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Thursday, January 27, 2011

Bitcoin Stash Delivered

Just a quick post to inform everybody, that we are selling BitCoins again. The market prices have rissen significantly since our last purchase. Therefore we had to adjust our prices.

[Omar your friendly Bitcoin dealer; The Wire; Copyright HBO]

We are now selling at the following Rates:
1 BTC = 0.35 EUR
1 BTC = 0.46 USD
1 BTC = 0.30 GBP

The stash is also bigger this time, so we won't run out as quickly as last week. We should also be to top it up much faster now, as we have established the process of sourcing the Bitcoins.
Please note the 45 day rule will keep on applying.

Tuesday, January 25, 2011

User Feedback & Bitcoin Reserve

We would like take to this opportunity to thank everyone for the great feedback we got, since our launch last week. The overall tone was very positive and welcoming, even though we managed to sell our Bitcoin reserve a lot quicker than anticipated.

The biggest compliments we got were, the we are the "Flattr of Bitcoin" or the "Bitcoin Killer Application".


Bitcoin acceptance & availability

It was great to see how quickly Bitcoin users started sending in their coins. The selling of Bitcoins went even better. Admittedly we underestimated the demand, especially at that good price we were giving.

We should have stocked up again by Thursday though, unfortunately at a higher price. Probably 0,45 – 0,50 USD. The main reason for this is that prices have gone up significantly since we bought our initial stash. The other reason is that we want to give Non-Bitcoiners an easy way into the Bitcoin world. If we sell below market value, well, I can't blame anyone trying to make a quick buck like that. On the other hand we believe Bitcoins should be used by everybody, not only by people who can fix computers.

Feedback and Improvements

We got a load of mails with improvement suggestions (and also the odd bug report:-) ).

The following has already been implemented and is live:
- On your My Profile Page you can now see, who tipped what when.
- We now have monitoring in place which notify us instantaneously, should the Bitcoin Service go down again.
- When registering, emails may now contain a “+“
- Fixed a Bug in the Edit Junket, which cut of parameters of the URL
- All Junkets should now be crawled by google.
- Added feedback service

The feedback system can be used for suggesting ideas, problems or asking questions. I think it's very slick and also works anonymously. We are using Idea Informer which is completely free and definitely deserves a few tips, (if they had a Junket.)
Some of the ideas from the Feedback we’ve gotten have already been added. Make your additions as needed. You can view it here, or click on the “Leave Feedback” button when you’re browsing YouTipIt.

Thanks again for the great start and keep it coming!

Wednesday, January 19, 2011

We now accept Bitcoins

As we announced recently we have now completed the transition to Bitcoin. It’s been exciting and fun getting the grasp of the concept behind Bitcoin and actually implementing it in our system.

First of all we would like to send out a big THANK YOU to the makers of Bitcoin and to the great people who are actively supporting its evolution. You guy are doing a fantastic job.

For those who don’t know what YouTipIt is, here is a brief summary: YouTipIt is an online community platform for tipping small amounts of money to other internet users. Anyone who has a YouTipIt account can tip other users or can receive tips. The motivation behind YouTipIt is to enable all those eager content creators out there (Bloggers, Musicians, Developers, Artists etc..), to get rewarded for the things they publish for free and often enough make our day(s).

Starting with our new release today, we enable our members to use the independent digital currency Bitcoin as the tipping currency. (Visit for more details). As using Bitcoin can seem daunting to the uninitiated, we are aiming to reduce the learning curve and make it more accessible to a wider audience. Ideally our users should not need to understand the mechanics of Bitcoin, but just accept and trust Bitcoin as a practical digital currency.

YouTipIt acts like an online Bitcoin wallet for its members. You can send in Bitcoins from your Bitcoin client and withdraw Bitcoins to any Bitcoin address. We also keep a reserve of Bitcoins which we sell using PayPal. Bitcoins purchased from us, have to abide by the 45 day rule, meaning they have to stay in our system for 45 days. They can be tipped internally to other members, but cannot be withdrawn until the exit date has been reached. (See our previous blog article for the background).

YouTipIt still is in a beta phase. It’s not feature complete (and probably never will be :-) ), the processes and the handling still need a lot of tuning and there will be some bugs which have managed to wriggle through.
Please bear with, send us your opinion and help make YouTipIt a success.

As an “introductory” offer to all you aspiring internet street performers out there, we will tip 3.33 Bitcoins to the first 33 members, who create a Junket, place it on their public web presence and send us a message through our contact form with a link to the page containing the Junket.

From the feedback we’ve already gotten we know that our snippets feature for promoting the Junket is not quite up to scratch yet. We will work on it.. :)

Thursday, January 13, 2011

The 45 Day Rule

To protect ourselves from fraud using stolen credit cards and/or abusing chargeback policies from payment services providers, we will be implementing a logic which we call the 45 day rule.

For YouTipIt members this will essentially mean, that Bitcoins that have been bought from us using PayPal etc. , will have to remain in our system for at least 45 days. These Bitcoins can be tipped immediately after purchase, but they just cannot be withdrawn before they have passed that 45 day stay.

We do realize that many users might see this as an inconvenience, but this our strongest method of deterring internet payment fraud and not making our members pays ridiculously high transaction fees. I’ll elaborate in more detail how these frauds work below, but before that I’d like to highlight the core facts of the 45 day rule.

  • Bitcoins bought from YouTipIt through a payment service provider such as PayPal will remain for 45 days in our system.
  • Bitcoins that have been deposited using the Bitcoin network do not have this restriction. They can be withdrawn at any time!
  • Bitcoins which still are on hold can be tipped and re-tipped. The hold remains, only the owner will have changed. (We add a timestamp and some metadata on each coin when it is credited to the member)
  • If a credit card transaction bounces and we have to pay the money back to the credit card company, then the Bitcoins of that particular transaction are “deleted” from the system. All tips using that money will then consequently be invalidated.
  • If a member is unhappy with our service and wants his money back, he/she can contact us and we will gladly arrange a reversal at a minimal fee. (Please do not use PayPal’s dispute functionality)

Now, as promised, more details on the background: The way most credit card fraud works on the internet is actually quite simple, provided you have sufficient criminal motivation that is...

  1. Illicit person acquires credit card data (theft, purchase..)
  2. Illicit person buys goods or services in a shop on the internet
  3. By the time the Non-Illicit person realizes that something is wrong and acts (blocks credit card, reverses credit card transaction), the shop on the internet will often have already delivered the goods or services, leaving the shop, the credit card owner, the credit card company and often also a payment service provider to fight it out who pays for the damage done.

Lawyers, I’m sure, really enjoy figuring these things out, but usually the weakest links in the chain break first, meaning it’s either the shop or the credit card owner who will be left crying in the end.

If we replace “shop” with YouTipIt in the above scenario, it quickly becomes clear that we are at a big risk of people using YouTipIt to launder their stolen credit card money and leaving us with the tally.

Credit Card Companies and Payment Service Providers all have their own strategies to minimize this kind of fraud. Most of them essentially make good people pay for the actions of the bad. This means: If they make enough revenue from “good” people, the relatively small percentage of fraud is something they can live with. So by adding sufficient transaction costs on the transactions of the “good”, they actually succeed in making a decent amount of money.

So if we’d add sufficient transaction costs on every YouTipIt transaction and manage to build up an equally sufficiently big revenue stream, then shouldn’t YouTipIt turn into a successful endeavor? Yes, but only if we had enough capital to burn for a couple of years until we reach that break even.

Now I’m sure we could convince the odd investor or two with a glossy business plan to cough up some dough. We don’t want to be driven by investors. We want to keep our freedom and make YouTipIt something worth its while and be driven its members and not by the investors.

Hopefully, the 45 day rule will deter fraudsters from using YouTipIt and will help us keep running our service at the lowest possible costs.

Thief Pictures, Images and Photos

Tuesday, January 4, 2011

Bitcoin transition

Although not many changes are visible on the YouTipIt site, we’ve been working away madly in the last weeks. Especially the last month has been very exciting for us, since we decided to move YouTipIt to using Bitcoins as the tipping currency.

Our biggest issue has been getting things sorted out with our payment service providers (PSP) and banks. Setting YouTipIt up to conform both with PSPs policies, current financial laws, and not opening all sorts of possibilities for payment fraudsters at the same time, has proven to be a bit of nightmare. PSPs have been hesitant to work with us because they view us as pseudo bank, implying that we need to have some expensive financial or banking license. Banks won’t touch us because we’re too small and seemingly irrelevant to them. Or banks will charge such high transaction fees, that we won’t touch them. Then there are financial laws which force us to add a significant overhead of administrative and regulative work... And on, and on and on. In the last weeks we often felt like the man in the photo below.

(With kind permission from Graham from Check out their site for a lot more of the above)

We believe Bitcoin offers a radical new approach on implementing an online currency. Bitcoin describes itself as a peer to peer cryptographic currency. For those wanting the detailed juicy bits, we’ll refer you to their website:

Essentially what it sums up to though, is that a Bitcoin is an encrypted data package which can be stored on computers and transferred to other computers using a peer to peer network. Bitcoins are started to be accepted as a payment method on all kinds of payments sites. To be fair though, sites accepting Bitcoins are usually more for the technically inclined. But exactly this is where YouTipIt will hopefully be adding some simplicity: We see ourselves providing our members an online Bitcoin wallet. YouTipIt members don’t need to install the Bitcoin client. They don’t really need to understand the technicalities surrounding Bitcoins. They just need to embrace Bitcoin as an online currency, (which is always the challenge when introducing a new currency).

Another great thing about Bitcoin for us and in the end for the users, is that it does not are no financial regulators or other monstrosities involved. The value (i.e. exchange rate) of a Bitcoin is purely determined by the market and the trust people put into it.

In the coming release we will be implementing the following changes:
  • Instead of letting you deposit money in a real world currency, we will be selling Bitcoins. (Initially at a rate of approx 0.3 USD per Bitcoin.)
  • Tipping will be done in Bitcoin.
  • To keep the financial and regulative ogres at bay we will initially not be buying Bitcoins back from you, but will instead send off to one the other (growing amount of) sites which either trade Bitcoins for real currency or sell services or goods for Bitcoins.
  • Once we feel we are in good control of Bitcoin we will then offer to buy back Bitcoins from you.

We have implemented all those changes already and are currently in the process of testing them. We should be releasing this version by mid January.