Topic: [IDEA] Credit card based speculative Bitcoin exchange - page 2. (Read 3086 times)

The credit card companies are duty-bound by the law to enable chargebacks, so even if THEY wanted to offer a no-chargeback payment system they couldn't.

Something I have seen around the Web are these so-called "chargeback waiver" clauses in merchant TOS but I'm not sure how legally binding they are, if there were they'd probably be commonplace by now.

So barring any fundamental paradigm shifts in consumer protection laws the better course of action would be figuring out a way to make (international) bank transfers as cheap and painless and possible, something I could do from my computer in a matter of seconds.

(off topic) yep. but it doesn't seem like you can carry out live "trades" with their platform (I could be wrong)

Why can't users validate their account to their email address and log in with a random pin generator or something similar. Some kind of ip recognition program and send out their ip's to other exchanges if they some how violate terms of service and follow through with a charge back, technically you could even send a fraud notice to their ISP. (It probably won't do much) I am just tossing out random ideas, obviously we could make this a much more simple & secure process then it is now.

You mean like this?

https://www.bitfinex.com/pages/ll_order_book

I too have been interested in buying some BTC. I looked at buying some back in 2011 and MTGox was the big turn off for me. I recently tried using a bank account that funded Dwolla to fund an exchange to fund my wallet. What a shit setup. Talk about transaction fees, shit 1/3 of your money ends up in everyone else's pocket. The exchange wanted a pic of my "Gov't issued ID" (Ummm fuck that) Stockbrokers (E*Trade) don't even require ID. What happened to a validated electronic signature? It seems to me the exchanges really need to boost their end of software capabilities and processing powers. I know bitcoin is relatively still in its infancy but how about an exchange that can be funded right from a bank account or credit/debit card verified with an electronic signature. For a digital currency the exchanges are still in the dark ages IMHO. Since I haven't actually acquired bitcoin yet, I don't know if any exchanges offer a level 2 "trading" platform/quotes if not, it would be a wise decision. I would be willing to help, if others are interested in creating something similar.

Exactly.

Good luck with that.

I think instead of finding people who are willing to hold the risk of a default, you should come up with a mechanism to make credit card payments irreversible.

The fact remains that most people have credit cards and do not understand the whole thing about jumping through so many hoops just to get a bitcoin.

Paying for risk is part of how the market works. People are willing to take risks in exchange for money.

A rating per person would make it easier like on BTCJam where people are willing to loan out bitcoins to people who could disappear.

You're giving incentives for the wrong kind of behavior, which is to wait 119 days and then issue a chargeback. As long as chargeback risk is there, the value of a bitcoin should be considered 0.

Good point.

Though I guess in theory that would just be part of the risk that people would have to compensate for.

The earliest trades would likely be very costly since, as been pointed out, without being established and not knowing the payment processor's stance on it the risk factor is huge.

Anything I have done as far as looking into the bitcoin time lock capabilities is that it is mainly client side and you are basically freezing your own funds from your client which then has to unfreeze the funds when the time comes.

If there was a way to use the nTimLock feature, you could escrow the bitcoins for the 120 day period. I wouldn't use a service that just held my coins in a wallet due to the fact that they may fly-by-night like so often has before.

After speaking with too many processors to list, mentioning the word Bitcoin appeared to give them a heart attack. We have an enquiry open with Visa at the minute to hear their thoughts on it, and see who they would recommend.

They may not ask you what you are selling, but would you want to risk your account suddenly being shut down due to a ToS violation?

The key part of that is that they could get bitcoins if they are willing to pay more. Buy 1.2 BTC for $120 then trade your red coin for a full bitcoin worth $100.

1 bitcoin on ebay is going for over $110 (at the current exchange rate of $60).

Interesting. The product being sold is a red token. I wonder how video game sites like Second Life do it.

I had a payment processor but do not recall them asking what I would be selling (maybe they did, I do not recall).

The biggest nightmare on this is actually getting a processor willing to deal with you. We've been looking at several for crypto.pm and it's an absolute fucking nightmare.

Funny, I've been toying around this same idea for a few months. I have access to cards. The biggest drawback was just that people couldn't get access to their coins for 120 days. I don't think that is a big obstacle.

There are many people frustrated with figuring out how to get into bitcoins. It has been shown that people who use PayPal would be willing to spend more per BTC than those going through the exchanges.

The main reason people will not exchange bitcoins via credit cards is because of chargebacks, you could give someone your bitcoins after they pay with a credit card only to have them disappear with your BTC and get their money back onto their card leaving you with nothing.

Most credit card companies have different time scales for different charge backs, the longest being 120 days (from a quick check on Visa).

So, what if we had an exchange that allowed you to pay with a credit card and when you do the purchase the exchange buys bitcoins on your behalf but holds them for you for 120 days. What you receive instead is a bitcoin equivalent credit or colored or slightly transparent coin (however the site wants to do it).

But what you can do with these coins once you get them is trade them on that exchange. Based upon the amount of time that has passed from the time you bought them to the time they actually get switched out for real bitcoins they will vary in value based upon what people are willing to pay.

Say bitcoin is $100/BTC. You go to pay with your credit card and pay $100 (plus credit card fees). You buy 1 BTC for $100. The site buys 1 BTC at $100 and pegs it to your purchase and gives you a red 4 month coin.

You notice on the site that someone is willing to trade .8 bitcoins for a red 4 month coin. You need the bitcoins for something else so you do the trade.

Now the guy with the red 4 month coin holds the coin for a month so it is now an orange 3 month coin. He notices that someone is willing to trade .8 light green 2 week coin for an orange 3 month coin. He has a bitcoin hosting service payment coming up in 2 weeks so he makes the trade.

He waits 2 weeks and the light green coin turns dark green until the final day of the 120 days it turns into a solid bitcoin which the site then transfers to the holder of the coin. He can now take the coin out and use it in his wallet for whatever he wants.

The original person could have waited the 120 days to get the one bitcoin as well.

But people would be motivated to trade based upon the risk of someone doing a charge back. You could even have credit ratings for each person based upon amount of trades and if they have ever done a charge back.

It would allow for easier entry into using bitcoins on the trading side allowing people to pay extra to use their credit card to buy bitcoins (users could be willing to trade their full bitcoin for 1.2 red 4 month bitcoins from an AAA rated seller for example).

Thoughts?