Creating A System of Online Peer To Peer Bitcoin Bank Accounts

[bitbadger]

I'd like to see a blockchain-based system providing bank accounts in the cloud for people, ie peer to peer with no intermediaries.

This must surely be the next step for Bitcoin and digital currencies - and for that matter fiat currencies too.

How would this be implemented?  I could imagine maybe something like this:
 
A separate blockchain network with an IBAN/BIC id which maintains the bank account records for the participants. Each account would effectively contain the public addresses that the account owner wants to include - effectively links to the Bitcoin blockchain.  

To activate transactions with these addresses requires the private key for the respective public address/es. These would be stored encrypted at the client end, together with a private key and additional security procedures for the account

Interfaces or gateways to the other blockchain networks and the SWIFT banking network would also be required - maybe built into each node to provide for redundancy and full reliability. Or perhaps provided by a tertiary level run by businesses as a service.

This system has the advantage of keeping all your transactions and balance information in one place, not spread out over different addresses. Its a step beyond a wallet, since the owner uses just a single bank account number for sending and receiving money.

Transactions could be in any currency, Bitcoin, Litecoin, Dash, etc, and to/from fiat currencies provided that there were interfaces to exchanges and automatic conversion. This could be configured via the client end.

The client-end access would be client software/app similar to the present with wallet software, or via web-based services provided as a business with paid for premium services and basic level access maybe free of charge like with email today.

The idea is to take Bitcoin and other digital currencies one step further and create real peer to peer banking with no intermediaries, faster, and at much lower cost to the consumer.

Next question: is it viable right now - and if so, how can it be implemented?

[1715168980]

1715168980

[unamis76]

Why would this be of any advantage? I can see where you're going with sending money and having it instantly converted to cryptocurrencies, I don't think something like that exists and it could be useful to many, however the rest you want you already have.

Although discouraged, you can save funds on the same address. Even if you have funds on several addresses, there are wallets that allow you to have things neatly organised...

[bitbadger]

To provide direct and transparent connectivity to the banking system. People can then use it to receive their salary, pay their bills and make transactions.  At the moment we have Bitcoin and other systems which are standalone and are not seamlessly integrated with the general banking system. They are completely separate.

The system would ideally incorporate all currencies recorded in the block information.  The account holder would have just one account number for all transactions, in other words their bank account. But instead of with a bank, its in the cloud, in the blockchain. It runs itself, no need for a bank.

People could have more than one account number if they wanted, for different purposes, businesses etc do this. But basically its differentiating between transaction id's which is what the Bitcoin system is, and proper account numbers which contain transactions.

Setting up such a system I guess could be done solely for Bitcoin initially, then adding the other digital currencies and then adding full fiat currency interfaces.

Another advantage is the level of abstraction. No need to handle the current long Bitcoin addresses, which are not human friendly. Instead you would have a single permanent account number, your Bitcoin bank account number. 

There would also be full IBAN/SWIFT integration as well later on so that it would be fully integrated into the existing traditional banking system.

[bitbadger]

Why would this be of any advantage? I can see where you're going with sending money and having it instantly converted to cryptocurrencies, I don't think something like that exists and it could be useful to many, however the rest you want you already have.

Although discouraged, you can save funds on the same address. Even if you have funds on several addresses, there are wallets that allow you to have things neatly organised...

Another reason it would be an advantage is that using conventional style bank account numbers is a recognizable format for the general public. At the moment you have these weird Bitcoin public addresses which don't make sense to people, they make it seem cryptic and complicated and they are hard to use. There is also the risk of mislaying or losing funds because of the complexity.  Bitcoin needs to become more useable for the public if there is to be more take up.

What I'm getting at here is creating a peer to peer bank running on a blockchain. Managing just Bitcoin transactions initially perhaps, then later on other currencies as well, and with full connectivity to the mainstream banking system for seamless transactions in both directions. 

[franky1]

OP

the banks and blockstream devs are working on it in the HYPERLEDGER project
where banks using hyperledger will have their own sidechains for each bank. and then from what i can see LN or some othr blockstream dev coded thing allowing hops between bitcoin to the hyperledger sidechains.

[bitbadger]

OP

the banks and blockstream devs are working on it in the HYPERLEDGER project
where banks using hyperledger will have their own sidechains for each bank. and then from what i can see LN or some othr blockstream dev coded thing allowing hops between bitcoin to the hyperledger sidechains.

Yes I heard they are looking into creating their own blockchains.

But thats basically an organization-internal project. Not an open peer to peer banking system in the cloud. That's what I'd like to see. Similar to how Bitcoin is an open source peer to peer currency system.  What I'm getting at is: bank accounts for people - but without the bank. And a more user friendly transaction system for Bitcoin and other digital currencies, as well as full transparency to fiat currencies. All in the one blockchain system if possible.

[tetrisbattle]

its hard to do with it because need government to apply all and where the currency exchange???
If this problem solve its okay to launch it

[Kakmakr]

You want to apply a old centralized model onto a new decentralized technology and this is where it will fail. The "cloud" as you have put it, will be the weak point in this system and prone to attack. Bitcoin is strong because it is decentralized, and these glorified ledger systems are weak.

Let's hope this never happens, because a lot of us wants stronger decentralized systems to be the norm. Who would control the "cloud"? <=== central banks / governments. ^hmmmmmm^

[ASHLIUSZ]

Creating a system of online peer to peer bitcoin Bank account based on a blockchain ledger is not a necessary one. We have already got our wallets to serve as the bitcoin Bank. If we depend on some banking firm to generate an account for us, we will be under their control. So Central authority decide about the transactions that we make.

[bitbadger]

Maybe I am covering too many issues in my vision here. Perhaps better to consider them as separate areas to be resolved individually.

So let's just think about the Bitcoin environment for now and leave aside the other currencies and forget about links to the rest of the banking system at this stage.

Say I live and work Bitcoin. I only use Bitcoin nothing else, and all the people I come into contact with also do the same. Not entirely realistic, but just for the purposes of this description of the concept.

So how do I make regular payments from my Bitcoin account? Eg standing debit orders. How do I pay my monthly rent? How do I receive my salary? If my employer says to me, what is your Bitcoin bank account number, what do I tell him?

What is my Bitcoin account? At the moment there is nothing.

Only a series of transaction Id numbers ie the Bitcoin public addresses. Thats ok as a transaction system, but its not a single account number system for the user. I can't easily do any of the above with that system.  It's like a kind of back-end for the bank, its the transaction processing department, the ledger department, but we don't yet have the front-end for the customers. All we have is wallets, not bank accounts.

We need a further level of abstraction in order to do this. At the moment we don't have it.

My point is we right now we have a peer to peer transaction system. But we don't have a peer to peer user account system.

It could be implemented as a system on top of Bitcoin. People would have the option to use it or to stay with the lower level current system of series of transaction ids ie Bitcoin addresses as a present, as they wished.

Maybe its a bit like introducing Windows on top of the DOS command line. People can still work with the commands if they wanted, but the majority much prefer a graphical interface. Or like a kind of DNS system for Bitcoin, allowing for domain names in place of IP addresses.  At the moment the die hards are all saying, why do we need a system of "domain names" on top of it when we already have the IP addresses.

[bitbadger]

You want to apply a old centralized model onto a new decentralized technology and this is where it will fail. The "cloud" as you have put it, will be the weak point in this system and prone to attack. Bitcoin is strong because it is decentralized, and these glorified ledger systems are weak.

Let's hope this never happens, because a lot of us wants stronger decentralized systems to be the norm. Who would control the "cloud"? <=== central banks / governments. ^hmmmmmm^

Why would it be weak? Is Bitcoin weak? It would use the same blockchain technology as Bitcoin, ie decentralized.  It would be as weak - or as strong - as Bitcoin.

I'm visualizing a decentralized peer to peer banking system, not a centralized one like now.

[Carlton Banks]

So how do I make regular payments from my Bitcoin account? Eg standing debit orders. How do I pay my monthly rent? How do I receive my salary?

Using payment channels. There are 3rd party services for this already (and demonstrates to the receiving party how many months of the service for which you are sufficiently solvent to pay for at any given time). p2p payment channels can be made with bitcoinj or Lightning (currently WIP)

If my employer says to me, what is your Bitcoin bank account number, what do I tell him?

What is my Bitcoin account? At the moment there is nothing.

Either you give people who wish to pay you a BIP32 chain of addresses (represented by a deterministic code), or you could open a payment channel between you and your employer. The former is probably more appropriate for this use case.

[bitbadger]

So how do I make regular payments from my Bitcoin account? Eg standing debit orders. How do I pay my monthly rent? How do I receive my salary?

Using payment channels. There are 3rd party services for this already (and demonstrates to the receiving party how many months of the service for which you are sufficiently solvent to pay for at any given time). p2p payment channels can be made with bitcoinj or Lightning (currently WIP)

If my employer says to me, what is your Bitcoin bank account number, what do I tell him?

What is my Bitcoin account? At the moment there is nothing.

Either you give people who wish to pay you a BIP32 chain of addresses (represented by a deterministic code), or you could open a payment channel between you and your employer. The former is probably more appropriate for this use case.

Yes, third party services are a possibility, but they are not p2p decentralized.

A BIP32 chain of addresses... that sounds horrible. So I say to my employer, well I don't have a Bitcoin bank account number - the best I can do is to send you a long list of 32-bit or whatever BIP32 chain of addresses. Just don't mix them up, transpose any digits, or mislay them. And let me know when they run out so I can then send you some more!

[Carlton Banks]

So I say to my employer, well I don't have a Bitcoin bank account number - the best I can do is to send you a long list of 32-bit or whatever BIP32 chain of addresses. Just don't mix them up, transpose any digits, or mislay them.

The banking system doesn't tolerate mistakes in their account numbers either.

And let me know when they run out so I can then send you some more!

It's essentially an infinite chain, so when infinity runs out, you will indeed have to furnish people using it with a new one.

[bitbadger]

So I say to my employer, well I don't have a Bitcoin bank account number - the best I can do is to send you a long list of 32-bit or whatever BIP32 chain of addresses. Just don't mix them up, transpose any digits, or mislay them.

The banking system doesn't tolerate mistakes in their account numbers either.

And let me know when they run out so I can then send you some more!

It's essentially an infinite chain, so when infinity runs out, you will indeed have to furnish people using it with a new one.

The LN proposal with direct channels is interesting, but not sure its exactly what I have in mind.

[Carlton Banks]

The LN proposal with direct channels is interesting, but not sure its exactly what I have in mind.

What you need in mind is reading comprehension; your replying about LN when I wasn't even talking about it

[bitbadger]

The LN proposal with direct channels is interesting, but not sure its exactly what I have in mind.

What you need in mind is reading comprehension; your replying about LN when I wasn't even talking about it

I think you mentioned it in your previous post. No need to be snarky.

[Carlton Banks]

There is a need to have a coherent conversation, and my tolerance for poor quality discourse is low.

[kiklo]

LN & Segwit are a SCAM!

CB is Segwit's Pet minion.


Do your Research on Segwit & LN, that way when you call CB a Liar, you can do it with conviction.  


 

FYI:

https://www.reddit.com/r/btc/comments/5vbofp/initially_i_liked_segwit_but_then_i_learned/

You wanted people like me to support you and install your code, Core / Blockstream?

Then you shouldn't have a released messy, dangerous, centrally planned hack like SegWit-as-a-soft-fork - with its random, arbitrary, centrally planned, ridiculously tiny 1.7MB blocksize - and its dangerous "anyone-can-spend" soft-fork semantics.

Now it's too late. The market will reject SegWit - and it's all Core / Blockstream's fault.

The market prefers simpler, safer, future-proof, market-based solutions such as Bitcoin Unlimited.

The damage which would be caused by SegWit (at the financial, software, and governance level) would be massive:

    Millions of lines of other Bitcoin code would have to be rewritten (in wallets, on exchanges, at businesses) in order to become compatible with all the messy non-standard kludges and workarounds which Blockstream was forced into adding to the code (the famous "technical debt") in order to get SegWit to work as a soft fork.

    SegWit was originally sold to us as a "code clean-up". Heck, even I intially fell for it when I saw an early presentation by Pieter Wuille on YouTube from one of Blockstream's many, censored Bitcoin scaling stalling conferences)

    But as we all later all discovered, SegWit is just a messy hack.

    Probably the most dangerous aspect of SegWit is that it changes all transactions into "ANYONE-CAN-SPEND" without SegWit - all because of the messy workarounds necessary to do SegWit as a soft-fork. The kludges and workarounds involving SegWit's "ANYONE-CAN-SPEND" semantics would only work as long as SegWit is still installed.

    This means that it would be impossible to roll-back SegWit - because all SegWit transactions that get recorded on the blockchain would now be interpreted as "ANYONE-CAN-SPEND" - so, SegWit's dangerous and messy "kludges and workarounds and hacks" would have to be made permanent - otherwise, anyone could spend those "ANYONE-CAN-SPEND" SegWit coins!

    Segwit cannot be rolled back because to non-upgraded clients, ANYONE can spend Segwit txn outputs. If Segwit is rolled back, all funds locked in Segwit outputs can be taken by anyone. As more funds gets locked up in segwit outputs, incentive for miners to collude to claim them grows.

My fear with LN is rather the opposite: that propagating "waves of panic" will overwhelm the block chain with transactions, because the amount of transactions pending on the LN network can in principle be orders of magnitude larger than what a block chain can handle (that's its main idea !).  So if a block chain can handle, say, 100 000 transactions per hour, and the LN network has 10 million transactions pending in 10 minutes, and there's a panic wave going through the network, those 10 million transactions will need to go on-chain which will create a backlog of 100 hours, often passing the safety time limit of regularisation, and huge opportunities to scam.

Your fears are confirmed , article from  Jul 5, 201612:28 PM EST by Kyle Torpey
https://bitcoinmagazine.com/articles/here-s-how-bitcoin-s-lightning-network-could-fail-1467736127/

And also what would happen in this scenario if the locks on the main chain expire before the tx from LN can be pushed back to the main chain, it would be a bit like double spending issue no ?

@IadixDev,
Nice,  you see the problems with LN also.  


How to Steal LN Funds from the LN WhitePaper itself.

https://lightning.network/lightning-network-paper.pdf
Page 49 thru 51  

Improper Timelocks
Participants must choose timelocks with sucient amounts of time.  If insuf-
 cient time is given, it is possible that timelocked transactions believed to
be invalid will become valid, enabling coin theft by the counterparty.  There
is a trade-o  between longer timelocks and the time-value of money.  When
writing wallet and Lightning Network application software, it is necessary
to ensure that sucient time is given and users are able to have their trans-
actions enter into the blockchain when interacting with non-cooperative or
malicious channel counterparties

9.2    Forced Expiration Spam
Forced expiration of many transactions may be the greatest systemic risk
when using the Lightning Network.  If a malicious participant creates many
channels and forces them all to expire at once, these may overwhelm block
data capacity, forcing expiration and broadcast to the blockchain.  The re-
sult  would  be  mass  spam  on  the  bitcoin  network.   The  spam  may  delay
transactions to the point where other locktimed transactions become valid

9.3    Coin Theft via Cracking
As parties must be online and using private keys to sign, there is a possibility
that, if the computer where the private keys are stored is compromised, coins
will  be  stolen  by  the  attacker.   While  there  may  be  methods  to  mitigate
the threat for the sender and the receiver, the intermediary nodes must be
online and will likely be processing the transaction automatically. For this
reason,  the  intermediary  nodes  will  be  at  risk  and  should  not  be  holding
a  substantial  amount  of  money  in  this  \hot  wallet."   Intermediary  nodes
which have better security will likely be able to out-compete others in the
long run  and  be able to  conduct greater transaction volume due to  lower
fees.  Historically, one of the largest component of fees and interest in the
 nancial system are from various forms of counterparty risk { in Bitcoin it
is possible that the largest component in fees will be derived from security
risk premiums.
A Funding Transaction may have multiple outputs with multiple Com-
mitment Transactions, with the Funding Transaction key and some Commit-
ment Transactions keys stored oine.  It is possible to create an equivalent
of a \Checking Account" and \Savings Account" by moving funds between
outputs  from  a  Funding  Transaction,  with  the  \Savings  Account"  stored
oine and requiring additional signatures from security services.

 

[Xester]

I'd like to see a blockchain-based system providing bank accounts in the cloud for people, ie peer to peer with no intermediaries.

This must surely be the next step for Bitcoin and digital currencies - and for that matter fiat currencies too.

How would this be implemented?  I could imagine maybe something like this:
 
A separate blockchain network with an IBAN/BIC id which maintains the bank account records for the participants. Each account would effectively contain the public addresses that the account owner wants to include - effectively links to the Bitcoin blockchain.  

To activate transactions with these addresses requires the private key for the respective public address/es. These would be stored encrypted at the client end, together with a private key and additional security procedures for the account

Interfaces or gateways to the other blockchain networks and the SWIFT banking network would also be required - maybe built into each node to provide for redundancy and full reliability. Or perhaps provided by a tertiary level run by businesses as a service.

This system has the advantage of keeping all your transactions and balance information in one place, not spread out over different addresses. Its a step beyond a wallet, since the owner uses just a single bank account number for sending and receiving money.

Transactions could be in any currency, Bitcoin, Litecoin, Dash, etc, and to/from fiat currencies provided that there were interfaces to exchanges and automatic conversion. This could be configured via the client end.

The client-end access would be client software/app similar to the present with wallet software, or via web-based services provided as a business with paid for premium services and basic level access maybe free of charge like with email today.

The idea is to take Bitcoin and other digital currencies one step further and create real peer to peer banking with no intermediaries, faster, and at much lower cost to the consumer.

Next question: is it viable right now - and if so, how can it be implemented?

This is possible if there is a big company that will buy bitcoin in huge amount and store it. Then they can just create an offline digital numbers that correspond to the actual number of bitcoins at their storage. The bitcoin will backed up their digital numbers or money and those digital money will be used by users even in offline transactions.