I'm selling through PayPal!

[ghgr]

EDIT: I've added some coins to the balance (I expect many more before the end of the week), and the limits are increased faster with each purchase. In order to avoid problems with Paypal you will see that the expression "Buy BTC" is omitted. Instead of that, the user pays to enter the "Hall of Fame", where the Bitcoin will be shown with a link to the transaction (Blockexplorer). This is just a measure to defend agains fraudulent chargebacks.

---- Now the original post ;-)

I have finished my electronic Bitcoin store, which accepts payments through Paypal. In order to keep away scammers and stay in business I have implemented some security measures to avoid fraud. I believe that succeeding in distributing Bitcoins through Paypal will enormously help to spread this e-currency, and thus the battle against scammers is worth waging*.

What Bitcoin Faucet do is admirable (they give something for nothing!), but naturally now it's mostly dried up (it gave me 0.02 BTC last week, and one cannot do much with such a small amount and transaction fees). My service is mainly (but not exclusively) for people who, like me, wanted to check how Bitcoin works but do not feel very confortable with wire transfers, specially for amounts of $10.

I have tested it in the Paypal sandbox and it seems to work fine. But I could not test it with actual Paypal since I cannot purchase anything being sold with the same account. It should work, but it is not 100% sure (the worst it can happen is an error message BEFORE the payment). So, I kindly ask you to be the testers of this service. As a compensation, the prices are noticeably lower than the market prices. I am losing money with each transfer, so if you decide to test it, please give me some feedback ;-)

All the procedure should be completely automated, anyway, I will stay alert to the database and my email, if some of you have problems.

I would really appreciate your feedback in some aspects:

   1) About your answer to the hypothetical question: "If I were a scammer, how could I bypass these security measures"?
   2) Your view on the limit of BTC per user per day (the limit increases with the number of purchases).
   3) Of course, if you had any problems.
      

So I invite you to try the service at http://www.donotcompare.com and make purchases ;-)


E.


*I don't think we should blame Paypal for being afraid of scammers, I'm sure I would do the same if I were in their place. Their business is to handle payments, not to close successful stores. Of course, if they feel risk, they go out (after all it's our business, not theirs). My approach is to be to be as transparent as possible, explaining the user what is he paying for and what he acknowledge to accept as proof of delivery. In addition, in the paypal transaction will be written the address of destination.


P.S.:If you want to make a donation, please do it to this address 1F2xS8PuygQjjy3gSCy3ikSgfsZNQp5QeY (the balance will be automatically updated in some minutes).
The reason why I do not put $1 = 1 BTC is to (a) avoid running out of coins too fast and (b) to paid somehow the server and the SMS gateway. At this stage I am no earning money with the service. Not during the BETA stage and not, of course, with your donations.

[1905]

id be extremely surprised if anyone on this forum backs ur idea of using paypal. paypal is like that word u whisper around here. lol. i seriously believe the best way to help our beloved bitcoin is to create an ebay type site backed by mtgox. your best bet is get a dwolla account set up at account with mtgox and transfer sales from mtgox to dwolla and dwolla to ur bank. until someone has a more safe method.... then ehhhh...

[indio007]

Your not going to stay in business very long selling bitcoins at nearly 40% discount.

Current* price: 1 BTC = $ 7.6643

[jackjack]

A hashed version will be stored in a database in order to anonymously identify you for your future purchases and increase your limit.

Wat?
6 seconds to calculate the hashes of all the phone numbers containing 6 digits
-> 60000s < 20h to calculate the hashes of all the phone numbers containing 10 digits

And this only on a CPU, imagine on a GPU...

[ghgr]

Thanks for your answers!

id be extremely surprised if anyone on this forum backs ur idea of using paypal.

for the buyer Paypal is the safest option. They can give a try, since the chargeback option is always possible.

Your not going to stay in business very long selling bitcoins at nearly 40% discount.

it's just during the BETA. In this way you will be more understanding in case of delay. As I said, consider this as a 'premium' for testing the service

A hashed version will be stored in a database in order to anonymously identify you for your future purchases and increase your limit.

Wat?
6 seconds to calculate the hashes of all the phone numbers containing 6 digits
-> 60000s < 20h to calculate the hashes of all the phone numbers containing 10 digits

And this only on a CPU, imagine on a GPU...

Good point. Even though this is only to protect the database in case it's compromised, I am implementing encryption of the hash. Anyway, after the number is hashed, encrypted and clearly stated in the main page that it will not be used, consider that nobody is interested in a bunch of numbers with no other personal information. It is as useful as generating random phone numbers. Anyway, I am going to encrypt the hash.

[bncbnc]

I dont get how you can afford to sell them soo cheap...

[1905]

exactly. rule of thumb. if it sounds too good to be true. it is.

[whitebird]

I see as this is a beta you don't have a nice layout. But Not having a good layout may put off certain customers (like me).
It really proves how professional you can be.

(On a side-note, I'm willing to do a custom css+html (javascript optional) design for you, in bitcoin or paypal  )

[ghgr]

I guess I gave too much information in the main post and the core aspects were not remarked enough. During the BETA stage, while the backend is being tested (the integration with Paypal and the SMS gateway, the database, etc.) I am offering Bitcoins below their market price. This is to stimulate potential buyers and to make them more understanding with potential issues or delays.

This measure had a side effect I hadn't foreseen; people will think that it's too good to be true, and since they cannot explain where is my business model. My business model is, once the infrastucture has proven to be solid, go to production mode, and then sell Bitcoins at a higher pricer. But for now I consider it as another expense, like the server or the SMS gateway. (see that there are less than 1 BTC to sell).

This service had existed for some time, for example http://www.btcnow.net or http://1209k.com/bitcoin, and it was precisely because they were not working (they have sold all their Bitcoins and are waiting to check the fraud rate) that I've decided to implement my own, and automatizing it as much as possible. In addition, I am doing it as transparent as possible, in order to protect agains fraudulent chargebacks.

I see as this is a beta you don't have a nice layout. But Not having a good layout may put off certain customers (like me).
It really proves how professional you can be.
(On a side-note, I'm willing to do a custom css+html (javascript optional) design for you, in bitcoin or paypal   )

Sure the layout is important, but again, I think users will accept simpler designs and an efficient service (of course they would love an efficient service with a lovely design ;-) but for the moment this is not a priority). Paypal should give the user the confidence that "satisfied or you money back".

[whitebird]

Sure the layout is important, but again, I think users will accept simpler designs and an efficient service (of course they would love an efficient service with a lovely design ;-) but for the moment this is not a priority). Paypal should give the user the confidence that "satisfied or you money back".

I'll give an example of what I mean:
http://www.bordercolliebes.net/
Simple. Small. Easy.

I can send you the blank html, the css and js now if you want.

I cannot emphasize enough that layout MUST be a priority, it'll surely put off several people.

[casascius]

I am going to be selling some Physical Bitcoins pretty soon... coins with embedded private keys.  So it's a real coin with an engraved face value of "1 BITCOIN" and actually contains a private key embedded inside worth one digital bitcoin.

They might be PayPal worthy - after all, people sell gold coins on PayPal all the time.  I wonder how what PayPal would do in the event of chargeback if I sold physical bitcoins on eBay and shipped them with tracking and signature confirmation to the PayPal user's verified address.  I am told by someone who sells goods on eBay all the time that PayPal is favorable to the seller under those circumstances.

[strictlyfocused]

I tried to purchase the max (.1 BTC) just now and when I click "Get PIN" nothing happens. Ive tried a couple times now and still nothing on my phone ...

[ghgr]

I am going to be selling some Physical Bitcoins pretty soon... coins with embedded private keys.  So it's a real coin with an engraved face value of "1 BITCOIN" and actually contains a private key embedded inside worth one digital bitcoin.

They might be PayPal worthy - after all, people sell gold coins on PayPal all the time.  I wonder how what PayPal would do in the event of chargeback if I sold physical bitcoins on eBay and shipped them with tracking and signature confirmation to the PayPal user's verified address.  I am told by someone who sells goods on eBay all the time that PayPal is favorable to the seller under those circumstances.

Are you talking about Bitbills (bitbills.com)?
I have been thinking about it before starting this project, but I finally decided not to do so for several reasons (I write as if I were a potential buyer):
  - If I bought a bitcoin and I have to wait until it arrives, I can also go to the bank and make a wire transfer. It can even be faster.

  - Once you have the physical coin, it's not easy to make it digital again (sure there are tutorials, but it is far more complicated that a common electronic transfer).

  - The buyer can still say that the bitcoin was fake, and you have no way to prove it is not true.

  - In case you are not talking about bitbills, nothing prevents the buyer to keep a copy of the private key (in case of bitbill they claim that the card becomes useless after the private key has been read. Well, it's a matter of trust).

Those are the drawbacks I have found before starting such a business. I'm almost sure you have thought about them and many others, but just in case it could help you to find solutions!

Sure the layout is important, but again, I think users will accept simpler designs and an efficient service (of course they would love an efficient service with a lovely design ;-) but for the moment this is not a priority). Paypal should give the user the confidence that "satisfied or you money back".

I'll give an example of what I mean:
http://www.bordercolliebes.net/
Simple. Small. Easy.

I can send you the blank html, the css and js now if you want.

I cannot emphasize enough that layout MUST be a priority, it'll surely put off several people.

I really appreciate your enthusiasm and I share your idea, but at this stage of the project I cannot allocate money to the layout. With 'not a priority' I meant during the BETA stage, before it start to generate money (if it does). Anyway, times passes fast in this world and if it succeeds, after some days running, layout will be the first thing I will tackle.

I tried to purchase the max (.1 BTC) just now and when I click "Get PIN" nothing happens. Ive tried a couple times now and still nothing on my phone ...

Hmm, interesting, in the DB says it has been sent. Did you write your number in the international format, without 00 and without the +? Anyway, I'm sending your PIN by private message in order to to allow you finish the purchase. Oh, by the way, can you tell me if your SMS finally arrives? Thanks!

[strictlyfocused]

Hmm, interesting, in the DB says it has been sent. Did you write your number in the international format, without 00 and without the +? Anyway, I'm sending your PIN by private message in order to to allow you finish the purchase. Oh, by the way, can you tell me if your SMS finally arrives? Thanks!

I got the PM and was able to complete the order, but never got the SMS.

[casascius]

Are you talking about Bitbills (bitbills.com)?

Nope, I'm talking about the 100+ lbs of brass Bitcoins I have here that will be offered for sale as real bitcoins once I receive a shipment of custom Casascius bitcoin security holograms I am waiting on!

I have been thinking about it before starting this project, but I finally decided not to do so for several reasons (I write as if I were a potential buyer):
  - If I bought a bitcoin and I have to wait until it arrives, I can also go to the bank and make a wire transfer. It can even be faster.

The buyer sacrifices the ability to do a chargeback and the comfort of ordering online.  There's also the wire transfer fee.  That will be fine for many buyers (myself included - wires work well for me).  But Grandma might prefer the physical coins.

 - Once you have the physical coin, it's not easy to make it digital again (sure there are tutorials, but it is far more complicated that a common electronic transfer).

I am hoping that some website (TradeHill etc.) will soon offer the instant ability to type in a private key code and redeem bitcoins.

 - In case you are not talking about bitbills, nothing prevents the buyer to keep a copy of the private key (in case of bitbill they claim that the card becomes useless after the private key has been read. Well, it's a matter of trust).

In both cases you have to rip the card/coin open, so it becomes pretty obvious that it has been mutilated.

Those are the drawbacks I have found before starting such a business. I'm almost sure you have thought about them and many others, but just in case it could help you to find solutions!

[Kansattica]

I had to wait an hour before I got my confirmation SMS, and now the site seems to be down.

[ysoliman]

The site is a dead link, no-one can even look at it until it is fixed.

[ghgr]

I got the PM and was able to complete the order, but never got the SMS.

In some cases the SMS takes more time than usual. Once the server is up again I'll provide you a link to let you check if the SMS gateway does not understand the format, does not support the country or it's just slow delivering SMS's.

The site is a dead link, no-one can even look at it until it is fixed.

I had to wait an hour before I got my confirmation SMS, and now the site seems to be down.

The server appears to be down. I'm handling that right now with the technical support. Once the server is up again your PIN will still be valid.

Anyway, for those who the SMS arrived and made the payment, the coins have been sent.

Thanks for your patience

In both cases you have to rip the card/coin open, so it becomes pretty obvious that it has been mutilated.

I see that you have thought about the main problems. Good luck! But just one more thing. Imagine the following scenario:

The Paypal fraud responsible receives an chargeback request from a buyer who claims that the seller sent him a physical bitcoin, but when he opened it and tried to recover the funds, it was empty (or there were less than half the advertised funds). On the other hand, the seller claims that the card was unmodified and that the buyer is trying to scam him. How could the person in charge of fraud prevention at Paypal find out who is right?

[ghgr]

The server is online again. The PIN you received is still valid. In case you didn't receive it or you want to ask for a different one, please write me a PM with the SHA1 of you mobile phone http://www.tools4noobs.com/online_php_functions/sha1 and I will provide you with the PIN (or allow you to ask for a different one).

I got the PM and was able to complete the order, but never got the SMS.

Although when you click "Get PIN" you should see a message saying "PIN sent" or "Invalid number", maybe your browser has javascript blocked, and thus you see nothing. In that case, and to be sure you number is accepted by the SMS Gateway, visit this link http://www.donotcompare.com/btc/existsNumber.php

[Kansattica]

Site's up and I got my BTC! Great service, when it works.