Topic: Circle is a Disaster waiting to Happen !!! (Read 4215 times)

I think some people who do not understand technology will like the idea of a Bitcoin bank. They do not get the idea that you can and should be your own bank.

If you do not have the private key for your Bitcoin then you have no Bitcoin - you do have, at best, a Promise to Pay (an IOU).

The only disagreement I have with frank1's posts regards the definition of scam.

It's not an immediate, or maybe not even a premeditated, scam.

It's something more subtle: "you can trust us to hold your bitcoins."

Anybody who makes that claim is perpetuating a future scam, whether or not they intend or know this.

Exactly. frank1 got it right too.

They set up circle to operate as a "bitcoin bank." And what do banks do? Play with your money. Once everyone starts using this as a quick buy service and never let their coins sit, Circle will crumble. It will happen gradually. First, the instant buy thing will stop. Then they will start trying to sweeten the pot for people who keep their BTC in Circle wallets. Then, more fees will be introduced. The customer service will begin to suffer.

Watch.

Whatever happens to Circle, just remember this:

If you decide to use them to buy bitcoins, always immediately withdraw those bitcoins to a real wallet.

Same thing applies to any other service of this kind.

I believe that using a VPN/Tor with coinbase is almost automatically a red flag to have a purchase get cancelled. I don't believe this is the case with circle and is a major security hole. It is not difficult to tell if someone is using a VPN or not and there is no real reason to use one because they know what your identity "should" be anyway as you give it to them and your bank/cc details

I think credit charge back is going to be a problem. It doesn't mean there is no solution. They are have id and address checks, or place a limit on the first transactions, to minimise their risk of chargebacks. I think Circle is an ambitious project and there will be kinks to sort out along the way.

Yeah it's pretty easy to get a pre-paid SIM. That's why I said 'an extra burden'.

3D Secure: http://en.wikipedia.org/wiki/3-D_Secure

Exactly. The first thing that came to mind when I read about Circle accepting credit cards was "How on earth can they do this?"

Here are the simple facts:

- A CC transaction can be reversed.
- A BTC transaction can not

Do not get me wrong, I absolutely LOVE the idea of people being able to go to a website & type in their CC number & have BTC instantly. This is GREAT - while it lasts. How many times to they need to be scammed before they realize that these simple facts means that accepting CC payments (or EU bank transfers for that matter...) for BTC is a inherently bad idea?


This is true but the situation is very different. I can visit a website from a proxy or VPN or Tor and give them made-up information and a stolen CC and they are none the wiser. If I go to a webshop and buy a TV then I do need to provide an additional piece of information which is somewhat (but not impossible) harder to "fake": a delivery address. You can use a friend or drug addict or something like that to take delivery so this does not prevent fraud but it does make it harder: You have to tie a real-world location to the transaction.


I do not believe Circle is a scam and I do not think anyone has that concern. My concern here is what happens when they end up with losses because they are doing business in a way which - at first glance - appears to allow people to scam them.


This will obviously stop criminals because it is so hard to go to the local kiosk and pay $10 cash for a pre-paid SIM card.


I am not familiar with "3D Secure" but I am totally all for any working solution to the problem of "How to use credit cards safely on the Internet".

Yeah I'm pretty sure they've considered all of this. After all you do have to login using a one time password via text message. An extra burden for the thief.

On top of that the CC companies (if they haven't already) will force Circle to use 3D Secure. Sites using 3D Secure CC payments require an additional password to be entered when initiating payment. And 3D Secure is also starting to implement OTPs on top of that. And when using this there's a nice clause in the TOS. Basicaly it's the customers fault for having his CC number and 3D Secure password compromised. Ergo, no chargebacks... I mean, very hard to get one...

I should know. My next project is implementing OTP via 3D Secure for a payment processor...

Americans are historically more likely to go with a 'simple payments + some fraud insurance' approach. But I don't think this will fly with Visa/MC in their case.

Uh credit cards get stolen all the time.  So charging back is the only option one has to recoup losses.  Also, plenty of services do rip off customers, so one has no choice but to notify customer of that.

LOL! Yes

Yeah, the only people who are going to fall for this are people who don't know anything to begin with about Bitcoin, I don't trust the idea of a Bitcoin bank, it's not a scam, but it's an idea that's pretty incompatible with how Bitcoin is designed, think of things like exchanges fixing volume and so on. Not only is it going to be a bad idea for the customer to get involved it's a business model that's based on the old way of doing things, that said, these kind of businesses may be what cause the Bitcoin price to explode finally, if all the customers are buying with debt, the supply of paper currencies will increase, causing the price of Bitcoin to go up because there's only a limited number of coins they can buy.

This is actually something I've been predicting years ago, but I didn't think it would happen like this, I thought that the banks would directly try to short Bitcoin using money printing to shut it down though you could argue this is what's happening depending on who circle are affiliated with if they're getting credit cards involved.

I dont see any SCAM here. Nor does the OP claimed so. Mt. Gox was NOT a SCAM either while it was running in 2013. Circle just presents some wonderful ingredients of SCAM. One of the primary reasons of Bitcoin's success was its advantage over Credit Card for not allowing Charge Back. Now, that Credit Card is being used to sell Bitcoin !!! Just wait and watch the circus.

Hate to tell you this but most of the time it's someone else making the purchase other than the card owner.

If I had say 10000 stolen US credit card numbers and wanted to convert them into max profit as soon as possible I'd tell you the first place i'd be visiting...circle.com

"Friendly fraud" that you mentioned would probably only be a tiny % of the total chargebacks.


How does offering a service at a loss with no clear direction to monetize it constitute a "proper business plan"

One has to assume that they have some kind of chargeback protection with their CC processor which A) isn't going to be cheap (ie an extra few % processing on each transaction)  and B) will probably get canceled by the CC processor as soon as they see the real chargeback numbers.

Or they have no chargeback protection; but this would be insane as it would open them up to an unknown and possible massive amount of liability.

It is not a question as to if a CC company allows a customer to initiate a chargeback. If there is a mistake on a credit card statement then a card holder has the write to dispute any debt they did not agree to borrow within 60 days of receiving a statement that contains such mistake.

Initiating a dispute (and winning the dispute) does not resolve you from liability from paying the merchant if you really did agree to pay, it only puts the burden on the merchant to attempt to collect on this debt.

From https://www.fdic.gov/regulations/laws/rules/5000-3860.html
It looks like the ECOA does not allow banks to deny credit based on a customer exercising their right to the Consumer Credit Protection Act.

Lending is a highly regulated business and when it comes to loans, yes banks must lend to anyone that meet their lending criteria that must be based on the potential borrower's ability to repay the loan

You can initiate a chargeback if your CC company policy allows it (they pretty much all do), but my point is immediately after the CC company can drop you like a hot potato as a potential liability. There is no fundamental right to being issued a credit card.

Just because someone is trying to make your life easier doesn't mean its a scam... But having said that I think we should keep in mind what happened with Mt.gox

lets just see and wait!
im sure they know how CC  scams work and have some plan to not loose on this

although im usually the first to shout scam..

circle has done alot of legitimate things that scams have not.
1. got regulated
2. signed up for credit card processing services
3. got into proper good working relationships with banks
4. advertised formally
6. got proper VC backing
7. having a proper business plan
8. there code does not look like basement dwellers PHP/mysql

that being said. i dont think they are a scam. but i do think that NO one should use them as a bank and keep funds with them for days/weeks/years.. simply use them to buy/sel coin, and get your funds out of there.

the point of bitcoins is not to ned to trust third parties because your suppose to hoard funds yourself, or to research third parties soo much that your not blindedly trusting them.

Hey kiddo, time to learn a thing about reality and move out of your mom's basement

Banks are businesses, they have the right to refuse you as customers dumb ass. Read your bank's TOS. And ofcourse its not illegal, retard.

This is not true, and would be illegal for a credit card company to do this. Initiating a chargeback is a right that you have if you did not actually authorize a purchase or if the item you purchased was not what was advertised (among other reasons). It is illegal for a bank to deny a loan to someone because they have exercised their rights in the past.

2 - I think he was referring to people who hold their bitcoin in circle when they finally run out of money

1. Hate to tell you this, but people who constantly perform "Chargebacks" on credit cards suddenly find out they can't get credit cards. The CC companies look for people who do this, and blacklist those who try to keep doing it. They generally won't be able to get CCs from another company either. However I agree stolen credit cards are going to be a potential problem.

2. What? How?

Dunno why you think it's a scam, I just got 0.2 BTC sent to my wallet within a minute.

Sure, VCs just love pouring money in obvious scams. 

Yeah, but they will cover losses out of their $20million VC funding. 

Hell, they don't even SPEAK about making profits. No need to.  CEO Allaire is making money by simply pocketing VC funds as a 'salary'.

So, they will get hacked, carded, scammed for a couple years until the money runs out. Then they will shut down, freeze all accounts, and say 'sorry' to all the Bitcoiners who lose their money ...

C'mon now, this kind of scam is old as the hills ...

a noob that actually made sense lol

Cheers to all the Hula Whoop surrounding Circle. I wanna put in a word of caution here...

1. They are accepting credit card payment against Bitcoin. Charge back and stolen card attacks are just a matter of time.

2. They are taking your credit card details. So, they'll use U to make up their losses.


If U have not learned from one Gox, U deserve to get Goxed again... GooD LucK \m/