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Author Topic: Bitcoin's Paypal solution/alternative?  (Read 1509 times)
roy
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May 09, 2011, 10:06:50 PM
 #1

People are only happy nowadays to purchase items using the internet due to consumer protection through payment gateways and credit cards.
The flaw in bitcoin for purchasing products seems to be the fact the seller has an advantage over the buyer.

It seems to be fine for trading currencies, virtual goods or face to face transactions, but I don't see how one could trust an online seller accepting bitcoins when you have no recourse?

Clearcoin would be helpful, but it doesn't fully address the issue because it means the seller loses out.
For example someone could pay 100BTC for an apple
 the buyer sends clearcoin 100BTC
 the seller notices payment & sends the apple
 buyer receives item and forgets to confirm clearcoin
 transaction expires & seller doesn't receive coins?

The other issue is that the seller only gets their money a lot later than using a service such as paypal/googlecheckout.

Solutions??
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MoonShadow
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May 09, 2011, 10:13:46 PM
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There doesn't need to be a solution, because you don't really understand the problem yet.  Even so, much of what you are concerned about is negated by MyBitcoin.com's system.

Let the buyer beware.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
SgtSpike
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May 09, 2011, 10:36:36 PM
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That's exactly why I created bitcoinfeedback.com.  Merchants can build up a reputation, and the buyer can use that trusted reputation as a reason why they won't be ripped off.  No, it's not as good as total recourse, but at least the thread of leaving negative feedback on a merchant's reputation will hopefully encourage the merchant to make any wrong situations right.
roy
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May 09, 2011, 11:51:51 PM
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There doesn't need to be a solution, because you don't really understand the problem yet.  Even so, much of what you are concerned about is negated by MyBitcoin.com's system.

Let the buyer beware.

But doesn't this just lead to a load of scammers ruining it for the legitimate businesses and people losing faith in bitcoins?
How does MyBitcoin.com offer recourse for buyers?
BitterTea
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May 09, 2011, 11:57:24 PM
 #5

Use good judgement with whom you trade. Don't trade with someone who has no history in the community, either on the forum or in the OTC Web of Trust.

Make use of tools that reduce risk. Use ClearCoin or some other escrow service to increase the chances of a successful trade for all parties.
MoonShadow
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May 10, 2011, 12:05:41 AM
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How does MyBitcoin.com offer recourse for buyers?

Why does Mybitcoin, or anyone, have to offer you recourse?  Bitcoin is cash for the Internet.  Would you walk into a corner store and pay cash for a candy bar?  What is your recourse there?  If the vendor took your money and then told you to buzz off, what would your recourse be?  Call the cops over $1.50?  What would happen, do you think?  In the end, you would be out your money and a candy bar, and would simply never trust that vendor again.  Don't send bitcoins to untrusted vendors.  If you get screwed, tell people about it, and name names.  Sometimes the risks of getting defrauded is just part of the costs of doing business.  There are steps you can take to limit those risks, but none of those things are intergrated into Bitcoin, nor should they be.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
roy
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May 10, 2011, 04:18:36 AM
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How does MyBitcoin.com offer recourse for buyers?

Why does Mybitcoin, or anyone, have to offer you recourse?  Bitcoin is cash for the Internet.  Would you walk into a corner store and pay cash for a candy bar?  What is your recourse there?  If the vendor took your money and then told you to buzz off, what would your recourse be?  Call the cops over $1.50?  What would happen, do you think?  In the end, you would be out your money and a candy bar, and would simply never trust that vendor again.  Don't send bitcoins to untrusted vendors.  If you get screwed, tell people about it, and name names.  Sometimes the risks of getting defrauded is just part of the costs of doing business.  There are steps you can take to limit those risks, but none of those things are intergrated into Bitcoin, nor should they be.

I don't believe your example works to describe an online transaction. When you walk into a store you usually pick out the item -> walk to the till and pay for it. The buyer has already seen & received the item before paying. In distance selling (such as the internet) we must first pay the seller then when the seller feels like it he provides the buyer with goods that may or may not be what they wanted.

In Satoshi's paper he suggests escrow services for the protection of buyers, but as far as what I've read of Clearcoin it seems Clearcoin is currently unfair to the buyer?
Mybitcoin offers a convenient payment gateway, but doesn't offer an escrow service afaik.
Sellers have protection by implementation.

I'm just trying to point out that as far as I can tell a suitable escrow service does not exist.
BitterTea
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May 10, 2011, 05:31:04 AM
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In Satoshi's paper he suggests escrow services for the protection of buyers, but as far as what I've read of Clearcoin it seems Clearcoin is currently unfair to the buyer?

If it's unfair to anyone, which I don't think it is, it's unfair to the intended bitcoin recipient. The bitcoin sender can claim that they never received the item and withhold payment. What ClearCoin does is provide a disincentive for them to do so. They either have to wait a set amount of time before reclaiming their escrow payment, or it will be sent to a charity. If the recipient doesn't trust the sender at all, they can request the latter option, which provides the strongest incentive to honesty.
Shortline
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May 10, 2011, 06:49:05 AM
 #9

Seller's advantage doesn't seem to be a bitcoin-related problem. There are any number of irrevocable cash transactions you can get involved in on the interwebz.

This is why ebay exists in its current form, to grapple with this kind of thing. When they started they were an auction house and a unique marketplace, now they're in the business of being the worlds largest dispute-resolution mediator, a function they've proven themselves to be somewhat competent at. Except for all those horror stories:)

Clearcoin, bitcoinfeedback - just a couple of things that have come up to deal with this, and if bitcoin really is going to become the native currency of the internet there will doubtless be dozens of dispute-managing services and escrow systems emerging.
caveden
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May 10, 2011, 07:00:12 AM
 #10

Actually, in most retail transactions, I believe the party most concerned with his reputation is the seller. The buyer frequently has no reputation to worry with. Cheating is more likely coming from the buyer than the seller.

And in more p2p-like transactions, where the seller isn't really a business with a reputation to care, you can always try to use a scrow as ClearCoin for instance.

Also keep in mind that bitcoin is a currency, like the dollar or euro - only orders of magnitude better Wink -, not a method of payment, like paypal, checks, credit cards etc.

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