I wonder if you know " Twister" (but probably the answer is 'yes') and if something comes out from that concept can be useful: It's a P2P microblogging platform. It comes with an implementation from Libtorrent (DHT) for the resources management, and it uses the blockchain for the users management. White paper and documentation explains everything, definitely better than I can.  Yes Twister is beside Bitmessage the preferred solution for the messaging system. Dark Wallet will probably use that as well, and it could be that we will build on Dark Wallet. But it is still too early to discuss much about the technical decisions... Are you more familiar with Twister? |
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If we are exchanging 1 BTC for $650 and we lock up 1 BTC or less as a collateral, then I can receive your $650 and let my 1 BTC stuck as a collateral forever. I'm not losing anything (I'd pay 1 BTC anyway), but you lose 1 BTC + $650.
No that is not right. If you unlock you get your collateral back (0.1BTC in my example, 1BTC in yours). If you dont unlock then you lose that. Collateral should be greater than amount in exchange. If they exchange $1000 for 1 BTC, collateral should be 2 BTC. So when Bob receives $1000 it's cheaper for him to unlock collateral (2 BTC) than to keep 1 BTC worth of product (cash in this case).
The collateral only serves as incentive to not hurt the other losing his money. There is no way to steal the others money. Even a small collateral like 10% can fulfill that job. If you behave unfair you will lose 0.1 BTC as well, even if the other will lose 1.1 BTC for rational persons it is not an incentive to lose anything if he only needs to click a button. The height of the collateral can be freely chosen, but there will be probabyl a recommended value. I will consider to set the default collateral higher maybe 50% or 100% of the trade volume. |
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Indeed, jubalix, the size of the deposit is open to debate. But the basic structure is that each side only stands to lose by defaulting on their commitment.
In my opinion this is not the main issue; the main issue is there is nothing forcing the two parties to pay out in the ratio (1.1,0.1) to (Alice,Bob) at the end. They could end up paying out (0.8,0.4) or anything else. This is one of a few things we've been discussing on irc #bankrun.
Yes the collateral of 10% seems to me now also too low, but it is free to choose, but probably there will be a recommended collateral more about 50% or 100% (will be updated in the paper in a new version). What will be the right collateral? We could analyse the statistics of past trades (data from the blockchain) and estimate the rate of failed trades and see the collateral used there. That could be maybe a mechanism helping to find the right balance. If the collateral is higher all will be more safe, but if it is too high the chances that somebody take the offer will decrease, also the possible loss will rise. If the other trader cannot continue unintendedly (death, hard disc crash,...) there is no way to unlock the funds if we dont use an escrow (still in discussion). But that case will be very rare. I assume 1 of 10 000 or less, so if you keep the trades low, that could be taken in account as kind of fee. Maybe a kind of insurance service could be used to flatten that effect, but that comes with new problems. Another solution could be to use a lottery system to spend the locked funds to a lucky winner who has traded once successfully. So the negative effect could be turned into some positive. But that system opens again up new problems, but it is in discussion. Yes that blackmail scenario waxwing has found is more serious then the one I discussed in the paper: A normal blackmail would suffer from the asynchonious payment. So if you accept a blackmail and then as 2. step the blackmailer need to pay back the open funds, then you are exposed again to him. Nothing prevents him to repeat the blackmail. So that could be an infinite loop. But if Bob signs a tx with changed outputs to his favor and send that to Alice, Alice only needs to sign and publish it, so there is no gap anymore between blackmail negotiation and payment. If Alice accept it and publish it, she will get her money back for sure. So that is a more serious attack scenario. But it still has its problem to become a realistic threat: The software does not provide any tool to do the signing and publishing for Alice in a way that a non-tech person can do it easily. Alice can not easily copy her private key, she need to be tech-savvy to do that. So Bob need to provide tools to help her and give technical instructions, making the attack more difficult to succeed. Another more important point is that Alice know the real ID of Bob due the Bank account, so she could go to a lawyer or try to confront him in real life (Bob does not knwo who is Alice, she might be an innocent girl or the sister of a powerful mafiosi). Assuming that Bob does not use a stolen Bank account (but that will be out of the scope here). There would be a way also to create a legal contract for the trade with the initial deposit tx. That would create then even more pressure to Bob to act fair. But we will try to keep the concept independent form the outside legal system, cross country trades would complicate all that as well... |
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...
I haven't delved into it in detail (not that it's so hard to understand) but - would it be possible to somehow use a single pubkey (bitcoin pubkey) for everything? No doubt bitmessage keypairs are different from bitcoin ones, but I'm curious as this could help to simplify the architecture. Maybe a single seed/privkey can be used to create a BM compatible and a bitcoin compatible key?
Yes that was my approach as well. In the paper/RCP example I used only one address for Alice/Bob for sending and receiving the BTC as well as for the messaging (to keep it simple). But I assume the real implementation will need to deal with more complex setup (input merge, change, diff. addresses and probably different a Bitmessage address, if BM will be used). |
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what motivation does he have to sign BTC over?
eg by no signing he acutly increases his wealth (sender is poorer) and marginally increases his and every one else BTC worth, by leaving BTC locked up.
time this by millions of transactions and you get alot of BTC locked up forever, and sender looses
" what motivation does he have to sign BTC over?" - To get back his collateral. The 0,1 btc in the paper is only an example, can be any. Think to 1 btc collateral, that's much incentive to behave fair. No, he does not increase his wealth (he has spent 1 btc + coll and received 1000 USD), so the collateral he needs to get back otherwise he loses. The effect of a locked up btc is close to zero (about 1/10 M). Locked funds will happen but probably very rare (1 of 1000?). There is no way to win money, only lose less then the other, that is for normal people no incentive to behave unfair. |
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From a thread I started in the russian forum: BTC is NOT illegal here. The general prosecutor issued a warning that it might consider all deals dont in crypto as "suspicious" - thats for companies, as it goes for citizens there was a clear statemnt in the speech - "that we CANNOT ban people buying bitcoin at the moment"
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Hallo, Sorry I don't speak russian, but I thought that topic could be interesting for russian BTC traders: It is about a pure P2P Fiat-BTC exchange. Would be great to get some information about the current situation in Russia. Is BTC illegal right now or is it just not considered as legal money? Is the situation legally clear? Here is the discussion thread: https://bitcointalk.org/index.php?topic=462236.0 |
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2. As long as centralized platforms like Bitstamp work, people will be too lazy to switch to the system described here, which lacks the funds to make it really attractive to people. And centralized platforms do work - I mean that despite the Gox-shit! If some exchanges go bankrupt every 5 years or so, that is ok. The normal user only has to trust them with his money for 1 day. The probability that the exchange goes bankrupt in that time is very very low.
Yes in western countries where we are (yet) not confrontated with governmental attacks against BTC, then main motivation to use a less feature rich platform would be a political one. But localBitcoin and Bitcoin.de have also quite a large user base so it seems there are enough people who are not so much concerned about the missing features/speed. For other countries like China that solution could be the only way to get into the fiat world. So there could be a huge potential. You say that localBitcoins and bitcoin.de are quite popular. That is not true. They all suck so much and nobody will use them in the near future. The only reason they still exist is the lack of any real exchanges that run in EUR. But in the next months I'm sure we will have a place that people trust. Kraken.com looks promising. Noone will ever go through all this shit on bitcoin.de or localBitcoins if he can use a proper exchange like Bitstamp or Kraken. 99% of the people also don't care about their data being passed to government. Exchanges like yours or localBitcoin will never work as 99% of the people are not willing to pay the costs associated with the additional privacy. 3. It is really important to determine how BTC Trading will develop if the country bans it. So maybe you should get informed about the situation in Russia for example. You should try to figure out if your exchange could possibly run in Russia. If there are ways to solve the Undercover Agent problem, it could very very successful! To address the blackmail problem: Studies in behavioral finance have shown, that people are willing accept a major financial loss if they could penalize a malicious trading partner. The only condition is that, the penalty for the malicious user has to be at least around as high as the penalty you are going to suffer. As the collateral can be set as high as you want and additional feedback systems could be implemented, blackmailing can be prevented... Cryptolocker worked because the penalties were imbalanced. I would not recommend to use bankrun in a country where BTC is illegal. We cannot prevent them from using it and maybe they find ways how they can use it without risking anything, but the "undercover agent attack" scenario is very real in those cases, and I don't see much room for protection against that. The privacy between the traders is leaked due the bank transfer. If there are alternatives to a bank transfer (mail?) which preserves privacy, they could gain some protection. But even then I would not recommend it. The project is intended to work inside the legal frameworks. I would appreciate to get more information about the situation in Russia, so if there is somebody with more knowledge about that please share it! I am also not sure if it is really illegal or just the central bank said that you may not use it... Legal questions tend to be complex, and I am absolute not an expert in that. China I see as much more interesting market. I have no idea how they trade BTC now with the bank bans for the exchanges? |
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I have some (limited) familiarity with banks and credit cards company fraud prevention systems, and I think that with enough interest, they *might* implement crypto-analytics to try and correlate wired transfers to crypto ones, and block/limit the relevant bank accounts.
That said, it probably will take quite some time until they decide to do that, plus will probably generate a lot of false positives.
In any case, this protocol should be much safer for crypto buyers / sellers, than a central exchange bank account (that can be easily traced and blocked), and I personally know some people who were hit by their banks for such transactions exactly.
Just my 2c.
Can you tell us how they manage to pick out btc related transactions assuming no central exchange account is used and people do not use any comments like "BTC trade id:1234" in the tx? Also opening up new bank accout is not a big deal at least in Europe. To be safe, we will be recommended to no use the primary Bank Account. But as far BTC is not illegal there is no reason why they should freeze your account. If you trade huge volumes, you will be confronted with money laundering questions, but thats another issue... One big open question is the irreversibility of bank transfers. As far as I know SEPA transfers are irreversible (my bank confirmed that for my account at least). But many people in the discussions say they are not. I am not familiar with the situation in the US. I will research that more to get some facts, but if you are more familiar with that area maybe you could add valueable input here or post some links to good resources? |
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Also I want to keep it as simple as possible. An escrow could be added to the system without much problem, the problem is that the escrow needs a tamper proof document. A screenshot from the bank tx is easy to fake. SSL dump could be a solution but thats complex.
Just to be clear on the practical point - ssl logging to provide proof works, I and dansmith have done hundreds of experiments. Since the core code is already written (actually, more than one version), the complexity isn't much of an issue. On the other hand I understand you're looking for non-escrow models, so that's fine. I would prefer if the system does not require escrow (I am still convinced that it should work fine without, but will lay out that more in detail in the paper soon), if it turn out that escrow should be mandatory included, your solution will be the way we have to go. Good to hear that it is already that mature! |
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You see, the Cryptolocker guys are actually smart criminals. They did not, as you assume (and in doing so, greatly underestimate their cunning and intelligence), enter your supposed infinite ransom loop. Instead, they decided that keeping their word was in the best interest of their "business plan", if we can call it so. They established a weird kind of credibility, where the victims knew paying was the best option, bar none at the moment. And then they delivered.
But here is the big difference. With Cryptolocker you deal with one attacker with a certain identity, so you know they behave in a certain way because they did it in the past. In an P2P exchange you will not make the trade with the same person again (the bank details give the identity). So there is no reason to assume when you onced get blackmailed and the blackmailer acted "honest" that the next time another blackailer will do the same. Also I am thinking on an idea to introduce a legal contract, that way (you have the identity due the dnak details) you have much protection. But I dont want to discuss that yet as it is half-baked. I will add that to the paper soon if it works out. But thanks for your input! Nobody can know now how it will work and if the assumtions are correct. For sure we need to improve stuff as soon we get it out and see how it works and where are the problems. That does not mean that I dont take these issues serious! Will try to find the best base setup to start. |
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My next steps:
From the feedback in the forum/reddit it seems that a few parts are difficult to understand.
I will expand those parts, describe them better, as well as adding more examples.
There are also 2 new ideas to add as well as investigation regarding reversibility of Bank transfers.
TODO list:
- Lay out/test idea for legal contracts
- Lay out/test idea for protection against system attacker
- Describe the attack scenarios better
- Price swings
- Investigate on reversibility of Bank transfers
- FAQ
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I would like to present a bit of my background and the area where I think I can contribute to the project.
I was >10 years mostly in GUI/Web-app development involved (Flex, Flash) and did a bit of Java development.
Last half year I was working on iOS projects, but due the unbearable politics of Apple (BTC apps ban) I stopped with that.
I am following BTC since 2011 and I am dedicated fulltime to BTC stuff since 2 month.
I can contribute to the project in these areas:
- Concept (paper)
- GUI development (depends on the chosen technology)
- Design (I am not a professional designer, but have some experience in that field)
- Software architecture (was an important part in my last jobs)
- Organization/Project management/Team building (once had a role as tech-lead)
- Community building
- Testing
- ....?
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This is the open project development thread for the BANK RUN! project and it is not intended for discussion or questions regarding the project. Please use the existing dedicated thread for that ( https://bitcointalk.org/index.php?topic=462236.0). Anybody who wants to participate to the project (development, concept, legal advice, design, funding,…) is welcome to join. It is intended as an open and transparent channel, but will be protected against misuse (We will delete spam, trolls, inapplicable posts,…). PLEASE RESPECT THESE RULES! |
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Ok, I looked over your scheme and have 2 points.
It seems, there is no orderbook? How does one get an idea, what price to ask or bid?
I thought about a p2p exchange, too. And I think it should focus on mobile phones, because they are harder to track down and to block. I'd also use the GPS api to support meetups to complete an actual exchange. No bank need then.
These 2 points led me to the next problem: how to create a distributed orderbook, that spreads orders in a fair way?
You get all the broadcasted orders (2 days message storage is standard in Bitmessage, so you get all > 2 days age) you are interested in: Set a filter for offers with: Offer-type: Buy BTC; Currency: EUR; bank transfer type: SEPA; Region EU Then you get a list of offers sorted by price, you can pick the best mathing price/amount of the list. It is basically similar to localBitcoin or bitcoin.de. You can even add price charts of completed offers (not investegated that yet, but should be not a big issue). Mobile is an important point! Thanks for bringing that up. One problem is that the wallets are dependent to centralized services as you cannot run a full node there. But a field to investigate further. Is on my TODO list.... |
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Check out https://www.cointouch.com/ (my site) CoinTouch uses the Facebook social graph (traversing friends of friends) to find bids and offers for bitcoins. It's P2P in the sense that all transactions happen directly between individuals. There is a single point of failure - the cluster that hosts the site. I'd like to explorer a BitTorrent-style model to remove this dependency, although we'd need to pre-seed clients with a list of supernodes, right? Interesting project! But as you mentioned the dependency to Facebook is a problem for decentralized pure P2P. The original ripple idea (not the Ripple.com) was the same direction. For me the friends net concept has 2 problems: 1. I may not want to share my financial behaviour with friends 2. Trust based on friendship could break friendship. Also does only protect against fraud but not against default. If a friend is too less cautious with his trust relationships, he could get in trouble some day and all others connected with him. In Ripple that is a problem, there was one thread exposing that risk in an social experiment. A lot of peole lost money because they did not fully understand the consequences if you setup a trust relationship (you guarantee for the other). In my proposal trus ti replaced with the collateral and the "game structure". So the losses are limited to the session and in normal circumstances there should be no risk to lose money. |
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There are two problems with that I can think of:
1. Bank transfers can be reversed in some circumstances (account was stolen etc). Some days after Bob gets the money and releases the bitcoins, the bank may reverse the transaction.
2. I'd be worried that the bank may freeze my account if I receive cash transfers from someone who turns out to be a criminal or the bank freaks out for some reason.
I would much prefer a centralized exchange.
This concept could work if A and B meet up and payment is made in cash. This concept could also work for trading between cryptocurrencies (btc <--> ltc etc)
I think these are serious issues which need to be considered These maybe hard questions to answer, but if #2 in particular starts happening for users of your system, you will become a VERY unpopular person, VERY quickly. Having a primary fiat bank account closed or locked is far more damaging and off putting for the novice user (who you've said this system would be for) than losing some fiat or some BTC. Thanks for bringing that up again and sorry for the late reply! 1: I mentioned in the paper that you may only use bank transfers which are irreversible (SEPA in europe, no Paypal). See Money hardness: https://en.bitcoin.it/wiki/Payment_methodsI will also add another idea I need to work out more in detail before discussing it which could help to solve that issue. Will add it to the paper soon... 2: There will be a kind of FAQ page where users get the most important side effects described. If you do 1000 trades a month with 50 000 USD every bank will raise "money laundering" alarm. So if you trade a lot dont use your primary account, create maybe a few accounts. That will not help to hide it to the government/tax authority as in most countries the banks deliver information there so the tax authority will ask questions for the sources of the money. If you are in contact with a problematic peer you could also get problems. If the other get an investiagtion from tax authority they may link to you and you are the next if you are in the same country. Also as you mentioned if a criminal send you money, you could get confrontated with problems. But those issues are the same with Ebay or other online services where you can make financial tx with private persons. So there will be some remaining risks. As well there are risks with centralized exchanges (I am still waiting for some money of a locked down exchange). There is no perfect Silver Bullet. Life is risk. It will be just a solution which fits better to the idea of BTC. The whole concept will be in line with the legal framework (at least in civilized countries). To make a financial transaction between 2 private persons without any other person in between is legal everywhere if it does not violate certain limitations (frequency, volume, criminal involements). That would be the same if you do a traditional trade privately. You need to take care to not overstretch the limits. If you buy a bike from a drug dealer you could get problems. If you buy 100 bikes a months you could get problems (looks like a business). If you buy from 100 different persons stuff that could cause problems (looks like you are a professional trader).... Yes it will be more comfortable to use centralized exchanges. But services like Bitcoin.de or localBitcoin have also quite a large user base, so comfort is not the only thing. And for countries like China that comfort is not available anymore. A crypto-crypto exchange will be possible as well, but there are already some solutions out there (Ripple, NXT,...). That was the easier problem to solve... |
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Great idea indeed. It could also be used to trade other things using BTC - not only fiat. But I see 3 major problems:
Yes there is headroom for much more... NashX is a centralized P2P market using the same concept (nash equilibrium). 1. There is no money to be made here. It should be 100% Open Source and such projects don't make any profit to potential investors. So who should pay the Developer here? I can only think of guys who hold a significant amount of BTC and are not afraid of getting their hands dirty. I don't think we will find such a person.
I have already some dev contact and most of them did not address the financial side yet, so seams it is not THAT important to them. But I know that will be a thing we need to solve. My preferred model yet would be croudfunding. I like the style how Dark Wallet has done it. Transparent and open. Not playing with the greed of the people, attracting a special fraction of Bitcoiners (see Ethereum threads, most are just discussing the invetment stuff and are not very interested in the idea itself, or just in respect of their investment). But I am open for any idea not destroying the basic principles: Openness, free, decentralized. 2. As long as centralized platforms like Bitstamp work, people will be too lazy to switch to the system described here, which lacks the funds to make it really attractive to people. And centralized platforms do work - I mean that despite the Gox-shit! If some exchanges go bankrupt every 5 years or so, that is ok. The normal user only has to trust them with his money for 1 day. The probability that the exchange goes bankrupt in that time is very very low.
Yes in western countries where we are (yet) not confrontated with governmental attacks against BTC, then main motivation to use a less feature rich platform would be a political one. But localBitcoin and Bitcoin.de have also quite a large user base so it seems there are enough people who are not so much concerned about the missing features/speed. For other countries like China that solution could be the only way to get into the fiat world. So there could be a huge potential. 3. If Bitcoin Trading will get banned the system here won't work either. Undercover Agents will easily track down the heavy trader via their bank accounts and put them in jail.
In countries (Russia) where the government is that corrupt to set BTC illegal, there are those risks, yes. I am not familiar with the situation there, but I assume people there are more used to these kind of threats and have other ways to get around it if they want. Also people there have maybe more important problems then how to get into BTC... Open question... Maybe somebody with experience about those places can add some input here. |
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