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Author Topic: A case for notes to foster anonymity and adoption  (Read 950 times)
townf
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April 29, 2013, 09:30:33 PM
Last edit: April 30, 2013, 04:04:33 PM by townf
 #1

I'm editing this entire Original Post to explain better, sorry for that:

ABOUT ANONYMITY:
Ok as far as the blockchain perusal goes you have something like these guys did:
http://anonymity-in-bitcoin.blogspot.com/2011/07/bitcoin-is-not-anonymous.html
http://www.quantabytes.com/?utm_source=anonymity_blog&utm_medium=blog&utm_campaign=quantabytes
They're surely not the only ones doing it. There are teams of monkeys in govt and organized crime and lone wolfs doing it right now probably. Many existing background checking companies may add this kind of thing to their background check services.

As far as govt data mining/spying goes (just one of many examples):
http://www.youtube.com/watch?v=TuET0kpHoyM
The communications (since it is everything) talked about here will obviously have cryptocoin addresses in it readily associated with email addresses, ip addresses, etc. This site bitcointalk or any like it like blogs and such where people include donation addresses in their sigs is at risk of being subpoenaed and forced to divulge account info, thus linking crypto addresses to people. Criminal botnets and hackers can gain and probably already are gaining these correlations without a subpoena obviously, and probably can do so without even being noticed, either on webservers and databases or simply on single users computers. The loss of anonymity is a one way street forever. The blockchain is permanent and public.

You put the blockchain analysis together with the data mining, and the anonymity of the cryptocoin users of the world in general pretty much disappears as time goes on, undeniably.

However all that being said, some researchers at Johns Hopkins invented Zerocoin which is a way to anonymize cryptocoin transactions beyond the public key hash addresses, but it requires integration into bitcoin code, which may or may not happen. If not, surely another cryptocoin will use it.
http://spar.isi.jhu.edu/~mgreen/ZerocoinOakland.pdf
https://www.google.com/search?q=zerocoin

ABOUT ADOPTION FOR USE AS A MEDIUM OF EXCHANGE:
The fluctuating fiat price currently hinders adoption because it's hard for people to affix prices for their goods or services. We can't really do much about that.

A block is only created every 10 minutes with btc. Other cryptocoins may be different. Not only that, it is recommended to wait at least several blocks after your transaction to be sure it is safe. This is too long for people to wait when they buy stuff in the physical world.

To transact in the physical world everybody needs various gizmos and android apps, and merchants and storefronts need their own internet connected appliances and gizmos to transact with, etc. This is hindering adoption.

--------------------

The solution to both these problems is inert, physical tokens that people and businesses can exchange immediately, in person, exactly like cash. To avoid a central token issuing authority which will gain the ability to become a fractional reserve lender (FRB) of these tokens, an implementation of a p2p cryptocoin token exchanging network should be invented.

When i first learned about FRB, i hated it. I thought it was a total scam. I still do pretty much. It definitely is a scam when the reserves are a ridiculous joke like "monetized government debt" instead of an actual, fungible, valuable, uninflatible, physical thing like precious metals (or cryptocoins on a bombproof blockchain). Even with real reserves, I kind of still do think it's a scam, but really only if the FR lenders make too many notes (tokens), go broke of their reserves, and then get bailed out by devaluing all the tokens. Also what is bad is if instead of devaluing the tokens, they simply go belly up and people get shafted holding all these useless pieces of paper. There isn't much to prevent this, so i'm not a big fan of it anyway. Therefore i think a decentralized p2p thing to issue and redeem the tokens one to one, no FRB, should be created give us our inert cash.

I will say though that issuing tokens on cryptocoin reserves will keep a bank way more honest than issuing tokens on precious metal reserves (unless they don't care about going broke and creating an angry mob), because demand for the cryptocoin specie will be constant and way, way higher. They have an actual important use, as opposed to gold. Anytime somebody wants to buy something on the internet, they will want real cryptocoins, not tokens, so if they have tokens and want to buy something online, they will demand cryptocoin specie from the bank. That being said, if we can come up with a way that a decentralized p2p network does this, why have private banks do it?

--------------------

So anyway to get back to the implementation of a p2p cryptocoin token exchanging network, which will facilitate anonymity and adoption in the real, physical, local merchant world:

Somebody did this thing, which is a bitcoin ATM for fiat:
https://bitcoinatm.com/
http://motherboard.vice.com/blog/the-worlds-first-bitcoin-atm-to-dispense-cyprus-bills

This obviously exchanges btc for fiat money, but could just as easily spit out cryptocoin-only tokens of some sort. It could also be connected to a free software, decentralized p2p network of token issuing/redeeming machines.

Maybe the tokens could be physically minted zerocoins somehow. Or maybe they can be pieces of plastic with a totally random privkey (having nothing to do with any btc keys) on a smartchip like an openpgp card or the like. The pubkey will be stored by the network. When somebody redeems the token at the atm, the machine can use the pubkey in the network to verify the token is real. The masses can validate the tokens in much the same way. Or maybe they should be totally inert, really hard to counterfeit pieces of paper, so much so that the machine will always be able to tell the difference when they are redeemed. How do these machines validate fiat paper when inserted?

If the ATM spits out tokens with real btc privkeys on them, that can undermine anonymity (like a too-small coin laundry would), and also you have to trust the ATM not to know it and spend it out from under you, and anybody you spend it with has to have that same trust. But that way you can open it up in an irreversible way and find the privkey and redeem it to yourself, and take the whole redeeming operation out of the ATM function, which would be simpler. If somebody can figure out a way to get a privkey on a physical thing and guarantee with no trust that not a soul in the world can possibly ever know it without irreversibly and obviously opening the token, not even the ATM software, that would be huge. Maybe zerocoin can do this? I'm not familiar enough yet to know.

The main problem is that tokens probably need to be easy to validate and hard to counterfeit since people and merchants aren't going to always want to whip out their token smartchip anti-counterfeiting tool in a dark alley when they're transacting their dimebags. It might should at least have some kind of hard to replicate features or something. Not sure what. Holograms?

Counterfeiting the tokens is most assuredly not the only fraud vector that would threaten this system.

Please give us all some ideas anybody!
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April 30, 2013, 03:39:17 AM
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Interesting topic, I'll have to give it some deep thought.

My initial knee jerk reaction is to argue with the premise of it all being data mined... but then if we're talking about governments all they'd have to do is identify one person I've traded with and beat a user name out of them.

As far as that goes I guess I see your point. But I wonder if there isn't a solution on the block chain in the direction of more complicated and security aware wallet software that combined with single use public keys for all incoming transactions and some creative coin washing services... we could probably create a solution to this... or at the very least an obscurity that might effectively prevent the entire scenario.

would having to resort to an online solution make 'generated' coins extremely valuable... or even the tx fees paid out more valuable then the actual amount of coin?



townf
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April 30, 2013, 04:29:50 PM
 #3

i edited th OP to make more sense.

Not sure about the tx fees or the denominations. Still just a vague idea. I see what you are saying though. What would the tx fee be on a 1 satoshi token? Probably won't need units that small (yet). But the bigger issue with tx is how to use it to recycle into the human infrastructure supporting the network. I suppose it is going to take actual humans to load/empty the machines of tokens, wheel the atms to various locations, etc.

Maybe the bitcoin atm guy or casascius will chime in, or anybody!

There are many issues with this, but just think, usefully inert cryptocash! Adoption and anonymity!!
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May 01, 2013, 05:21:36 PM
 #4

Another "problem" that note issuing solves is the irreversability problem.

Many think transaction irreversibility is a good thing, others don't.

I don't really have a die hard opinion either way because I can see the pros and cons of it in different situations. I'm just throwing it out there.
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May 01, 2013, 11:57:36 PM
 #5

Another "problem" that note issuing solves is the irreversability problem.

Many think transaction irreversibility is a good thing, others don't.

I don't really have a die hard opinion either way because I can see the pros and cons of it in different situations. I'm just throwing it out there.

Personally I like irreversibility as a feature of btc. I just think there was to be a way to do online rather than off - then once it's nailed down to take it offline via secure hardware wallets.


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