If you're wondering how you should do these types of transactions without putting cash up front, the field is called trade finance.
Call your bank - most of them have a trade finance desk, or Google the term. A slightly cheaper way of doing it is to have a lawyer draft a terms of trade or supply agreement with either the funds in escrow with the firm or a bank guarantee.
Having your bank finance the trade is worthwhile as interest rates are so low at the moment. Common terms are 60, 90 or 120 day delivery with FED/LIBOR + x% (where x is the risk profile of your business - shop around to get prices) cost over the term.
The agreement would contain delivery timetables, warranties, customs clearance, liabilities, indemnities, guarantees, who pays what, etc. and you are protected legally without handing over tens of thousands of dollars or more upfront. These contracts are protected by law in almost all jurisdictions.
You don't finalize the transaction and pay for it until all conditions have been met and you have the goods in hand and have verified. The seller is trusting an international bank or a law firm escrow, and they should also have a lawyer or bank on their end (a trusted seller can receive the cash upfront for a fee with the bank picking up the risk, although I doubt any bank would finance a bitcoin atm without verified trade volume and a lower risk profile).
Talk to your lawyer and talk to your bank, having expensive items delivered without risking the full cost is a solved problem as old as finance itself and trillions of dollars annually are traded in this way. The extra $1k or so you'd pay on a $25k deal are worth it for the guarantee. If you ship goods regularly the costs are amortized as you can use the same contracts and finance suppliers. Don't deal with anybody shipping $20k+ valued products that doesn't deal with a bank trade finance desk or law firm and is instead asking for a bank transfer.
This is how most high cost goods are traded - from oil and other commodity supply contracts through to companies like Boeing and Airbus supplying planes, or GE supplying turbines for a power plant. Most people without experience lead into it thinking that buying something that costs $25k, $100k or millions of dollars is just the same as purchasing something at your local store just with bigger numbers. It isn't.
Bitcoin multisig transactions, or m of n transactions are also worth investigating as they cut the costs - although there is currently a lack of escrow/intermediaries who are as trusted as major law firms or an international bank. There is a huge opportunity in cutting the costs and fees associated with trade finance with bitcoin.
>There is a huge opportunity in cutting the costs and fees associated with trade finance with bitcoin.
Why is there an opportunity with bitcoin? Aren't the costs and fees paying for the legal agreements, risk management, arbitration and things like that? Bitcoin might possibly reduce the cost of moving the dollars around but I suspect this is a very small fraction of the cost of this type of service.
Trade finance isn't a transparent market. The costs are higher because the way it works atm is you work with your favorite bank or call 2 or 3 others. There is no real price discovery. There are also high costs in settlement, and a barrier of entry for financing that wouldn't have to exist if you could sell tranches in a distributed way online - similar to kickstarter.
An m-of-n transaction with a decent and trusted intermediary (or multiple less trusted intermediaries) could also replace bank guarantees, which is the simplest form of trade finance. There are also other opportunities in using bitcoin as proof of ownership or proof that you hold a product.
>An m-of-n transaction with a decent and trusted intermediary (or multiple less trusted intermediaries) could also replace bank guarantees, which is the simplest form of trade finance. There are also other opportunities in using bitcoin as proof of ownership or proof that you hold a product.
So let's replace banks with... banks?
The overhead costs that bitcoin will save are just the wire transfer fees. Beyond that, there's still lawyer time, intermediary escrow fees, etc. Those will not change.
You would replace a bank with coinbase, circle, someone else you trust or 2, 3, 4, 5 or even 10 other companies or individuals. Similar to a web of trust.
That is just to replace the trust element of a bank, not the financial function. At the moment it is nearly impossible to split trust across more than one institution - which means there is a single point of failure in the trust chain and if 2008 repeats again x% of people will lose funds. m-of-n allows you to distribute that trust, even if its just more banks signing the transactions to begin with.
Further, there are other ways to do proof of reserve with bitcoin that don't involve m-of-n.
In terms of the financing and risk assessment element, you could carve that out in tranches and sell out it on auction. At the moment the $2 trillion p.a trade finance market is limited in entry to only those who have a banking license, hence the thick fees and profits in it. You could open up the financing and terms to an open market, just like crowdsourced venture funding or project funding, or have smaller institutions that specialize in certain types of risk that they better understand (it is crazy that there are a half-dozen major banks who pretend to be able to understand and price every time of import / export finance situation anywhere in the world).
There's one big difference here: with Bitcoin's multi-signature transactions, you can require the agreement of two of the buyer, seller and arbiter in order to release the funds. The arbiter cannot move funds on its own and must have the cooperation of one of the other parties, which means that he doesn't actually control nor hold any funds. The legal situation here is a classic binding arbitration, and not an escrow - which are very strictly regulated, require licensing in some parts of the world and have a very high costs of operations due to bonds and securities.
Dealing with arbitration services rather than with escrow makes this much simpler, drops the entry/operational costs to nearly nothing and does not even require a lawyer to assist you with the process. This lowers the barriers of entry significantly and allows to create a competitive market for arbitration services in a way that's simply not possible when an escrow is required, leading to reduced end-user costs and improved service quality.
Source: I'm the founder of Bitrated [1], a service that enables exactly those kinds of arbitration services, and received extensive legal advice on this matter from my attorney. Do note, however, that this is a new and somewhat gray territory that can be interpreted in multiple ways (and of course, IANAL/TINLA apply - ask your own lawyer before doing anything.)
(P.S. Bitrated v2, a complete rewrite I've been working on for the past 6 months, which now includes an identity & reputation management system, is about to be shortly released. If anyone is interested, you can follow @bitrated on twitter for updates. </shameless-promotion>)
The reality is that $25k contract is a very small one and nobody will do bank finance on a one off deal like that. If they bought 20+ ATMs it would have been different but not for one.
Why not? They get a commission. Banks issue close similar deals (letters of credit) all the time for single-container shipments in international trade. A 20K transaction is certainly not below their notice, they have entire departments specialized in services for small business. The less trade volume you have with them, the higher their commission (in %)!
Not sure what gives you an impression that there is some minimum amount for a trade finance deal. Bank guarantees are a form of trade finance, and you have other simple instruments. A google search brings up 2 or 3 providers who would do an online quote for amounts starting at $10k.
Structured trade finance is a whole other matter, that is where you have bespoke instruments and teams working on deals - usually with businesses that see $50M+ p.a in deal flow.
In either case I mentioned in my post that having a lawyer do a terms of trade or supply agreement is cheaper at the low end.
The fraud level in the Bitcoin world is so high that it makes South Florida look good.
There's a working Robocoin ATM at Hacker Dojo in Mountain View, CA. Nobody uses it. Nor should they. 15% bid/ask spread, 5% fee.
Incidentally, the retail price for an ordinary ATM machine is $2,000 to $4,500, depending on the features ordered. A standard through-the-wall bank ATM is about $9,500. Even if you order every option from cash deposit through biometrics, they don't cost $25,000.
There's a big difference between an "ordinary ATM" machine and the NCR/Diebold machines that the large American banks deploy. Sure, you can get a Hyosung/Triton/Wincor/$whatever machine and it will technically function for the usual customer operations . . . but I would never order those machines if I were in a purchasing capacity because of physical security concerns. I've worked with enough damaged/compromised machines to see what is physically possible in a very short amount of time, and the cheaper machines aren't worth it.
I've found you get what you pay for in the ATM world when it comes to hardware. Software is another story altogether, but there's no cheap and easy solution for physical security. The bad thing about Bitcoin ATMs is that they have the same physical security problems but an extra set of information security problems, with none of the established and well tested solutions that have existed in the banking world for 30 years.
Forget Bitcoin ATMs for consumers - if you want to actually make money you should build a regular banking ATM network that uses Bitcoin/altcoins in the background for transaction processing. That would actually disrupt the industry and allow you to undercut the other networks' pricing models.
"if you want to actually make money you should build a regular banking ATM network that uses Bitcoin/altcoins in the background for transaction processing. That would actually disrupt the industry and allow you to undercut the other networks' pricing models."
How exactly is this cost-based "disruption" supposed to work when Bitcoin and friends are outrageously expensive per transaction?
One of the funniest things about the entire Bitcoin movement is the way that self-styled experts babble on and on about how amazing a technical revolution cryptocurrency is, despite clearly not understanding the first thing about cryptocurrency technology. Bitcoin is an experimental attempt to solve the classic Byzantine Generals' Problem, which can be boiled down to "how can a public transaction ledger maintained by its own users (with no central authority) be resistant to attack by bad actors". The Bitcoin "solution" to this problem is, in essence, for each node on the network to provably waste energy in an exceedingly flagrant way, in hopes that the costs of taking over the network are too high for any individual bad actor.
Well guess what, my friend? That means Bitcoin ends up chewing ridiculous amounts of energy doing no useful work on the desired end product of the system -- the ledger of transactions. Trust-based systems (you know, the kind deployed by, say, a bank, which would like to believe it can run its own system) do not need to waste energy, because they aren't built on deliberately wasting energy.
Bitcoin only makes sense if you are fanatically dedicated to the notion that Gibsonian dystopias (wherein the collapse of public institutions requires development of cryptocurrency) are either inevitable or desirable. It certainly isn't going to disrupt the existing system by being more cost- or energy-efficient. It isn't, it can't be, and that's by design. (Since Nakamoto couldn't figure out a less-bad way of solving Byzantine Generals.)
> The Bitcoin "solution" to this problem is, in essence, for each node on the network to provably waste energy in an exceedingly flagrant way, in hopes that the costs of taking over the network are too high for any individual bad actor
This is like saying, "The traditional banking 'solution' is to have a bunch of lawyers and government agencies waste time, paper, and ink drafting up and verifying documents, in hopes that the costs of taking over the system are too high for any individual bad actor." Obviously it's not perfect, but neither is any other financial system. They both serve a purpose: addressing problems that haven't been solved any other way, so it's not a waste.
I'm not even as rabid of a Bitcoin fan as some others, but it's just silly to read "OMG, mining costs energy!" when so does any other activity. At least put out some numbers to show how much more wasteful mining is than other systems, in your opinion. And who appointed you to decide which uses of energy are dumb/immoral/wasteful? Why do you care if miners are willing to buy electricity and electric companies are willing to sell it?
Ordinary ATMs have economies of scale not available to Bitcoin ATMs, from simply making bigger purchases to distributing fixed costs (like software development). It's also a much safer business - you can be relatively sure the dollar economy won't crash tomorrow and kill your business.
Since Bitcoin ATMs still dispense cash, why not just retrofit the same hardware?
You can use the same hardware, but when you're buying 10s instead of 1000s of them, it'll probably cost you a lot more per unit. At least that's how it works for most manufactured goods.
That's the dumbest argument ever. You are comparing one of the most expensive bitcoin ATMs with the cheapest traditional ATMs. "But, but" is the core of your argument.
Judging from the replies, it seems to have backfired probably because he did not acknowledge the errors on his side (shipping a lemon, unresponsive over email and not having provided a refund yet).
Worse, he doesn't seem to realise that the name-and-shame was a result of his and ultimately RoboCoin's actions.
Edit: The correct response would have been to issue a refund immediately, acknowledge and apologise for the issue, highlight the trouble area (upstream supplier issues or whatever lead to this), and commit to solving or already having solved this problem for future clients + internal review of this mishap.
When I clicked on his nickname, robocoinjordan, few hours ago there was ANOTHER post from him where he states he is sorry and just wired the money - it seems that second post is also deleted now
"Just so we're perfectly aligned, I want you to understand the relationship that Robocoin has with our manufacturer. We are actually just a reseller of their kiosks with our software."
I've heard this from smaller retailers of all kinds of products and, as pointed out in Andrew's reply, it's complete bullshit. The company that took your money is the company you formed a contract with. Any nonsense about "yeah, but the manufacturer..." is a smokescreen designed to dodge responsibility.
(Wimpy disclaimer: this isn't legal advice and maybe it's not true if you live in Yemen or something, I dunno)
I really think that it's not even a smokescreen as much as it's really what they think. "Why should I assume any risk when I'm just a reseller?" is a common thought among many new companies. They don't really see themselves as a business with its own risk as much as a subsidiary of the company.
It's just a sign of naiveté among many new entrepreneurs.
Orders ship within 2-3 weeks. Shipping to Canada is no problem, customs is no problem. Assembly is in Portland, Oregon, so it's a quick ship to Vancouver. We've shipped hundreds of units.
Setup is completely on the owner's end. Owners don't need the company to configure the unit, and the company doesn't need to run servers for them. Skyhook ATMs use blockchain.com for the wallets (using accounts the owner creates independently), and the exchange price source is the owner's choice, all controlled through the interface. This isn't to avoid having a setup phase - it's to allow owners to have complete control over their money, because then it's a trustless system (the source code to the ATMs is open and auditable: https://github.com/projectskyhook).
I'm astounded at the prices on some of these ATMs. For $25,000 they could have ordered 24 Skyhooks (a little padding for shipping, which I believe can be palleted to save money). Bitcoin ATMs shouldn't cost the down payment on a house, IMHO.
Skyhook is also completely bootstrapped by the founders (no VCs) and a result of that (and careful burn rate management) is now profitable, despite the low price point. The cofounders have been using some of the money (and their free time) to help clean up and build out a new hacker/makerspace in Portland that's going to be awesome. Easily the best group of people I've ever had the privilege to work with.
I wish more people approached startups this way. There's a real pride to making companies on your terms that you control, and succeeding at it. Startups shouldn't be about overvaluing your company and having Kid Rock do a rock concert in your back yard.
The physical security on units such as these, or the majority of newly manufactured Bitcoin ATMs, is a joke. There's a good reason to build a large, heavy safe into an ATM, and all but the very strongest and most expensive can be broken into trivially. Bitcoin ATMs are even worse than cash ATMs from this perspective because physical compromise of the machine potentially nets you private keys.
Small/cheap units like this also don't support industry standard features like Mas locks or other one-time-combination locks to allow third party security and cash replenishment organizations to service them. [0] A used Mas lock (or its equivalent) will run you at least $500 and newer units are easily over $1,000 [1]
I agree with you that the locks aren't the best possible. Skyhooks wouldn't be a particularly great choice for an outdoor mall or a shady alleyway (they're not waterproof anyways), but they're perfect for cafes, small businesses, meetups, etc. I haven't heard a single report of a stolen or compromised Skyhook yet, and hundreds have been shipped. I don't think this is as big of a problem as it's made out to be.
Instead of making the entire unit expensively heavy, we opted to provide a way to bolt the unit onto something else, via 4 thick screws on the bottom of the unit with a heavy mounting plate, and supply that with purchase. That way, the ATM is either portable (a lot of people like to take them to Bitcoin meetups or swaps), or you can optionally secure it to something very difficult to steal. That way, you get a choice.
If the unit is removed from the wall, the unit detects that it has been powered off and locks the system, requiring the operator password to unlock it. It's not perfect security, but it's pretty good.
where self::ITERATIONS is 500. That's extremely low.
Furthermore, they're using CBC mode encryption for the 'config' file rather than an authenticated cipher. The only 'authentication' there is is whether the file inflates. Because the IV is in the encrypted file (and I can pick any password), I can make the first block decrypt as anything. Depending on when gzinflate throws an error, I could potentially make the decrypt succeed with just control over the first block.
Neither of the issues is (in this case, because it's 'just' the config file encryption) probably anything to especially worry about, but it does show that other, more critical, parts of the codebase might not be up to snuff.
I have the feeling that Jordan knows exactly what he's doing. The amount of $20,000 is a lot but it's not that much once you start to hire lawyers and file a suit or go into arbitration. Sounds like he's stringing them along waiting to see how much more cash they're willing to invest to recoup that $20,000.
Even worse Jordan might be setting himself up for a settlement of less than $20,000 where he keeps some of the money but knows it's a better offer for Andrew and Rajiv than hiring lawyers.
Been there. Done that. I'll never look at a purchase or legal document the same again. Jordan's got the upper hand here.
> I have the feeling that Jordan knows exactly what he's doing. The amount of $20,000 is a lot but it's not that much once you start to hire lawyers and file a suit or go into arbitration. Sounds like he's stringing them along waiting to see how much more cash they're willing to invest to recoup that $20,000.
I'd say they are just on the verge of bankruptcy and probably have similar experiences with other customers and just attempting to string them along enough that they can keep going.
> I have the feeling that Jordan knows exactly what he's doing.
Not to excuse him, but this sounds exactly like a business noob who doesn't know what he's doing. He started on dreams and bluster, somehow got people to send him lots of money up front, and now is discovering that starting a company is actually hard.
The first test most businesses face is being able to talk a good line. But that's not the last test, so it's pretty easy for fast talkers with no real skills to get in over their heads. And I think they really don't know what idiots they are, because they've grown up being able to talk their way out of their problems. Turns out actual customers (and the Reddit rabble) are not as forgiving as their moms.
I wouldn't say Jordan has the upper hand. Managing the reputation of the company is critical for the survival of a startup. Andrew may lose, at worst, $20k, but Jordan can lose everything (unless its a scam or they already made a substantial profit from these machines).
From my experience with one of their ATMs (both myself and two friends using it), they're incredibly error prone and not even shitty-ATM levels of usable. (I'm loathe to name locations, since the owners of the ATM are friends of mine and have dealt promptly with any problems I've had stemming from the ATM. They're often at the bar where it's located, as bar customers, and I've seen them deal with other upset ATM users. Great businessmen, bad equipment.)
That being said, it doesn't really surprise me that people with that poor of a user experience have poor customer service.
What is it about the bitcoin market that seems to attract less-than-ideal business practices?
A currency that defies regulation attracts less-than-ideal business practices - our highly regulated baking system attracts poor business practices, none of this should be surprising.
I am shocked, shocked that a Bitcoin-related vendor was crooked.
Really, this story does totally suck for you guys but there should be absolutely zero trust or respect for anyone selling anything related to bitcoin at the moment. You're just begging to be ripped off.
wow that sounds like a horrible experience!
it is unfortunate that you got stung like that.
out of interest, what was the expected ROI?
I mean, you sunk $25K into it.
even if you were charging 5% fees - you would need half a million in transactions to break even, and that isn't including the monthly rental fee for the location.
is there really that big of a demand for BTC in a pub?
Eh, I think it's going to draw people to the pub more than anything else. And if you're a bitcoin evangelist, I could understand sinking your disposable income into a cool thing that might get more people into the currency. Current BTC owners/speculators only stand to profit from userbase growth because the currency growth rate is fixed or very controlled if I understand the system correctly. Probably wouldn't make 25k back, but it softens the blow a bit.
As a side note, I just realized BTC may become a really good existence proof for Piketty's r > g proposition, though one probably can't extend that idea out to economics in general because bitcoin is so weird.
I am not saying that there would be a lucrative ROI, but if you expect bitcoin to rise sharply it is a good way to trade cash en masse for bitcoins. So you would (most likely) be outputting heaps of cash and receiving bitcoins in the process. Between fees and currency appreciation you could probably make your money back and have a fun experience. That is, unless a completely unorganized company opperates their business in a cartoonishly unprofessional manner, and your ATM arrives 3-4 months late and broken...
Ah yeah thats right, when I read the emails, it read more like an ATM that accepted deposits (there were currency scanning issues attributed to the polymer notes) rather than cashing out. I guess it would work both ways.
bitcoin appreciation I think. They essentially buy low and include steep transaction fees, which I think are warranted for how convenient this would be, and then you hold the currency if you are speculating.
In Canada we can't get Bitcoin as easily as in the US and getting cash from Bitcoin isn't easy either. There's a big demand for BTC, the pub has probably not much to do with the choice (but it could easily become a way to attract customers).
I would guess the demand would be created to a certain extent. A single data point, but I travelled to Tokyo from another part of Japan to visit the only BTC ATM in Japan, so there may be a novelty factor involved for other people too.
Wow and the ceo acts like he is killing it on twitter. If this is how you guys were treated,i guarantee you there is lots more. Thanks for going public as this will save a lot of other people time and money.
I used to place/sell regular ATMs. This Stuff sounds pretty standard for the industry. Nobody, even the biggest companies, seem to know what they're doing.
How are the alternatives "evidently superior"? Not that I doubt this Robocoin experience, but playing devil's advocate and the bitcoin economy... is a bit necessary.
When Butterfly Labs was scamming people over so long a period, it was difficult to mention them without a flurry of negative personal anecdotes coming your way. Is this also the case with Robocoin, or is this an isolated incident?
First, he's doing the morally right thing by calling them out after a fiasco spanning several months, backed by correspondence.
Second, applying public pressure to get his refund is much better than going to litigious way, unless he seeks damages too (which I believe he doesn't - just wants his refund back).
I get that we are on the Internet and everyone gets a voice, but they should have let their lawyers do the talking. Both companies are run by adults I assume, but both are throwing sand in each other's faces running across the playground, in this case reddit, Twitter and HN. Either party can use this as slander I suppose.
If Robocoin is still making money, this bad PR might go against them for just a bit, but their "success" with others will pass on via word of mouth.
If acting like kids on the Internet has worked well for others in order to get their own back, someone should write up a pretty medium article outlining a proper way to do this for any company.
Disregarding the legal issues, warning other customers of such behavior is pretty much a moral duty - keeping mum, as you propose, would be a shameful behavior and if everyone did that way then we'd have a worse society.
Maybe. But 9/10, we get a hate mob fueled by a one-sided story by someone who feels "offended".
There isn't enough punishment when it's all based on false information. In fact, there's none. If I was the target, I would be personally ruining the lives of the people that started it. It would be my moral imperative.
look at what happened with notch and minecraft. Silly children that couldn't get their own way decided to get the masses sending him shitty and hateful messages, which eventually led to his quitting/selling to microsoft.
I don't think your argument here holds water. Robocoin can't spin this to their advantage. Everyone can read the dialog between the two parties and see what's going on. This is much better way to go about getting reparations than litigation.
I don't see how getting uninformed internet nerd rage on your side is going to somehow be a better fix than an actual legal settlement, which is what most mature companies rely on to fix their business disputes.
This type of experience is why I don't understand "No Chargeback" or "Replace the credit card" type marketing.
If I purchase this with my credit card and don't get the product before the price goes down, I have the option to cancel the order or get the lower price. If the product gets stuck in RMA or support is not as promised, I can chargeback.
The 'advantage' of bitcoin is that now I have to deal directly with the vendor, who is not my advocate.
Is it such a good idea to invest in something that's built on deprecated software (Windows XP)? And to handle money, no less.
I'm a layman in regards to this, but is there a valid reason to choose XP over, lets say, a LTS Ubuntu release? Maybe some PCI ruling or something like that? Just seems strange and I've had a bad vibe ever since I read it.
I understand the confusion but this isn't Windows XP Home with MS Paint and pinball — it's XP embedded (XPe), a minimal OS tailored to specific hardward and still receives security updates until 2016-19 depending on version purchased.
It's quite common for ATM's to be running Windows XP, so maybe that is why this one is doing it as well. And ATM's and POS machines running XP do still receive security updates.
It's common for ATMs to be built on XP, there's no denying that. But the reason is because they were built on it initially, when it was still okay to do so. To using Windows XP for the base of an ATM (especially one that -- by design -- must be connected to the Internet) in 2014 is more than irresponsible. I can't imagine the kind of cargo cult thinking required to make that decision.
I am pretty sure that manufacturer of ATM used XP as a base and Robocoin did not really have a choice. They could have chosen different ATM company, but it's not like manufactures are fallen over themselves to sell 70 ATM machines to new start up.
Because ATMs are usually not connected to the Internet, so there are minimal attack vectors. Every time you make a transaction the ATM literally rings up the bank, using an old fashioned modem. They could probably have Windows 95 installed on them and they would still work fine.
Not really anymore. This was the case with many of the much older OS/2 based machines but the days of dedicated lines are drawing to a close. Most ATMs I serviced were either directly plugged into a bank's network via ethernet cable or they had a wireless router hidden in the external enclosure and did transactions over a non-dedicated wireless network. These were all XP-based machines.
Updates are issued but they are typically on CD-ROMs from the software vendor, and unless the tech servicing company is going out on a monthly basis the machines are not patched or current. It was not uncommon to tack on 6 different upgrade disks to a maintenance call because that machine hadn't been patched since last year.
They use it because it works for them and it's not worth upgrading and taking on that risk. That said, that in no way excuses using XP for new development.
First warning sign: smiley faces and hashtags in Robocoin's initial email responses. I would expect nothing but professionalism from someone who just sold me a $20,000 product.
This stuck out for me, too. Jordan was far too chummy in his responses. This signals, "I want you to like me so that when I fuck up you will give me more slack." It's not genuine warmth, it's a cynical, sociopathic ploy to garner imaginary "friend credits" that can be traded for real money when need.
(It actually reminds me of how mobile customer service call centers repeatedly, obnoxiously apologize, to the point where they seriously degrade the service. I would much rather a person help me than waste time apologizing to me.)
I have had some dealings with fraudulent merchants (while running a popular price comparison site and dealing with customer complaints, criminal charges against mervchants etc.) in the past 14 years and my gut feeling with this is that this Jordan has already spent your money on his expensive lifestyle.
It's the repeated false promises and claims he makes in his e-mails that create this impression, for example the quick refund. A serious businessman only promises this if he can make absolutely sure that the customer will get it (and it doesn't matter that he wrote "we hope to ...", it's a clear message). I've also read Jordan's reddit posts, sounds fishy as hell.
Personally, I've tried five times to make small purchases with Bitcoin (this was several years ago). In all cases I was ripped off and never received product.
It's not going to be government regulations that kill Bitcoin, its the associations with illicit drugs, child pornography, and dishonesty of vendors like Robocoin.
On the other hand, I've been into Bitcoin since early 2011, have made hundreds of purchases with Bitcoin, gotten made for major contract jobs in Bitcoin, paid other contractors in Bitcoin, and never been ripped off. You just have to exercise some caution and do your due diligence.
Unfortunately, Bitcoin has attracted more than its fair share of scammers -- in part because the core community was at one time pretty naive -- but it's also full of honest people who are attracted to Bitcoin for ideological reasons, and fellow technophiles who are happy to engage in honest commerce with other people.
That's OK. As long as there is a large enough population using Bitcoin to create a small economy, that's fine with me. Right now, I get paid in Bitcoin, and pay for about 40%-50% of my household expenses in Bitcoin (and increasing monthly).
For people who are attracted to Bitcoin for ideological or technological reasons, mass adoption would be nice, but it's not as important to us as it is to the massive wave of "to the moon!" speculators who came in last fall.
On IRC, somebody once put a bug bounty of 2BTC for a geometric problem. I fixed the bug in two hours (including the time it took to look up the geometry formulas...) and did receive the bitcoin. This was at the time that Bitcoin was trending $850 each.
It seems to me though, that due to bitcoin's relative newness and grey market status, you're going to see a lot of scammers and bad businessmen related to it. It's high risk in that sense, and you need to do your research. Give it time, and the bad business practices will be weeded out, and stability will come. This is the pain of early adoption.
I made multiple purchases with Bitcoin both small and large (in particular I've been buying air tickets exclusively with Bitcoin for the past year) and have never been scammed.
People have gotten very used to some of the niceties and existing organizations that have evolved around normal currency (Over a lot of years. Probably a few orders magnitude more years than how long Bitcoin has even existed). Such a safety net does not exist for Bitcoin, yet.
It's just a matter of people realizing that fact, and re-acting accordingly. Be more cautious, perhaps come up with some sort of novel organization to fill this need, even.
Was just reading the reddit thread and Jordan posted a picture of a transfer of $25000 to Andrew. However the details were not blacked out properly, you could see the address easily and could probably figure out the account numbers given a bit of time. The picture has since been removed.
So you want a pat on the head or something for finally doing the right thing?
Sorry kid, but by you letting the situation escalate to this point shows me that you have no place in the business world. I really hope your company sees how poorly you've handled this situation and removes you from it.
A sorry-not-sorry post, which is later edited for Jordan's benefit, then apparently he posted an image of the wire transfer in progress and failed to redact the recipient's account details, despite trying!
Would that all of theme were this blatant and easy to identify.
Meanwhile: Dorian Nakamoto - alleged Bitcoin founder - is trying to raise a fund because this whole Bitcoin entourage and goldrush has destroyed his personal life. Hopefully if Andrew gets a refund he will be so nice to donate a bit to The Dorian Nakamoto Legal Defense Fund.
Regarding point 1: a contract is an agreement between two or more parties. In this case, Robocoin agreed to deliver a working Bitcoin ATM, and Andrew and Rajiv agreed to pay a certain amount for it.
Robocoin didn't do what they promised they would do, or did it badly. Therefore, A&R are not required to uphold their end of the deal - in fact, if they are willing to take the matter to court, they are also entitled to get a compensation for all the extra money they lost.
So even though the contract specifies "no refunds", that contract was broken by Robocoin, and therefore A&R should indeed get their money back.
I am often shocked when I hear people lean on that "it's in the contract" nonsense. State and federal law have always superseded contract law, or else people could overthrow the government by means of contracts. It's just a ridiculous notion to hold, as evidenced by the ridicule heaped on it here, reddit, and twitter.
Call your bank - most of them have a trade finance desk, or Google the term. A slightly cheaper way of doing it is to have a lawyer draft a terms of trade or supply agreement with either the funds in escrow with the firm or a bank guarantee.
Having your bank finance the trade is worthwhile as interest rates are so low at the moment. Common terms are 60, 90 or 120 day delivery with FED/LIBOR + x% (where x is the risk profile of your business - shop around to get prices) cost over the term.
The agreement would contain delivery timetables, warranties, customs clearance, liabilities, indemnities, guarantees, who pays what, etc. and you are protected legally without handing over tens of thousands of dollars or more upfront. These contracts are protected by law in almost all jurisdictions.
You don't finalize the transaction and pay for it until all conditions have been met and you have the goods in hand and have verified. The seller is trusting an international bank or a law firm escrow, and they should also have a lawyer or bank on their end (a trusted seller can receive the cash upfront for a fee with the bank picking up the risk, although I doubt any bank would finance a bitcoin atm without verified trade volume and a lower risk profile).
Talk to your lawyer and talk to your bank, having expensive items delivered without risking the full cost is a solved problem as old as finance itself and trillions of dollars annually are traded in this way. The extra $1k or so you'd pay on a $25k deal are worth it for the guarantee. If you ship goods regularly the costs are amortized as you can use the same contracts and finance suppliers. Don't deal with anybody shipping $20k+ valued products that doesn't deal with a bank trade finance desk or law firm and is instead asking for a bank transfer.
This is how most high cost goods are traded - from oil and other commodity supply contracts through to companies like Boeing and Airbus supplying planes, or GE supplying turbines for a power plant. Most people without experience lead into it thinking that buying something that costs $25k, $100k or millions of dollars is just the same as purchasing something at your local store just with bigger numbers. It isn't.
Bitcoin multisig transactions, or m of n transactions are also worth investigating as they cut the costs - although there is currently a lack of escrow/intermediaries who are as trusted as major law firms or an international bank. There is a huge opportunity in cutting the costs and fees associated with trade finance with bitcoin.