6 ms·

Dwolla Begins PayPal-Style Account Suspensions for Bitcoiners

109 points by enmaku 14y ago

waterlesscloud 14y ago
Bitcoin provides me more utility than Dwolla at this point.
- enmaku 14y ago
  As it does for most Bitcoiners, just gotta be careful how you use Dwolla now, apparently, unless you don't care if they close your account any more.
- fossuser 14y ago
  What do you use as an exchange to buy bitcoins? Have you just been mining for a long time so you've accumulated a bunch? Do you use Mt. Gox?
  - barmstrong 14y ago
    Give Coinbase.com a try - you an connect any U.S. bank account to buy/sell bitcoin. (A YC company).
kiba 14y ago
Overzealous patrol of fraud activities is how payment providers survive, but it also decrease utility, which allows cryptocurrency like bitcoin a niche in all sort of areas.
- kapilkale 14y ago
  As an operator of a payments company, I second this.
d4vlx 14y ago
I'm curious what people on HN believe the future holds for Bitcoins. I expect the US government will step in in the not to far future and severely restrict the ability to legitimately exchange Bitcoins for dollars. I'm not passing any judgement on Bitcoins themselves, it just seems unlikely to me that people in places of power will be ok with an independent currency.
- jlgreco 14y ago
  As long as you can exchange bitcoins for drugs delivered to your front door in first-class packages, it will be fairly trivial to exchange bitcoins for cash if you really need to. Legalization of all narcotics would hurt bitcoin far more than anything else the government could manage. As far as I see it, it is not really a currency but rather a tool. A tool that remains operational so long as it has any "value" at all.
  - slygent 14y ago
    Surely currencies are nothing but tools for exchange, and their value is as a medium of exchange?
    - wonderyak 14y ago
      It probably depends on whom you ask and what the currency is. Something like Bitcoin could be seen as very subversive. Money is an asset/liability relationship, there is no intrinsic value in a fiat currency.
    - jlgreco 14y ago
      Most currencies are also used to store wealth and invest. Bitcoin can be, and is, used like that, but I think that use of it is foolish. I see "bitcoin" as a currency not too unlike I see "paypal" as a currency. That is, not particularly.
      - jerguismi 14y ago
        > but I think that use of it is foolish. Why foolish? Risky, but not necessarily foolish. The bitcoin exchange rate has been going up all the time. Even with simple strategies such as dollar-cost averaging you would probably have done pretty well within the last couple of years.
        hackinthebochs 14y ago
        I think its foolish because your investment is based on something that you have no control over, nor any ability to rationally judge risk. The US government could collapse the value of bitcoin in an instant by declaring it illegal. It's probably only a matter of time until they do this actually. Unless you have a good reason to think this won't be for another X years, investing is a bad bet.
drivebyacct2 14y ago
Dwolla was shitty to Bitcoin users earlier on. That's why I still have a bad taste in my mouth when hearing about them. Fortunate for them, I still hate Paypal more.
- halviti 14y ago
  No, you misunderstand. The vast majority of Dwolla's success is due to bitcoin. Throughout 2011 it was the primary method of converting USD to bitcoin. It was practically their whole business. During the hype that brought bitcoin to it's highest price so far, Dwolla's profits exploded. Looking at their promo e-mails, the amount of time between them going from 1M/week in transactions to 1M/day in transactions was only one month. Once they got big enough, they've not only turned on the people that built their empire, but are now actively targeting them. It's hard for me to decide if I hate Paypal or Dwolla more.
  - richarmstrong 14y ago
    Dwolla:Bitcoin::YouTube:Daily Show clips
  - loceng 14y ago
    You're not their target market then, the masses. You're the evangelists, their first users to prove the need.
    - halviti 14y ago
      That's not what evangelist means. Further, the reason people used Dwolla in the first place was because of their "no chargebacks" policy, which doesn't even exist anymore. Actually, even when they had their "no chargebacks" policy, they started secretly processing chargebacks, and not even telling the people they were taking money from. Google for the story about how Dwolla bankrupted the TradeHill exchange by stealing money from them, not showing any affadavits for the money they took from them, and then blocked them from even withdrawing their own funds.
      - 14y ago
redegg 14y ago
I've had my account for 2 years with no problems; however, that doesn't ease me the fear that my account may be suspended and require government ID when I hit some limit. I barely use Dwolla now. Coinbase (YC S12) has replaced it for me.
- loceng 14y ago
  Do you not have government ID or is it because of not wanting to be attached to purchases you make / services you order or render? Not meaning any accusatory tone, just to note. I understand privacy.
jebeng 14y ago
All these years we've been reading on HN how Dwolla was supposed to be different than PayPal. As a passive observer I've taken their marketing message/value proposal to be specifically that they were not the type of company who would ever execute these PayPal style seemingly thoughtless account suspensions. At this point unless the facts turn out to be different than presented here, I will never be a Dwolla customer.
finnw 14y ago
Describing this as "for bitcoiners" is misleading. The suspicious activity that this user's account was suspended for was a payment (in USD) from one individual to another, that Dwolla suspected was an "unlicensed BTC exchange" (not necessarily on a commercial scale.) Using a network like bitcoin-otc is a solution only if the USD side is paid in cash.
plumeria 14y ago
https://mtgox.com/press_release_20120808.html https://mtgox.com/press_release_20120808.html ????

109 points by enmaku 14y ago

waterlesscloud 14y ago

Bitcoin provides me more utility than Dwolla at this point.

enmaku 14y ago
As it does for most Bitcoiners, just gotta be careful how you use Dwolla now, apparently, unless you don't care if they close your account any more.
fossuser 14y ago
What do you use as an exchange to buy bitcoins? Have you just been mining for a long time so you've accumulated a bunch? Do you use Mt. Gox?
- barmstrong 14y ago
  Give Coinbase.com a try - you an connect any U.S. bank account to buy/sell bitcoin. (A YC company).

kiba 14y ago

Overzealous patrol of fraud activities is how payment providers survive, but it also decrease utility, which allows cryptocurrency like bitcoin a niche in all sort of areas.

kapilkale 14y ago
As an operator of a payments company, I second this.

d4vlx 14y ago

I'm curious what people on HN believe the future holds for Bitcoins. I expect the US government will step in in the not to far future and severely restrict the ability to legitimately exchange Bitcoins for dollars. I'm not passing any judgement on Bitcoins themselves, it just seems unlikely to me that people in places of power will be ok with an independent currency.

jlgreco 14y ago
As long as you can exchange bitcoins for drugs delivered to your front door in first-class packages, it will be fairly trivial to exchange bitcoins for cash if you really need to. Legalization of all narcotics would hurt bitcoin far more than anything else the government could manage. As far as I see it, it is not really a currency but rather a tool. A tool that remains operational so long as it has any "value" at all.
- slygent 14y ago
  Surely currencies are nothing but tools for exchange, and their value is as a medium of exchange?
  - wonderyak 14y ago
    It probably depends on whom you ask and what the currency is. Something like Bitcoin could be seen as very subversive. Money is an asset/liability relationship, there is no intrinsic value in a fiat currency.
  - jlgreco 14y ago
    Most currencies are also used to store wealth and invest. Bitcoin can be, and is, used like that, but I think that use of it is foolish. I see "bitcoin" as a currency not too unlike I see "paypal" as a currency. That is, not particularly.
    - jerguismi 14y ago
      > but I think that use of it is foolish. Why foolish? Risky, but not necessarily foolish. The bitcoin exchange rate has been going up all the time. Even with simple strategies such as dollar-cost averaging you would probably have done pretty well within the last couple of years.
      - hackinthebochs 14y ago
        I think its foolish because your investment is based on something that you have no control over, nor any ability to rationally judge risk. The US government could collapse the value of bitcoin in an instant by declaring it illegal. It's probably only a matter of time until they do this actually. Unless you have a good reason to think this won't be for another X years, investing is a bad bet.

drivebyacct2 14y ago

Dwolla was shitty to Bitcoin users earlier on. That's why I still have a bad taste in my mouth when hearing about them. Fortunate for them, I still hate Paypal more.

halviti 14y ago
No, you misunderstand. The vast majority of Dwolla's success is due to bitcoin. Throughout 2011 it was the primary method of converting USD to bitcoin. It was practically their whole business. During the hype that brought bitcoin to it's highest price so far, Dwolla's profits exploded. Looking at their promo e-mails, the amount of time between them going from 1M/week in transactions to 1M/day in transactions was only one month. Once they got big enough, they've not only turned on the people that built their empire, but are now actively targeting them. It's hard for me to decide if I hate Paypal or Dwolla more.
- richarmstrong 14y ago
  Dwolla:Bitcoin::YouTube:Daily Show clips
- loceng 14y ago
  You're not their target market then, the masses. You're the evangelists, their first users to prove the need.
  - halviti 14y ago
    That's not what evangelist means. Further, the reason people used Dwolla in the first place was because of their "no chargebacks" policy, which doesn't even exist anymore. Actually, even when they had their "no chargebacks" policy, they started secretly processing chargebacks, and not even telling the people they were taking money from. Google for the story about how Dwolla bankrupted the TradeHill exchange by stealing money from them, not showing any affadavits for the money they took from them, and then blocked them from even withdrawing their own funds.
    - 14y ago

redegg 14y ago

I've had my account for 2 years with no problems; however, that doesn't ease me the fear that my account may be suspended and require government ID when I hit some limit. I barely use Dwolla now. Coinbase (YC S12) has replaced it for me.

loceng 14y ago
Do you not have government ID or is it because of not wanting to be attached to purchases you make / services you order or render? Not meaning any accusatory tone, just to note. I understand privacy.

jebeng 14y ago

All these years we've been reading on HN how Dwolla was supposed to be different than PayPal. As a passive observer I've taken their marketing message/value proposal to be specifically that they were not the type of company who would ever execute these PayPal style seemingly thoughtless account suspensions. At this point unless the facts turn out to be different than presented here, I will never be a Dwolla customer.

finnw 14y ago

Describing this as "for bitcoiners" is misleading. The suspicious activity that this user's account was suspended for was a payment (in USD) from one individual to another, that Dwolla suspected was an "unlicensed BTC exchange" (not necessarily on a commercial scale.) Using a network like bitcoin-otc is a solution only if the USD side is paid in cash.

plumeria 14y ago

https://mtgox.com/press_release_20120808.html https://mtgox.com/press_release_20120808.html ????