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Comment by muppetman | Hacker News Reader

I wanted to donate to my favourite private tracker recently. They only take bitcoin. So I thought no worries, I'll sign up to coinbase. They were the suggested easy-to-sign-up-to way to get bitcoins. (I don't know about wallets or mining, I'm just your average Internet joe)

They wanted copies of my passport and drivers license.

I laughed and closed my newly created account.

Until the process of being able to get bitcoins is simple and easy, expecting people to part with them for donations is unrealistic in my opinion.

(Please don't follow up with 20 "easy" ways I could have gotten bitcoins, after that experience I really don't care)

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It's important to note that this is to comply with US money laundering laws. There's no technical reason for this to be the case.

Ahhh ok, thank you, I wasn't aware of that. Why isn't it the case with Paypal etc?

If you try to put money into Paypal you'll likely create some link with a verified source (credit card, bank account). So if some investigation were to happen Paypal at least has some hints as to your real identity.

With coinbase people could put in their (mined) bitcoins, and then sell them. In that case Coinbase has effectively no way of figuring out who you are.

What happens with the money after you sell them? That has to go somewhere, and couldn't that create the "link" required?

Yeah I thought of that, I think banks/money handling services have responsibilities before the actual pulling out though (probably like how pawn shops can't accept goods without ID).

PayPal is a reversible transaction where they know their customer (who you are paying), so they don't take risk when accepting your credit card. In BTC unless you have it already you need to become the customer of an exchange to first buy BTC and the laws there make it such that they need government ID. There are alternatives like mining it yourself (very hard) or meeting someone in person and paying cash (you'll pay a premium).

Presumably because PayPal transactions are reversible; Bitcoin transactions are not.

I'm in a similar position—I'd like to purchase a small amount of BTC, but am not willing to use my credit card or send photocopies of ID papers over the internet to do so.

I suspect that I should simply attend a meetup in my city and do an in-person transaction for cash. But all of that is additionally complicated by the fact that I don't use a smartphone. :)

If you are prepared to take a hit on multiple exchanges you can buy Bitcoin using https://www.virwox.com/‎ using Paypal.

You input Dollars use that to buy Linden then use that to buy Bitcoin. You pay exchange fees for each transaction, and you are limited to small amounts each month till you gain credibility, but it is possible.

That's weird. When I signed up with Coinbase I didn't have to supply any of that information. Are you based outside the USA?

Yes, I live in New Zealand. As another poster has said, it appears to be due to US money laundering laws.

Ahh, ok. That would explain it. I can see their point, it helps cut down on illegal activity. But it's also a pain for users like yourself who would have really enjoyed their service.

True, if you use a third party, you lose many of the benefits of Bitcoin, and the existing client programs may not be very good at helping you integrate.

But you don't need to use a third party, so you don't need to give anyone any ID (or put up with their hassles), so long as you just want to receive BTC without converting back. You just download a bitcoin client, and it generates addresses for you. Give out the address, and you're done -- people know where to sent it, and you can receive them.

Naturally, you'd want to make sure the private keys to those generated addresses are backed up and safe.

I just wanted to donate money though. Even if I download a wallet app thing, how do I transfer my actual currency to BTC? I still need an exchange don't I? Then I buy "already mined" coins in exchange for my dollars, so I can then donate them.

That's the problem, it's only easy to get BTC from someone else with BTC. It's hard to get BTC for USD and get USD for BTC. Most USD transactions that are not in cash are reversible and no BTC transactions are, that makes it very tough to get BTC on the internet. Add in all the know your customer laws to prevent money laundering and it's very difficult to exchange BTC for USB without effectively setting up a new bank account.

> But you don't need to use a third party

But how do you get bitcoins in the first place without going through an Exchange ?

Ah, seems I misunderstood the situation -- I was thinking of the article's use case (of simply wanting to receive BTC as donations) rather than the GGP's problem, which was getting the BTC in order to donate.

> They wanted copies of my passport and drivers license.

If you go to a bank and try to create a bank account, do you laugh when they ask you for your ID and proof of residence? :)

This isn't a good comparison. I have no reason to trust Coinbase and my options for recourse are minimal if they end up being shitty. My bank is an institution with capital assets in my city. I know where they are. They have an address and it's local. I can talk to a manager, face to face, if there is a problem. (And have.)

(And my bank has a better security record than Bitcoin companies have thus far shown, besides.)

How do you feel about online banks, like Ally?

I don't use them. I like having someone whose office I can sit in and very politely refuse to leave until things work out to everyone's satisfaction.

Ally is a bank and regulated as one, even though they're 'online'. Coinbase is not regulated as a bank. They're not even regulated under the much looser guidelines of a money transmitter.

Yeah, but bitcoin businesses may have to follow the same regulations no matter what if they considered as dealing currencies (depends on your local jurisdiction). That's what it boils down to. It's probably not Coinbase who independently implemented this requirement.

But it's Coinbase who wants me to trust them with my driver's license and passport despite being Some Faceless Internet Company. That business model kind of sucks. It may not be their fault that it sucks, but it still kind of sucks.

> But it's Coinbase who wants me to trust them with my driver's license and passport despite being Some Faceless Internet Company.

Most Internet Companies are faceless. Yet people still use AirBnB, Uber, and other services that connect them to people they don't know - and that kind of thing can be a source of risks as well.

By the way, whenever you go in a hotel overseas, they'll ask you about a copy of your passport too. Do you trust every single hotel that they will keep your passport copy secure ? I'd probably trust Coinbase more on that than any second grade hotel out there.

Uber doesn't demand I give them an archival copy of all my identification to use them. (AirBnB might, I wouldn't know because I wouldn't ever use them.) The difference between these companies--or ones I actually use--should be quite obvious, but I get that the Disingenuous Bitcoin Guy schtick is powerfully tempting.

(And I have never had my passport copied by any hotel.)

Paypal didn't ask me for that. I just entered my Visa details and I donate. Google Wallet hasn't asked me.

I guess I made enough on paypal that they were all of the sudden interested in proof of my SSN, and a copy of my DL. That is when I realized that my paypal account was setup in an unlicensed company name, that didn't match my SSN or my DL. They won't allow me to correct the error. Had to close the account.

If you go to PayPal and want to open regular account for low transactions, do they ask you for ID and proof of residence? You cannot compare brick and mortar bank to bitcoin service.

For low transactions maybe, but as soon as you want to do anything more with your Paypal account they will ask for the same kind of papers. I find nothing strange about that.

You said it yourself - for low transactions. When people donate/do transactions around the web they wont spend probably more than $100 in one go. If any bitcoin service would be worried about scam they would implement same security measures - lets say limit of $100 per transaction or total of $1K per year before they ask for papers. Easy and saves them a lot of money on processing applications as well.

They didnt ask for my passport and drivers license because I live in the US but if they did it wouldn't push me away, its not like I have a million dollars to money launder, and in the group of Bitcoin users, I am a small fish

I got rejected from one exchange that asked for a driver's license and proof of address, my driver license was ok but my proof of address was not, three days later that same exchange, MtGox, goes down. It is very easy to call a Bitcoin-based company a joke but I think Coinbase is a legitimate company.

> private tracker

Just to be clear, this is some sort of bittorrent thing that operates somewhere between gray and black. You want to donate, but aren't interested in having your name tied to it?

Correct. Nor are they interested in having their name tied to the transaction either I guess!

https://www.tinkercoin.com/ will be nice, $20 worth of BitCoin one time.

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