Paypal’s Abandonment of Major Cyberlockers May Become Bitcoin’s Big Win

Paypal’s Abandonment of Major Cyberlockers May Become Bitcoin’s Big Win

Paypal is now well known for a sort of sanctimonious attitude towards sites that they feel will damage their ability to make money and now that cyberlockers are under fire from copyright conglomerates such as the RIAA, MPAA, and BRIEN. This comes during the long-burn of Megaupload by the U.S. government at the behest of these copyright cartels and now Paypal pulling out means that many of them will lose a primary source of funding and accessibility to the general public.

According to TorrentFreak, Paypal has stopped working with cyberlockers such as MediaFire, Putlocker, DepositFiles, and many others citing concerns of piracy.

Even the newest folk hero of cyberlockers, somewhat infamous Kim Dotcom, has come out asking the community on Twitter about better payment systems than PayPal and U.S. credit companies to upkeep this advancement of Internet innovation. As we all know, the MPAA and RIAA have gone to credit transaction companies and gotten them to withdraw their support from sites that may be capable of supporting piracy (which means any and every cyberlocker out there.)

An obvious answer comes to mind from the growing population and functional use of a digital cryptocurrency we already know: Bitcoin.

The e-currency is still in its rough-start stage when it comes to technology and much of that has been because it’s been treated as a fanatic commodity by a small but extremely loyal group who keep it afloat. It also fluctuates in value too often for most people to want to store their money with it; but we have seen it used effectively for an intermediate currency and a number of services do take bitcoins as compensation—such as Bitmit.net auctions and several VPN providers who also take the currency.

Point-of-sale for service with Bitcoin could be used via a vendor taking bitcoins, instantly trading them on a platform like MtGox for their local currency, and providing access to the cyberlocker to the customer.

Paypal’s withdrawal from cyberlockers, which have proven to be extremely useful to a multitude of people, see the popularity of Megaupload before the U.S. burned it to the ground and the layout of customers who used it for legitimate means, even U.S. military servicefolk.

A growing use case that everyday people can interact with will provide stability

If Bitcoin were to become the alternative to PayPal and U.S.-based credit cards for getting cyberlocker services it would mean that there would be money flowing into outfits that exchanged and traded in bitcoins. This means that they’d have a reason to make their systems more stable, the currency itself would find a happy medium with a larger critical mass of trading going on, and we’d see innovation taking advantage of the presence of money flow.

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It’s worth to note that the market for bitcoins is already extant, it functions, and it’s survived several major upheavals (including losses of bitcoins, hacking, and even market crashes) and we’ve seen it used in the real world for trading and for selling products.

If Kim Dotcom uses his celebrity to bring attention to the use of Bitcoins for cyberlocker access, welding the two together will most likely bring both out with a much bigger market than before and make both of them much more resilient to economic siege by the copyright industry.

Kyt Dotson

Kyt Dotson

Kyt Dotson is a Senior Editor at SiliconAngle and works to cover beats surrounding DevOps, security, gaming, and cutting edge technology. Before joining SiliconAngle, Kyt worked as a software engineer starting at Motorola in Q&A to eventually settle at Pets911.com where he helped build a vast database for pet adoption and a lost and found system. Kyt is a published author who writes science fiction and fantasy works that incorporate ideas from modern-day technological innovation and explore the outcome of living with those technologies.
Kyt Dotson

15 Comments

  1. Excellent article. Bitcoin was designed to give people full control over money, and it’s situations like this one with PayPal that should make the value of Bitcoin obvious to anyone who is not yet convinced. The fact that a Locker site could accept Bitcoin as payment, then automatically convert the Bitcoin into normal currency (thereby eliminating all exchange rate risk/volatility) should seal the deal. 
     
    Bitcoin is an incredible alternative monetary system, and everyone should be learning about it.

  2.  @ErikVoorhees Thanks, Erik. I agree completely.

  3.  @ErikVoorhees I think that’s very astute. For merchants, I think the volatility has been a major obstacle to adoption — being able to set that aside and opening up a greater number of avenues to take bitcoins should indeed be a big deal.

  4.  @Kyt Dotson Paysius.com and Bit-pay.com are the two best ways for merchants to accept Bitcoin (with automatic USD conversion).

  5. It is a great for bitcoin that paypal slowly becomes more and more useless.  I can no longer trust paypal for transactions on virtual goods, and now even well known companies can not use it for services because paypal refuses to take any risk at all.  At 3% fees, paypal can afford to take some risks just like the credit card companies. 

  6. Paypal is in the wrong side of the history. Good article.

  7.  @ErikVoorhees @Kyt Dotson Please note that Mr. Voorhees is affiliated with Paysius.com, as can be seen at this page: https://paysius.com/about.

  8.  @Milton Corlett Thx for pointing that out! Covert advertising is an unfair thing for sure.
     
    However, I think he got a point here: With all these merchant services, Bitcoin volatility being a show-stopper for merchants is neither here nor there.

  9. Hm, hm, I’m undecided. For one thing, such a major player joining Bitcoin would be a great thing to boost Bitcoin adoption and to decrease Bitcoin’s volatility.
     
    However, I think we should be careful that Bitcoin won’t become a currency primarily only used by the “bad” guys. It’d just give politicians another reason why they will have had to pass bills to break “our” internet.

  10.  @Milton Corlett Yes that’s why I also suggested Paysius’ main competitor. 

  11.  @ErikVoorhees “…a Locker site could accept Bitcoin as payment, then automatically convert the Bitcoin into normal currency (thereby eliminating all exchange rate risk/volatility)…”
    Could you explain how this would work? Wouldn’t the merchant change their pricing according to the fluctuations in Bitcoin?

  12.  @Neophyte It’s super easy. The merchant keeps things priced as normal in USD. When customer goes through the checkout process, there is a “pay with bitcoin” option. If he clicks that, the USD price is shown in BTC at current exchange rates. The user pays in BTC, then the system converts that to USD automatically and pays the merchant’s bank account in USD on a routine basis. Thus the merchant never has to touch BTC if he doesn’t want to (he is never holding BTC, and receives USD just as normal… the only difference is that the customer paid with Bitcoin).  This is all done automatically and instantaneously. 

  13. Our online storage site http://filecloud.io/  accepts bitcoins as an option when upgrading, big discounts to since there are no chargebacks/fraud to worry about

  14. The fundamental problem with credit cards (from a merchant’s perspective) is chargebacks.  Cash-based payment systems such as BitCoin don’t suffer from that.  That alone is reason enough to move off credit cards for payment.

  15. Great Article! I’m really loving the potential that bitcoin has.

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