An idea to move Bitcoin closer to everyday use

[Stn]

As we all know at the moment Bitcoin is not quite ready to be a payment system for everyday use. Many people put their efforts towards that direction (including myself) but it didn't work that well. Bitcoin still remains merely investment and speculation tool.

I analysed what could be the main obstacle in this process for Bitcoin. My conclusion appeared that exchange rate to local currency is the main problem here. There is no fully "trusted" source of the rate. We do have rates from the leading stock exchanges, we do have average or weighted aggregates of those rates. But still that sources are "points of weakness" in the system. We can't trust them that way like we trust blockchain information.

Therefore I came out with an idea to add to the blocks exchange rate information. Not necessary for all available currencies, world reserve currencies would be enough (USD, EUR, GBP). A peer will collect exchange rate from any available source or sources (or establish its own). Then miners averages and confirm such rate in the block (dropping obviously rubbish values). It becomes an "official" rate like Central Bank's rate in each country. Though commercial entities are free to add their own margins as commercial banks do now.

It should not be integral part of the Bitcoin protocol but kind plugin functionality. We can drop it when turn the world to Bitcoin economy. Pleas give your thought on the idea and its technical implementation possibility.

[Possum577]

You lost us with "like Central Bank's."

I think the BTC exchange rates do just fin right now. The challenge might arise with lesser known, smaller volume exchanges but those marketplaces should keep greater eye on the major marketplaces (i.e., Blockchain).

Why add another process to the mix to increase variance?

[turvarya]

Just pick 3 big exchanges and take their average exchange rates.

Have you ever converted from one fiat to another fiat(e.g. EUR to USD)? The exchange rates between foreign exchange offices also differ even when they are physically just some meters apart. I never heard, that that is a problem.

[Stn]

Just pick 3 big exchanges and take their average exchange rates.

Have you ever converted from one fiat to another fiat(e.g. EUR to USD)? The exchange rates between foreign exchange offices also differ even when they are physically just some meters apart. I never heard, that that is a problem.

Do you offer every single merchant "pick 3 big exchanges and take their average"? You may relay this job to an aggregate website and then pray it is not down, hacked or whatever else.

Of course it is not a problem for manual sales once a week. But I am talking about turning it to industry. Do you think that in Paypal or Visa when it come to local currencies "pick 3 big exchanges and take their average"? They have certain directive source and just follow it.

You lost us with "like Central Bank's."

Sorry you are so sensitive. Yes I do consider blockchain as a robotic "Central Bank" of Bitcoin. Scary?

[turvarya]

Just pick 3 big exchanges and take their average exchange rates.

Have you ever converted from one fiat to another fiat(e.g. EUR to USD)? The exchange rates between foreign exchange offices also differ even when they are physically just some meters apart. I never heard, that that is a problem.

Do you offer every single merchant "pick 3 big exchanges and take their average"? You may relay this job to an aggregate website and then pray it is not down, hacked or whatever else.

Of course it is not a problem for manual sales once a week. But I am talking about turning it to industry. Do you think that in Paypal or Visa when it come to local currencies "pick 3 big exchanges and take their average"? They have certain directive source and just follow it.

So, they take the 3 exchanges as their directive source.
I really have no idea, what problem you are seeing.

And btw. regarding a aggregate website:
https://www.google.at/search?hl=en&tbo=d&output=search&sclient=psy-ab&q=btc+usd&btnG=&oq=&gs_l=&pbx=1

[Borisz]

I agree that exchanging is the biggest problem and bottleneck currently. I am not sure if it has to do with the price, I think that is another issue.

The main problem is the difficulty of exchange, from my personal experience at least. If you do it online you have to go through verification because of your bank and fraud. So then again, it all comes down to the banks plus the fees they impose on transactions. Also, as a recent topic here in bitointalk claimed if you withdraw to your account over 1000€ you will get flagged. And there are many more issues, all coming down to exchange, trust, verification and banking.

A true bitcoin currency won't exist until I can simply exchange my fiat to BTC whenever I want, without having to wait 5 days of bank working days, provide 2 pieces of proof of residence, my ID etc. Simplicity is needed.

[Stn]

I would not touch exchange to fiat in this topic. It is different theme. My aim is to create Bitcoin environment and use to pay for goods and services. I think not that many say PayPal users (if they are not merchants) do ever deal with PayPal withdrawal procedure. PayPal money merely rotates in its own circle.

For obvious reason we can not assign stable price in BTC and always have to keep glance on other fiat currencies. As I said it is no problem with occasional deals. 3 major exchanges and blah-blah. But some guys probably don't understand when it comes from occasional to industrial flow it became different. If you are serious seller and you don't have absolutely reliable source of rate to set BTC  price you just won't deal with it.

[Kprawn]

Well the coindesk Bitcoin price index chart shows the average price, to give you a clear indication of what is going on with the price.

Just select all of them:
Exchanges
CoinDesk BPI
Bitstamp
Bitfinex
BTC-e
OKCoin

http://www.coindesk.com/price/

And if you use http://preev.com/ the weighted average are calculated by default for :
Bitfinex
Bitstamp
BTC-E
LocalBitcoins

[Stn]

Guys guys please hear me. With all my respect to preev.com and their work, who is that preev.com to believe in? We do believe in blockchain. We don't believe in Gox, Preev or any other centralized entity. Isn't it the main principle of Bitcoin? I offer to put such thing like rate under the same umbrella.

[johnyj]

I agree that exchanging is the biggest problem and bottleneck currently. I am not sure if it has to do with the price, I think that is another issue.

The main problem is the difficulty of exchange, from my personal experience at least. If you do it online you have to go through verification because of your bank and fraud. So then again, it all comes down to the banks plus the fees they impose on transactions. Also, as a recent topic here in bitointalk claimed if you withdraw to your account over 1000€ you will get flagged. And there are many more issues, all coming down to exchange, trust, verification and banking.

A true bitcoin currency won't exist until I can simply exchange my fiat to BTC whenever I want, without having to wait 5 days of bank working days, provide 2 pieces of proof of residence, my ID etc. Simplicity is needed.

The problem is not on the banks, it is the government officials who set up this anti-money laundering/terrorist financing, know your customer law and applied it to financial institutions like exchanges and banks (banks are essentially an exchange)

Regulators put a heavy fine on those institutions who does not follow this law. If anyone can trade bitcoin like buying grocery, there will be many criminals use bitcoin to launder money (money comes from hacked bank account, cheated victim, smuggling, drug dealing...), and once money enter bitcoin, it is not traceable anymore(at least beyond the current ability of law enforcement due to no regulatory framework at all on blockchain), so it is very difficult to reverse the loss like in fiat money system (In fact the law enforcements are more interested in reversing the loss, capture the criminal is less important since they never cease to exist)

So far the best practice is to treat it like cash, and limit each customers daily transaction volume like in an ATM

[Amph]

Guys guys please hear me. With all my respect to preev.com and their work, who is that preev.com to believe in? We do believe in blockchain. We don't believe in Gox, Preev or any other centralized entity. Isn't it the main principle of Bitcoin? I offer to put such thing like rate under the same umbrella.

well you must centralized the data, to have an average estimate, otherwise you will be stuck in searching for various exchange to retrieve the final value

[monsanto]

It should not be integral part of the Bitcoin protocol but kind plugin functionality. We can drop it when turn the world to Bitcoin economy. Pleas give your thought on the idea and its technical implementation possibility.

I had a similar idea for a system to be used with a pegged currency called Dollarcoin (https://bitcointalk.org/index.php?topic=702098.0). I envisioned the exchange rate determination to be a function in wallets, where the wallet holder could select from various API sources of exchange rates from something like a drop down list. Or, if they wanted, they could add in their own source. This would form a decentralized consensus exchange rate.

[jonald_fyookball]

 There is no fully "trusted" source of the rate. We do have rates from the leading stock exchanges, we do have average or weighted aggregates of those rates. But still that sources are "points of weakness" in the system. We can't trust them that way like we trust blockchain information.
 

No offense, but you're absolutely incorrect.  Market prices are the only "real" prices.  Please understand the concept of "price discovery".
https://en.wikipedia.org/wiki/Price_discovery

Even Fiat like USD, has no "official" price in relation to other currencies.  Various exchanges and
banks trade currencies and rates are always floating.  Rates tend to converge on a single price at any given time
due to arbitrage.  This is true whether its dollars or Bitcoins.

[scarsbergholden]

 There is no fully "trusted" source of the rate. We do have rates from the leading stock exchanges, we do have average or weighted aggregates of those rates. But still that sources are "points of weakness" in the system. We can't trust them that way like we trust blockchain information.
 

No offense, but you're absolutely incorrect.  Market prices are the only "real" prices.  Please understand the concept of "price discovery".
https://en.wikipedia.org/wiki/Price_discovery

Even Fiat like USD, has no "official" price in relation to other currencies.  Various exchanges and
banks trade currencies and rates are always floating.  Rates tend to converge on a single price at any given time
due to arbitrage.  This is true whether its dollars or Bitcoins.

I have seen first hand the rate variation from the so called official rate, if you land in a country some airport has this exchanges that trade under the official say 5% even 10% under to sell 5% to 10% over the price just because they see a business opportunity when it comes to exchanging fiat for fiat.

ever since i decided to travel with only bitcoin it has been a re leave to not deal with this type of exchanges.

[jonald_fyookball]

 There is no fully "trusted" source of the rate. We do have rates from the leading stock exchanges, we do have average or weighted aggregates of those rates. But still that sources are "points of weakness" in the system. We can't trust them that way like we trust blockchain information.
 

No offense, but you're absolutely incorrect.  Market prices are the only "real" prices.  Please understand the concept of "price discovery".
https://en.wikipedia.org/wiki/Price_discovery

Even Fiat like USD, has no "official" price in relation to other currencies.  Various exchanges and
banks trade currencies and rates are always floating.  Rates tend to converge on a single price at any given time
due to arbitrage.  This is true whether its dollars or Bitcoins.

I have seen first hand the rate variation from the so called official rate, if you land in a country some airport has this exchanges that trade under the official say 5% even 10% under to sell 5% to 10% over the price just because they see a business opportunity when it comes to exchanging fiat for fiat.

ever since i decided to travel with only bitcoin it has been a re leave to not deal with this type of exchanges.

Yes, rates can vary because an exchanger adds their own spread.  As you said, in an airport,you're going to pay a bit more
because you don't have easy access to other platforms.   

[Scamc0p]

I agree that exchanging is the biggest problem and bottleneck currently. I am not sure if it has to do with the price, I think that is another issue.

The main problem is the difficulty of exchange, from my personal experience at least. If you do it online you have to go through verification because of your bank and fraud. So then again, it all comes down to the banks plus the fees they impose on transactions. Also, as a recent topic here in bitointalk claimed if you withdraw to your account over 1000€ you will get flagged. And there are many more issues, all coming down to exchange, trust, verification and banking.

A true bitcoin currency won't exist until I can simply exchange my fiat to BTC whenever I want, without having to wait 5 days of bank working days, provide 2 pieces of proof of residence, my ID etc. Simplicity is needed.

The problem is not on the banks, it is the government officials who set up this anti-money laundering/terrorist financing, know your customer law and applied it to financial institutions like exchanges and banks (banks are essentially an exchange)

Regulators put a heavy fine on those institutions who does not follow this law. If anyone can trade bitcoin like buying grocery, there will be many criminals use bitcoin to launder money (money comes from hacked bank account, cheated victim, smuggling, drug dealing...), and once money enter bitcoin, it is not traceable anymore(at least beyond the current ability of law enforcement due to no regulatory framework at all on blockchain), so it is very difficult to reverse the loss like in fiat money system (In fact the law enforcements are more interested in reversing the loss, capture the criminal is less important since they never cease to exist)

So far the best practice is to treat it like cash, and limit each customers daily transaction volume like in an ATM

Those are good things you pointed out.
I won't look at the banking system the same way again after your words of insight of what they really do with your money.

[MicroGuy]

As we all know at the moment Bitcoin is not quite ready to be a payment system for everyday use. Many people put their efforts towards that direction (including myself) but it didn't work that well. Bitcoin still remains merely investment and speculation tool.

I analysed what could be the main obstacle in this process for Bitcoin. My conclusion appeared that exchange rate to local currency is the main problem here. There is no fully "trusted" source of the rate. We do have rates from the leading stock exchanges, we do have average or weighted aggregates of those rates. But still that sources are "points of weakness" in the system. We can't trust them that way like we trust blockchain information.

Therefore I came out with an idea to add to the blocks exchange rate information. Not necessary for all available currencies, world reserve currencies would be enough (USD, EUR, GBP). A peer will collect exchange rate from any available source or sources (or establish its own). Then miners averages and confirm such rate in the block (dropping obviously rubbish values). It becomes an "official" rate like Central Bank's rate in each country. Though commercial entities are free to add their own margins as commercial banks do now.

It should not be integral part of the Bitcoin protocol but kind plugin functionality. We can drop it when turn the world to Bitcoin economy. Pleas give your thought on the idea and its technical implementation possibility.

Strike everything you just wrote. The issue is that the community at large can't understand that wage integration is paramount to success. Educate the bitcoin masses and you will see Bitcoin inch closer to general adoption.

Employees must rise up and demand BTC as their payment currency. You solve that riddle and fiat currencies around the globe will fall.

[TheButterZone]

The rate is the All-Time High, $1250 USD/BTC. Done. Nobody can sell at a loss anymore, it's now a currency.

[STT]

No offense, but you're absolutely incorrect.  Market prices are the only "real" prices.  Please understand the concept of "price discovery".
https://en.wikipedia.org/wiki/Price_discovery

Even Fiat like USD, has no "official" price in relation to other currencies.  Various exchanges and
banks trade currencies and rates are always floating.  Rates tend to converge on a single price at any given time
due to arbitrage.  This is true whether its dollars or Bitcoins.

Yep basically this.   Whats happened here is you believed the hype of government, who want you to believe in such things as official prices.   Or regulated markets with government official stamps, with tariffs and taxes of course are what BTC needs, too dangerous otherwise.  
 To me the whole point of BTC is it should be self regulating.   There is never an official price, capitalism is a free market and I'll give you however many dollars or euros for your BTC that I personally feel like and it is upto the other party to find the best price not a centrally dictated or controlled idea what is allowed
 
Some countries do have fixed exchange rates, usually these are communist or similar dictatorships with punishment possibly with death for those who have another price in mind.    Well meant ideas unfortunately turn to force to ensure their success.  Even in USSR their fixed exchange rate was false, people did use dollars and the price varied every day.   Nixon was a person who put in price controls at one point, you get the idea hopefully

[tss]

i dont understand the point in adding exchange rate to each block as it will be different on the next block.  maybe op is confused on the notion of supply and demand and exchange rates from fiat to bitcoin.  no one sets these and the market would not use the "block rate" rather would still find its own rate.