They are still doing the job and you are not, so it should be their choice and not yours.

As to miners who are not including any transactions (against their own best financial interest), they are still providing confirmations for previous blocks. Thus, they are providing owners of bitcoins a service by increasing the proof-of-work needed to double spend the coins. Considering that they are only providing this service to savers, it seems fair that only the savers pay for this through inflation. In short, miners get paid for the service they provide, by the people who recieve said service. Savers are actually getting the short end of the straw here since they are actually subsidizing those who want to get their transaction relayed at the moment.

They have no obligation to include a transaction. They are doing the work. You are the one that wants it included, so you are the one that need to convince them.

I would however have liked some feature where all transactions should specify a time frame after which they become invalid. This would solve the problem where a transactions gets stuck in limbo if it doesn't get included in a block soon enough. And it would also possibly allow some neat physical smart card wallets/coins I've been brainstorming about recently.

What makes bitcoin viciously beautiful is that it doesn't really favour early-adoption. It favours adoption. Period. The incentive to adopt it never ceases without artificial costs being forced upon it from the government.

Even more beautiful is that bitcoin's deflationary nature actually punishes non-adoption. The complaints from non-adopters will surely only increase over time, especially if bitcoin ever becomes big enough to affect exchange rates to the degree that price-inflation actually increases for non-adopters. It's the greenback all over again.

There's a difference though. The price really doesn't matter for network. Bitcoin works at any price. However, many people are getting excited since they are getting richer. So I think you have to separate personal excitement from Bitcoin excitement.

Doesn't my suggestion make exactly that possible. You would one-click the file rather than a link, but that's really the only difference, and my proposal create some other possibilities as well. It's also probably easier to make your browser recognize a new file type than a new URI standard, depending on your browser.

This could also be used on sites such as MT. Gox to allow one-click-withdrawals rather than typing in an adress, simply by having them linking to a file.

The question is wether or not the average non-technical user could. Everyone can send an e-mail. Everyone understands a file that is attached to an e-mail. Everyone understands the sentence "X Bitcoins added to your wallet" if they double-click the file. Not everyone understands public key cryptography, and they shouldn't need to either.

A standardized container with bitcoins would also provide a really intuitive way to store your bitcoins outside your wallet as I mentioned. You may only have an android client but doesn't want to keep all your bitcoins on it. Create a password-protected container, name it 100btc.btc and send it to drop box. Problem solved.

There is an issue with bitcoins, which is that you always need to communicate with someone and recieve an adress before you are able to send them any bitcoins. This is opposed to regular cash where you can leave it somewhere (like under a door mat, or in someones mailbox or wherever depending on the sum and security needed) and have someone pick it up later. In the digital world this would be achieved if we had a standardized way to send someone bitcoins regardless of the way we communicate. We should be able to send bitcoins over e-mail, http, sms, or really any way we want as long as we have some way of sending a message, even if it's just one way communication.

I've seen some ideas to provide this for e-mail through third parties, but I really think such a fundamental service could and should be provided at a more basic level.

There is a way to do this right now though, by creating a new wallet that contains some bitcoins and send it to my friend, but it is really cumbersome at the moment, and intuitively there should be a difference between wallets and spare cash. My idea is to use a new file type, called a bitcoin container with the file ending *.btc. Technically it would be a small wallet with only one key-pair, but once it is opened by a client, the client simply sends the money to the user's wallet and informs the user "X btc added to your wallet."

An example of how neat this could become. Say I want to send my friend some cash, but doesnt have any bitcoin adress of his. Instead, I go into my android btc app that uses the android share api and I press share via e-mail. The android client then creates file.btc, it sends a chosen amount to the new adress, withdraws it from my balance in the app, and enters my e-mail application with the new file attached. So I e-mail my friend who recieves the money and simply opens the file to put it in his own wallet with.

Preferably, you should also be able to protect these containers with a password. That would also provide a fairly easy way to store parts of your own btc outside of the client in a secure manner. Simply create a btc container from the client and choose to save it on a usb drive. If you use an android app you could send it directly to drop box via the share api etc.

Thoughts?

Kind of OT, but could fully homomorphic encryption be used to create bitcoin banks that doesn't have access to your private keys, but can still use them to send bitcoins with your help? What I mean is, can it eliminate the trust issue in anonymous banking?

Obviously, humans could pay them to do this if this is what humans want.

These agents would essentially always be dependent on humans, and especially the fact that we keep valuing bitcoins. If we stop value bitcoins they would lose their ability to pay us, we would stop providing them with hardware, and they would become nothing more than common computer viruses. So it's in their best interest to provide us with services that we value.

I wonder how a really developed system of these agents would interact. Would they sell profitable ideas to eachother rather than just share them? Would different agents develop different personalities? Would some of them turn malevolent without the original creator's intent and start stealing bitcoins from humans and sharing some of the loot with a few trusted hardware providers?

But what should be the programmed goal of these agents? I think that the only goal such an agent should have is to maximize bitcoin profits. Survival is not really neccessary since unprofitable agents won't able to pay for hardware and will likely be terminated. Survival of the fittest and all that.

I was thinking about something more like this. I specify a block number (say 155100) and then sign a transaction with my private key. If I choose not to broadcast this the transaction wouldn't be accepted in a block after block 155100. If a miner tries, the rest of them will refuse his block.

Can you say something like "this transaction becomes void at block X" so if it's not put in a block before then it becomes useless?

When bitcoin was one day old, 1 person owned 100%. I'd say the market seems to be evening things out.

This would certainly be in Silk Roads interest. It would most likely result in another media blitz that would draw even more attention and users to them.

And I don't think the person running the site is in it only for the money. He also seems to be a pretty dedicated anarchocapitalist so a lot of the commitment behind Silk Road seem to be ideology.

What are the odds that some offshore bank starts accepting deposits in bitcoins? What are there incentives for doing or refraining from this?

An off shore bank with an anonymous ATM-card would be heaven.

As I said, the point is instant transactions and invisible transactions. If you are going to withdraw the BTC immediately it's pretty pointless though. But this proposal makes it possible to recieve a BTC and spend it again instantly, without leaving any trail at all. To track you someone would need access to your banks private database, but the bank doesn't even need to store this info as it only needs to keep track of the current owner of the BTC.

I'm fully aware that my proposal doesn't eliminate the trust issue, but it reduces it severely. Lets say the bank actually does collude with another user. If there is a lot of bitnotes in circulation, only a fraction of them would become "tainted". So while a regular bitcoin bank always has the choice between business as usual and stealing all of its customers money, a bitnote bank would only have the choice of business as usual and stealing some of its customers money. So the incentives to commit theft is greatly reduced, especially if the bank has a reputation and a profitable business to care about. So in terms of trust, I believe my proposal would mean a great improvement over similar services today.

I also think it would be possible to create some kind of clearing system between different banks, which means that customers could actually choose a bank of their own choice and still enjoy instant transactions with customers of other banks. This is something we surely don't have today. Lets say customer A of bank A recieves a bitnote B from bank B. He gives the bitnote to his own bank with a newly created public key. Bank A then gives the note to Bank B and withdraws the money to two adresses (the one you gave them and one of their own). From the customers view, depositing a bitnote from another bank would actually be pretty much the same as depositing a bitcoin. As long as bank A trusts bank B enough to not believe they will double spend, you can be free to use your new bitnote instantly. And if one bank does decide to start double spend against other banks they will surely be blacklisted from the clearing process among all other banks pretty fast. This does create a transaction in the block chain though, but this transaction could only be traced back to the banks, not to the individual customers.

But my proposal is not perfect. Ideally I would've liked to find a way to use smart contracts to eliminate the trust issue completely. But this is the best I have managed to come up with, and I certainly think it's way better than current methods of bitcoin banking.

Basically, I've been trying to come up with ways to securely remove what I believe are the two biggest disadvantages of bitcoin, the wait for confirmations and the transaction history in the block chain. The idea I have (I've seen variations of it elsewhere as well) is to solve this by stop trading bitcoins altogether, and start trading ownership of bitcoins instead. This obviously creates some new problems though, especially in terms of trust in whoever is in possesion of the actual coin. But I was hoping that the trust issue could be resolved using the smart contracts feature of bitcoins. So in this thread we discuss every way that may be possible.

Below are my thoughts on one way that this could be possible. Although first a disclaimer, I'm not an expert in the details of cryptography in any way, but I do believe I have a pretty good grasp of the logic behind it. My proposal may be flawed or bad from a technical view. If so, feel free to improve or disprove it.

One way this could be achieved is by creating "virtual bank notes" that simply represents ownership of a bitcoin stored at a "virtual bank". These bank notes could then be exchanged between people without transactions actually taking place in the block chain (not entirely P2P though, see further down). This would be very similar to real bank notes backed by gold and issued by private banks. There are some differences though, and the most prominent one is that the nature of bitcoin could make fractional reserve banking impossible. Upon recieving a note you could simply look up the specific coin in the block chain to make sure that it is where it should be.

Another difference is that the pseudo-anonymous nature of bitcoin means that the incentives for the bank to simply run away with the money is a lot higher than in real life. So this needs to be solved by the smart contract feature of Bitcoin. Lets say you want to make a deposit to a virtual bank and recieve a virtual bank note (lets call them bitnotes from now on) in exchange. This would be done by you making a transaction that needs both the bank and you to sign the output in order for the bitcoins to be spent again. This means that the bank can't steal the bitcoins from you, and you can't steal it from the bank either. After this, you recieve the data you need to create your first bitnote. The bitnote contains at least the following: 1. The private key that you have and the bank needs to spend the bitcoins, and 2. A secret identification that you need to proove to the bank you are the owner of the deposited bitcoins.

So now you want to pass this bitnote on to someone else. Easy, you simply send him your bitnote with the private key and the secret ID. This means he could withdraw the bitcoins just as easily as you. However, he doesn't want to withdraw it, he only wants to stop you from doing it. So he contacts the bank, tells the bank the secret ID and recieves a new one. So now the bank knows that you are not the owner of the deposit anymore. So even though you still have the private key that could be used to sign a new transaction of the bitcoins, the bank knows you are not the owner and has no reason to allow you to withdraw by co-signing your transaction.

The idea here is that the bank can't spend the bitcoins it has in possesion without the private bitcoin key in circulation with the bitnote (thus minimizing the need to trust the bank), and that it won't spend it even if someone would provide them with the key without prooving that they actually own the funds too. I realize this is not bullet proof protection against theft though. If you recieve a bitnote, the bank could thoeretically still run of with your money, but only if it managed to collude with a previous owner of the bitcoin that you currently have claims on. This still greatly reduces the incentives though since it makes it really hard for the bank to ever get away with more than a fraction of all of its clients money, since that would require collusion with a lot of its customers. The bank never has the choice between stealing every customers money and continuing business. So the incentives to continuing business as usual are much higher than it is for current "virtual banks" such as MyBitcoin.


I really have no idea if this is among the best ways to achieve what I want (Instantaneous invisible transactions). So really, any proposals on how smart contracts can be used to make anonymous full reserve banking work better is welcome in this thread. My proposal is just a start for the discussion. I really hope the interest in something like this is high here, and if my method could be improved noone will be happier than me.

I recieved an answer.

Get them to accept bitcoins! Considering that they seem to be quite open to new technology and that Bitcoin is quite popular in the pirate scene it shouldn't be impossible. Since they are new they will probably appreciate the attention that this could bring them as well. So send them a feature request at their site. I already did my part.


http://bayfiles.com/contact

Thanks for your response and the link was quite helpful as well. I have more questions though. I've been doing some reading on bitcoin scripting and contracts, and I find this part especially interesting: https://en.bitcoin.it/wiki/Contracts#Example_4:_Using_external_state

Is it possible to make a bitcoin transaction such that the voting pool can't spend the coin without an unused OT-reciept even if they decided to collude?

Also, transaction-servers can't fake a transaction, but they can fake reciepts, right? The goal is to disincentivice them to do this, through audits etc. But what if they decide to anyway, is there any mechanism for the issuer to recognize the fake receipts from the real?

I'm trying to get my head around this so I have some questions to you. I'm really intrigued by the whole thing though.

As I've understood it, the transaction servers could make money from transaction fees. Is there a similar mechanism for the issuing pools?

Also, how would the issuing pools work if they started to get shut down by governments? Say you need 9 out of 10 pools to vote yes in order to accept a transaction and 2 out of 10 servers get shutdown. Would the bitcoins be lost in the ether forever?