Possibility: Using BIPS for PPC - Merchant Acceptance

General
1

Would love to hear from the developers here, merchant acceptance is the holy grail. This is from BIPS support:

"As BIPS is and will most likely stay Bitcoin, I cannot promise integration of any other virtual currency. However an idea I would like to share with you is, that if you want to see this happen at checkout at BIPS, you could create a business able to instantly convert PPC to BTC and forward these BTC to the Bitcoin address on the BIPS invoice page.

A scenario would be:

  1. Customer checkouts at a merchant store and are redirected to BIPS invoice.
  2. On BIPS invoice, he is able to choose to pay in PPC by sending PPC to a pre generated address. This pre generated PPC address comes from your system and are displayed on BIPS invoice as well. ( Proof of Concept: BIPS will call your system via API asking for a PPC address to be generated of X amount of Bitcoin )
  3. When the customer sends PPC to that address, your system will have a buffer of Bitcoin instantly sending these to the Bitcoin address displayed on BIPS invoice on receiving of the PPC, hence completing the payment even though the coins was sent with PPC
  4. Your system will than send these PPC to an exchange and convert them back to BTC, hence allowing your buffer to keep its volume.
  5. Your system will provide BIPS the PPC address as described above, but also the amount to pay in PPC. This will allow you system to define the PPC amount plus any fees needed to earn revenue plus account for the exchange to BTC fees.

This is the way I am seeing alternative virtual currency being used at BIPS checkout/invoice.

Regards
Kris

PS: Please note the disclaimer below.
"

2

Would love some feedback on this idea (proposed by a rep over at BIPS). I know sites like Cryptsy do automatic conversion of coins to BTC. Payment processor would be a huge deal for PPC.

3

this is great if they agree to do it.

sounds like its a maybe.

but maybe they are waiting for the system they were asking for first.

there’s an opportunity here as suggested by the rep, someone can act as a middleman between BIPS and PPC and take a cut. can be a start up all on its own.

someone should take a crack at this, can be very beneficial for that person and ppc as a whole.

good luck.

4

I can promise you that your competition is working on solutions for this exact problem. There are other possible solutions such as scripting PPC/USD options on exchanges and then submitting to payment processors such as Bitpay, BIPS etc… If we get a list of possible solutions, we can start contacting the payment processors directly and figuring out what options make sense to both sides.

This is an area that LTC did not secure quick enough, fantastic opening for PPC to get it handled.

5

I like this approach better than what coinpayments.net current offers, for whatever reason the PPC rate at coinpayments.net is very low.

The main problem operating such a service is that it is close to the requirements of an exchange. This service can easily extend to support multiple currencies so not sure doing it for ppc only makes sense.

There is also the risk of double spending as the converter might need to take ppc with 0 confirmation although fees should be able to cover this risk. Also issues like chargeback/refund handling etc.

That said, I think it’s a great project to try and a worthwhile venture!

6

I sent this information to the Bitpay devs to also evaluate.

7

I live near the BitPay offices. I’ve talked to them on 3 occasions. They will not be adding any altcoins anytime soon.

8

Exactly! Take a peek at what the customer service rep from BIPS wrote… there are opportunities that don’t require the processor to directly accept the coin.

9

tl;dr: I agree that PPC’s potential is limited until we get a payment system in place, but I disagree that this should be the community’s top priority. I think that we want PPC to stay small until Sunny or others can fix the encyrption/minting problem, which is PPC’s largest flaw. Proof of Stake doesn’t secure the network when most people encrypt their coins, thereby preventing them from securing the network. If PPC gets too big, we are going to develop the inertia of BTC and not be able to fix our flaws. We need to make PPC fully better than BTC before we risk destroying confidence in it by introducing a payment system that would possibly cause the exchange rate to collapse, and with it, confidence in PPC.

I think that once Sunny solves the minting/encryption problem by cold locked storage or by having a spend and stake key, peercoin will have finally fixed the only fundamental (technical) problem that BTC has. But until then, PPC isn’t better than BTC because they both have these fundamental flaws. Currently PPC is worse than BTC because at least BTC has the momentum and rapid adoption rates.

Comparing the market caps of BTC (~$1500M) to PPC (~$8M), establishing a payment system for PPC now is like establishing one for BTC when it was trading at $0.67.

Remember at this point, almost all products (except the Trezor) have their prices set in USD and payment processors (bitpay, coinbase, etc) are simply converting it to USD by selling the BTC on an exchange. The only reason that the BTC/USD rate hasn’t collapsed is because it has enough liquidity – there are enough buyers willing to part with their USD to buy the BTC being sold by the payment processors at any given moment that the exchange rate does not fluctuate by much. If we introduce a payment system, we have to be sure that there is enough liquidity for PPC such that it doesn’t collapse when buyers pay with PPC directly.

Over the last 24hrs on BTC-e, the total volume of PPC has only been ~250,000PPC = ~$100,000. Because markets are made on the margins of supply and demand, introducing a way for people to liquidate their PPC directly into goods could be disastrous if the selling pressure increased by even as little as 10%. I would say that until PPC breaks the buck, implying a market cap of roughly ~$20M, it is essential that we work on making PPC a better coin.

BTC still has a major flaw that isn’t given enough attention in the BTC community, but fully understood by ours. BTC is still very vulnerable to a 51% attack and, even with ASICs entering the picture, they do not have enough hashing power to withstand the continued attack of a corporation or government. You cannot say that BTC will cause governments to fall and also pretend that the governments in question will not care. It is more advantageous for those governments to destroy BTC by destroying confidence in it than it is for them to earn the minor block reward they would get if they were to cooperate. Less than $100M has been put into ASICs. The US is spending $400,000M ($400B) on the new round of fighter jets alone. Long term , BTC is vulnerable and will always will be.

I think that once Sunny solves the minting/encryption problem by cold locked storage or by having a spend and stake key, peercoin will have finally fixed the only fundamental (technical) problem that BTC has. But until then, PPC isn’t better than BTC because they both have these fundamental flaws and PPC is worse than BTC because at least BTC currently has the momentum.

10

[quote=“tandit, post:9, topic:413”]tl;dr: I agree that PPC’s potential is limited until we get a payment system in place, but I disagree that this should be the community’s top priority. I think that we want PPC to stay small until Sunny or others can fix the encyrption/minting problem, which is PPC’s largest flaw. Proof of Stake doesn’t secure the network when most people encrypt their coins, thereby preventing them from securing the network. If PPC gets too big, we are going to develop the inertia of BTC and not be able to fix our flaws. We need to make PPC fully better than BTC before we risk destroying confidence in it by introducing a payment system that would possibly cause the exchange rate to collapse, and with it, confidence in PPC.

I think that once Sunny solves the minting/encryption problem by cold locked storage or by having a spend and stake key, peercoin will have finally fixed the only fundamental (technical) problem that BTC has. But until then, PPC isn’t better than BTC because they both have these fundamental flaws. Currently PPC is worse than BTC because at least BTC has the momentum and rapid adoption rates.

Comparing the market caps of BTC (~$1500M) to PPC (~$8M), establishing a payment system for PPC now is like establishing one for BTC when it was trading at $0.67.

Remember at this point, almost all products (except the Trezor) have their prices set in USD and payment processors (bitpay, coinbase, etc) are simply converting it to USD by selling the BTC on an exchange. The only reason that the BTC/USD rate hasn’t collapsed is because it has enough liquidity – there are enough buyers willing to part with their USD to buy the BTC being sold by the payment processors at any given moment that the exchange rate does not fluctuate by much. If we introduce a payment system, we have to be sure that there is enough liquidity for PPC such that it doesn’t collapse when buyers pay with PPC directly.

Over the last 24hrs on BTC-e, the total volume of PPC has only been ~250,000PPC = ~$100,000. Because markets are made on the margins of supply and demand, introducing a way for people to liquidate their PPC directly into goods could be disastrous if the selling pressure increased by even as little as 10%. I would say that until PPC breaks the buck, implying a market cap of roughly ~$20M, it is essential that we work on making PPC a better coin.

BTC still has a major flaw that isn’t given enough attention in the BTC community, but fully understood by ours. BTC is still very vulnerable to a 51% attack and, even with ASICs entering the picture, they do not have enough hashing power to withstand the continued attack of a corporation or government. You cannot say that BTC will cause governments to fall and also pretend that the governments in question will not care. It is more advantageous for those governments to destroy BTC by destroying confidence in it than it is for them to earn the minor block reward they would get if they were to cooperate. Less than $100M has been put into ASICs. The US is spending $400,000M ($400B) on the new round of fighter jets alone. Long term , BTC is vulnerable and will always will be.

I think that once Sunny solves the minting/encryption problem by cold locked storage or by having a spend and stake key, peercoin will have finally fixed the only fundamental (technical) problem that BTC has. But until then, PPC isn’t better than BTC because they both have these fundamental flaws and PPC is worse than BTC because at least BTC currently has the momentum.[/quote]
Welcome to forums tandit, and thanks for your analysis. I agree that we should work on Peercoin as a protocol in the early stages. One of the things I think needs work the most is the wallet software. Proof of stake is a great concept, but needs to work well and be easy to use.

As someone who has been a government employee for period, I can guarantee that government would not be able to get the resources together to build an ASIC attack farm. Even for a corporation they don’t have the flexibility to be able to pull that off before the network is 2x as big. Furthermore, if they did manage to do that, well there is more than $1.5 billion currently in the Bitcoin economy. People are simply not going to let that go quietly. Core devs would come out with a simple algorithm change overnight that would invalidate all current ASICs, and push us back to GPU times.

11

Update from CoinPayments.net

"Hello John,

We are working with an exchange on a similar system, I’ll let them know
BIPS is looking for something like that as well and maybe that will spur
them to do it faster. On our end it would let people accept any coin we do
but receive payment in Bitcoin or Litecoin.

Exchanges have the volume to implement a system like that most efficiently
which is why we brought it to one of the major players.

-MrData"