I have created a new thread, because (I think) I have stumbled across an elegant solution to one of the main issues with the bitcoin community, Visa, MasterCard, and other fraud.
The solution is xcoins: the ultimate, untrusted currency.
Ok I have had a brainwave, Please bear with me. I’ll try and explain it neatly.
Ok, in my previous posts: http://bitcointalk.org/index.php?topic=1467.0
I outlined my first idea of xcoins, the inverse version of bitcoins.
Simply put, they are the inverse, inflationary analogue to bitcoins. Please read the first two posts for background.
Since xcoins are inflationary, their value, if kept, (or deemed invalid), will always tend towards zero.
This property makes them useful for holding temporary value.
What I propose is that a one use xcoins as a way to hold the value of promised bitcions, until the transaction is deemed valid.
When a promised bitcoin transfer is made, instead of transferring the promised bitcoins, a value of xcoins is marked with the record of the promised bitcoins, and transferred to the 2rd party. This second party can continue to sell and trade with other shops and services that accept the liability of xcoins marked by the promisor. This allows the network to check that the bitcoins (promised) cannot be traded or double promised.
In the case that the promised transfer is found to be valid, the marked xcoins, (or the sub divisions of them), can be returned to the promisor to be traded for the bitcoins promised, (or the share of the bitcions promised).
However, in the case that the promised transfer is deemed invalid, the xcoins are marked in the network as invalid, and no bitcoins are awarded on their return. This is the liability of accepting xcoins marked with bitcoin value.
If a seller has high confidence of the transaction, it can issue xcoins worth the same amount to the bitcoins promised, this allows 3rd partys to see the confidence the seller has… While, the seller, is still able to retract the transaction if indeed invalid.
This system is dependent on the good name and reputation of the promisor.
There is no risk of giving away bitcoins that will be forever stolen.
What do you think? Would such a system work, would such a system even be moral?
EDIT: Changed a few things, now works better.