A partnership between Bitcoin startup BitInstant (Brooklyn-based) and Georgia-based payments processor TrustCash means users can use BitInstant to pay for their BTC in cash by making a deposit at any of five major banks including Bank of America, Chase and Citibank. The process is a bit more involved than depositing to your own bank account; you must print or download a deposit slip from TrustCash, which alerts BitInstant of balances on 30-minute intervals. BitInstant then credits the BTC to the customer’s account, minus the appropriate transaction fees. “It’s just like depositing money into a bank account, except in this case, it’s directly to your Bitcoin exchange/destination,” says a press release.
And according to the release:
In addition to cash deposits, BitInstant users can now transfer unused or leftover bitcoin from the exchanges directly into their Paypal accounts and, utilizing Paypal methods, withdraw from their account in US dollars. There’s no need to feel like your money is “trapped” as bitcoin. “No longer do you have to worry about getting your money in and out,” explained co-founder Charlie Shrem. “It gives you peace of mind, as well as liquidity of funds, all done safely, securely and cheaply.”
BitInstant was founded on the idea that the Bitcoin economy needs more liquidity. Bitcoin transactions in the past took days to weeks to process, long enough for the price of the volatile currency to change.
“I sat there one day feeling frustrated with the extremely slow speeds of transfers into MTGox and withdrawals out of it into other exchanges and came up with this idea,” BitInstant’s UK-based cofounder Gareth Nelson said in the release.
“Bitcoin are becoming a more and more useful and utilized method of payment for online shopping,” Brooklyn-based cofounder Charles Shrem said in the release. “It’s more secure than any other method of payment available – for merchants and customers alike. Some people would prefer to be able to directly transfer funds into their Bitcoin accounts, and, we listen to what our clients want. This is just one of many new services we’ll be offering in the upcoming days and weeks. Cash deposits are just the start.”
Odds are, you either had a Luddite or Libertarian relative recently say something about how they’d never put their credit card information on the internet. Or perhaps that person is you yourself? TrustCash is designed for customers who want to avoid tapping in their credit card numbers (this blogger’s solution? Lose the credit card every ten weeks and get a new number). According to Mr. Shrem, the banks are aware of BitInstant and TrustCash’s activity. Betabeat had trouble determining the mechanism TrustCash uses to process payments, so we’ve reached out to the startup to find out more. It appears that TrustCash holds an account at each major bank. Customers fill out a form on the site saying how much they plan to deposit. TrustCash sees when that exact amount is deposited—if the deposit amount is off by even a penny, TrustCash has to verify the transaction manually—which triggers them to alert BitInstant. BitInstant then credits its customers with BTC. “Something like that,” Mr. Shrem acknowledged. “We integrated with [TrustCash] bank accounts, so when the customer deposits the software tells us in a fully automated way.”