Topic: Why I Do Virtual Item/Currency Transactions in BTC Only (Read 818 times)

Preface
Hey everyone! So I've been selling Diablo 3 Gold for BitCoin (BTC) at Ogrr.com, and I also have experience selling WoW items/gold/accounts in the past. I've seen the pros and cons of different payment methods over the years, and I REALLY like BTC for this type of trading. So much so that I attempt to deal exclusively in this currency and plan to from now on (as long as it's stable).

I've had quite a few inquiries due to my competitive pricing for D3 gold with the BTC discount. People want the discounted rate BUT they also want to use PayPal or some other payment method. When I refuse to do this, they get upset. In this thread, I'm going to try to outline with full transparency why I generally won't accept other payment methods and especially why I won't discount them to the level I discount BTC payments. I use PayPal as an example, but really, this can apply to MoneyBookers, Dwolla, and even Direct ACH Bank Transfers as they all have similar or equivalent issues. I've both experienced and witnessed these issues over the years, and I strongly believe BTC is the answer.

Why I Generally Avoid PayPal Payments for Virtual Item/Currency Transactions
The reasons I avoid PayPal is I typically have to pay a fee (2.9% + $.30 per transaction), but most importantly, I run the risk of a fradulent chargeback. What this means is you file a dispute with PayPal saying one of two things so that after you get the gold, you also get your money back. You typically have up to 30 days to commit this fraud, so it's difficult for me to keep tabs on it when it happens. Additionally, when it happens, my PayPal account can be FROZEN, preventing me from withdrawing, receiving, etc.

Fraudulent chargebacks can come in two types:
1. You tell PayPal you never received what you paid for. As a rule, I keep and can provide screenshots to refute my case for every one of my transactions. This works 45% of the time in my favor, and 55% in the case of the fraudster if I kept good records.
2. You tell PayPal your account was hacked and you didn't send the funds yourself. If you used an anonymous VPN (or proxy) to access your PayPal account when you sent me the funds, it would appear this was true. You win this case 99% of the time. I have nothing to prove to PayPal that you absolutely were who you said you were at time of purchase.

There is very little I can do to mitigate fees and the risk of fraudulent chargebacks other than an honor/reputation system with each individual seller, which can generally be unfeasible. This is especially true for private buyers who only want to make one or two purchases and that's it.

Why BTC is Preferred for Virtual Item/Currency Transactions
Well, basically direct BTC transfers are near-instant and irreversible. To coincide with this, transfers of virtual items/currency should be delivered near-instantly and irreversibly. Since there's generally no fee paid by either party to facilitate the transfer, I can happily discount the pricing to you since I'm saving money in the long run compared to other methods. Paying with BTC is like handing someone cash: There is no governing entity to facilitate a fraudulent chargeback against me on your behalf. This means I have 0 worry about you keeping the service/items I provided you AND the funds you sent me. Your biggest recourse would be to tarnish my reputation, which would (hopefully) keep me from continuing to scam others if your accusation was rightly so.

The Big Cons of BTC for Virtual Item/Currency Transactions
First off and most worrisome: You adopt all the risk of me scamming you. Once I have your BTC, you can't get it back. If I don't follow through on my order you're out whatever you sent me. The only counter to this is me building my reputation (for example, on this forum) and publicly publishing my BTC address I receive payments on (1PoYbp44vcvZ9XeT3gMsDtEHtoWZ2GWoYq) in every "Ad" so that nobody can steal my identity. An identity thief would never have access to my BTC address, and since I state explicitly not to ever send BTC to any other address, you can be fully confident that what you send to my published address (1PoYbp44vcvZ9XeT3gMsDtEHtoWZ2GWoYq) will be received by ME and ME only.

Secondly: Storing BTC is a little scary and foreign to people. There are no banks for BitCoin that secure your money, there are only wallets. Some "exchanges" or "servers" will hold your BTC like a bank would by using their own wallets, but this carries significant risk. If you store the BTC in an actual server, such as MtGox or Bitcoinia, those servers can be hacked and all wallets emptied (Google it, it has been done before!). The server (and culprit) could also just disappear. In both cases, you're out all your money and so is everyone else, and the faith in the currency drops. The solution to this problem is off-line and/or client-side only wallets, which is why I use a BlockChain.info Wallet. There are even BETTER solutions for getting your very own BTC wallet. Client-side/off-line only wallets are a very viable and easy answer to this issue.

Third, BTC pricing fluctuates just like any currency. People (including myself) are worried that one day, BTC will completely crash or become worthless in value. Nothing to be said about this, because it's absolutely true. However, the same could be said of any currency, especially fiat currency. At time of writing, BTC has been increasing in value like crazy vs the USD and Euro in the past few weeks. This is not an indication of strength or stability though. It could just as easily crash in price next month, or next week, tomorrow, or even in the next hour for many different reasons. My biggest worries are a loss of faith in the currency and/or high influx of new BTC being introduced to the economy due to technological innovation. The first would be difficult to rectify, the second could only ever be temporary due to the way BTC works.

Finally, and the biggest hurdle, is: Not everyone has BTC to spend. Everyone has dollars, euros, etc to spend but most do not have BTC. Going from one currency to BTC is NOT necessarily an easy thing to do at this point. Many places you can buy BitCoin from have a waiting period and significant commission. MtGox is a good place to buy it, but it takes time to receive and send money from them. m/]BitInstant and BuyBitcoin are good resources for a quick exchange, but the commission that gets charged during the process is unfortunate and the speed of receiving the BTC is always a concern. My favorite way? LocalBitcoins hooks you up with someone in your zipcode. You give them cash, they send you BTC via their phone or laptop on-the-spot. Done and done. I've sold plenty of BitCoin this way and highly recommend it.
IMPORTANT: Please note that I am not personally endorsing any of the methods listed above to purchase BTC! I do not enough experience buying BTC to be considered any sort of authority on the matter.

tl;dr
BTC transactions have no risk of chargeback fraud, virtually no fees and happen near-instantly. No other payment method has all of these benefits rolled into one. For that reason, I exclusively give a heavy discount to my BTC paying customers.

And in the interest of full disclosure, I'll state for the record that I still do virtual item/currency transactions by PayPal, MoneyBookers, ACH Transfer, etc for sake of convenience for the buyer, but only with people I have dealt with many times before over a long period of time and only when selling in significant volume to those select few.