The bitcoin exchange landscape has undergone plenty of changes over the past eleven years. Making it easier for users to buy and sell cryptocurrency is a complicated business model. For the Bitcoin market team, their original business model came to haunt them and forced a shut down in the end.
The Bitcoin Market Story
In the early years of bitcoin, the number of platforms letting users buy and sell this currency were very limited. That was only normal, as this cryptocurrency had very little to no real market value. While some tried to convert it to traditional cash, it was often a painstaking venture.
Big was people’s surprise when a new exchange saw the light of day. Known as Bitcoin Market – perhaps the best exchange name in the industry today – it was considered to be a very prominent platform. It allowed users to buy and sell bitcoin in exchange for PayPal payments. One could argue this was one of the first “fiat” gateways for the world’s leading cryptocurrency.
Bitcoin Market originally began its trading of bitcoin in March of 2010. During the first few months, the platform noted some decent trading volume. After a full year of operation, the platform was forced to shut down. Recurring fraudulent transactions made it impossible to offer the service past June of 2011.
PayPal was a bad Choice
In the 2010 – 2011 period, PayPal was less strict regarding digital goods and services than it is today. Their policy at that time allowed Bitcoin Market to let users buy bitcoin with PayPal, as well as use it as a way to convert BTC to fiat currencies. On paper, it was a very smart idea due to the sheer convenience provided by this integration.
Unfortunately for the company, the use of PayPal caused its downfall. It was, back in the day, very easy to make fraudulent purchases through this online payment processor. Their verification of credit card users’ identities was not all that strict.
If one managed to get their hands on a stolen American Express card, they could spend up to $10,000 without going through additional verification. Visa and Mastercard cards could be used for up to $2,000 without verification.
It is only normal to see criminals leverage these aspects and buy bitcoin with the stolen cards. For Bitcoin Market, it caused a lot of issues in quick succession.
A few fraudulent cases were reported initially, but it soon became a nearly daily occurrence. In the end, the exchange was forced to disable PayPal altogether. Not long after, the exchange ceased to exist altogether.
PayPal and Bitcoin in 2019 and Beyond
For reasons unknown, there are still hundreds of people looking to buy or sell BTC in exchange for PayPal funds. While some trading platforms seemingly provide that functionality, their legitimate nature is often in question.
That is only normal, as the popular payment processor no longer provides buyer protection when dealing with unsanctioned digital goods, such as cryptocurrencies.
For bitcoin sellers, accepting PayPal is not a good idea either. Cryptocurrencies are not covered by the company in any way. If a buyer were to simply ask a refund after receiving the bitcoins, PayPal will often grant their request without questions asked. It is best to not mix these two forms of money in any way, as it will only lead to trouble sooner or later.