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Author Topic: Virwox and Paypal  (Read 3866 times)
Seal
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May 17, 2012, 12:52:26 AM
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My understanding is that Paypal is not accepted as payment for a virtual currency, mainly because of reversals but partially as it is against their policy.

How does Virwox get away with using paypal as a payment gateway for Linden dollars then?

Also, how long after a transaction is complete, does it take for a payment to become non-reversible?

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Stephen Gornick
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May 17, 2012, 03:24:26 AM
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My understanding is that Paypal is not accepted as payment for a virtual currency, mainly because of reversals but partially as it is against their policy.

How does Virwox get away with using paypal as a payment gateway for Linden dollars then?

Discussed here:
 - http://bitcointalk.org/index.php?topic=77777.msg865818#msg865818


Also, how long after a transaction is complete, does it take for a payment to become non-reversible?

Well, the generally accepted answer to that is six confirmations  Each service can set it themselves.  Most exchanges require six confirmations for bitcoin transfers, for instance.   CoinDL, a digital download service, accepts payment immediately (on 0/unconfirmed).  Others may give credit after two or three blocks, as the benefit to an attacker for that particular business (e.g., goods get shipped out to a physical mailing address) causes the transaction to be low risk.

0/unconfirmed can be sufficient for low value or high margin sales when 1.) the client does not accept inbound connections and 2.) the client explicitly connects to well-connected nodes.  That is still vulnerable to a Finney attack though, so waiting for 1 confirmation lessens the risk of a double spend.

So it really depends on what type of transaction it is, and thus is there a reason to worry that an attacker would attempt to double spend on you.

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May 17, 2012, 05:37:29 AM
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Also, how long after a transaction is complete, does it take for a payment to become non-reversible?

Well, the generally accepted answer to that is six confirmations  Each service can set it themselves.  Most exchanges require six confirmations for bitcoin transfers, for instance.   CoinDL, a digital download service, accepts payment immediately (on 0/unconfirmed).  Others may give credit after two or three blocks, as the benefit to an attacker for that particular business (e.g., goods get shipped out to a physical mailing address) causes the transaction to be low risk.

0/unconfirmed can be sufficient for low value or high margin sales when 1.) the client does not accept inbound connections and 2.) the client explicitly connects to well-connected nodes.  That is still vulnerable to a Finney attack though, so waiting for 1 confirmation lessens the risk of a double spend.

So it really depends on what type of transaction it is, and thus is there a reason to worry that an attacker would attempt to double spend on you.

Sorry, I should have made it clearer. I mean a payment from Paypal.

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May 17, 2012, 07:53:23 PM
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Sorry, I should have made it clearer. I mean a payment from Paypal.

If it was credit card that funded the payment, it can be reversed up to six months after the transaction date.   Their terms of service say 60 days after receiving the credit card statement but they still process new claims up to 6 months, reportedly.  There is a generally accepted belief that if the funds are in the receipient's paypal account, PayPal will accept the claim and yank the funds.  If the recipient has closed the account or doesn't have funds, PayPal is a little more strict on the timeline for claims, particularly for the "not as described", "never received" variety.

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May 18, 2012, 12:22:15 AM
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I'm interested in what constitutes 'proof of delivery'

Maybe someone has already thought about this angle so forgive me for thinking out loud...

To purchase bitcoin with paypal, a money transfer can be made, and as long as you get the user to perform some sort of double confirmation of a sending address for X amount of bitcoin. Also emailing a reciept, then you could effectively, and publicly show proof of delivery by showing the block that the transfer happened in right?

Would paypal not also accept a tickbox saying you agree to various terms and conditions about reversals?

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May 18, 2012, 12:56:11 AM
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I'm interested in what constitutes 'proof of delivery'

Maybe someone has already thought about this angle so forgive me for thinking out loud...

To purchase bitcoin with paypal, a money transfer can be made, and as long as you get the user to perform some sort of double confirmation of a sending address for X amount of bitcoin. Also emailing a reciept, then you could effectively, and publicly show proof of delivery by showing the block that the transfer happened in right?

Would paypal not also accept a tickbox saying you agree to various terms and conditions about reversals?

That dog won't hunt.  



It matters not if you can prove the bitcoins were delivered.

PayPal simply expressly prohibits using PayPal for digital currency transactions.  Period.  (Well, VirWoX found some type of exception)  They may not be  able to always tell that a transaction was for Bitcoin but when they do it is brutal.  Nearly every person that accepted PayPal in exchange for bitcoin has either had their account closed, funds frozen, etc.

"I got suspended for selling paperclips with free bitcoins 2 days ago, and yes i sent the damn clips with a tracking number. "
 - http://bitcointalk.org/index.php?topic=67137.40

 - http://www.bitcoinmoney.com/post/5086167006

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