eBay Patent Filing for Currency Exchange System Included Bitcoin

Pete Rizzo (@pete_rizzo_) | Published on March 10, 2014 at 18:28 GMT | Companies, Law, News, Technology

A second eBay patent application has surfaced on the US Patent and Trademark Office database – further highlighting the online marketplace’s interest in digital currencies and digital currency processing systems.
Named ‘System and Method for Managing Transactions in a Digital Marketplace’, the application follows its “gift token” patent revealed on 19th December last year. Filed in December 2011, six months before its gift token filing, this document names bitcoin specifically.
The patent details eBay’s plan to create a currency module configured to manage the exchange of digital currencies, one that might require eBay to maintain or access an exchange rate for conversion.
Reads one patent section:

“The currency module 308 allows a user to trade one form of currency for another form of currency. [...] The digital currency may be used to pay for real-world financial obligations (e.g., bills) as well as for virtual-world obligation.”

The news supports the notion that eBay has been aware of, and thinking strategically about, digital currencies for some time.
eBay currently encourages the sale of virtual currencies on its Classified Ads platforms in the US and the UK, though it permits the sale of such items elsewhere on its site provided they are housed in physical items like hard drives or USB sticks.

Patent lists bitcoin as acceptable currency

The processing system would not be just for bitcoin alone, but rather a long example list of currencies that could be used on the proposed system.
This included US dollars, eBay bucks, now-defunct Facebook credits and bitcoins:
“A non-exhaustive and example list of currencies capable of being exchanged may include frequent flyer miles, loyalty and reward points (e.g., credit card reward points, hotel loyalty points, retail loyalty points), virtual currency, cash, Bitcoins, Facebook credits, eBay bucks, cash-equivalent currency (e.g., gift cards, travellers checks, cashier’s checks), and any other form of currency.”
Payment system 122, as detailed in the filing, would in turn allow bitcoin users to potentially “accumulate value in a commercial currency” on the site that would later be redeemed for goods and services on the eBay network.

eBay’s bitcoin speculation continues

The patent filing marks the second time in recent weeks that eBay has hinted its broader plans may include digital currencies, and adds to the growing history between the company and the digital currency.
Though he may have been speaking more broadly about digital forms of payment, eBay CEO John Donahoe has indicated as recently as 19th February that PayPal could pursue a digital wallet that holds multiple forms of currency.
Donahoe has been one of the more outspoken executives when it comes to addressing bitcoin. Last November, the exec stated he believes digital currency will become a “very powerful thing” that could one day factor into PayPal’s plans.
Image credit: Twin Design / Shutterstock.com

South Korea Launches its First Two-Way Bitcoin ATM

Jon Southurst (@southtopia) | Published on March 9, 2014 at 10:25 GMT | Bitcoin ATM, Companies, News, Technology

South Korea is the latest country to introduce its first bitcoin ATM. Not only is the machine produced locally by a home-grown company, it is also two-way, meaning users can also sell bitcoins and withdraw cash.
The machine, which officially began operating yesterday, sits in the Coffee Sedona cafe in one of Seoul’s largest shopping malls, the Coex Mall which is also close to the Coex Intercontinental Hotel and a casino in the city’s world famous Gangnam district. For those wanting to buy bitcoins, it accepts cash
and credit cards(note: the card slot on the machine is a dummy slot, normally used for non-bitcoin ATMs).

It is the result of a joint venture between bitcoin exchange Coinplug and Nautilus Hyosung, the number one ‘regular’ ATM manufacturer in Korea, which also has the world’s fourth-largest market share. Coinplug’s Richard Yun said the machine’s launch was well attended by the Korean media.
This video (in Korean) demonstrates how transactions are made in both directions using a smartphone wallet.

Security and compliance

The machine also has one other key feature, or lack thereof: unlike other two-way bitcoin ATMs, such as the one produced by US company Robocoin, the Coinplug machine does not collect any identification or biometric information from users. Robocoin, as what it calls a security feature, requires photo ID and takes a palm vein scan of users, although the company says this information is not uploaded to a database anywhere and that palm vein scans function like a secondary PIN, representing the “most anonymous biometric on the market”.
Coinplug’s machine does have some restrictions of its own, though. Yun said the machine is set to allow transactions at a maximum of (the equivalent of) $200 each, and a maximum of three transactions a day per wallet address. This is less than what is typically allowed by Korean banks for ATM transactions, which is $1,000 per transaction and $6,000 per day.
Other popular bitcoin ATM options, like the machines produced by Lamassu, accept cash and dispense bitcoins only.

Yun said the company was able to produce a two-way machine thanks mainly to the South Korean government’s light touch approach to bitcoin regulation so far. The government, like many others, has declared bitcoin is not a currency and will not regulate it, and has not made any attempts to restrict its use. Should the machine prove successful in its homeland, Coinplug will be looking for interested buyers outside Korea.
Coinplug has been busy in Korea this year, recently launching three separate Android bitcoin apps for merchants and traders, and a wallet app for everyday users. The company has also been funded so far 50% each in bitcoin and fiat currency by its Silicon Valley-based partner, new venture capital firm Silverblue.
ATM image via Coinplug

Overstock Tops $1m in Bitcoin Sales, Projects Up to $20m By Year’s End

Tom Sharkey | Published on March 4, 2014 at 23:27 GMT | Coinbase, Merchants, News

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It has been less than two months since e-commerce giant Overstock.com began accepting bitcoin payments on their website, and the online retailer has already surpassed $1m in total sales.
Overstock’s CEO Patrick Byrne confirmed the company’s plans to embrace bitcoin back in December, and bitcoin payment processing officially went live on Overstock.com on 9th January.
Byrne spoke with CoinDesk about its $1m milestone, asserting that while the initial surge of bitcoin sales did subside, there has since been steady growth in bitcoin payments:

“In the first day there was an enormous surge of bitcoin sales, but we’ve also seen a gradual building of bitcoin sales in a week-by-week basis.”

The initial projections for sales processed with bitcoin on Overstock.com this year was set at $3-5m, but this figure has since increased dramatically, according to Byrne.
The CEO now predicts that Overstock will see a total of $10-15m in bitcoin sales this year, and suggested that this number could reach as high as $20m if bitcoin sales maintain their current growth rate.

New data

Overstock partnered with Coinbase to process bitcoin payments, and together the two companies have compiled and released data that shows the spending habits of bitcoin users on Overstock, notably comparing them to credit card users.
The findings show that customers who use bitcoin as a payment method spend on average $58 (34%) more on their orders than customers using credit cards.

Byrne says that Overstock has reaped the benefits of accepting bitcoin as a payment method, most notably in regards to eliminating chargeback fraud from credit card payments and reducing payment processing fees:

“Bitcoin payments have helped us avoid fraud in the form of chargebacks with credit cards, and we’re also able to get paid faster than when payments are processed with credit cards.
It takes three days for payments to finalize with credit cards, and with bitcoin we can get paid immediately.”

Market effects

While Overstock is credited as the first major online retailer to accept bitcoin payments, they’re not alone when it comes to reputable companies embracing bitcoin. TigerDirect began accepting bitcoin payments in late January, and companies like Virgin Atlantic and Reddit have helped further legitimize the digital currency as a convenient and secure payment method.
Speaking on the recent news of Overstock’s $1m bitcoin sales milestone, Coinbase noted that while they’re excited about the growing number of transactions being processed with bitcoin, they’re certainly not surprised:

“We are more gratified than surprised with these recent milestones, as they illustrate our belief that we are near a tipping point for broad merchant and consumer adoption of Bitcoin.”

Byrne hopes that the news of Overstock surpassing $1m in bitcoin payments will continue to build the currency’s credibility and adoption rates, noting that many customers are switching from competing commerce sites to shop with bitcoin on Overstock:

“I’ve seen the bitcoin community really embrace Overstock and I’ve read about many cases of our customers coming over from Amazon specifically to shop using bitcoin.
I think that bitcoin payments will account for several percent of all online transactions in the next year or two, and when this happens, Amazon will be forced to start accepting bitcoin on their website.”

With the amount of sales being processed with bitcoin steadily growing on Overstock, Byrne noted that the company has recently changed its business model and will start to hold “5-10% of [their] processed bitcoins in reserves.”
Given the option that Coinbase offers its merchants to immediately convert bitcoins to fiat currency, this move is a symbol of Overstock’s confidence in the principles of bitcoin and its utility as a means for buying goods and services online.