Printing bitcoins : could it work?

[RHorning]

How does the kid that mows the lawn know that the certificate is valid? To really be able to verify the certificate you need a computer, and then the smartphone solution its more practical.


I think that a bitcoin wallet software for mobile phones or usb dongles is more practical, if you dont want to have your phone connected to the internet in any way, than this paper certificates. If this paper would be used without imediate validation in the bitcoin network, they could be unreliable and give bad image to bitcoin currency.

I don't see how this is going to "give bad image to bitcoin currency".  At the moment the concept of bitcoins are completely unknown in any form.

How does a kid know the certificate is valid?  How does that kid know that a check or for that matter government-issued currency is valid?  If that kid takes a check or bank note somewhere and tries to buy something with it (deposit it into a bank or whatever), and the merchant or bank refuses to honor the check or banknote.... the kid knows at that point he has been ripped off and fraud has been committed.  The same kind of test would apply to bitcoin certificates, where those attempting to defraud would get caught red-handed.  It would be the act of using the note which would be the final test, as with all financial instruments.

I'm curious about how you think e-mailing somebody some bitcoins with an e-mail equivalent of a certificate like this would "drive people away from bitcoins"?  If they have a certificate and want to redeem the money, the inclination would be to download a client and join into the network.  Presumably the URL for the Bitcoins client would be on the certificate.  If they purchased government-issued money directly with such a certificate (presumably from one of the exchange websites), they are still using the bitcoins and instead are helping the exchange markets and spreading the coins out to more people.  I fail to see where a down side to the issue of e-mailing certificates would come from.  I'm talking people who would not normally be using Bitcoins, rather than people who are using them and are bailing out of the system.

Mind you, I'm not dismissing the "smartphone" solution either, and I think multiple approaches can and should be tried.  I am talking freedom here, and noting that not all people will fit into a simple worldview of highly connected power computer geeks.  The concept of paper currency is one of many possible solutions, not the one solution that rules all.  I'm also pointing out that the practical issues could be dealt with and make this something that could work.  It does take opening up your mind a little bit and to imagine other possibilities.  Right now the only solution for government money is to use a central bank of some kind or to use paper currency alone.  Almost all arguments against this concept apply equally well to arguments against government-backed paper money as well.  This potential of having a paper currency equivalent for Bitcoins could offer a way to ease a transition for people to get away from government currencies to adopting Bitcoins.

Existing real-world currencies have been established on far and away flimsier grounds and backing than bitcoin certificates, including several "alternative currencies" that are currently accepted by a number of merchants.

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[RHorning]

[No.  Imagine if you have a kid mowing your lawn.  In that case I think it would be much easier to hand him a bitcoin certificate for his work than trying to demand that he has bluetooth or a wireless device to receive the payment for services rendered.  

It's not required that the kid have a bluetooth phone, although he is likely to already have one.  It's not even required that *you* have one, although that might make the transfer more convientent.  All that is required is that you have an address of his.  He doesn't need to verify that your money is good; he knows where you live and he couldn't force you to pay him if you refused anyway.  He is dependent upon your honesty from the start, although if you screw him, not only are you going to have to cut your own grass, you might wake up one day and find someone has salted your flowers.

It isn't true that the kid is not in a position to force payment.  If you refused to pay somebody for services rendered, it becomes fraud and can be prosecuted both civilly and criminally as such.  Failure to make payment or paying with an invalid financial instrument are treated exactly the same as if payment never happened.... and indeed worse with a "bad check" because it acknowledges that the debt was legitimate but that the payment was done in an illegal manner with an intent to defraud.  It is that basis that check kiting usually gets people into jail.

Yes, personal integrity does play a role here, but a well structured and functioning judicial system can also play a role to stop would-be con artists from abusing a system of this nature.

I don't know how many kids will take you to small claims court over five dollars (assuming that is a rough price for mowing a lawn), but I'm quite certain that the judge hearing such a case would not be too sympathetic if it got to him in regards to the home owner trying to rip off an young entrepreneur.

[hugolp]

Existing real-world currencies have been established on far and away flimsier grounds and backing than bitcoin certificates, including several "alternative currencies" that are currently accepted by a number of merchants.

As you are guessing, I am not convinced, but maybe you are seeing something I dont. Good luck with the initiative.

[FreeMoney]

 
If I'm buying a DVD from a guy on a street corner, he might not be inclined to take my bitcoin note (unless he has an iPhone to check the transaction is valid) and I'll probably want to use exact change, because I'm not going to trust any notes he gives me in return.

My understanding is that you don't get any coins from the guy you pay. Your transaction simply involves you sending all of the coin from one of your address; some to the person you are paying and the rest to one of your addresses (change). You don't need to trust his payment.

 
Bitcoin notes are a great solution when you are:

a) Offline
b) Dealing with someone you trust.

It also doesn't prevent you choosing to use some other method.
It just provides you with an extra option. Which is a Good Thing.

If you are trading with a trusted partner why can't you just pay when you get a machine?

[NewLibertyStandard]

The easiest solution would be to make a user account at MyBitcoin.com, deposit desired amount of bitcoins and then write the user name, password and web address on a piece of paper. You could even suggest he change the email and password or withdraw the funds to complete the transaction.

[MoonShadow]

Another way would be for a bank-like institution to print banknotes with only an address, in both machine and human readable form, onto a difficult to copy banknote.  That way, anyone who was to see it would be able to check the blockchain to make sure that said money is actually associated with that address.  However, the banknotes would have to return to the bank in order for anyone to claim the bitcoins, and the address used would have to be retired.  This allows the pubic to 'audit' the bank at will to make sure that there is full reserve related to the banknotes, and it's difficult for anyone to nab the bitcoins before you deposit them.

Another similar way would be to use the plastic rfid tokens that casinos use, each could have a face value, but report a checkable address when a rfid reader was available.  Once they return to the bank, the rfid tag could be rewritten with a new valid address and sent back out into the flow.

There is no way that I can see that easily copied paper money could work, particularly without a bank.

[RHorning]

The easiest solution would be to make a user account at MyBitcoin.com, deposit desired amount of bitcoins and then write the user name, password and web address on a piece of paper. You could even suggest he change the email and password or withdraw the funds to complete the transaction.

The problem with using a site like "Mybitcoin.com" is that it is a 3rd party website that sort of flies in the face of the decentralized nature of this project.  There are other approaches that don't necessarily require anything other than simply accessing the network as a whole, and not depending on any single website as to if it happens to be up, has their domain name paid for (aka not expired), and doesn't even tempt that the 3rd party maintaining that site to even have the opportunity to watch your transactions in a direct fashion... or involve any sort of direct legal jurisdictional issues that might be associated with that website.

Yes, that would be a quick and dirty way to get this accomplished, and certainly if somebody wanted to go that route, go ahead.  Just don't give up on this idea yet and claim that the issue is solved, as it isn't.

[Anonymous]

The easiest way to carry your cash around  is to have a mobile client you can use on your phone.With the bitcoin app you could just go and stand near someone and your money is transferred.The location of your goods could then be sent to your phone,or you collect the goods when you pay.No one would be aware you did this and to everyone else it would appear no transaction actually took place,just that you took something off the shelf or you stood next to someone looking at your phone....This would also be a great way to use an automatic bitcoin server as you wouldnt have to risk getting your card scammed.Just stand near it and your cash appears on your phone.The only problem with a physical object is you have no deniability.If someone films you handing over a token or cash it makes you look guilty.


(Come to think of it probably a great system for bribing politicians and paying for weed. )

[Anonymous]

Having said that last post,i am in favor of as many ways to access bitcoins as possible.An app on a phone,sms payments,paper certificates,metal tokens,plastic notes,digital iou's,bearer certificates,ripple pay.

[chaord]

Having said that last post,i am in favor of as many ways to access bitcoins as possible.An app on a phone,sms payments,paper certificates,metal tokens,plastic notes,digital iou's,bearer certificates,ripple pay.

I too am in favor of as many processes/mediums/methods as possible.  Incidentally, the guys at http://www.kilowattcards.com/template/index.cfm came up with a pretty cool paper solution.  It actually seems quite similar to bitcoin.  Basically, the paper notes have a serial number on them.  When you give the note to a merchant, or anyone with internet access, they type the serial number in, and get an additional 2 digits.  They cross off the first two digits, and hand write the new digits at the end.  This forms  the new cereal number and prevents double spending.  When the merchant trusts  you he might just skip the verification process or save it for later in the day. Unfortunately this solutions still requires at least some internet capability to prevent fraud.

[MoonShadow]

Having said that last post,i am in favor of as many ways to access bitcoins as possible.An app on a phone,sms payments,paper certificates,metal tokens,plastic notes,digital iou's,bearer certificates,ripple pay.

I too am in favor of as many processes/mediums/methods as possible.  Incidentally, the guys at http://www.kilowattcards.com/template/index.cfm came up with a pretty cool paper solution.  It actually seems quite similar to bitcoin.  Basically, the paper notes have a serial number on them.  When you give the note to a merchant, or anyone with internet access, they type the serial number in, and get an additional 2 digits.  They cross off the first two digits, and hand write the new digits at the end.  This forms  the new cereal number and prevents double spending.  When the merchant trusts  you he might just skip the verification process or save it for later in the day. Unfortunately this solutions still requires at least some internet capability to prevent fraud.

That's pretty cool, and a similar system could be used to create a local paper trade currency backed by bitcoins without the need for expensive printing processes to make it difficult to photocopy.  A note design that incorporates the moving serial number with the 2d machine readable Bitcoin address would work great.  Any computer with a reader could check the blockchain to be certain that the funds actually exist (instant bank audit) while the serial number could be used by literally anyone with the bank's own website to create an anonymous chain of custody of a particular note, so that when the note returned to the bank for redemption and replacement, there is no (likely) way that a counterfit copy (no matter the quality) can be used to claim the funds between the acceptance of the note and depositing it in an account at the bank.  This would allow the Bitcoin backed notes to circulate for a longer period of time with less risk of loss by fraud.

I think that more than a six digit serial would be required, however, and the circulation of the note is limited by the number of blank spaces on the note.

[chaord]

I think that more than a six digit serial would be required, however, and the circulation of the note is limited by the number of blank spaces on the note.

Yeah.  I thought the system was pretty simple and smart too.  I agree though that the serial number would probably need to be longer than 6 digits.  The cool thing is that even if you run out of blank space to write more numbers, you could simply print off another one and start adding more.

[Anonymous]

Nice simple system.A bitcoin version would be redeemable for bitcoins?

[MoonShadow]

Nice simple system.A bitcoin version would be redeemable for bitcoins?

I was thinking that a local version would need some kind of local connection also.  After reading about their kilowatt-hour backed currency idea, that got my mind rolling.  The national currency is so widely accepted, even though it's fiat, because that is all that is accepted by government for payment of taxes.  This is intentional, as it means that there will always be someone in any market with a need for them.  In any city that I know of, the power company is the *one* company that every company and household in the vicinity must deal with.  Even those "greenies" who have a massive phtovoltic array usually deal with the power company on a monthly basis.  So a local currency with dual, concurrent backing would be ideal.  A face value in both bitcoins and kilowatt-hours with an agreement with the local power company.  The bearer could redeem the cash either at the institution that issued them for bitcoins, redeem them at the power company for kilowatt-hours, or just pay someone else with them in the same way that they likely received them.  They could redeem them in an either-or manner, but not both.  The likely result would be that their value would be very close to whichever of those two options was the more valuable at the time.  The issuing institution would need a contract with the power company that fixed the private exchange rate that the institution would be obligaged to repurchase the notes from the power company for, should the power company choose to redeem them for US$, but if the value of the bitcoin face value should exceed the value of a KWH at the residential rate, both the public and the power company itself would likely be redeeming them in bitcoin.  The private exchange rate with the power company does not need to be public, and could likely be set at or near the wholesale power rate.  Which would give the notes themselves an initial arbitrage value that the issuing institution could use to pay for the initial printing, because the creation of cash isn't a free exchange.  The power company would likely require a cap on the total currency in circulation, in order to limit their counter party risk; they simply can't have the entire city paying for all their power at the wholesale rate (from their perspectives).  In my state, the power company is obliged to trade KWH with greenies, but only up to a limit of 1% of the company's total connected load.  I imagine that the cap on currency would be far lower than that.

This would help to keep the currency local as well as keep it in circulation without a need to be tied to the national currency in any explict or fixed way.  Even local governments have to pay for their power, so maybe local taxes would eventually be payable in KWHs/

[Ground Loop]

I'd love to see printed bitcoins.

Basically, a bearer-bond note in a 2D barcode.

The receiver would have no protection against double-spend, so it would behoove them to scan it on-the-spot and get it into the Bitcoin network.  They could wait for a confirmation, or not.

It seems like this would be pretty simple -- get the client to generate a one-time receiving address, pay to it, and then print out the address public/private key pair onto the note.  Any scanner would then have the required keys to receive the transaction and re-spend the coin.

Assuming the receiver has a method to scan & post the note, it's no less secure than any other means of bitcoin payment, right?

[jgarzik]

The receiver would have no protection against double-spend, so it would behoove them to scan it on-the-spot and get it into the Bitcoin network. 

Correct.  And a mobile phone's camera works great as a "scanner."

[MoonShadow]

I'd love to see printed bitcoins.

Basically, a bearer-bond note in a 2D barcode.

The receiver would have no protection against double-spend, so it would behoove them to scan it on-the-spot and get it into the Bitcoin network.  They could wait for a confirmation, or not.

It seems like this would be pretty simple -- get the client to generate a one-time receiving address, pay to it, and then print out the address public/private key pair onto the note.  Any scanner would then have the required keys to receive the transaction and re-spend the coin.

Assuming the receiver has a method to scan & post the note, it's no less secure than any other means of bitcoin payment, right?

Print only the address on the note, so the amount can be verified by any client, but the backing cannot be nabbed by the guy who had the bill last week and render the note useless.  We would want it to circulate more than once.

Personal checks, however, could potentially print the private key, but even that presents a risk that an employee of a company could steal the coins before the company could claim them.

[Insti]

Personal checks, however, could potentially print the private key, but even that presents a risk that an employee of a company could steal the coins before the company could claim them.

Shops seem to do fine accepting dollar bills which are subject to the same risk.

[nelisky]

Personal checks, however, could potentially print the private key, but even that presents a risk that an employee of a company could steal the coins before the company could claim them.

Shops seem to do fine accepting dollar bills which are subject to the same risk.

Yes, but when the dollars get stolen/spent, you no longer hold the bills. It's pretty obvious that something happened.

If you could spend based on the serial of the bill, or something alike, that would be a good analogy.

[MoonShadow]

Personal checks, however, could potentially print the private key, but even that presents a risk that an employee of a company could steal the coins before the company could claim them.

Shops seem to do fine accepting dollar bills which are subject to the same risk.

Um, no, they are not subject to the same risks.  The US FRN is physically the object of value.  With a bitcoin backed note, the paper note is simply data.  If the private key is on the note, that data can be used to take the value of the note without needing to take the note itself.  If we were to make a paper note that had the private keys, it wouldn't be long before some employee was stealing bitcoins from their employer by taking photos of the notes and using the keys to transfer the bitcoins before the company's billing department could do so.  If the private keys were in a machine readable 2d format, how long would it be before some criminal app was developed that could take the photo and transfer the funds automaticly and immediately?  If only the address is present on the note, then anyone could verify that bitcoins exist associated with that address, but could only claim them by bringing it into the institution that issued the note. 

What I cannot resolve is how to prevent the issuing institution from issuing multiple notes with the same address, because the address can be verified, and the rolling serial number checked so that it's not a counterfit copy of another note, but there is no way to verify that said institution isn't engaged in double issuing *itself*.