I follow Bitcoins, in the matter that some people might follow Nascar crashes, and it is not credible to me that Dwolla is primarily getting those volumes on Bitcoin transactions. First, the Bitcoin community is, on the observable evidence, not large enough to support them. Second, my understanding is Dwolla belatedly discovered the value of chargebacks, which bit the Bitcoiners because of all the obvious reasons.
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).
