Pretty awesome, the basic mechanism is the same. Thanks for pointing out this project. Now I know someone is working on this, my mind is at ease

the whole point of my proposal is that it avoids a middle man..

to say again:

- the seller encrypts the file symmetrically with his public key
- the buyer sends bitcoin to the associated bitcoin address
- the seller must publish the public key of the address to spend the payment

no middle are necessary

however, another issue with it is that the buyer has no guarantee that the file was actually encrypted with the address'es pubkey

Ah, yes of course, but I was actually thinking about symmetric encryption. The public key would be used for both encrypting it, and decrypting. In that case, it would work and the seller MUST publish the encryption key to spend the money, since it is his public key, which is published upon signing the transaction.

The following mechanism would allow people to sell files for Bitcoin, without requiring trust.

- a seller encrypts a file with the public key of a bitcoin address he owns
- a buyer downloads the file from the seller, but cannot open the file yet
- the buyer makes a payment to the seller's address
- for the seller to ever spend his payment, he needs to publish his public key
- using the public key, the buyer can decrypt the file

Use case:
- trading files online
- unfortunately, also ransomware

Advantages:
- the seller cannot access the payment without allowing the buyer to access the file
- the buyer has some assurance that his payment will not be wasted

Disadvantages:
- this mechanism doesn't let the parties agree on a price before the transaction is made. it is up to the seller whether to accept the payment, after the fact.
- the seller could refuse the payment, then the buyer lost his money and still cannot access the file
- if the encrypted file was hosted publicly, anyone else could also decrypt it, once the seller claims his payment

Possible improvements:
- use nLockTime to ensure that the seller takes the payment (transfers it to another address), or that the buyer will get his money back.

Do you think this is possible, or did I miss something important?

Hi all. First post here, because I had an idea that I wanted to share, and I think reddit may not be the right place. Sorry if I somehow broke forum rules.

Bitcoin Address Discovery Protocol over SMS

https://gist.github.com/boukeversteegh/9550387