins, who can?

Common sense? I'm not trying to make the case for bitcoin, I'm trying to compare DWOLLA/Paypal/Bitcoin.

Those are the real threats to wealth.

You had proposed a few more lines for the table, which was great, then you made it a fanboy rant with this last comment (who gives a shit about threatening wealth? we're comparing money services), so I'd like to outline some sensical discussion guidelines for this thread:

• how bitcoin is different from DWOLLA/Paypal
• what parts of this list need corrections
• additional points to add to the table

Please leave the fanboy/cultism at the door on this one.

Thanks

Interesting perspective.

I do not consider it to be a fanboy rant.  I consider it to be recognizing the most significant advantages, rather than just treating all attributes as equally significant.

u mad?

[tvbcof]

I find Bitcoin great for making charitable donations.

I generally prefer PayPal and VISA for buying things of any significant value, and am happy to pay a premium for their services of discriminating scammers/flakes and making me whole if I meet one.  The cost and hassle of obtaining BTC and keeping them secure usually outweighs the PayPal fee anyway to my way of thinking.

I think that Dwolla are filthy scum for their business practices vis-a-vis Tradehill and I would not use them if they paid me money to do so.  Not to mention that they seemed to have mooched off the taxpayers of Iowa to get going, and may still be for all I know.

[Matthew N. Wright]

I consider it to be recognizing the most significant advantages, rather than just treating all attributes as equally significant.

Please read the title. "DWOLLA vs Paypal vs Bitcoin". It is simple enough to list characteristics for each (which is what is being done here). We don't need to list "why bitcoin is the best". Bitcoin is not the best for many, many people in many, many situations. If you'd like to add something to the table to *compare*, please list those things and I'd be ecstatic to add them. FYI, "it will crush governments", "you can avoid paying legal taxes", etc are political opinions not clear benefits.

I find Bitcoin great for making charitable donations.

BOOM! There's a good criteria to add. "Ease of donations".

[TippingPoint]

OK

You have a vision of what you want it to be. 

Best wishes.

[Matthew N. Wright]

You have a vision of what you want it to be. focused purpose to this thread and would like honest, unbiased, level-headed comparisons of DWOLLA, Paypal and Bitcoin in the form of specific criteria, free from any cultism, anti-political propaganda, etc.

FTFY.