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Author Topic: Bitnotes: paper notes backed by bitcoins  (Read 1553 times)
troner
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October 11, 2016, 03:06:12 PM
 #1

TL;DR

Bitnotes are:

  • multisig paper wallets
  • distributed empty as sheets of 3 notes
  • one key is under a tamper-evident scratch-off seal
  • second key is added by the customer
  • additional digital sig issued by the manufacturer is present if properly issued and backed

Keep it as a cold storage or pay with it. Verify it offline using a mobile app (not yet ready).
   
  • Samples (READY!) for testers and reviewers will be given out in November 2016
  • Production batch hopefully in Q2 2017
  • All necessary apps will be opensourced

Pics: https://imgur.com/gallery/jZfMD   
Paper: http://www.bitnotes.org/bitnotes.pdf
Website: http://www.bitnotes.org
Twitter: https://twitter.com/BitNotesOrg




Full post

Bitnotes - Trust-reduced physical bitcoins with offline verification

We believe that physical cash has its place even in the digital age. Thanks to Bitcoin it is possible, for the first time in history, to issue coins and banknotes with verifiable backing.

Today cash is not backed at all, being the result of a complex several decade lasting transformation of money, at the beginning of which stood a fraud of precious metal depositories. However, paper notes were originally backed in gold or silver. The holder trusted the money issuer - a bank - that there was an adequate backing in precious metal, which could be any time redeemed.


   
Using Bitcoin as the asset for backing physical cash brings a tremendous advantage and shifts the cash to a qualitatively new level. The holder may redeem paper banknotes for the underlying backing any time and without assistance.

Surely you've heard of Casascius coins or Bitcoin Suisse certificates (looking like banknotes). Each of these and many other physical Bitcoins bear an integrated private key in the form of a tamper-evident box, which allows a non-stop withdrawal of Bitcoins and devaluation of the physical medium.
   


However, the issuer must know the private key to produce the physical Bitcoin. Therefore, the holder must continue to trust the issuer since the issuer may control the Bitcoins and, to be precise, devaluate the holder´s banknote or coin without a notice.

Thanks to Bitcoin there is an opportunity to verify the backing any time and a chance to really use it, but what remains is the fear of a future misappropriation of backing by the issuer. Who knows whether an initially honest issuer having copies of private keys will eventually resist own temptation, will not become the victim of a hacker attack or physical violence. The safety of Bitcoins seems then compromised.

That is why we have created BitNotes: Bitcoin cash which makes the holder the only person knowing the necessary secret information to deal with Bitcoins.



In some respects, the issuer still must be trusted (see below), but used Bitcoins can no more be misappropriated.

How does it work?

The solution is built on 4 pillars:

  • Multisignature authorization scheme: Precisely 2 of 2
  • Tamper-evident technology
  • Security print
  • Digital signature

The manufacturer distributes an unbacked (blank) note with a private key integrated in the form of a tamper-evident box.

The second private key is determined by the customer – holder, who sends already acquired Bitcoins to the multisig address.

As the next step, the holder asks the issuer to produce a digital signature – to confirm that the given piece of note is backed. Afterwards the holder completes the note with the private key and digital signature and that way produces the note similarly to a check.

Supposing that the tamper-evident box is still intact, neither the holder nor the manufacturer can manipulate with Bitcoins. Both know only one of two required keys. However, the holder may any time decide to redeem Bitcoins, i.e. to scratch the tamper-evident box and move Bitcoins elsewhere. However, this will visibly devaluate the note.

Charged notes may be used for payments, where payees can verify the security features visually (especially the intactness of the scratch-off box, the presence of hologram, watermark, etc.) and verify the digital signature of the issuer. Both can be done offline.

Is this solution decentralized? Trustless?
No. We do not think that cash may be produced with a fully decentralized model of issuance and trustless nature of Bitcoin.

The issuer must always be a central authority, a manufacturer of physical product with security features. Although such an authority cannot misappropriate Bitcoins in our scheme, it still needs to be trusted and act honorably. In particular:
  • The product must feature the highest possible security using the security print as protection against counterfeiting
  • There must be only one copy of each note with particular serial number
  • The issuer may not conspire with another entity on the market in order to collect private keys of users
  • The issuer may not produce fake digital signatures on blank notes

However, there may be more bitcoin notes issuers active on the market under the proposed scheme and competing with each other. Being honest is the first prerequisite for business success. Violation of any of the above is easily detectable and does not indicate a systemic threat to all note holders. More likely it will result in loss of confidence in the issuer and its business death.

How does it look?

The whole gallery is here: https://imgur.com/gallery/jZfMD

Where to read more?

White paper: http://www.bitnotes.org/bitnotes.pdf

Feedback will be much appreciated!

   
   
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troner
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October 11, 2016, 03:07:20 PM
 #2

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October 11, 2016, 04:07:45 PM
 #3

What was the need that made you create this?



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October 11, 2016, 04:49:29 PM
 #4

...

You have an interesting idea that I will think about before commenting at length.  However, ALL new ideas and products involving BTC are worth a positive examination.

Generally speaking I think that plain old CA$H is all the paper we need.

This seems a little bit like the OpenDime wallets.  And as cloverme asks, what is the need of this product?
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October 11, 2016, 06:44:49 PM
 #5

I like the idea. It could help to introduce Bitcoin to people that are used to use fiat money in their daily life. Further, it is much easier to store Bitcoin as a value for long term investors (those also buy and store Gold at home). Of course, they could also use paper wallets but you need some technical knowledge to create them.

I just do not like the design. It remembers me more on vouchers than on fiat money. Maybe you should redesign it to make it more banknote-like.

What was the need that made you create this?

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October 12, 2016, 12:57:05 AM
 #6

I like the idea. It could help to introduce Bitcoin to people that are used to use fiat money in their daily life.

Exept this is not really like FIAT money only package aka medium is FIAT-like. You can't use them without linking your bitcoin to it.

You you still need to 'redeem' it online. I like the idea, as I am a fan of physical coins and banknotes but this project won't win hearts of old school FIAT lovers.
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October 12, 2016, 01:38:58 AM
 #7

Who was the demographic in this design? It's tricky because multi sig isn't for grandpa and the savvy user has digital means now. Not saying the idea is bad, it has potential and I hope you do well. Just trying to better understand the reason for designing the concept


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October 12, 2016, 04:08:49 AM
 #8

Id be happy to review this. Send me a sample and I'll review it on my blog, cryptodot.com.

I have a few questions, however.

1. Much like an opendime, this is a cheaper paper alternative. However you have to take the time to scan it to verify it holds bitcoin. Not for the lazy.
2. You need a special application to generate multisig privkeys using keyparts for extra security, right?
3. What advantage does this have over cash?
4. The design is quite primitive, I must say. It seems like the note is a little too flashy.

You you still need to 'redeem' it online. I like the idea, as I am a fan of physical coins and banknotes but this project won't win hearts of old school FIAT lovers.

If I'm understanding this right, you don't need to redeem it. The bitcoin is meant to be left in the note, so the note itself will be worth x amount of BTC. Just like 1 dollar represents x a share of the economy, among other factors.



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troner
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October 12, 2016, 02:33:05 PM
 #9

What was the need that made you create this?

The need for secure physical bitcoins.

There are many use cases: trading bitcoins with newbies, introducing new persons into Bitcoin via a gift, cold storage for conservative investors, possibly buying BTC in ATMs.

There have been many attempts to produce physical bitcoins and there is definitely a market for them.

Our product is not very similar to OpenDime. You won't need a computer with full USB port to accept a BItnote. Only a smartphone with an appropriate app.
You don't have to scratch it off at all, you can pay with it to somebody else. That's the main point. It's reusable. Like cash.

The second main point is that the manufacturer cannot steal the funds as long as you don't reveal the user's key from a particular Bitnote.
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October 12, 2016, 06:55:12 PM
 #10

I hope you not directing this to the open market? This is way too complicated for the average fiat user. You would have to know a little

bit about Bitcoin and private keys and multi sig etc... to be able to use this. How will the user know how to create the second key?

Good luck with the project, but I doubt if this is going to work on the average Joe out there.  Roll Eyes

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October 12, 2016, 07:08:01 PM
 #11

I like the idea of paper with bitcoin value.

Got the feeling you are heading the 'papersafe' way with these notes.
check papersafe.org those are created by the forum member BG4

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October 12, 2016, 07:48:20 PM
 #12

I really like an idea, it's great and I don't know it wasn't released until now.
Design is something similar of old cinema tickets but it's still normal for new bitcoin paper wallet.
You say that simples will be given for testers in this November but do you ship this paper wallets to another country or how it will be? Will it be for only testers from concrete country?

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October 13, 2016, 04:09:49 PM
 #13

Got the feeling you are heading the 'papersafe' way with these notes.
check papersafe.org those are created by the forum member BG4

Of course we know about Papersafe. We did a research properly. Our security design is much more advanced:
  • notes are multisig
  • can be verified offline
  • the holograms are hot-stamped (not stickers)
  • many more security features in design and print


Who was the demographic in this design? It's tricky because multi sig isn't for grandpa and the savvy user has digital means now.

Only the first holder/issuer has to be tech/bitcoin savvy. All other holders just need to download the verification app and scan the big QR code. That's all. The app will tell them if a particular note is genuine and loaded and possibly guide them through security features examination if they see the note for the first time.
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October 13, 2016, 07:17:45 PM
 #14

-Going all "paper" for a digital currency which was made to replace the paper methods ? Something contradicting itself?
-Nevermind,I like the design, however do you think it's portable to carry around if at all I'm planning on paying with one ?
-I can download my keys from a site such as blockchain.info as a pdf file with a fancy scanner code.Basically,print the same which will provide almost similar functionalites.Agree,you've better security.
-How much you're planning to price a note for?

 

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October 14, 2016, 08:34:53 AM
 #15

-I can download my keys from a site such as blockchain.info as a pdf file with a fancy scanner code.Basically,print the same which will provide almost similar functionalites.Agree,you've better security.

That's completely different. That would be a backup of your keys. You can't pay with it because you can't prove you don't have another copy. The recipient simply won't believe you. With Bitnotes the recipient can be sure you cannot defraud him.
That's the main point of your security model.

Price will definitely be lower than existing physical bitcoin solutions. If you want to get a free sample and review it as a developer, you will be able to apply. We will launch an application form soon.

Thanks for the feedback so far. Any security remarks? Have anyone read the paper?
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October 14, 2016, 10:51:32 AM
 #16

Very promising work. What about banks issuing physical notes backed by ColoredCoins? In some ways it might actually greatly simplify the process, because there is specific issuance date of the ColoredCoin and a known issuer. It looks like the cost of verification is also related to the human understanding of it (education is needed). Could there a physical verification device, similar to a bank-note checking device? It seems also that if issuers are known this solves the legal problem, since they are allowed to "print" bank-notes (although they effectively get them from the central bank).

You might want have a look at our whitepaper for ColoredCoin architecture: https://lykke.com/Whitepaper_LykkeExchange.pdf
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October 15, 2016, 04:37:06 PM
 #17

Partially off-topic:

I was asked for ensuring OP's identity. So yes, I know OP in person. I know him as honest and very active in local (Czech) community. As he is developing this project quite long time, I know this project as well in detail. So it's real Smiley

Maybe I seem quite as newbie but I'm just no very active on Bitcointalk but very active in Bitcoin (also check my register date).

Author of WalletExplorer.com.
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October 15, 2016, 10:27:43 PM
 #18

not bad,  pro
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