> develop[ing] a way to facilitate transfers without risk of widespread fraud...may be a tall order for eBay<p>No it isn't. The bitcoin seller transfers the bitcoins to a bitcoin address controlled by Paypal. Paypal sends USD from the buyer's Paypal balance to the seller's Paypal balance, and BTC from the Paypal-controlled bitcoin address to the buyer's bitcoin address.<p>Paypal knows the dollars and the bitcoins both exist, and can deliver them to the right party itself, so the parties don't have to trust each other to complete the transaction; they just have to trust Paypal.<p>There is a problem, I guess, if the USD comes from a source like a credit card that may eventually be reversed, or if the buyer claims a hacked account. But you could get around that with some waiting period, requiring a Paypal balance/bank transfer for Bitcoin transactions (credit cards can't fund Bitcoin purchases), and/or requiring 2-factor auth for large transactions / Bitcoin transactions.<p>Processing an eBay transaction is actually harder to prevent fraud, because it's hard for Paypal to tell that physical goods were as described, and delivered to the right party. (AFAIK eBay basically has humans reading what both parties wrote and using their judgment to deal with disputes about product delivery.)