Saturday, 15 February 2014

Paypal is waging war against Bitcoins

Bit Coins
A Forbes contributor once wrote that, "PayPal is in the center of two battles: one for control of every transaction on the planet, the other for control of its own destiny." It now appears that PayPal does not want people selling Bit coin on its platform. I can only imagine how far PayPal is willing to fight this revolutionary currency. Bit coin is a peer-to-peer payment system and digital currency introduced as open source software in 2009 by developer Satoshi Nakamoto. Bit coins can be obtained by mining or in exchange for products, services, or other currencies. It appears that related goods and services, such as Bit coin mining rigs -- that is, specialized computers designed to mine the crypto currency by solving complex math problems -- may also be forbidden.

Users on Bitcointalk, a popular online discussion forum for the Bit coin community, are indignant Wednesday following a report that PayPal is enforcing a draconian ban on all things Bit coin. One user wrote that his account had been suspended after he sold some Casascius bit coins -- collectible coins of brass and other metals. Each coin comes with its own Bit coin address and a private key to access an amount of the digital money equal to the purported value of the physical coin. They are often seen in pictures illustrating media reports about Bit coin. "PayPal has largely ignored and allowed physical Bit coin sales until beginning of this year when some kind of new policy triggered a massive account review on everything Bit coin-related that's considered high value sales, including physical coins," newguy05 wrote.

 In an earlier post dated Feb. 4, newguy05 said that "PayPal has started a massive banning campaign on accounts selling anything Bit coin-related, whether it's mining equipment, eBooks, or the currency itself." Not everyone will be shocked by this news. Some see the crypto currency as a natural enemy of PayPal, because the sort of transaction fees that PayPal charges as a matter of course are nonexistent in person-to-person Bit coin transactions. According to a PayPal representative, merchants who sell Bit coin mining equipment are in the clear and can continue to offer PayPal as a payment option. The company expects all participating merchants to follow "the policies we've put in place to protect both buyers and sellers who use PayPal," the spokesperson said. But PayPal's policies toward Bit coin may have recently been altered, according to one employee.

At time of writing, however, details on what these policies entail and when they were implemented were not available. The effect of those policies is clear from PayPal's email to newguy05 notifying him that his seller account had been suspended. "We have reviewed your PayPal account and found that you are operating as an e-currency dealer/exchanger including the sale of electronic media of exchange (such as electronic money or digital currency)," the email reads. "Per our current Acceptable Use Policy for Money Service Businesses, PayPal may not be used to operate a currency exchange, bureau de change or check cashing business."
The email goes on to ask for a full listing of the seller's products and services, an explanation of his business model, a list of all websites that will be used for payments and more. In order to reinstate his account, PayPal also asks the seller to sign an affidavit stating that he will comply with the company's policies.

 If newguy05 is to be believed, he is not alone in his plight. Last month, Pando Daily reported that an eBay merchant named TerraHasher was claiming to have had his assets frozen by PayPal for selling Bit coin mining equipment. TerraHasher said he intended to sue PayPal if the matter was not resolved. Some users on Bitcointalk said that PayPal stands to gain more than most companies by embracing Bit coin. Indeed, as early as April 2013, eBay's chief executive, John Donahoe, was quoted saying his company was "looking at Bit coin closely. There may be ways to enable it inside PayPal."

What's more, PayPal president David Marcus has more than once spoken favorably of the crypto currency. Marcus himself tweeted last month that using PayPal to sell Bit coin mining rigs is allowed. But despite the potential for PayPal to benefit, some remain skeptical of whether the entrenched payments company and the upstart Bit coin will become friends. "Right now [PayPal's] business does few things that Bit coin couldn't do better and cheaper," user RodeoX said in a post on Bitcointalk. "If people start sending money around the world and shopping online for pennies per transaction, PayPal is going to have to do something different."