IndieGoGo actually support direct credit card donations, but a lot of people asked for PayPal as an option and we relented. So donating via. IGG actually works just fine - we have obviously disabled the PayPal option.
Wait... really? Because when the ubuntu phone campaign happened, I wanted to buy one, and didn't purely because I couldn't figure out a way to do it without PayPal.
Did I miss something on the page that would have let me pay without it? Oh well; too late now I guess.
I was in the same boat as you with respect to the Ubuntu Edge, as it turns out each campaign can choose which payment services to use. Ubuntu chose to only enable PayPal.
My sentiments exactly, if this were the first instance of this i would forgive them however it is not; I fail to see why paypal is used given it recent history.
Ref:
GlassUp Campaign - Indiegogo
Diaspora's Funding Account
Skullgirls DLC by developer Lab Zero - Indiegogo
Paypal even froze a $35k donation for cancer treatment and in another case forced Regretsy to refund all their donations.
PayPal terms of service strictly requires any kind of charity donation campaign to be approved by them in advance. Anyone who has their unapproved donation drive frozen by PayPal kind of deserve what they get.
I don't agree with that. They kind of emphasise that they want people using donation buttons and unless you are going into the ToS and looking (which I'm sure 99.99% of people don't) you wouldn't know that.
The more I hear these kind of stories the less insane PayPal actually becomes in my eyes. It's just that their service is very specific and tailored to eBay usage.
They will only release the funds when version 1.0 ships? Does PayPal not understand that it costs money to create products? That's the entire reasoning behind crowdfunding! 'Well you see this money you said you needed to make version 1.0 of the product? Well you can have it after you've finished'
> That's the entire reasoning behind crowdfunding!
They're not a crowdfunding service, they are a escrow service. The whole point of escrowing is that the service keeps the money safe until the transaction is completed (ie the buyer gets what she was buying).
I was under the impression that PayPal was a payment service. Party A uses it to send money to Party B and as long as no laws are broken, PayPal keeps its nose out of other people's business.
What makes you think PayPal is an escrow service akin to escrow.com?
Having dealt with a lot of chargebacks (none legitimate) people that like to chargeback seem to just say that someone unauthorised gained access to their account and they never meant to make that payment so they can just turn around and say 'as I didn't make the payment I didn't agree to that'
It would then make it super easy for someone to hack a PP account and buy loads of stuff with 'non-reversible' transactions.
Paypal is just an intermediary between merchants and whatever payment methods customers use to pay Paypal, such as debit/credit cards and bank transfers. And guess what? The modern financial system has no irreversible payment methods. Bank transfers, credit cards, and ACH are all reversible, wherever you go around the world.
If you haven't heard of it before, the May Scale of Monetary Hardness is a great way of thinking about this: http://stakeventures.com/articles/2012/03/07/the-may-scale-o... . If you're a payment intermediary, and you're delivering irreversible assets like gold coins or briefcases full of cash in exchange for very reversible payment methods like credit cards for personal checks, you will get horribly, horribly burnt by fraud, because you can deliver the gold coin and find out weeks later that your credit card was charged back. http://whatilearnedtoday.jameslarisch.com/?action=view&url=b... is a great example of this with Bitcoin and Paypal respectively.
It's not even about educating the user about irreversible transactions -- it's just that there's no way for Paypal to offer them unless customers fund their Paypal purchases by dropping off briefcases of cash and gold bullion at their local Paypal branch.
Paypal already has a policy for dealing with users who reverse transactions out from under them. Unfortunately for the users, that policy is known as "scorched earth". We're talking account suspensions and referrals to collection agencies.
It would certainly be a lot less skeevy if it was done for a service-oriented reason (i.e. one way transactions) instead of the "because fuck you" reason that they appear to use currently.
Paypal understands full-well. They just don't want to be in that business to begin with. Whoever ends up accepting credit and debit cards (in this case Paypal) has to deal with chargebacks on those cards from unsatisfied customers, and crowdfunding is rife with chargebacks from unsatisfied customers. Paypal doesn't want to bear that burden; they never signed up for it.
This whole problem would be mitigated if Paypal set certain limits on accounts by default ($3000 transfer per month, say)--that you'd obviously want to unlimit before running a campaign like this--and then required a phone call with the account owner to discuss the need for the unlimiting. Then they could just tell the crowdfunders "no" up-front.
This is not the first time Paypal did that [1] and it most certainly won't be the last time. That's one of the reasons Bitcoin was invented. I hope that events like this will drive its adoption as a safe alternative for crowd funding and online shopping.
Bitcoin ftw. Sure, not everybody can contribute in bitcoin. But on balance, bitcoin beats paypal by a factor of infinity. Why infinity? Well, with bitcoin you could at least have some contributions, i.e. > 0. With paypal you get 0 contributions. (N>1)/0 = infinity.
Why would anyone WANT to contribute in Bitcoin? From a contributor point of view, Bitcoin leaves them massively vulnerable to fraud--it is almost as bad as mailing an envelope full of cash.
They are crowdfunding a speculative application. That's already mailing envelopes of cash. Although the users read that they are funding development and not buying software, Paypal grabbed it all and said they're worried about fraud.
Bitcoin lets the user assert that they trust the recipient. Or they could trust a third party escrow recipient. There's no payment processor to restrict who a crowdfunder wishes to trust.
Please don't be so vain. Division by zero is undefined, that is (supposed) to be taught in high school. The fact is that computers have to display some value when x/0, and that value is defined by IEEE standard in the context programing languages for consistency.
Paypal doesn't understand that it isn't their money. Every contributor to Mailpile has just had their funds stolen by what was supposed to be a middleman.
Actually it is their money. Paypal is taking all of the risk in the transaction. If Mailpile fails to deliver, Paypal is on the hook. I see no problem with what they did, maybe this should have been communicated better.
> "... unless Mailpile provides PayPal with a detailed budgetary breakdown of how we plan to use the donations from our crowd funding campaign they will not release the block on my account for 1 year until we have shipped a 1.0 version of our product."
I'm a little confused by this. What crowd-sourced funds is PayPal withholding, as I thought that went via IndieGoGo? (answer: IndieGoGo uses PayPal)
What on earth does PayPal care about the financial planning of the recipient of the funds? This doesn't seem like it has anything to do with fraud detection.
IndieGoGo offers PayPal as an option. Many people prefer it, for various reasons. The funds donated via. credit card directly on IndieGoGo are still available to us.
Maybe you can show Paypal this, demonstrating you are carrying a large share of the risk as well.
It's all risk containment for them. I'm a bit surprised that you would write such a confused blog post about the freeze, isn't it common knowledge that this happens with all Paypal accounts that do not deal in (existing) physical things?
> What on earth does PayPal care about the financial planning of the recipient of the funds? This doesn't seem like it has anything to do with fraud detection.
Because PayPal provides users with the option to ask for refund which can be very expensive for them. If they deem the risk is too high they won't do business with you.
The post doesn't have a lot of info, but the only rational explanation I can think of is that Paypal believes Mailpile is a scam intended to solicit donations through false pretenses.
Have a large number of donors issued charge-backs (or whatever the paypal equivalent is)? Has Mailchip missed some sort of deadline that might have caused donors to complain to paypal? Regardless of any of those things this action seems on the surface to be a huge overreach by paypal, but at least in those cases it would make some kind of sense.
Also, I assume there's something in the paypal use contract that gives them authority to take this kind of action? Clearly not a good idea to keep any significant balance in a paypal account.
I am sorry this happened to you. As a consumer I used to love Paypal, buy anything with one click. After using them as a business owner for online transactions I absolutely hate them.
I won't go into my situation but the horror stories are endless:
I've always wondered why this policy is in place. Is it just to screw people over or is there some legitimate use? Are they trying to prevent money laundering?
I think they do have to contend with legitimate fraud, and their automated systems simply can't deal with a true FOSS project where the people donating know precisely what they're getting into, and the developers are obviously not some gang from Nigeria
...and that is why you don't use PayPal, no matter how loud people scream that they want to use PayPal.
Seriously, PayPal has screwed over so many individuals, businesses and projects in the past, the obvious conclusion is that PayPal isn't an option when you run a small business (esp. IT/software-related) or a crowdfunding campaign.
I assume this is to protect against chargebacks. If Mailpile were to empty their PayPal account and then buyers start requesting refunds for non-delivery of the described product, PayPal would be left holding the bag.
Recently I sold a bunch of hardware on eBay. Took photos of it being packaged, photos of it at the post office, added express shipping and a tracking number. The tracking number says delivered, so I withdrew the funds back to my bank account. Next thing I know, PayPal debited my account for the full amount because the buyer filed a non-delivered complaint.
End story is, PayPal doesn't leave themselves with no options for recourse.
I certainly didn't have $250 in that account, which of course added a $50 overdraft fee. One would assume that they didn't spend all their money at once, so paypal would be able to suck back at least some of it.
PayPal is fine for a certain class of limited transactions - usually when they involve selling physical or digital products which actually exist and can be delivered today.
Rightly or wrongly though they have a very[1] long[2] history[3] of freezing the accounts of projects they deem to be remotely 'risky' to them. By definition this would seem to include almost any crowdfunded project where an actual product or service which people are paying for does not yet exist.
Given how well documented this is I can't help but wonder why a company like IndieGoGo would touch PayPal with a bargepole - their interests seem diametrically opposed !
IndieGoGo should be protecting their users by disabling PayPal as a payment option for all projects.
Mailpile is about encrypted email that NSA may not be able to access. Mailpile also referred to Edward Snowden in their indiegogo campaign. Mailpile also accepts bitcoin payments. Do you need anymore reasons to why this happened ???
It's not without precedent to see payment systems leaned on to disable their clients. This is a shiny new webmail client with a focus on encryption, but these shady groups probably aren't attacking projects this early in their life... probably.
True, and given the amount of economic and legal pressure the government has proven itself willing to apply to preserve its surveillance capabilities, I'm not sure why people think it's out of the question in this case. We haven't seen it yet for early-stage projects, but this one's gotten a fair amount of press and donations.
It may seem more likely that PayPal froze the account due to discomfort with crowdfunding, but the question then is how many other campaigns have they done this with. Since Indiegogo still uses them, it seems the answer must be "not many."
You need to get Indiegogo involved and IGG need to take serious measures, such as threatening to completely disable the paypal option from all their future projects.
I added a "donate" button to a free to use website I run. After its first use, PayPal proceeded to freeze my account because I "recently declared your organisation to be non-profit or started receiving donations".
I was very unimpressed, mostly because there was absolutely no indication that adding a "donate" button would do this
The first Google result for "paypal donate button" gives this page:
It clearly states: This button is intended for fundraising. If you are not raising money for a cause, please choose another option. Nonprofits must verify their status to withdraw donations they receive
I think it's unfair to blame a company for enforcing policies which they're completely open about, especially when it's a policy you could read after mere seconds of research.
Yeah when I put together a donation site for a small (not-501(c)(3)) org some years ago, I was tempted to use donations but while reading the docs realized I just wanted payments. That site still operates, although thankfully I'm no longer involved, because PayPal still makes me nervous.
They just don't want to, and we cannot help but wonder why.
The risk of complaints, refunds, and chargebacks for non-delivery would be my guess.
"Please provide an itemized budget and your development goal dates for your project"
This puts us in an incredibly uncomfortable position...
...of having a roadmap for your product's development. It's really not unreasonable, and if you don't have even a vague idea right now, that's a big warning sign.
... we do not feel that it's remotely in their jurisdiction to ask for a detailed budget of our business
Which is unfortunate, as PayPal's business boils down to risk management, and they're asking you to reduce their risk.
Note that they had previously stated that they wanted to release the funds as slowly as possible. Asking us to provide a detailed budget is basically asking us to justify that and give them a timetable so they can withhold the maximum amount of cash for the maximum amount of time.
Note that they had previously stated that they wanted to release the funds as slowly as possible. Asking us to provide a detailed budget is basically asking us to justify that
None of this contradicts my point about mitigating risk, nor that it's a Very Good Idea to have even the most basic of development roadmaps.
Sure, but we have no reason to give those details to PayPal, and very good reasons not to.
Edit: Delaying payments by months is not acceptable or reasonable. There are tax implications (we have to deal with multiple jurisdictions) and opportunity costs. Also, this very obviously goes against the wishes of our community of backers - they are supporting a free software development project, not buying a product.
PayPal is a business partner in this setup, and they are shouldering a lot of risk on the developers behalf. I can understand not wanting to share something as intimate as a business/developement plan, but PayPal is within their rights, boty legally and morally, to ask for one. If the developers are having trouble with this, they should find another partner for their venture. (imho)
That said, PayPal can be real douchebags. Too many friends, business partners and colleagues has been burnt by them in the past. If you're doing something nonprofit, move elsewhere.
> but PayPal is within their rights, boty legally and morally
No and no. They're a payment provider, a utility, not a partner. They could have stated up front that they want a business plan or could have denied acting as payment provider. They could have demanded the backers to waive their refund rights. I'd even be on their side if they kept a percentage of the funds as security.
The backers have a moral right to see a business plan, if any person at all has one. It's their money and they did not give it to paypal so that paypal can collect interest on it, they gave it to mailpile and they collectively are shouldering a much bigger risk than paypal in that transaction.
> they collectively are shouldering a much bigger risk than paypal in that transaction.
No, they are not. Financially, PayPal is the one shouldering the biggest risk.
Edit:
> No and no. They're a payment provider,
They most likely have legal obligations in various jurisdictions and with the credit card providers to do due diligence. And looking at business plans and how payments like this will be used is an important part of that. Try getting the same funding directly from a bank rather than going through a middleman and see what they ask for.
Every time a PayPal story comes up, I'm always reading at how the people are innocent and everything is fine, and yet, they are doing something shady.
Here you have an organization that's effectively asking for donations to support a project, but it's not, from what I can tell, certified as a non-profit.
So suddenly yes, that does become high risk. Any banker in the world is going to look at this scenario and know that it's high risk.
> No, they are not. Financially, PayPal is the one shouldering the biggest risk.
Actually not. Let's assume a chargeback rate of 100%. The donated amount was 135 000 USD, the amount PayPal handled was 45 000 USD, so the remaining backers collectively shoulder about twice as much risk as PayPal.
> They most likely have legal obligations in various jurisdictions and with the credit card providers to do due diligence.
They're an official payment provider for IGG. I assume they know what IGG is by now and the risks associated with that. So they can either
a) choose to forfeit that business because it's too risky. Fair enough.
b) Lay out the conditions early: Hey, we'll take the money and keep it for a year. But would would IGG then still offer PayPal as payment provider?
c) eat the risk and honor the implied contract.
> Here you have an organization that's effectively asking for donations to support a project, but it's not, from what I can tell, certified as a non-profit.
Yes, that's what they do. Every backer voluntarily decided to support that business. I backed kickstarter campaings because the project sounded nice and I wanted those people to have a chance to finish their project, because I thought it was a worthy thing to back. I never even touched the finished goods. A lot of open-source projects ask for donations without being non-profits, for example nginx do. Point is: everyone can decide under which conditions he'd like to support a project - certified non-profit or not, but that's not PayPals business.
> So suddenly yes, that does become high risk.
Sure. Nobody denies that crowdfunding is not inherently risky. But see above. Either don't participate or live with the risk. But PayPal is trying to eat the cake and still have it too: They happily took the money and kept the fees, but will neither refund it to the backers nor cash it out. That's shady in my opinion.
Which is the only part relevant to this discussion. PayPal's risk is far greater than 45,000. This depends on how much PayPal is charged for chargebacks, a rate I cannot know.
> They're an official payment provider for IGG. I assume they know what IGG is by now and the risks associated with that.
Yes. Hence the reason for the additional due diligence. Understanding IGG's operations, it makes complete sense that the would oversee individual projects going through on IGG, and doing additional due diligence on top of IGG. You are making a unwarranted assumption that they their diligence stops at IGG. Having dealt directly with situations like this (essentially acting as an IPSP, or basically, something akin to IGG), banks are still required to do their part.
> Point is: everyone can decide under which conditions he'd like to support a project - certified non-profit or not, but that's not PayPals business.
Just because you say it's not PayPal's business doesn't make it so. It's very much their business. The belief that it shouldn't be their business shows a lack of understanding of the area that PayPal operates.
> Nobody denies that crowdfunding is not inherently risky.
Except no one understands all the risks that are involved. Otherwise, you'd understand why PayPal should be asking for how the money will be used, the business plan, etc. These are additional steps that should be taken precisely because of the risks that exist.
Stopping diligence at IGG would be horribly, horribly wrong.
> Either don't participate or live with the risk.
They are trying to participate. They are being denied.
> Every backer voluntarily decided to support that business
But they can still change their mind and go crying foul to their credit card provider. If there was some way to indicate to the card provider "for this transaction I understand the risks and forfeit my right to a chargeback", this wouldn't be a problem. But as it is now, people can say "oh yeah I'm all for crowdfunding", then when the project fails say "fuck it, I'm getting my money back", and PayPal is shouldering that risk.
> They happily took the money and kept the fees, but will neither refund it to the backers nor cash it out
I'm willing to bet if Mailpile told PayPal, "OK, just refund the backers", they would do it in an instant. If they refunded everyone with no discussion or attempts to resolve anything then people would be even angrier.
"They could have stated up front..." - IIRC their ToS stated up front that you can't accept that money at all (i.e., no pre-sales) - but they didn't catch you in time, so they are holding the funds. It's essentially as an escrow, but better than that - escrow would release funds only AFTER shipment, but they are presumably offering to release part of it before shipment according to the requested business plans. And they have no obligation to catch 100% of violating merchants immediately, it's your responsibility to not request payments breaking the ToS.
"They could have demanded the backers to waive their refund rights." : No, they can't demand that - the refund rights are mandated by law and nothing can waive that, consumers have them no matter what any merchant (like you) or intermediary (like paypal) might want or put in agreements; some chargeback rights apply even if they sign in blood "this is an nonrefundable donation".
Mailpile sets off alarm bells for me. The web page seems big on promises, and decent webmail isn't the eaiest thing in the world to make a decent UI for. Never mind that it's all wrapped around some kind of seamless background application.
I'm doubtful that they'll do what they think they can do. Good luck to them, but I'm unsuprised that paypal has witheld funds.
FUD. Every project that's not yet done is a crystal ball of promises until its delivered. IGG and KS have good records so far. And these guys that put their names on this project are highly motivated to deliver.
You're entitled to your opinion. But I've personally met two of three team members. So these or not phantom people, trying to take your money.
Paypal doesn't seem to have any problems taking money for "shady" people and just refusing to pay out. In my mind, that makes Paypal shady - and not the people that use it.
> So these or not phantom people, trying to take your money.
Well Paypal doesn't stay in business on trusting the reputation of one or two people at a time. Trust simply doesn't scale like that. So while I or you personally might not worry about this, Paypal would still have to look at this through their dispassionate business case microscope to evaluate how risky the situation looks.
The problem here is that crowd-funding is a risky business and as things stand paypal has to shoulder that risk. What we need is a type of transaction where the payer/crowdfunder assumes the risk, i.e. chargebacks are not allowed.
I don't know why, in 2013, people are surprised when they use PayPal and wind up without access to the money for months or years. Paypal apologists will say that this is relatively rare. Even if that is true, since the criteria they use to take these actions are often beyond the control of merchants, using PayPal is an unacceptable risk for any business that doesn't have at least 6 months of working capital.
Always avoid PayPal if you need access to the money. Even if you feel that your business falls squarely within PayPal's AUP, always have a backup implementation with an alternative payment provider coded and ready to go (I recommend using Stripe and skipping PayPal altogether). You don't want to lose new sales on top of the money PayPal decides to hold indefinitely.
People can get tired of other people telling this, but really, they should use Bitcoin. There are several advantages of this: accountability (you can verify with the block chain that they really received your payment), ease of use (utilizing 3rd parties like Coinbase, BitPay and others you don't really have to know how Bitcoin works to pay with them) and most importantly - irreversibility - once you receive Bitcoin there are no chargebacks.
PS. They accept Bitcoin donations (not in the indiegogo campaign, just independently) and already raised 52.44 BTC which roughly translates to 5244 EUR. Not bad if you ask me for a payment channel that's not actively advertised by them.
Not really - can USA spy on credit cards issued by Chinese banks? And vice-versa? There is at least some level of privacy. But with BTC every time you make a purchase you can be linked to all your previous and future purchases.
That's only true if one has access to data at every point in the block chain. If at some point coins go to a private person or company that didn't advertise their address anywhere you're lost. There's no way to know who own a Bitcoin address if it's not part of any online service/exchange and was funded by someone else.
The US surely can spy on Chinese CC transactions that occur in, or where the tx data passes through a friendly locale. There is a decent chance for them to be able to get CC tx data from within China as well.
Bitcoin is a protocol that gives you as much privacy as you want. You can use one-time addresses both for sending and receiving, which gives you more privacy than using Paypal or credit cards directly.
> irreversibility - once you receive Bitcoin there are no chargebacks.
Unless I receive the goods before paying, I would never buy anything with Bitcoin online. There’s no buyer or fraud protection whatsoever. I don’t understand how any legitimate merchant would be alright with that. If a merchant would only accept Bitcoin, that would come across just as sketchy as a merchant who wants me to mail him a cashier’s check – never gonna happen.
Merchants have a reputation to keep. Most people will trust a merchant who has proved themselves trustworthy. Merchants who haven't built trust will be forced to use a trusted escrow service, of which there are many.
There are more than enough options for buyer protection with Bitcoin. The good thing is that they're all optional. Buyer protection is a trade off. Sometimes it is unnecessary. But with card companies and businesses like PayPal, merchants don't get a choice. They're liable for charge-backs for 90days and for having their accounts frozen indefinitely.
MailPile has already received over $6000 in Bitcoins, by the way. It is their only donation received which is currently liquid.
Out of the dozens of times I've purchased with Bitcoins I have never been ripped off.
Buy from reputable companies or use an escrow service.
A homeless guy asked me for my car keys the other day. He said he'd clean the inside of my car and bring me the keys. I didn't give him my keys. Something tells me you would have.
Not exactly. Bitcoin enables multi signature transactions, so power rests not only with the escrow service, but also with the parties involved. There can also be more than one dispute mediator involved, as to maintain a balance.
For the delivery of real world goods you can write small scripts in the tx that monitor tracking numbers, have time locks, and the like as to maintain more control over the flow of money. Bitcoin is trustless, but only to an extent. Just like anything there will be point of failures, but Bitcoin minimizes them to a large extent and brings with it the opportunity to distribute power among many third parties, not just one.
I won't even bother answering you last question though, because I'm sure you realize how ridiculous that sounds in the context of this thread. Namely, if MailPile only accepted Bitcoin this would have never happened.
Remember that "chargebacks for everyone, no questions asked" is a US and Australia-only thing. In most other places it's not very common (you need to go premium for that), and Bitcoin would be more than welcome to reduce fees, delays, frozen accounts, and other bull.
Fraud is still fraud, so if you get defrauded by someone, all you need is that a judge decides that Bitcoin is money, like it has already happened with that guy in the US who ran a ponzi scheme based on Bitcoin and got caught. So don't worry about that.
> all you need is that a judge decides that Bitcoin is money
And then what, do I need to sue every time someone stiffs me? That would be a colossal waste of time and money, which means in practice that the fraud gets away with it – knowing they might not even have the funds to pay me.
The way it works now is, if I’m not satisfied and the merchant isn’t being reasonable, I can call my credit card company and request a chargeback. No lawyers and courts needed.
I was talking about fraud, which is a lot broader than "I bought something on Amazon and something went wrong". If you fall into a ponzi scheme, a credit card won't save you.
About chargebacks, again, it's a US and Australia-only thing, so yeah, maybe in those places Bitcoin won't look so good, won't be adopted, and they will be left behind.
At least in the US, it's not quite "no questions asked". The last time I requested a chargeback my credit union sent me a form with a list of questions, including asking me to detail how I had attempted to resolve the issue with the merchant, with the dates of when I had phoned them.
On the other hand, "chargebacks for everyone if no evidence of goods delivered" is a global thing.
Fraud is very different from chargebacks - if you lose money in fraud, good luck getting it back from the fraudster; proper chargebacks mean you get the money back in any case, even in extreme cases if your bank goes bankrupt during that time.
> Unless I receive the goods before paying, I would never buy anything with Bitcoin online.
Good, then you should be fine donating to Mailpile using Bitcoin. Because it's not a purchase transaction, it's a donation. There is no promise of a product.
By clicking 'Continue', you acknowledge that you understand that you are contributing to a work-in-progress and not making a direct purchase. Perks are managed by the campaigners and cannot be guaranteed by Indiegogo. Your click also acknowledges that you agree to the Indiegogo Terms of Use.
There is something I don't understand about Bitcoin: right now there is a lot of instability in the exchange rate of Bitcoin and everyday currency like dollars, euros, or pounds, from the graph I checked from here[1].
How can it be a viable alternative, when its value can change by 40% in a month? Gaining or losing value is not important (if it's increasing value, I have to delay exchanging to dollars as much as possible thus withholding funds), but as long as a vast majority of the population is not using it to pay or get paid, it poses a serious problem to its adoption.
The only solutions I can think of are: either it becomes stable, and so everyday people can exchange other currencies in Bitcoin, or people get paid in Bitcoin by employers, so they can spend it whenever they want, but neither of them look like they're going to happen soon.
Am I wrong in my analysis? I'm not an expert in finance so maybe I might have missed something.
Just don't keep BTC. I'm surprised the default method of using bitcoins isn't "I give send USD to my transfer agent, they make a BTC transfer to your transfer agent, and your transfer agent immediately deposits USD in your account", with the entire process occuring with a defined instantaneous exchange rate.
Yes, I imagine that, like with Paypal, the sender would be responsible for eating both exchange fees. The delay, on the other hand, would impose price volatility that would likely be equal in both directions--so as long as the transfer-agents formed a network with an agreement that the receiving agent smoothed over both all losses and all gains during transfer, there should be net zero liability (they'd just need some float.)
You've lost me. Why would a consumer ever bother with BTC? Especially if both ends of the transaction are paying fees, spreads and paying for an escrow service.
Also, does the merchant set your prices in BTC, and change prices a few times per week as the exchange rate fluctuates? Or are the prices in USD?
Who said anything about an escrow service? One of the whole reasons to use BTC is irreversibility. You can build a crowdfunding site on atomic USD->BTC->USD transfers, precisely because there's no possibility of chargebacks. Crowdfunding is fundamentally a "pay cash in advance for some probability of a return" model, and BTC is the "cash" part that would make that work. Credit cards are very bad at being cash.
It's a new currency that is not artificially stabilized by any government, so it's only natural that it has some wild fluctuations. If you don't like big gains just avoid holding BTC and you'll be fine.
As derefr said, there are many third party processors who will handle the Bitcoin for you and wire you the cash directly as soon as you receive Bitcoin payment. Or you can do it yourself and sell your BTC as soon as you get them.
I will accept goats and chickens before I accept Bitcoin. 99% of people have never even heard of it. I am pretty certain that 100% of my customers have never heard of it. Not worth my time.
Like it has been said a gazillion times already, you can get paid in USD if you want to (using Bitcoin behind the scenes). You get the same benefits as a merchant (no chargebacks, easy implementation, ridiculously small fees, countries: All), and without the annoying x10 yearly gains.
That's probably what you should have said in the first post (benefits as a merchant) and not implying he was dumb because it was missing those fabulous gains
Folks who bought in April will be early adopters and will see incredible profits too if they don't panic sell. It's a matter of logic. Like I said, it can go to 0 or +inf.
Quite hard to accept goats and chickens from people living on another continent. With Bitcoin it's possible, fast and costs pennies. Plus, many Bitcoin supporters are buying from merchants that accept Bitcoin just because of that, so with little cost you get more business. I don't see how this could be a bad thing or not worth your time.
I've seen PayPal nearly put several small businesses out of business.
There are some things that cause PayPal to just freeze an account, and it's next to impossible to speak to a human or to otherwise get the situation resolved.
Pretty much the only threat to Stripe's eventual world domination would be PayPal getting its act together.
Most of Paypal's competitors weren't wiped out by Paypal being good, they were wiped out because they weren't as good as handling risk and fraud as Paypal. They got wiped out by criminals.
Paypal is risk averse, which means you shouldn't use them for cases where you're taking a large amount of money up front and not delivering in the near future (i.e events, crowd-funding), or alternatively get pre-approval from Paypal.
I've no idea what the current fraud level against Stripe is, but as they become more mainstream they're going to need to employ more anti-fraud and anti-risk measures as their exposure increases.
> I've no idea what the current fraud level against Stripe is, but as they become more mainstream they're going to need to employ more anti-fraud and anti-risk measures as their exposure increases.
I'm one of Stripe's cofounders. For what it's worth -- we already process billions of dollars a year. (More than PayPal when it was acquired.) There'll always be more we can do on the fraud/risk side, but we're already operating at a scale that requires a decent amount of sophistication.
(in a previous life I worked in front office investment banking so had to undergo anti-fraud and anti-money laundering training as well as worked on general exposure risk issues)
The problem is that fraud/risk (like tech security) is it often involves black swan events. Everything seems fine right until the point where it's not and you're on the hook for millions of dollars (Stripe is probably in the position where you can afford to take a few black swan type events and survive; a lot of Paypal competitors weren't).
Given that Stripe don't do the "wallet" approach of Paypal and is primarily focused on API customers I'm guessing your risks in general are lower, but I'd recommend you be careful about becoming over-complacent.
> I'd recommend you be careful about becoming over-complacent.
Absolutely. Indeed, I'd characterize us as actively paranoid. My point was merely that we're already operating at a scale that needs pretty good fraud systems.
Only for extremely specific and useless definitions of "no fraud."
If I send my bitcoins to someone to buy something, I have no protection if they decide not to deliver.
At which point the Bitcoin enthusiasts will say "but you can use a third party escrow service," which is true, and puts us right back into the same situation we are with PayPal.
The difference is you have the option to offer buyer protection or not offer it with Bitcoin.
With Credit Card companies and their proxies, Stripe, PayPal, etc. there is no option of choosing a buyer protection service provider which meets your needs (unless you consider strict to extremely strict a choice).
Buyer protection isn't always a good thing. Often it is a hindrance to progress. Merchants should be able to chose the level of buyer protection they want to offer.
But with Bitcoin, if you trust the merchant/recipient you can opt out of using escrow and transfer the money directly to him. With Paypal it's impossible.
The fact that the vast majority of payors used PayPal rather than Bitcoin certainly has nothing to do with PayPal's buyer protection and everything to do with Bitcoin being obscure and more complex to use.
I rarely use cash when I buy anything in person mainly because of the buyer protection a credit card offers me.
Online it's the same thing. I'd pick credit card or Paypal over bitcoin just like I pick credit cards IRL over cash. It has nothing to do with obscurity.
Just send a money order or cash through the mail. After all, you trust the recipient, so you don't need all that customer protection stuff that Paypal offers.
I do that all the time. I live in Poland and bought hundreds of things from the Internet. Buyer always pays first, and there are no such things as chargebacks. And yet most people are okay with that. Only US people take chargebacks for granted.
I live in the Czech Republic and by far the most used payment method here is 'cash on delivery' - you send something and the postal service collects the money for you and than just sends you the cheque. It can hardly get simpler and it's safe. I wonder why this solution is apparently so rarely used in western countries.
> At which point the Bitcoin enthusiasts will say "but you can use a third party escrow service," which is true, and puts us right back into the same situation we are with PayPal.
Bitcoin escrow doesn't work that way. Escrow cannot decide by itself to freeze your money. There are three parties in the transaction and you'd need the consensus of at least two of them to move the money. It's either the buyer and seller (in ideal transaction), or the escrow and seller or the escrow and buyer in a situation where transaction is disputed. The bitcoin escrow cannot behave like paypal do in this case.
While fraud was a big deal for PayPal, based on reading The Paypal Wars (http://en.wikipedia.org/wiki/The_PayPal_Wars) network effects, good early customer engagement and the fact that the dotcom bust killed everyone else's funding were also pretty important.
Everyone keeps saying that fraud will be a serious problem for Stripe, but they move a huge amount of money now which is probably comparable to the period when PayPal nearly got destroyed by fraud - which was around the year 2000 when the web was a lot smaller.
Everyone always recommends Stripe as an alternative to PayPal. Sure, it's an alternative to PayPal for accepting credit cards. But it doesn't accept payments from PayPal accounts, which is the only reason most people use PayPal in the first place. I have a business in the SEO sector, and many of my clients are foreign without credit cards. Over 50% of my transactions are from PayPal (the that option is direct credit card through a traditional gateway).
People should start to understand that crowdfunding is not a trivial business from a legal and regulatory perspective.
Yes, PayPal sucks, but you can run into this crap with any bank or payment service provider you don't have clear and direct business dealings with, and who you haven't informed upfront about what you're up to.
Also, it's just plain lazy and irresponsible of IndieGogo to pay out via PayPal, at least not without big fat warning signs. Of all the options available, this is pretty much the worst.
It's very naive to think that you can just accept money in exchange for unverifiable promises and not set off all kinds of alarm bells. Expect frozen assets to start to happen more and more often with crowdfunding, and not just at PayPal.
I'm surprised PayPal still haven't taken a clear stance against crowdfunding like Amazon Payments have. That's part of the problem - it's really vague as to what situations PayPal will intervene in.
I think that Kickstarter has their shit together, and the risk of a chargeback from Kickstarter to [project leader] is relatively low, compared to the risk of a project funded directly through Amazon Payments.
I don't know how indiegogo works, but in the case of Kickstarter, I would assume that Kickstarter is collecting the payments, arbiter of refunds in the case a goal is not met, and does not have access to the money in the interim.
Then Kickstarter uses Amazon Payments to disburse the funds to project lead? I am uneducated and did not contribute to the fund, so I don't really know how it works. Can you enlighten?
Not 100% sure but I think kickstarter uses amazon's deferred payment api. Basically they get authorizations from the donors to be charged a certain amount on their credit card, but the amount isn't charged until the crowdfunding ends successfully. If the goal isn't reached nothing is charged on credit cards, if it is, the money is sent to kickstarter's amazon payments account, and from there kickstarter sends it to the project after taking its cut.
Ah. So, it sounds lower risk for Amazon, but I don't really know how indiegogo and paypal interoperate, so maybe it's the same exact pattern.
Sounds like a fantastic racket for Kickstarter!
EDIT: I've read more of the comments and it sounds like IndieGoGo has nothing to do with Paypal. They were separate funding efforts, from the same landing page. "You can pay by IndieGoGo or Paypal."
I presume the reason I couldn't figure this out from the Mailpile website is that they stopped mentioning the PayPal option when it was clear that Mailpile wasn't going to get paid by PayPal in any kind of short order. You can pay IndieGoGo or you can send Bitcoins.
That's how I'd run my business if I didn't have a product yet. You'd have to be crazy to use PayPal for that.
EDIT2: I guess IndieGoGo does offer the PayPal option. I don't understand enough about how this is put together to have an informed opinion. If PPUSD and credit cards are all handled by PayPal, then it would seem that PayPal does indeed have some risk. Maybe it's actually accepting credit cards that's crazy. _THOSE_ have some serious anti-fraud guarantees, and there's more to fraud than simple non-delivery.
It's not the first time I have heard about them freezing funds - the last time was a few years back. From what I remember they were worried that the customers would ask for their money back if the product wasn't completed (explaining why they want to see a budget). This has nothing to do with fraud. They are allowed to do whatever they want with your money because they are not a bank.
It's completely ridiculous because participants in crowd funding are aware of the risks - they may never see their money's worth (even though that isn't the case here).
Either way, I would raise a massive stink if they don't buckle - I see you have a WIRED article, maybe approach them about writing about this encounter with PayPal. That's some pretty bad publicity right there. You may also be able to demand interest if they do continue to illegally with-hold the funds for that long (again, they are not a bank, but that means that this time they are not protected by those very same laws).
> It's completely ridiculous because participants in crowd funding are aware of the risks - they may never see their money's worth (even though that isn't the case here).
I wish I could agree, but the angry rants on a few Kickstarter projects show that many people see it as a "shop for things that haven't been built yet", rather than "give us some money, and we'll try to build these products, and if we do manage to build them you'll get one, but we could fail".
As I read this post, I felt a brief rush of anxiety wondering if I backed this project. I hoped not. These guys come off as rather flippant with other people's money.
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[ 3.7 ms ] story [ 273 ms ] threadGlad I didn't donate yet. If necessary I'll fly over and deliver it in person ;)
Did I miss something on the page that would have let me pay without it? Oh well; too late now I guess.
Ref: GlassUp Campaign - Indiegogo Diaspora's Funding Account Skullgirls DLC by developer Lab Zero - Indiegogo Paypal even froze a $35k donation for cancer treatment and in another case forced Regretsy to refund all their donations.
They're not a crowdfunding service, they are a escrow service. The whole point of escrowing is that the service keeps the money safe until the transaction is completed (ie the buyer gets what she was buying).
What makes you think PayPal is an escrow service akin to escrow.com?
It would then make it super easy for someone to hack a PP account and buy loads of stuff with 'non-reversible' transactions.
If you haven't heard of it before, the May Scale of Monetary Hardness is a great way of thinking about this: http://stakeventures.com/articles/2012/03/07/the-may-scale-o... . If you're a payment intermediary, and you're delivering irreversible assets like gold coins or briefcases full of cash in exchange for very reversible payment methods like credit cards for personal checks, you will get horribly, horribly burnt by fraud, because you can deliver the gold coin and find out weeks later that your credit card was charged back. http://whatilearnedtoday.jameslarisch.com/?action=view&url=b... is a great example of this with Bitcoin and Paypal respectively.
It's not even about educating the user about irreversible transactions -- it's just that there's no way for Paypal to offer them unless customers fund their Paypal purchases by dropping off briefcases of cash and gold bullion at their local Paypal branch.
It would certainly be a lot less skeevy if it was done for a service-oriented reason (i.e. one way transactions) instead of the "because fuck you" reason that they appear to use currently.
This whole problem would be mitigated if Paypal set certain limits on accounts by default ($3000 transfer per month, say)--that you'd obviously want to unlimit before running a campaign like this--and then required a phone call with the account owner to discuss the need for the unlimiting. Then they could just tell the crowdfunders "no" up-front.
[1] http://www.gamesindustry.biz/articles/2013-04-23-skullgirls-... and probably there's more of this
Why would anyone WANT to contribute in Bitcoin? From a contributor point of view, Bitcoin leaves them massively vulnerable to fraud--it is almost as bad as mailing an envelope full of cash.
Bitcoin lets the user assert that they trust the recipient. Or they could trust a third party escrow recipient. There's no payment processor to restrict who a crowdfunder wishes to trust.
The IEEE floating point standard (for any precision) defines anything divided by zero to be the infinity value (all bits except the sign set to 1).
You where saying?
Pretty good wiki on the topic: http://en.wikipedia.org/wiki/Division_by_zero
I'm a little confused by this. What crowd-sourced funds is PayPal withholding, as I thought that went via IndieGoGo? (answer: IndieGoGo uses PayPal)
What on earth does PayPal care about the financial planning of the recipient of the funds? This doesn't seem like it has anything to do with fraud detection.
It's all risk containment for them. I'm a bit surprised that you would write such a confused blog post about the freeze, isn't it common knowledge that this happens with all Paypal accounts that do not deal in (existing) physical things?
Because PayPal provides users with the option to ask for refund which can be very expensive for them. If they deem the risk is too high they won't do business with you.
Have a large number of donors issued charge-backs (or whatever the paypal equivalent is)? Has Mailchip missed some sort of deadline that might have caused donors to complain to paypal? Regardless of any of those things this action seems on the surface to be a huge overreach by paypal, but at least in those cases it would make some kind of sense.
Also, I assume there's something in the paypal use contract that gives them authority to take this kind of action? Clearly not a good idea to keep any significant balance in a paypal account.
I won't go into my situation but the horror stories are endless:
http://www.ripoffreport.com/reports/directory/paypal-inc http://www.paypalsucks.com/
As a developer I won't use them anymore. I use Stripe now.
Seriously, PayPal has screwed over so many individuals, businesses and projects in the past, the obvious conclusion is that PayPal isn't an option when you run a small business (esp. IT/software-related) or a crowdfunding campaign.
Recently I sold a bunch of hardware on eBay. Took photos of it being packaged, photos of it at the post office, added express shipping and a tracking number. The tracking number says delivered, so I withdrew the funds back to my bank account. Next thing I know, PayPal debited my account for the full amount because the buyer filed a non-delivered complaint.
End story is, PayPal doesn't leave themselves with no options for recourse.
(I'm still fighting that one)
The same could be said for your situation, but I'm assuming the liability is lower due to the amount.
Edit: That's not quite right since $100,000 represents a collective amount, not individual buyers demanding a refund.
Rightly or wrongly though they have a very[1] long[2] history[3] of freezing the accounts of projects they deem to be remotely 'risky' to them. By definition this would seem to include almost any crowdfunded project where an actual product or service which people are paying for does not yet exist.
Given how well documented this is I can't help but wonder why a company like IndieGoGo would touch PayPal with a bargepole - their interests seem diametrically opposed !
IndieGoGo should be protecting their users by disabling PayPal as a payment option for all projects.
[1] http://techcrunch.com/2011/12/06/paypal-account-freeze/
[2] http://www.holdtheline.com/threads/paypal-freezes-funds-from...
[3] http://www.siliconbeat.com/2013/08/16/paypal-freezes-then-re...
> Crowd funding is an adventure.
I don't think PayPal are as enthusiastic in joining you in an "adventure" as you think. Especially if that adventure includes credit card chargebacks.
It may seem more likely that PayPal froze the account due to discomfort with crowdfunding, but the question then is how many other campaigns have they done this with. Since Indiegogo still uses them, it seems the answer must be "not many."
I was very unimpressed, mostly because there was absolutely no indication that adding a "donate" button would do this
The first Google result for "paypal donate button" gives this page:
https://www.paypal.com/cgi-bin/webscr?cmd=_donate-intro-outs...
It clearly states: This button is intended for fundraising. If you are not raising money for a cause, please choose another option. Nonprofits must verify their status to withdraw donations they receive
I think it's unfair to blame a company for enforcing policies which they're completely open about, especially when it's a policy you could read after mere seconds of research.
The risk of complaints, refunds, and chargebacks for non-delivery would be my guess.
"Please provide an itemized budget and your development goal dates for your project"
This puts us in an incredibly uncomfortable position...
...of having a roadmap for your product's development. It's really not unreasonable, and if you don't have even a vague idea right now, that's a big warning sign.
... we do not feel that it's remotely in their jurisdiction to ask for a detailed budget of our business
Which is unfortunate, as PayPal's business boils down to risk management, and they're asking you to reduce their risk.
None of this contradicts my point about mitigating risk, nor that it's a Very Good Idea to have even the most basic of development roadmaps.
Edit: Delaying payments by months is not acceptable or reasonable. There are tax implications (we have to deal with multiple jurisdictions) and opportunity costs. Also, this very obviously goes against the wishes of our community of backers - they are supporting a free software development project, not buying a product.
You'll reduce your risk profile, and increase your chances of receiving payment inside the next year.
and very good reasons not to
Aside from potentially delayed payouts, what are your other good reasons?
Edit, replying to your edit:
Our community of backers... are supporting a free software development project, not buying a product
Do you know for a fact that all of your backers 100% understand the difference?
Do you also know for 100% that you will receive no complaints, no refund requests, and no chargebacks in the event that you don't deliver?
PayPal is a business partner in this setup, and they are shouldering a lot of risk on the developers behalf. I can understand not wanting to share something as intimate as a business/developement plan, but PayPal is within their rights, boty legally and morally, to ask for one. If the developers are having trouble with this, they should find another partner for their venture. (imho)
That said, PayPal can be real douchebags. Too many friends, business partners and colleagues has been burnt by them in the past. If you're doing something nonprofit, move elsewhere.
No and no. They're a payment provider, a utility, not a partner. They could have stated up front that they want a business plan or could have denied acting as payment provider. They could have demanded the backers to waive their refund rights. I'd even be on their side if they kept a percentage of the funds as security.
The backers have a moral right to see a business plan, if any person at all has one. It's their money and they did not give it to paypal so that paypal can collect interest on it, they gave it to mailpile and they collectively are shouldering a much bigger risk than paypal in that transaction.
No, they are not. Financially, PayPal is the one shouldering the biggest risk.
Edit: > No and no. They're a payment provider,
They most likely have legal obligations in various jurisdictions and with the credit card providers to do due diligence. And looking at business plans and how payments like this will be used is an important part of that. Try getting the same funding directly from a bank rather than going through a middleman and see what they ask for.
Every time a PayPal story comes up, I'm always reading at how the people are innocent and everything is fine, and yet, they are doing something shady.
Here you have an organization that's effectively asking for donations to support a project, but it's not, from what I can tell, certified as a non-profit.
So suddenly yes, that does become high risk. Any banker in the world is going to look at this scenario and know that it's high risk.
Actually not. Let's assume a chargeback rate of 100%. The donated amount was 135 000 USD, the amount PayPal handled was 45 000 USD, so the remaining backers collectively shoulder about twice as much risk as PayPal.
> They most likely have legal obligations in various jurisdictions and with the credit card providers to do due diligence.
They're an official payment provider for IGG. I assume they know what IGG is by now and the risks associated with that. So they can either
a) choose to forfeit that business because it's too risky. Fair enough.
b) Lay out the conditions early: Hey, we'll take the money and keep it for a year. But would would IGG then still offer PayPal as payment provider?
c) eat the risk and honor the implied contract.
> Here you have an organization that's effectively asking for donations to support a project, but it's not, from what I can tell, certified as a non-profit.
Yes, that's what they do. Every backer voluntarily decided to support that business. I backed kickstarter campaings because the project sounded nice and I wanted those people to have a chance to finish their project, because I thought it was a worthy thing to back. I never even touched the finished goods. A lot of open-source projects ask for donations without being non-profits, for example nginx do. Point is: everyone can decide under which conditions he'd like to support a project - certified non-profit or not, but that's not PayPals business.
> So suddenly yes, that does become high risk.
Sure. Nobody denies that crowdfunding is not inherently risky. But see above. Either don't participate or live with the risk. But PayPal is trying to eat the cake and still have it too: They happily took the money and kept the fees, but will neither refund it to the backers nor cash it out. That's shady in my opinion.
patio11 answered this in another comment: https://news.ycombinator.com/item?id=6333932
It's there, it's always been there, people just accepted the T&Cs without reading them.
Which is the only part relevant to this discussion. PayPal's risk is far greater than 45,000. This depends on how much PayPal is charged for chargebacks, a rate I cannot know.
> They're an official payment provider for IGG. I assume they know what IGG is by now and the risks associated with that.
Yes. Hence the reason for the additional due diligence. Understanding IGG's operations, it makes complete sense that the would oversee individual projects going through on IGG, and doing additional due diligence on top of IGG. You are making a unwarranted assumption that they their diligence stops at IGG. Having dealt directly with situations like this (essentially acting as an IPSP, or basically, something akin to IGG), banks are still required to do their part.
> Point is: everyone can decide under which conditions he'd like to support a project - certified non-profit or not, but that's not PayPals business.
Just because you say it's not PayPal's business doesn't make it so. It's very much their business. The belief that it shouldn't be their business shows a lack of understanding of the area that PayPal operates.
> Nobody denies that crowdfunding is not inherently risky.
Except no one understands all the risks that are involved. Otherwise, you'd understand why PayPal should be asking for how the money will be used, the business plan, etc. These are additional steps that should be taken precisely because of the risks that exist.
Stopping diligence at IGG would be horribly, horribly wrong.
> Either don't participate or live with the risk.
They are trying to participate. They are being denied.
But they can still change their mind and go crying foul to their credit card provider. If there was some way to indicate to the card provider "for this transaction I understand the risks and forfeit my right to a chargeback", this wouldn't be a problem. But as it is now, people can say "oh yeah I'm all for crowdfunding", then when the project fails say "fuck it, I'm getting my money back", and PayPal is shouldering that risk.
> They happily took the money and kept the fees, but will neither refund it to the backers nor cash it out
I'm willing to bet if Mailpile told PayPal, "OK, just refund the backers", they would do it in an instant. If they refunded everyone with no discussion or attempts to resolve anything then people would be even angrier.
"They could have demanded the backers to waive their refund rights." : No, they can't demand that - the refund rights are mandated by law and nothing can waive that, consumers have them no matter what any merchant (like you) or intermediary (like paypal) might want or put in agreements; some chargeback rights apply even if they sign in blood "this is an nonrefundable donation".
I'm doubtful that they'll do what they think they can do. Good luck to them, but I'm unsuprised that paypal has witheld funds.
Paypal doesn't seem to have any problems taking money for "shady" people and just refusing to pay out. In my mind, that makes Paypal shady - and not the people that use it.
Well Paypal doesn't stay in business on trusting the reputation of one or two people at a time. Trust simply doesn't scale like that. So while I or you personally might not worry about this, Paypal would still have to look at this through their dispassionate business case microscope to evaluate how risky the situation looks.
Always avoid PayPal if you need access to the money. Even if you feel that your business falls squarely within PayPal's AUP, always have a backup implementation with an alternative payment provider coded and ready to go (I recommend using Stripe and skipping PayPal altogether). You don't want to lose new sales on top of the money PayPal decides to hold indefinitely.
For better or worse, Paypal has survived and looks like it's going to go on surviving, that's why people if they only support one method, choose it.
Bitcoin has a long way to go before it's as easy to use as Paypal.
Coinbase (out of Y combinator) is getting there.
PS. They accept Bitcoin donations (not in the indiegogo campaign, just independently) and already raised 52.44 BTC which roughly translates to 5244 EUR. Not bad if you ask me for a payment channel that's not actively advertised by them.
If it isn't, you can't use it to pay Mailpile- so it's irreverent.
This is simply not true. If i make my first purchuase using address A and my second purchuase using address B, how can they be linked together?
Unless I receive the goods before paying, I would never buy anything with Bitcoin online. There’s no buyer or fraud protection whatsoever. I don’t understand how any legitimate merchant would be alright with that. If a merchant would only accept Bitcoin, that would come across just as sketchy as a merchant who wants me to mail him a cashier’s check – never gonna happen.
There are more than enough options for buyer protection with Bitcoin. The good thing is that they're all optional. Buyer protection is a trade off. Sometimes it is unnecessary. But with card companies and businesses like PayPal, merchants don't get a choice. They're liable for charge-backs for 90days and for having their accounts frozen indefinitely.
MailPile has already received over $6000 in Bitcoins, by the way. It is their only donation received which is currently liquid.
See https://blockchain.info/address/13z55AGS14pSPiPpMqAAFHb576tS...
I'm a supporter of bitcoins and want it to succeed, I just don't trust a lot of the vendors that use it.
Out of the dozens of times I've purchased with Bitcoins I have never been ripped off.
Buy from reputable companies or use an escrow service.
A homeless guy asked me for my car keys the other day. He said he'd clean the inside of my car and bring me the keys. I didn't give him my keys. Something tells me you would have.
Something like PayPal for Bitcoins? Sounds like we're back to square one. What's the point of bitcoin again?
For the delivery of real world goods you can write small scripts in the tx that monitor tracking numbers, have time locks, and the like as to maintain more control over the flow of money. Bitcoin is trustless, but only to an extent. Just like anything there will be point of failures, but Bitcoin minimizes them to a large extent and brings with it the opportunity to distribute power among many third parties, not just one.
I won't even bother answering you last question though, because I'm sure you realize how ridiculous that sounds in the context of this thread. Namely, if MailPile only accepted Bitcoin this would have never happened.
Fraud is still fraud, so if you get defrauded by someone, all you need is that a judge decides that Bitcoin is money, like it has already happened with that guy in the US who ran a ponzi scheme based on Bitcoin and got caught. So don't worry about that.
And then what, do I need to sue every time someone stiffs me? That would be a colossal waste of time and money, which means in practice that the fraud gets away with it – knowing they might not even have the funds to pay me.
The way it works now is, if I’m not satisfied and the merchant isn’t being reasonable, I can call my credit card company and request a chargeback. No lawyers and courts needed.
About chargebacks, again, it's a US and Australia-only thing, so yeah, maybe in those places Bitcoin won't look so good, won't be adopted, and they will be left behind.
Fraud is very different from chargebacks - if you lose money in fraud, good luck getting it back from the fraudster; proper chargebacks mean you get the money back in any case, even in extreme cases if your bank goes bankrupt during that time.
Good, then you should be fine donating to Mailpile using Bitcoin. Because it's not a purchase transaction, it's a donation. There is no promise of a product.
By clicking 'Continue', you acknowledge that you understand that you are contributing to a work-in-progress and not making a direct purchase. Perks are managed by the campaigners and cannot be guaranteed by Indiegogo. Your click also acknowledges that you agree to the Indiegogo Terms of Use.
I think crowdfunding would be a lot less popular if people actually understand it wasn't just a pre-sale. Because most people are not just donating.
Exactly. In a world where caveat emptor doesn't apply for consumer purchases, this is a mild case of fraud. Naturally, PayPal is extremely wary.
How can it be a viable alternative, when its value can change by 40% in a month? Gaining or losing value is not important (if it's increasing value, I have to delay exchanging to dollars as much as possible thus withholding funds), but as long as a vast majority of the population is not using it to pay or get paid, it poses a serious problem to its adoption.
The only solutions I can think of are: either it becomes stable, and so everyday people can exchange other currencies in Bitcoin, or people get paid in Bitcoin by employers, so they can spend it whenever they want, but neither of them look like they're going to happen soon.
Am I wrong in my analysis? I'm not an expert in finance so maybe I might have missed something.
[1] http://bitcoincharts.com/charts/mtgoxEUR
Also, does the merchant set your prices in BTC, and change prices a few times per week as the exchange rate fluctuates? Or are the prices in USD?
Why bother with the bitcoin sandwich? Why not transfer between the agents using Western Union or Hawala or whatever?
http://blockchain.info/charts/market-price?timespan=all&show...
N.B. maybe I'm wrong but according to this graph: http://bitcoincharts.com/charts/mtgoxUSD#rg360ztgSzm1g10zm2g... http://blockchain.info/charts/market-price Now bitcoin has half the value than in April (and, I known, 10x Jan value). Too volatile to use if your business IMHO.
Bitcoin can only go to zero or +inf. Past performance is a way to show what haters are losing every year for denying Bitcoin.
... said real estate agents in the early 2000s.
Folks who bought in April at $260 are out more than a hundred bucks per Bitcoin. It's just as easy to lose your shirt as it is to get rich.
irreversibility is good for the merchant, and bad for the customer.
There are some things that cause PayPal to just freeze an account, and it's next to impossible to speak to a human or to otherwise get the situation resolved.
Pretty much the only threat to Stripe's eventual world domination would be PayPal getting its act together.
Paypal is risk averse, which means you shouldn't use them for cases where you're taking a large amount of money up front and not delivering in the near future (i.e events, crowd-funding), or alternatively get pre-approval from Paypal.
I've no idea what the current fraud level against Stripe is, but as they become more mainstream they're going to need to employ more anti-fraud and anti-risk measures as their exposure increases.
I'm one of Stripe's cofounders. For what it's worth -- we already process billions of dollars a year. (More than PayPal when it was acquired.) There'll always be more we can do on the fraud/risk side, but we're already operating at a scale that requires a decent amount of sophistication.
The problem is that fraud/risk (like tech security) is it often involves black swan events. Everything seems fine right until the point where it's not and you're on the hook for millions of dollars (Stripe is probably in the position where you can afford to take a few black swan type events and survive; a lot of Paypal competitors weren't).
Given that Stripe don't do the "wallet" approach of Paypal and is primarily focused on API customers I'm guessing your risks in general are lower, but I'd recommend you be careful about becoming over-complacent.
Absolutely. Indeed, I'd characterize us as actively paranoid. My point was merely that we're already operating at a scale that needs pretty good fraud systems.
(I think we're mostly in strong agreement.)
Payments are final and instant and, best of all, don't require a middle man.
Only for extremely specific and useless definitions of "no fraud."
If I send my bitcoins to someone to buy something, I have no protection if they decide not to deliver.
At which point the Bitcoin enthusiasts will say "but you can use a third party escrow service," which is true, and puts us right back into the same situation we are with PayPal.
With Credit Card companies and their proxies, Stripe, PayPal, etc. there is no option of choosing a buyer protection service provider which meets your needs (unless you consider strict to extremely strict a choice).
Buyer protection isn't always a good thing. Often it is a hindrance to progress. Merchants should be able to chose the level of buyer protection they want to offer.
Online it's the same thing. I'd pick credit card or Paypal over bitcoin just like I pick credit cards IRL over cash. It has nothing to do with obscurity.
To be more precise, you have no protection from the money transmission service. This is no different from cash.
Bitcoin escrow doesn't work that way. Escrow cannot decide by itself to freeze your money. There are three parties in the transaction and you'd need the consensus of at least two of them to move the money. It's either the buyer and seller (in ideal transaction), or the escrow and seller or the escrow and buyer in a situation where transaction is disputed. The bitcoin escrow cannot behave like paypal do in this case.
Everyone keeps saying that fraud will be a serious problem for Stripe, but they move a huge amount of money now which is probably comparable to the period when PayPal nearly got destroyed by fraud - which was around the year 2000 when the web was a lot smaller.
Yes, PayPal sucks, but you can run into this crap with any bank or payment service provider you don't have clear and direct business dealings with, and who you haven't informed upfront about what you're up to.
Also, it's just plain lazy and irresponsible of IndieGogo to pay out via PayPal, at least not without big fat warning signs. Of all the options available, this is pretty much the worst.
It's very naive to think that you can just accept money in exchange for unverifiable promises and not set off all kinds of alarm bells. Expect frozen assets to start to happen more and more often with crowdfunding, and not just at PayPal.
[0]: http://www.kickstarter.com/help/amazon
I don't know how indiegogo works, but in the case of Kickstarter, I would assume that Kickstarter is collecting the payments, arbiter of refunds in the case a goal is not met, and does not have access to the money in the interim.
Then Kickstarter uses Amazon Payments to disburse the funds to project lead? I am uneducated and did not contribute to the fund, so I don't really know how it works. Can you enlighten?
Sounds like a fantastic racket for Kickstarter!
EDIT: I've read more of the comments and it sounds like IndieGoGo has nothing to do with Paypal. They were separate funding efforts, from the same landing page. "You can pay by IndieGoGo or Paypal."
I presume the reason I couldn't figure this out from the Mailpile website is that they stopped mentioning the PayPal option when it was clear that Mailpile wasn't going to get paid by PayPal in any kind of short order. You can pay IndieGoGo or you can send Bitcoins.
That's how I'd run my business if I didn't have a product yet. You'd have to be crazy to use PayPal for that.
EDIT2: I guess IndieGoGo does offer the PayPal option. I don't understand enough about how this is put together to have an informed opinion. If PPUSD and credit cards are all handled by PayPal, then it would seem that PayPal does indeed have some risk. Maybe it's actually accepting credit cards that's crazy. _THOSE_ have some serious anti-fraud guarantees, and there's more to fraud than simple non-delivery.
http://www.techdirt.com/articles/20120809/09213019977/amazon...
It's completely ridiculous because participants in crowd funding are aware of the risks - they may never see their money's worth (even though that isn't the case here).
Either way, I would raise a massive stink if they don't buckle - I see you have a WIRED article, maybe approach them about writing about this encounter with PayPal. That's some pretty bad publicity right there. You may also be able to demand interest if they do continue to illegally with-hold the funds for that long (again, they are not a bank, but that means that this time they are not protected by those very same laws).
I wish I could agree, but the angry rants on a few Kickstarter projects show that many people see it as a "shop for things that haven't been built yet", rather than "give us some money, and we'll try to build these products, and if we do manage to build them you'll get one, but we could fail".