31–40 of 86 posts
How do you handle ACH clawbacks? What your business models needs to protect against is... hackers steal a victim's private information enough to be able to submit the ACH to you. The victim reports it to their bank several days after the theft. The bank does an ACH clawback from your banking partner. Where is your time gap to get past ACH clawbacks?
We have guards in place to protect against fraud by verifying your identity in a few different ways, but this is something we'll monitor and make improvements to over time. It's critical to the survival of the business that we have strong fraud detection methods. However, we also think that the experience of instant transfers is valuable, so on a risk-based approach we allow instant transfers using ACH for certain cu…
You have a fundamental misunderstanding how ACHs work. There's no such thing as an ACH that is "completed". At +180 days the state is "It is probably going to be fine". At +365 days the state is "It is probably most likely going to be fine" etc.
Source: Done consulting for execs at medium sized banks.
Can you go into a little more detail about who owns the bank account that users are depositing into when they use sparkswap?
AnchorUSD is our payment partner who operates the API we interact with (it's a custom API that they built for us). The escrow account is held with a trust company in AnchorUSD's name, but is designed so that only the users they onboard can access the funds. Funds cannot be legally used for any other purpose.
That means the total FDIC insurance on all the money in all accounts is capped at $250K between all the users of your platform. One Bitcoin quoting at $10,288, means that at most money needed to buy 24.3 bitcoins are insured across the entire platform.
Earlier quoted context omitted.
AnchorUSD is our payment partner who operates the API we interact with (it's a custom API that they built for us). The escrow account is held with a trust company in AnchorUSD's name, but is designed so that only the users they onboard can access the funds. Funds cannot be legally used for any other purpose.
> The escrow account is held with a trust company in AnchorUSD's name, That means the total FDIC insurance on all the money in all accounts is capped at $250K between all the users of your platform . One Bitcoin quoting at $10,288, means that at most money needed to buy 24.3 bitcoins are insured across the entire platform.
aka, buy bitcoin instantly once you've deposited your USD into some partner bank account which you don't have access to but Sparkswap absolutely does. This isn't really new or interesting and has been shut down repeatedly before because most crypto companies can't handle the fraud mitgation, here's a clue, it's not cheap or easy and can't be automated at this small scale. Instant access to the coins has never really…
There are certainly pros and cons to self-custody - it's not for everybody. Given the value proposition of Bitcoin and the huge amounts of cryptocurrency stolen from exchanges, it's important for many people to hold their own keys. We're like that ourselves: we didn't want to choose between holding our keys and still being able to trade, which is part of why we built Sparkswap.
Earlier quoted context omitted.
> I've been in crypto full time for the last 6.5 years Do you really believe the "coins of today" are going to stand the test of time as hardware gets more powerful in the next decade? Where do you personally see crypto in 10 years in terms of real world usecases that aren't fraud / money laundering?
> Do you really believe the "coins of today" are going to stand the test of time as hardware gets more powerful in the next decade? Bitcoin sure, because it actively gets less efficient as computers get more efficient. The only thing that'll stop it getting less efficient is a grey-goo like scenario where it consumes all the world's power. Or, I guess, if we run out of leading zeroes.
Bitcoin's mining difficulty automatically adapts both up and down to keep blocks at roughly 10 minutes, whatever the offered resources are. It doesn't monotonically become more difficult.
Earlier quoted context omitted.
> The escrow account is held with a trust company in AnchorUSD's name, That means the total FDIC insurance on all the money in all accounts is capped at $250K between all the users of your platform . One Bitcoin quoting at $10,288, means that at most money needed to buy 24.3 bitcoins are insured across the entire platform.
Personally, I don't expect FDIC insurance on swap space used for trading, or generally anything except my bank account.
Compare this to you depositing money with your brokerage to trade stocks. The account is opened at clearing broker in your name, which means that the SPIC coverage limit is just yours.
1.AnchorUSD
2.Their trust company where escrow is held
3.Zap for lightning network wallet
4.Abacus for identity verification
5.and you (sparkswap)
I'd say this is neither direct nor instant (just abacus verification adds crazy friction). And the trust issue is real, I'd personally feel better with one large custodial institution than a number of startups in this chain that I know nothing about (or their security practices).
If you can solve that there is market for sure.
Earlier quoted context omitted.
We have guards in place to protect against fraud by verifying your identity in a few different ways, but this is something we'll monitor and make improvements to over time. It's critical to the survival of the business that we have strong fraud detection methods. However, we also think that the experience of instant transfers is valuable, so on a risk-based approach we allow instant transfers using ACH for certain cu…
> However, we also think that the experience of instant transfers is valuable, so on a risk-based approach we allow instant transfers using ACH for certain customers and certain transaction sizes. You have a fundamental misunderstanding how ACHs work. There's no such thing as an ACH that is "completed". At +180 days the state is "It is probably going to be fine". At +365 days the state is "It is probably most likely…
So I need to trust 1.AnchorUSD 2.Their trust company where escrow is held 3.Zap for lightning network wallet 4.Abacus for identity verification 5.and you (sparkswap) I'd say this is neither direct nor instant (just abacus verification adds crazy friction). And the trust issue is real, I'd personally feel better with one large custodial institution than a number of startups in this chain that I know nothing about (or…
Both Zap and the Sparkswap app are open source, which should reduce some of the trust you have to place in them.
The trust issue with fiat is difficult to get around, with both Sparkswap and any other service that interacts with the traditional financial system. By removing custody of at least the Bitcoin side of the transaction, we think we're taking a step in the right direction.
Overall your feedback is well-taken - there is certainly more we can do to reduce the number of steps and different pieces of software / service providers that users need to interact with to use Sparkswap.