1) Buttercoin does not appear to be a registered money transmitter. They've known about this requirement for months, they've had the financial capabilities to do this for months...and yet they haven't bothered so far. See http://www.fincen.gov/financial_institutions/msb/msbstatesel....
2) They started off as open source, took a bunch of free code, and then ended the open source aspects of the project.
3) They took a substantial amount of BTC donations (even more substantial now with the higher F/X rate) and never returned those donations when the project pivoted from an open source software project to a V/C funded business.
One of these red flags is bad enough, but 3 together is a big, red, flashing "STAY AWAY".
They clearly don't have the professionalism or the wherewithal to handle the basic foundational aspects of their professed industry. I recommend staying away from them before they become the next MtGox.
Im sorry but having a rubberstamp of PG is not the same as having blessing of Elon Musk, for example. PG seems to be drifting into the dark side. What worked for Airbnb (scamming people on craiglist to solicit airbnb) worked as charm on SocialCam when the idea was to scam as many of your Facebook friends as possible.
> I think people will be wondering if this resembles the founders' ideas when they were funded by [PG], and if this represents the kind of company you wish to be funding.
YC likes hustlers, it says so in the application, and has for years.
1. We'll be disclosing our approach to applicable licenses at launch within our FAQ. Keep in mind, each country has different requirements. We're rolling out globally and will use a different approach in each country we launch in.
2. Regarding the open source parts of Buttercoin, Benentt (Buttercoin's CTO / co-founder) has been talking to our approach on reddit, http://bit.ly/1lu58J0
=== Copied from http://www.reddit.com/r/Bitcoin/comments/1z86t7/reddit_cofou.... By Rev. C. Bennett Hoffman Buttercoin CTO ===
The project started off as a bit of announce-first development in response to the MtGox issues during the run-up in price last April. We had a lot of really enthusiastic people all trying to figure out what it was we were actually trying to do. Many people wanted to build a completely distributed exchange, others wanted to go other directions. That's the beauty of open projects, even if it can be a bit overwhelming. Cedric and I already had an interview with Y Combinator scheduled to pitch a different bitcoin idea. A few of us decided to focus on building something we could use to launch a real platform and pitch that instead. We started from scratch and kept it closed to focus on that, always with the intention of opening it back up once it was at least somewhat usable.
It's taken way to long to get there. Why are we waiting for launch? Mostly because we're too busy. There's still a good amount of code specific to our deployment mixed into the stuff that's actually usable by anyone else. I'm embarrassed to admit we even have a couple of test passwords and API keys floating around in the repos. In short, we're humans of limited capacity. If I were to do it again, I'd go about things differently, but if we can put up a technically solid trading platform that helps make bitcoin (and other digital currencies) more widely adopted, then I'll have no regrets. ===
3. Regarding Bitcoin donations, we've asked the community what they'd like us to do with the donations here: http://www.reddit.com/r/Buttercoin/comments/1l543n/what_to_d...
If any donor would like their bitcoins back, just send us a signed message from the address you used to donate along with a message to [email protected].
Also, for transparency's sake here's the wallet address we've been receiving donations at: 1McqPj92jvWfFg5F24dwyDSUptjTosH2EY
And here's a link to the most recent thread where my bearded buddy Bennett (co-founder/CTO) asked the community what we should do with the donations: http://www.reddit.com/r/Buttercoin/comments/1l543n/what_to_d...
Finally, here's the Blockchain record the wallet address: https://blockchain.info/address/1McqPj92jvWfFg5F24dwyDSUptjT... To date we've had 32 transactions in, and 0 transactions out.
Benentt (Buttercoin's CTO / co-founder) has been talking to our approach and plan wrt the open source trade execution engine on reddit, I'll add his latest thread below as it does a nice job of adding context to the conversation.
=== Copied from http://www.reddit.com/r/Bitcoin/comments/1z86t7/reddit_cofou... By Rev. C. Bennett Hoffman Buttercoin CTO ===
The project started off as a bit of announce-first development in response to the MtGox issues during the run-up in price last April. We had a lot of really enthusiastic people all trying to figure out what it was we were actually trying to do. Many people wanted to build a completely distributed exchange, others wanted to go other directions. That's the beauty of open projects, even if it can be a bit overwhelming.
Cedric and I already had an interview with Y Combinator scheduled to pitch a different bitcoin idea. A few of us decided to focus on building something we could use to launch a real platform and pitch that instead. We started from scratch and kept it closed to focus on that, always with the intention of opening it back up once it was at least somewhat usable.
It's taken way to long to get there. Why are we waiting for launch? Mostly because we're too busy. There's still a good amount of code specific to our deployment mixed into the stuff that's actually usable by anyone else. I'm embarrassed to admit we even have a couple of test passwords and API keys floating around in the repos. In short, we're humans of limited capacity. If I were to do it again, I'd go about things differently, but if we can put up a technically solid trading platform that helps make bitcoin (and other digital currencies) more widely adopted, then I'll have no regrets. ===
Hope this helps add context to where we are and why. If you have more questions, please ask, we'll do our best to answer quickly.
Besides, exchanges are a network effect problem primarily. People will continue to trade where there's liquidity unless a new market offers something substantially better. Look how many people still used Mt Gox with its constant freezes and rumored insolvency.
https://docs.google.com/a/coinharvest.com/document/d/1w0JPnG...
https://docs.google.com/a/coinharvest.com/document/d/1qfEnnV...
(Don't take this comment to serious, they will probably have done a lot of work beyond that. I just want to point out that these documents say nothing at all. This is what you come up with during the first day of brainstorming.)
And then they build their system using CoffeeScript, a dynamically typed language? They are kidding me?
EDIT: Another comment implies they rebuild the engine using Scala.
One example I once read about are control systems for rockets and missiles - they use different data types for x, y and z coordinates. They are all just numbers but you really want to make sure that you do not accidentally swap two variables and the missile turns left while it should ascend. And you just can not enforce such constraints in dynamically typed languages.
Have they been audited?
this was a scam
they got a bunch of people to write the software for them and then took it closed source
shame on them
Sadly this was open source, not free.
The Affero GPL was designed to force the release of source even in that case. That's the only license I know which has that property though.
Mtgox crash about 1 year ago, when their trade engine could not keep up with the large number of transactions. Later we found out that Mtgox could not handle more than something like 50 transactions / second. Buttercoin was a developer's response to Mtgox's crash. To build a better mouse trap that could handle 100x more trade volume than Mtgox.
https://buttercoin.hackpad.com/FAQ-QTRSMzlkLD6
It was originally supposed to be open source, to improve the underlying machinery for all bitcoin exchanges. There were some really bright and ambitious people involved in the beginning too. Somewhere a couple months in, the core developers took VC money, and decided to launch their own exchange instead. I haven't kept up with the project enough to know if they are holding to the initial open source exchange source code promises, but I'm not surprised at all that they want to cash in on becoming a big centralized exchange.
It'd probably be hard to be VC funded, while also giving away their competitive advantage (highly scalable trade engine source code) for free.
https://buttercoin.hackpad.com/FAQ-QTRSMzlkLD6
http://www.reddit.com/r/buttercoin