Bitcoin - The Tool For Topping Up
Your bank has a problem — it is so slow.
We’ve come to expect instant results but banks operate as if they are still in an earlier era.
When we receive a payment in PayPal, for instance, we’re thrilled when we can immediately spend the money — even when the payment was sent by a stranger for payment of a purchase on eBay. But try to add funds to PayPal using your bank account and there’s a several-day delay.
This situation is not specific to PayPal. A bank transfer to anywhere takes days to clear.
Recently there have been many innovative payment systems introduced to make it easier to move money among us, person-to-person. In the U.S. these include Square, Dwolla, Serve (a competitor to PayPal from American Express), CashEdge’s PopMoney and and Chase’s QuickPay. In the EU there is TransferWise for transferring from the U.K. to elsewhere within the EU and in Brazil there is MoIP (Money over IP).
But each of these innovations is flawed in that a delay is introduced by the banking systems they rely on.
Enter Bitcoin and the #bitcoin-otc marketplace.
Need $100 added to your PayPal account immediately? Sell some bitcoins and request that the proceeds be delivered to your PayPal account. You can top up your Dwolla account the same way.
The #bitcoin-otc marketplace has multiple participants with established trust who offer to buy bitcoins at near market rates and send payment to the payment network of the seller’s choice, such as PayPal, Dwolla or Serve.
Going the other direction, those wishing to buy bitcoins can use the #bitcoin-otc marketplace to find traders who will sell bitcoins and who then accept payment through some of these methods (i.e., Dwolla, PopMoney, Chase QuickPay) as well.
Due to the abundance of scammer attempts, few bitcoin sellers will accept payment through methods that are easily reversed, such as PayPal, Serve or credit and debit cards.
Using bitcoins as the intermediary can even be skipped. Some traders will let you transfer straight from Dwolla or Popmoney directly to your PayPal, less their fee of course.
Traffic to the #bitcoin-otc marketplace’s IRC channel has become so heavy that the operator has created the #bitcoin-pit channel (-pit as in “trading pit”) solely for facilitating trade negotiations and for order handling.
This concept of a market whose participants use text chat might seem unusual, inefficient or complicated even to some. We as consumers have become used to the level of convenience that CoinPal and CoinCard provided (before they were shuttered after PayPal’s actions).
Thus scoping out trust ratings, setting up a GPG identity, and perusing an order book to find a decent trade offer are practices typically not performed by most of us. However, once proficiency at trading on #bitcoin-otc is reached, the marketplace seems to function quite well. Evidence of this comes from the skyrocketing quantity and variety of open buy and sell orders.
Until consumer level alternatives return, the #bitcoin-otc marketplace remains about the only game in town.
Maybe it is time to come off the sidelines?