What patio11 is saying is that Dwolla underestimated the scam potential by accepting payments with are rechargeable and giving non-rechargeable "digital cash" in return.
Basics of the scam: Deposit in Dwolla, buy Bitcoins on an exchange, send bitcoins to your own wallet, chargeback Dwolla deposit.
A couple of months ago TradeHill, the second largest bitcoin exchange, discovered Dwolla billed them $30K in chargebacks despite their claims of never doing that.
It's this Dwolla issue that stopped the influx of new money into Bitcoin and now the price is 90% down.
This is a key problem for growing any kind of digital cash like economy: somebody needs to take the risk of turning chargeback-money (USD) into cash-like money (bitcoin), or you need to have a network to somehow take physical cash.
Or it's not USD that is chargeback, but the nature of digital transaction for the current state. If you go to a store and buy a can of soda with bills and coins, you don't really get a chargeback without handing back the goods.
It just illustrate that online transactions should be chargeback-able to protect consumers from fraud. Bitcoin just doesn't cut it.
But if I want to send money to a family member (as an "online transaction"), and I have concluded that I do not need chargeback protection, why should I have to pay an extra fee to cover all those people who DO need it?
I believe there's a place for non-chargeback online transactions. Just as there's a place for non-chargeback in-person transactions (i.e. CASH).
Basics of the scam: Deposit in Dwolla, buy Bitcoins on an exchange, send bitcoins to your own wallet, chargeback Dwolla deposit.
A couple of months ago TradeHill, the second largest bitcoin exchange, discovered Dwolla billed them $30K in chargebacks despite their claims of never doing that.
It's this Dwolla issue that stopped the influx of new money into Bitcoin and now the price is 90% down.
This is a key problem for growing any kind of digital cash like economy: somebody needs to take the risk of turning chargeback-money (USD) into cash-like money (bitcoin), or you need to have a network to somehow take physical cash.