Edit:
achow101 was a faster typist than me, but I'll leave this message here anyhow since it includes some useful additional information about being careful about the message you ask someone to sign.I've known Bitcoin since 2010, but only now am figuring out the nuts and bolts of it. Sorry if this question has a well-known answer, but I wasn't able to find it after some looking. Here goes:
Suppose someone, let's call him Frank, communicates to me that he owns 100 BTC. That's a lot of BTC and Frank could prove ownership by sending them to a Bitcoin address under my control. But suppose I want to prove ownership without Frank actually sending me any BTC. How could he prove to me that he actually owns 100 BTC and could send them to me (if we agreed to such a transaction)? What would proof of ownership in the absence of a BTC transaction look like? Is it possible?
Thanks for any help this forum can give me.
Best wishes,
Steve
If, for some reason, Frank actually wanted to prove to you that he had control over those 100 BTC, he could send you a signed message.
You would then be able to confirm that the message was signed with the private keys associated with the addresses where he received the 100 BTC bitcoins, and by inspecting the blockchain could confirm that there are 100 BTC associated with those addresses.
Note, that all this really proves is that Frank was able to convince someone with access to 100 BTC to sign the agreed upon message, so it would be good to agree on a message that nobody else is likely to be willing to sign.
For example...
If you ask Frank to sign a message that says:
"This address has 100 BTC"
Then Frank might be able to convince Bob to sign that message with the private key to 100 BTC that Bob controls. Then Frank could just forward that message on to you and you'd never know that Bob created the signature.
On the other hand, if you ask Frank to sign a message that says:
"I, Frank, am creating this signature to prove to stevekreizl that I have full control over these 100 BTC as of 2016-09-27."
It would be much more difficult for Frank to get Bob (or anyone else) to sign such a message.
And if you are selling something to Frank such as a Tesla Model S in exchange for that 100 BTC, you might ask him to sign:
"I agree to send these 100 BTC to address 17aPyzRtgKKSyAANE4tR9WMrhzHFdfuupG in exchange for the agreed Tesla Model S to be delivered to the individual residing at 1060 W Addison St, Chicago, IL 60613 on 2016-09-28. If I fail to make payment by the end of the day, I agree to pay a cancellation charge of $2000"
Good luck getting Bob to sign a message saying that he'll pay to buy Frank a car.
