Bitcoin Central Bank

[masize]

I searched in the forum and found nothing about a Bitcoin Central Bank idea like.

Maybe Bank is not the right word, actually what I mean is a centra authority to regulate Banks.

And what I mean for Bitcoin Banks is an Organization that works to keep people's Bitcoins safe and enable fast-secure transaction.
I come up for this idea as the 6 confirmation required and 1 hours min delay for transactions is totally ridiculous and impossible to implement in the local marketplace for anything you buy.

As I said, maybe this has been discussed before but havent found it.

It would act for reputation between banks, and a central authority to regulate banks.

When I have my wallet in a Bitcoin bank, and want to pay in a store, This store can have the wallet in the same bank or even another bank.
So when I do the transaction, the transaction is created by a trusted bank, who own the private keys of the BTC, so theres no way the user can Double Spend the coins. It'll work just like any other wire transfer or credit card payment nowadays. As the bank trusts the Credit Card to make the payment.

The transaction is created when theres money between two different banks and can be made simultaneously, but the user dont have to wait for confirmation, as the banks have trust between each other.

Transactions between two users from same bank don't even need a BTC transaction to be made, as the whole BTC of the Bank can be stored in the same address. The total user coins can be stored in a secure database with your actual BTC amount. The transaction just have to subtract the amount from the sender and add it to the receiver. Just like any other BANK in the world, they are just numbers in a database.

I hope its clear enough, sorry for my poor english.

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[Stephen Gornick]

I hope its clear enough,

Its clear.  You are describing Mt. Gox.

Account-to-account transfers (bitcoin payments from one account to a merchant or other account who also uses Mt. Gox) are instantaneous.  

Other "banks" who don't even have accounts at Mt. Gox might accept payments from Mt. Gox account holders instantly using "green address" (because they trust Mt. Gox won't do a double spend). 

But to store your bitcoins with someone else means you are trusting that they are competent enough to hold your coins securely, and that they are not dishonest in which they run off with the funds.

[justusranvier]

But to store your bitcoins with someone else means you are trusting that they are competent enough to hold your coins securely, and that they are not dishonest in which they run off with the funds.

What could possibly go wrong?

[SomeWhere]

Wait, what?

There is no need for reputation, trust or anything of the sort.

If you don't do *very* big transactions, two confirmations is plenty. For really small ones, even one should be enough.

Why the hell would you go and turn something as ingenious as Bitcoin into a copy of the fiat system? I think you got something very wrong in your mind.

[Dalkore]

Independent trusted counter-parties will develop over time but the whole point of Bitcoin is not to completely centralize.  It is counter-productive. We want lots of small independent operators that can work with each other while still remain independent.  I hope you realize why Bitcoin is so popular now.   People want an alternative, not more of the same. 

[solex]

The reason central banks exist is to allow fractional reserve banking to "work", with the "beneficial" side-effect of giving governments great "control" over their respective economies.

The words in quotes above are applied very loosely indeed. FRB works only because central banks can prevent bank runs by printing money (robbing savers and taxpayers). A billion words have been written about how government control of an economy tends to wreck it, rather than help it.

Bitcoin OTOH has an inelastic monetary base, making FRB honest and CBs powerless.  Capitalism and living standards, freedom and personal wealth can only thrive without the cancers of riskless FRB and CBs.

For the specific problem of instant confirms companies could act as intermediaries for account holders they know and verify, charging a fee which covers the odd case when a customer defaults by double-spending with a merchant. On-line, instant confirms are not so necessary as shipping can wait.

[masize]

Wait, what?

There is no need for reputation, trust or anything of the sort.

If you don't do *very* big transactions, two confirmations is plenty. For really small ones, even one should be enough.

Why the hell would you go and turn something as ingenious as Bitcoin into a copy of the fiat system? I think you got something very wrong in your mind.

Maybe youre not seeing the whole picture here. If something like is not done, Bitcoin will be just a bubble, like it is now. It wont be able to access the real world (street stores, supermarket, drugstores, cafes, whatever you like). The transaction delay is too much, even 10 minutes for 1 confirmation, is a lot of time. Transfer must be instant for purchases on the go.

Mt. Gox would be Bitcoin bank with currency exchange feature. We trust it because.... I don't know... They are the biggest?

Thats why it would be great if more Mt. Gox come around and be regulated by a Central Authority with a reserve in USD or whatever the likethat claims that that bank is trustfull and so is "green address", it can have reputation like bitcoin-otc or something like that.

I'm trying to make this work in my country, and go to stores to make them accept bitcoin, but theres no chance they'll make their claim just sit there waiting for the transaction to be confirmed. Am I the only one that thinks 10min for a confirmaction is a lot of TIME?!?!?!

[lassdas]

Thats why it would be great if more Mt. Gox come around and be regulated by a Central Authority

MtGox is the central authority, why add anotherone on top to regulate it?
Now you only need to trust MtGox, when you add another authority, you need to trust them both.

[masize]

Independent trusted counter-parties will develop over time but the whole point of Bitcoin is not to completely centralize.  It is counter-productive. We want lots of small independent operators that can work with each other while still remain independent.  I hope you realize why Bitcoin is so popular now.   People want an alternative, not more of the same. 

It doesn't mean it looses centralization. Centralization is a natural behaviour in anything that grows, Bitcoin itself fave birth to lot of those
Mining: Mining Pools
Exchange bank : MtGox
Payment Processing: BitPay
Community: bitcointalk forum
Exchange Rating system: #bitcoin-otc

Like like everything else, theres need for organization.

Maybe I should used another word instead of Central.

I mean, Bitcoin Banks are a necessary evil. And needs Organization/s that should control bank legally speaking. Their authority is strong as people believe in it. If the organization gets corrupted, then nobody believes in it and a new Organization should take place. Just like #bitcoin-otc feedback system. Its a centralized system to feedback people and know who to trust, it basically control everyone reputation, is it centralized?

[mai77]

a central bank for a decentralized currency? sounds funny 

[||bit]

bank is a four letter word

[masize]

bank is a four letter word

Very Interesting Info. Post+1

[Spaceman_Spiff]

Maybe youre not seeing the whole picture here. If something like is not done, Bitcoin will be just a bubble, like it is now.

If bitcoin works as digital gold, it can easily go up in price a lot more without being a bubble.

It wont be able to access the real world (street stores, supermarket, drugstores, cafes, whatever you like). The transaction delay is too much, even 10 minutes for 1 confirmation, is a lot of time. Transfer must be instant for purchases on the go.

Agreed, if bitcoin wants to be used for point-of-sale transactions, a convenient instant system needs to exist.

Thats why it would be great if more Mt. Gox come around and be regulated by a Central Authority with a reserve in USD or whatever the likethat claims that that bank is trustfull and so is "green address", it can have reputation like bitcoin-otc or something like that.

Backing with USD is a terrible idea.  Bitcoins do not have a fixed USD value, how could you possibly back it with USD?  What happens when USD crashes in value?
What you want to have is proof that the 'central bank' really holds the bitcoins.  This can easily be done by making publically showing account balances (in an anonymized way, such as hashing your username or whatnot), and comparing this to publically known cold wallet balances.

I'm trying to make this work in my country, and go to stores to make them accept bitcoin, but theres no chance they'll make their claim just sit there waiting for the transaction to be confirmed. Am I the only one that thinks 10min for a confirmaction is a lot of TIME?!?!?!

As mentioned above, I agree instant verification systems are needed for point-of-sale.  I think you are wasting your time going to brick-and-mortar shops at the moment. Allow the system to grow on its online services, online purchases, online finance & gambling, anonymous transactions and store of value merits. If a sufficiently trustworthy company/system for POS arises, all the better.

[masize]

Thats why it would be great if more Mt. Gox come around and be regulated by a Central Authority

MtGox is the central authority, why add anotherone on top to regulate it?
Now you only need to trust MtGox, when you add another authority, you need to trust them both.

I love the descentralized system Bitcoin is. But dont't be fool to think that Bitcoin if independant.
Actually Bitcoin is valuated in dollars, and it'll continue like this for many years as the volatility continues.

Nobody can price things in Bitcoin without mentioning the dollar or any other fiat currency. They just get MtGox value and update the price.

What I mean is that you should link Bitcoin to the legal system somehow. Some Organization tied to the legal system must regulate banks as they can disappear and get your Bitcoins whenever they want. Actually this is why people get scammed. Bitcoin should be free forever but Banks should be regulated somehow.

I wouldn't be worried about this is transaction were instant. But they can't, so a Bank or an Organization between must exists for fast transactions, and an Organization must regulate them somehow.

What happens if MtGox dissapears?

[Razick]

I searched in the forum and found nothing about a Bitcoin Central Bank idea like.

Maybe Bank is not the right word, actually what I mean is a centra authority to regulate Banks.

And what I mean for Bitcoin Banks is an Organization that works to keep people's Bitcoins safe and enable fast-secure transaction.
I come up for this idea as the 6 confirmation required and 1 hours min delay for transactions is totally ridiculous and impossible to implement in the local marketplace for anything you buy.

As I said, maybe this has been discussed before but havent found it.

It would act for reputation between banks, and a central authority to regulate banks.

When I have my wallet in a Bitcoin bank, and want to pay in a store, This store can have the wallet in the same bank or even another bank.
So when I do the transaction, the transaction is created by a trusted bank, who own the private keys of the BTC, so theres no way the user can Double Spend the coins. It'll work just like any other wire transfer or credit card payment nowadays. As the bank trusts the Credit Card to make the payment.

The transaction is created when theres money between two different banks and can be made simultaneously, but the user dont have to wait for confirmation, as the banks have trust between each other.

Transactions between two users from same bank don't even need a BTC transaction to be made, as the whole BTC of the Bank can be stored in the same address. The total user coins can be stored in a secure database with your actual BTC amount. The transaction just have to subtract the amount from the sender and add it to the receiver. Just like any other BANK in the world, they are just numbers in a database.

I hope its clear enough, sorry for my poor english.

While large transactions do require 6 confirmations to be safe, a large cash transaction would require checking the bills for counterfeits, or a wire transfer which can take days.

Small transactions can be done with fewer. For example, a convenience store could accept 1 confirmation on a $35 sale, which means a wait of (most likely) less than 10 minutes. My online paintball store, txt-paintball.com, requires 6 confirmations before an order is shipped, but the order can still be prepared before that.

Micro transactions, or really anything under a few dollars, can be accepted with no transactions because of the low risk.

Eventually, I think Green Addresses will become common and point-of-sale applications will be nearly instantaneous. These could easily be provided by online wallet services.

I don't think it's as much of an issue as Bitcoin detractors claim. Don't forget (and I am personally in favor of this) if the Bitcoin community decides to, the confirmation time could be halved or even quartered as in Litecoin.

By the way, I pretty much skimmed over your post, but your English seems very good.

[Razick]

The reason central banks exist is to allow fractional reserve banking to "work", with the "beneficial" side-effect of giving governments great "control" over their respective economies.

The words in quotes above are applied very loosely indeed. FRB works only because central banks can prevent bank runs by printing money (robbing savers and taxpayers). A billion words have been written about how government control of an economy tends to wreck it, rather than help it.

Bitcoin OTOH has an inelastic monetary base, making FRB honest and CBs powerless.  Capitalism and living standards, freedom and personal wealth can only thrive without the cancers of riskless FRB and CBs.

For the specific problem of instant confirms companies could act as intermediaries for account holders they know and verify, charging a fee which covers the odd case when a customer defaults by double-spending with a merchant. On-line, instant confirms are not so necessary as shipping can wait.

Fractional-reserve banking can work fine without central banks of any sort. In fact, it can even work with Bitcoin. To go even farther, it can work without banks at all: Look into BTCJam, as long as you're honest about your intention to reinvest, there is no reason you can't practice fractional-reserve banking on there.

[lebing]

Another solution would be to have a verification system for online wallets, so that transactions from verified online wallet providers would be treated as verified immediately.

It might work something like this:

User side:
1. User sends coins from X wallet into verified online wallet (blockchain for example). It is considered verified (and ready to be accepted immediately) after 12 confirmations.
2. User walks into store and is able to have their payment verified immediately.

Verified wallet side:
Wallet has specified bitcoin addresses which it uses to send from so that the transaction can be received and verified immediately by POS machines.

Verification system would not need to be terribly complex. It could simply be a protocol that anyone could follow with their transaction history listed publicly (in aggregate) to assure validity & safety.

[SomeWhere]

There is already a solution for what you are talking about. It's called the blockchain.



All that's needed will be provided by *technological* solutions, like 2 of 3 signing, not by trust.

I can't believe how this idea is even seriously discussed here. GTFO!

[lebing]

There is already a solution for what you are talking about. It's called the blockchain.



All that's needed will be provided by *technological* solutions, like 2 of 3 signing, not by trust.

I can't believe how this idea is even seriously discussed here. GTFO!

The issue is instant confirmations... something the blockchain does not address....

[herzmeister]

can be solved with a Ripple layer on top.