Coinbase Commerce: merchants can accept multiple digital currencies | Hacker News Reader

Coinbase Commerce: merchants can accept multiple digital currencies

medium.com

152 pointsbarmstrong82 comments

The KYC/AML regulations require essentially 1:1 human effort for every new person who attempts to buy any practical amount of cryptocurrency (within the US and EU, and probably elsewhere).

So the #1 problem is that people who want to buy some cryptocurrency cannot. They wait days or weeks to get verified. And the exchanges and money changers want to provide the virtual currency to the hungry customers, but they cannot afford to hire enough people to process all the verification applications.

Given this extreme bottleneck, I don't see the significance of news about how much easier it is for people to spend virtual currency.

Ironically, Coinbase is one of the most complained about in terms of slow verifications.

I'm in this boat now - I've been a Coinbase customer for years, and then randomly they blocked my ability to withdraw my money (MY money, BTW) from the account. Nothing had changed about my account setup.

Now they want me to go through the Photo ID process, but I don't have a US drivers license, only a permanent resident (green) card for ID. Which should be fine, after all it works as ID for literally everything else I could need ID for in the US - including flying. Support have been fairly responsive, but they keep sending me back to through their photo verification process, and I keep telling them "but this is not a driver's license, please look at the pictures!".

It's really annoying - this is a federally-issued photo ID I'm required to carry with me, and yet Coinbase seems to be struggling to accept it. In the meantime my money is stuck and I don't know how to get it back.

Fellow greencard holder here, I’m in the exact same boat with coinbase. I’m booking an appointment at the dmv to get a new ID card just for this. It really sucks.

The error of the ways of Coinbase seems to be allowing various transactions and money transfer activity, sometimes for lengths of time, on unverified accounts. Then, suddenly boom, there's a problem, and customer support is already backlogged.

Kind of like they opened the door to unlimited new subscribers and sobbed that they were overloaded. With some of the HN crowd playing the violin music of poor, fast-growing start-up (the "growing pains" cop out).

Naughty (greedy) Coinbase.

Yeah what's particularly frustrating is that I'm not a new user, I've had an account for years. If I had a problem signing up, and couldn't start using their service, that would be one thing, but that I already have money in there and they're preventing me from getting it back is what's really frustrating me.

Each state has different laws regarding KYC, AML and money transmitter status. For example, in all states but California payroll companies are money transmitters.

It's annoying, but requiring a state-issued ID instead of a federal ID satisfies some of their legal requirements and makes the verification process much easier on their side.

Could they do this with a federal ID? Probably. It'd be a completely new verification process - not automated. They may need to request recent bills for proof of address, plus the necessary tooling to store/verify these.

It's the same reason you can't wander into a bank with a green card and be like "open an account". You need proof of address, state residency etc.

Could you get a state id as a workaround? Most states issue IDs that pretty much look identical to a drivers license, but are not a drivers license. Much faster turn around time, no real testing required.

It only takes about 10 minutes to get verified on Coinbase. The majority of people are done in this amount of time. It's when something goes wrong and you can't get a response from customer service that is a problem. After all this time, it still sucks.

Here's tip for getting past the automatic verification failure problem on Coinbase: after failing, try their mobile option. For whatever reason, the mobile option (where you take a photo of your ID with your phone) seems to work much more reliably than the computer method.

When I first bought ETH (Coinbase) it took 5 min verification and a debit card. Practically instant in comparison to traditional financial setup times.

Verification is not done by humans, and it's instant.

It's not that simple. Instant verification is shaky and relies on 1) the ability for a computer to properly read your document and 2) the information it reads to exist in a 3rd party repository of your personal information (these are terrifyingly vast).

If 1 or 2 fails, which they do often, you're back in human land.

There are a significant amount of stories out there (and shared here) that directly disagree with your assertion.

What does this mean for a crypto project like Request Network (https://request.network/#/) which is trying to become the "Paypal for cryptocurrencies"?

I am genuinely curious as I own some REQ, believe in the team, but also like what Coinbase has done to bring crypto to the masses (minus the outrageous fees of course).

My personal opinion about Request and similar projects.

I have been using bitcoin for a while, I have payed for real goods and online services with it and I've following the crypto ecosystem for a few years. I really can't see the reason for more than just a handful of competing cryptocurrencies becoming mediums of exchange.

Request's goal is noble, but I think that they'd be better off working on implementing payment gateways for existing cryptos. The first mover advantage seems to be huge in this space, and I really can't see how Request, or any other crypto can scale fast enough to dethrone bitcoin or the rest of the big competitors.

I think you're misunderstanding what the Request network is doing. Their goal is exactly what you described, a payment gateway for existing (all) cryptos (including fiat). The Request token ($REQ) is only used to collect fees for using the request. The REQ tokens are burned as part of the transaction, and in the end goal the end user themselves won't have to actually ever buy any REQ tokens either, it will automatically be done by the network. REQ tokens are actually only ERC20 tokens (meaning they're using the Ethereum blockchain).

The end goal is a decentralized payment gateway that will accept any crypto or fiat and payout in the desired currency. Request will handle the swapping of currencies and everything else in a decentralized manner. Obviously, likely quite a ways away from that, and there are a lot of scaling issues that need to be solved with blockchain tech itself before this can actually exist in a usable way.

I also think there are way too many projects in this space and most of them are very obvious money grabs. Ultimately only a few projects will survive and gain mainstream adoption.

I am really on the face regarding bitcoin though: it is the grandfather of all those crypto projects and massively moves the market, but I don't quite understand how it could ever replace a currency given its very limited supply and astronomical unit economic price: it was not supposed to be a store of value like gold when it started.

Ultimately, I think a few projects with much higher coins in circulation and faster transaction times will end up becoming more valuable due to greater usability.

It's a shame it feels like REQ is a bit late to the game, but they do have ambitious plans, one of them is to enable cross-currency transactions (including fiat). No-one has yet gained the first mover advantage in this space so the jury is still out.

REQ is not late to the game. It's still extremely early. I think multiple dex that translates currency to any other currency will emerge. Dexs can compete on fees, features, risk, etc. Additionally supply will be distributed as automated arbitrage becomes an easy way to make money.

I also don't believe in the convergence of coins with enough dexs. There are a lot of design features that people will want that are incompatible across coins, but still useful. Some coins will fail sure, but people still trade bitconnect(200k volume yesterday).

I don't understand why companies would compare their offering to paypal but don't offer escrow. I suppose people use paypal for paying individuals but not as much as for goods/services, right?

There's also the GloBee[0] payment processor. It accepts Monero, so you're able to maintain your privacy whilst consuming like a capitalist zombie.

[0] https://globee.com/

That's not going to last long, it's basically an open invite for money laundering.

I can't think of anything that is universally good other than God. & from what I've heard about the Old Testament that's not even true!

So we a situation where people can't even construct something from their imagination that is virtuous in all concerns. & people want financial technology to meet that bar? Seems unlikely to me.

Could there be some money laundering? Probably. Will there be attempts by the owners of the payment processor to stop such a thing? Probably. Will there be perfection? Probably not.

From what I understand, most money laundering occurs in the traditional financial system. Does it follow we should tear it down?

& besides, I thought crypto(assets) were a fad. A bubble. A figment of the imagination. A plaything for greater fools. If that's true, it's hardly worth worrying about.

The traditional financial system carries out trillions of transactions which are not money laundering, yet is required to jump through enormous amounts of red tape to prove its customers are not money launderers, and companies still get into trouble with regulators if they're not satisfied with their AML policies.

A new payment processor advertising the ability to accept completely anonymous transactions as a key benefit over the traditional ecosystem is going to attract a much higher ratio of money laundering to legitimate merchant accounts, and even without that, marketing Lack-of-AML-as-a-Service is sort of thing that gets regulators interested in shutting you down...

> The traditional financial system carries out trillions of transactions which are not money laundering, yet is required to jump through enormous amounts of red tape to prove its customers are not money launderers, and companies still get into trouble with regulators if they're not satisfied with their AML policies.

I'd agree the traditional system would probably have less money laundering. It also has less freedom, & could have significantly less innovation in the future.

> marketing Lack-of-AML-as-a-Service is sort of thing that gets regulators interested in shutting you down

I think they're run from South Africa, so I'm not sure if regulators could shut them down. Crypto is global & crypto is on the internet. Wherever cryptocurrencies go, human minds will follow. People will create them with their computers (mining) & transact with those who accept them.

Coming down hard on crypto assets could create a parallel economy. Untaxed & no regulation. Then what do regulators do? Nothing, because they just lost their jobs & any control over anything.

Criminal economic ecosystems have existed since long before cryptocurrency, as has AML law even in mere regional financial hubs like South Africa.

The real question is to what extent is it beneficial for non-criminal businesses to invest in the capability to handle niche currencies like Monero used by hardly anybody and attractive primarily to money launders. Because if it's predominantly criminal businesses using them, it's not really making regulators' jobs more difficult.

> Criminal economic ecosystems have existed since long before cryptocurrency, as has AML law even in mere regional financial hubs like South Africa.

Even if South Africa shut them down, I'm sure others will find a way to run such payment processors. Where there's money, there's motive.

> The real question is to what extent is it beneficial for non-criminal businesses to invest in the capability to handle niche currencies like Monero used by hardly anybody and attractive primarily to money launders.

People who launder large sums of money would likely do it through the traditional financial system. How does one launder, say, a billion dollars through a Monero today? I don't think they could. That type of money is being laundered through the banking system[0].

> The real question is to what extent is it beneficial for non-criminal businesses to invest in the capability to handle niche currencies like Monero

If it's easy to implement & their niche likes to use them, then I would say it's probable.

Crypto can win bit by bit. Country by country. There are some jurisdictions that seem to be embracing the tech (like Japan & Switzerland).

That's some people using it. If it continues to grow & you know it's going to grow faster than any other asset it makes sense to do some speculation. Then with that speculation, you start to learn about crypto. It starts to spread as people become aware of returns, & it continues to grow, & so on.

It's resilient. I like resilient assets. I think a little bit of crypto can be a good investment. If anything it's fun. That's one of the reasons I think young people like it.

Do it for fun, spend it when people accept it. People even give discounts for buying in crypto.

[0] https://www.reuters.com/article/us-hsbc-probe/hsbc-to-pay-1-...

If you ever added your US bank account to Coinbase by giving it your online banking credentials(!)[1], you might want to know that your financial/banking information was crawled (income, costs, average balance), and is available for resale[2] to 3rd parties.

1. This is very, very, very bad for security, but is only possible because US interbank transfers are way behind the rest of the world (including 3rd world countries). Everywhere else, all you need to transfer money is the name of the bank, account holder and account number.

2. see "Products" on https://plaid.com. Plaid provides Coinbase's bank integration.

Plaid co-founder here. We don't resell data. In the case of Coinbase, they're setting up ACH transfers (see Auth on our products page), to avoid the 3-5 day delay in connecting a bank account for ACH.

> We don't resell data.

There must be some confusion on my part, because I consider this product (https://plaid.com/products/income/) as selling the income data, I'm guessing it's unrelated to Coinbase.

In any case, are you able to unequivocally state that you do not collect this data for coinbase users, even if it's not for reselling? I know you might have good intentions, but there's no telling where that data will end up once it's collected (past the point of your 'exit' event).

Our Income product is distinct from Auth, and not used by Coinbase. The only way for a consumer's Income data to be collected, analyzed, and sent is when the consumer directly permissions an application to receive it.

Let's say you're applying for a loan via a lender that's a Plaid customer and you want to verify your income. In that case, you'd have to link your bank account with that lender (via Plaid), giving that lender permission to collect data about your Income. There's no way for that lender to get your income (or any other) data from Plaid without you explicitly connecting your account.

> Everywhere else, all you need to transfer money is the name of the bank, account holder and account number.

Actually here only the IBAN account number is required (and it's used everywhere). Bank is inferred from that and it's not stricly necessary to give account holder's name.

> Everywhere else, all you need to transfer money is the name of the bank, account holder and account number.

I'm curious where you got this bit of information? All I need to transfer money in the US is a routing number and account number.

> All I need to transfer money in the US is a routing number and account number

While this is true, Routing + account numbers are less useful as this information can only be shared with trusted parties because anyone with this information can trigger a debit(!) against your account. For all the other countries I know, the worst anyone can do is deposit money into your account.

I wonder what they're policy is on adult. I do some work on an adult site and ccbill has got to be the worst credit card provider out there. Adult payments need to be disrupted.

Part of the appeal of bitcoin is that you don't need to care what a payment processor thinks of your business.

You're welcome to accept bitcoin payments without using coinbase or any other payment processor.

Right... but then you have to manage securing and cashing out the tokens yourself.

That's a much easier problem to solve than the initial problem of building a profitable business.

Agree, lots of value can be provided to services in the grey-area. Specifically Coinbase doesn't allow this.

Under "Prohibited Businesses" you can see "Adult Content and Services" being listed. Source: https://www.coinbase.com/legal/user_agreement?locale=en

Really funny how we've come full circle to the same centralized cabals acting as the gatekeepers decentralized currency was meant to destroy.

It just goes to show, as long as the world runs on fiat currency, and you need to convert from cryptocurrency -> fiat to live your life, the conversion point (e.g. Coinbase) will always be a point of failure and regulatory capture.

Nothing really stops you from processing crypto-coins unlike credit cards where Visa and MasterCard have the last say. With crypto you no longer need approval from the platform owner. If you don't like Coinbase you can create your own coinbase-like platform. You have to remember that with fiat you don't have much control over your money either unless it's cash so I believe crypto-coins are a big step forward.

Buying fiat with crypto is another issue but as long as crypto coins are accepted widely there will always be ways to buy goods, services and even fiat.

Are there any checkout systems pre-built solely for holding crypto afterwards, and not for converting to fiat? Guessing Coinbase has to have it like that because they interact with wider networks.

If you wanted to sell a saucy story, how'd it work? Essentially a hot wallet with a webhook?

You’d just need an extended public key that gives unique addresses to buyers and a price API to provide rate conversions. Your private key can be offline or on a hard wallet. Also see btcpayserver for an open source bitpay clone that does what you are thinking and more

Far from being an argument against cryptocurrency's utility, that's a very strong argument in favour of using cryptocurrency.

The more people who use cryptocurrency, and accept payment in cryptocurrency, the easier it is to live your life with minimal exposure to the likes of Coinbase.

There is no such clause in the Coinbase Commerce TOS[0], and "Coinbase Commerce accounts are completely separate from Coinbase accounts"[1].

Also not sure what the Coinbase Commerce account is even for since "Coinbase Commerce is not a hosted service".

[0]: https://commerce.coinbase.com/legal/terms-of-service/ [1]: https://commerce.coinbase.com/faq

That's true, didn't know about that. However, the Coinbase Commerce has a clause that I guess (if they feel like), can apply for adult entertainment businesses.

> You agree not to use the Services in ways that:

> Are illegal, obscene, defamatory, threatening, intimidating, harassing, hateful, racially, or ethnically offensive, or instigate or encourage conduct that would be illegal, or otherwise inappropriate, including promoting violent crimes;

Depending on who you ask, "obscene" and "otherwise inappropriate" can cover adult entertainment.

Guess it's impossible for us to guess, unless a case goes to court.

I don't think the courts have anything to say about it; Coinbase can refuse your business for any reason. Adult businesses aren't a protected class.

I've never used bitcoin but to my understanding it can take quite some time for a payment to be processed.

What happens if you buy something and pay, then when the merchant receives the bitcoins the value of them has dropped say 10%? Does the merchant take the loss in this system?

Bitcoin alone is responsible for this reputation of slow transaction times among cryptocurrencies. Litecoin and Ethereum have the same blockchain architecture but are mined faster, so they are faster, but this linear improvement may not be sufficient for scaling. Minerless "DAG" coins like Nano may prove to be more practical in the long run because they scale exponentially.

re: Value change during a transaction: volatility is a fundamental problem with any currency. Adoption and volume will decrease volatility, which this announcement is moving towards :) Ripple's value-add to the banking industry, for instance, similarly relies on adoption in order to create an international pool of liquidity in order to facilitate efficient cross-border currency exchange. The more volume, the less volatility there is, which means less cost to banks using XRP as a payment "bridge". The same is desirable for merchants and consumers.

your logic is funny, is like having a busy site with a postgress db, and saying postgress is at fault, look at my mysql wordpress site with 1.3 visitors per day, how fast it is.

Ethereum will colapse on itself sooner of later, no one managed to sync a node recently.

Where exactly is my logic funny? Mined blockchains scale linearly. Increasing block size, etc. can increase speed temporarily but can still only scale linearly. Busy site or not, the ledger needs an architectural change to handle exponential growth. Your busy Postgress db would also need to change in architecture from a single resource to something more distributed in order to scale exponentially. A less busy website of the same architecture also wouldn't handle exponential growth. What am I missing?

Edit: To clarify, yes, some mined blockchains feel faster now simply because they are less busy. They are still doomed to Bitcoin's fate at scale unless distributed systems techniques like sharding (or Nano's block lattice) are used. I'm not saying that the less busy blockchains are any better.

> To clarify, yes, some mined blockchains feel faster now simply because they are less busy.

Yes, and for now it's not proven in practice that Nano will also stay responsive when it hits the same scale/busyness.

Fair enough. In theory Nano's design can handle something like O(2^n) transactions per second where n is the number of nodes, while mined blockchains can handle O(n) transactions per second where n is roughly the block rate multiplied by block size. In practice who knows. The former has a fighting chance, at least.

Hasn't the latest Geth update improved syncing? https://blog.ethereum.org/2018/02/14/geth-1-8-iceberg%C2%B9/

Nano takes like 4 seconds to confirm and has zero fees for transfer. It's really a no-brainer, but unfortunately this Bitgrail thing is going to muddy the waters for a long time.

BTC survived Mt. Gox and Bitfinex, NEM survived Coincheck, and fiat currencies survived many a bank robbery. Investor perception is low because the theft hurt early adopters, but I think that the technology will shine through sooner rather than later.

I'm with you for the long hodl.

Coinbase can easily take care of this. They can have a small reserve and sell the bitcoin as soon as the transaction is published/sent to the mempool. No need to wait for any confirmations. If the transaction happens to be fraudulent†, they just buy the bitcoin back and realize the earning/loss (in the long run they will tend to even out).

†Not sure what the attack vectors are here.

If they're interested in taking on the counterparty risk they could do this, but when the mempool is flooded you can replace pending transactions with new transactions with a higher fee (called "Replace by Fee").

but they don't seem to convert to fiat (at least from this article or the demo), so it's irrelevant.

I've made payments to merchants who acknowledge that the price can change over the process of sending a payment. The Bitcoin price is fixed at the point that the transaction is acknowledged in the mempool, so any fluctuation during the time taken for transactions to reach their required verifications is ignored.

This was my immediate question. I bought some Etherium from Coinbase a couple weeks back and by the time I got the funds, the value had dropped (!)25%. I don't particularly care because I'm long on my crypto holdings, but in what world is something like that going to be tolerable for merchants?

It sucks, but you can store cash there in advance, and purchase on the fly when desired.

Looks exactly like Sprite's offering right down to the scary 15 minute window you are expected to complete your Bitcoin transaction in, doesn't it?

I just bought a computer from newegg with bitcoin and I think they used bitgo. They also had the 15 minute window thing. But the transaction didn't have to be confirmed in that time. It just needed to be out there somewhere which only took about a minute. And that was back when BTC was around 15K and it would takes hours for a actual transaction to be confirmed. But it would lock in the transaction quickly and then it would take a while for newegg to send me a email saying the payment was confirmed.

I just checked and the time between my order and initiating the sending of BTC to bitgo in Electrum to newegg saying the payment was accepted was just a little under five hours.

Bitpay and Coinbase's old merchant tools both already use a 15 minute window. Not sure what Sprite is but most likely the influence was the other way around.

No mention of the time delay between accepting funds and withdrawing the funds. How would a merchant refund the customer in fiat or crypto?

They are also working on Lightning Network integration.

https://www.youtube.com/watch?v=UtXe-wQyrWw&feature=youtu.be

Lightning Ramp isn't a Coinbase project, it just integrates with them.

Does lightening address coinbases incredibly long and arbitrary delays in deposits to an actual bank account?

No, lightning (not lightening, btw) addresses the relatively long delays in confirming transactions. Merchants who are unwilling to accept unconfirmed transactions must wait tens of minutes (depending on risk they want to accept). With lightning it's as fast as you can transmit packets through the internet (order of milliseconds).

I have a coinbase account, but it looks like like a Coinbase Commerce account. Commerce wont accept my regular Coinbase login. I guess I have to create a new account?

So this just shows you an address to send crypto to and calculates the equivalent amount needed with a 15 minute window??

No conversion to fiat at a guaranteed rate?

Can't you game this with such rapid price fluctuations? Time buying a high priced item during a crash maybe?

https://www.coinpayments.net has been doing something similar for a few years now.

I used to be bullish on crypto. Now I see something like this and wonder "why the fuck do I want to use crypto to buy something when cash is instantaneous and my credit card provides consumer protection?". Add on to this the necessity of dealing with capital gains on my taxes at the end of the year just for buying something? No thanks.

I also fully expect to get downvoted to oblivion for this opinion based on what I have seen in the past.

This has a good scope for humblebundle

awesome! look forward to trying it

Not only is Coinbase an extremely slimy, untrustworthy company seemingly entirely driven by bad AI, the amount of different currencies they accept is also very limited.

What?

GDAX is one of the best companies out there in the field.

Note to others: a portion of the internet seems to relentlessly attack Coinbase because they listed Bitcoin Cash (BCH) months ago

Bitcoin Cash was listed in an incredibly dishonest way. They “surprised” announced it at 8pm on a Tuesday night. Along with the “launch” they had disabled selling bch from the fork (you could only buy). The launch coincided with Roger Ver and numerous CNBC “stories” trashing Bitcoin. It was so shady Coinbase agreed to launch an insider trading investigation.

Worse, coinbase is dragging their feet improving their Bitcoin technology stack. At this point it appears intentional.

That is not an accurate chain of events.

I understand why they did not pre-announce. They would have been attacked by rabid BTC fans, plus a bunch of astroturfers and bots.

...You're going to have to back those aggressive claims up with some sources or reasoning on HN.

> the amount of different currencies they accept is also very limited

They cover the 4 primary ones. I'm not sure as a business I'd want to accept any other ones... besides maybe ZCash and Monero for privacy reasons.

Wtf? Are you are tether/bitfinex shill? Coinbase is the most legit in a toxic shithole of dodgyness

Reply on news.ycombinator.com