Codename: EasyCoin

[cloud9]

While Bitcoin in an honest user implementation is a very secure, purchased digital cryptographic key pair - produced by tiresome numbercrunching making it a scarce, precious commodity subset amongst the other useless 0's and 1's of the bit domain.  Its production costs (due to variable difficulty adjustment and production effort required - proof of WORK - same as a gold coin proofs that you have done some prospecting, excavation and extraction work to obtain it) would always tend to marginally meet its trade value.  An honestly obtained Bitcoin (set of cryptographic key pairs) is not a laundered instrument - it is a scarce, precious, digital asset amongst its domain.  An honestly obtained gold coin is not a laundered instrument - although it could also be - it is a scarce, precious, physical asset amongst its domain.  Bitcoin digital goods falls under the auspices of the digital manufacturing industry, and if it is transmitted via a telecommunications network - this communication will fall under the auspices of the telecommunications industry.

However an instrument/contract be it digital, paper, verbally or any other form, representing a commodity of intrinsic cryptographic value might fall under the auspices of the financial services industry.

See blindbitcoin.com ( https://blindbitcoin.com/ ) as an example of an instrument representing Bitcoin as an underlying commodity.  The legalities of such an implementation of Bitcoin might not be considered to be honest, in the same sense as laundering Bitcoin cryptographic keys (in the same way that any other digital/physical goods asset can be laundered) will not be considered a legal honest implementation of Bitcoin.

[1714102042]

1714102042

[1714102042]

1714102042

[molecular]

All Bitcoins will be pegged to virtual credits in a database, like current payment processors.

Rewind a couple of centuries: we have gold, but it's too hard to be used by "normal people" (divisibility, safe storage), so we store the gold safely for them and write down in our books who owns how much gold. Additionally we hand out slips of paper (notes) representing certain amount of gold that can be used by people to trade much more easily than gold.

We can also start a bank and lend this new money to people so they can start businesses. (Of course we will demand interest to cover the risks)
We can even lend out more money than we have bitcoins for, because only a fraction of people will demand to have their bitcoins at any given time (why would they want them anyhow, since you cannot conveniently buy anything with them)
This also gives us a great tool we can offer to people who wish to stimulate (certain parts of) the bitcoin economy: we simply increase the money supply and lend out the fresh money by lowering interest rate and therefore pump more money into the economy. Of course they will also have to pay us back at some point.

Well, "history repeats itself".

It is clear we have currently a problem with adoption of bitcoin and it is unclear wether or not bitcoin can make it without help of sub-currencies.

I sure hope it can: bitcoin is more promising than gold, because

• it's easily divisible
• it's easily countable
• it's easily transferrable

I would really like to avoid the problems that would come with such a solution (and are actually overcome by bitcoin):

• accountability (privacy issues, taxability, need for money laundering)
• trust requirements, security issues
• possibility of fractional reserve banking

I'm not saying you shouldn't go that route, Atlas, but I'm still hoping for naked bitcoin adoption... it'll take a lot more time and effort, though (mobile clients, wallet security, shared keys,...).

I'll be patient.

[phillipsjk]

Finally, EasyCoin software will be open-source and available to everyone. Everybody can open a payment processor to mitigate risk in the industry. Competition will keep all competitors accountable in safety and service.

This is what the GNU AFFERO GENERAL PUBLIC LICENSE was written for.

I agree some kind of payment processing service is needed. I also share the concern that once realized, it may not be much better than PayPal. A community organization I am involved with has started using PayPal simply because of the merchant services they provide.

From my point of view, PayPal has all of the funding difficulties Bitcoin does: I actually read the card-holder agreements. I refuse to use a credit card. The terms for online banking require me to install an anti-virus: something I consider a potential security risk, and a waste of CPU time. I can't really use PayPal, even if I did agree to their PayPal User Agreement.

[koin]

Isn't this already the case with mtgox or mybitcoin for example? I don't really see the difference between a currency backed by bitcoin and a bitcoin ewallet.

it could be.  there would likely need to be a concept of "in-network" and "out-of-network" transactions.

"in-network" refers to transactions between two parties using the same ewallet.  Those in-network transactions confirm instantly, are reversible, etc.

but when the spend occurs "out-of-network", those properties don't apply.

that would increase the opportunities for fraud to occur though -- as some transactions are reversible and others not. the typical consumer might not know the difference.

[lemonginger]

@Atlas: How is this different than any kind-of ewallet that offers instant transactions (which I'm sure many will in the near future) - they take a small fee and it acts as a risk premium for allowing people to pay/withdraw quickly. Instant deposit is already in the works. Why build a whole separate currency when you can just use bitcoins, but through various ewallets/ebanks/payment processors etc combined with mobile clients, better wallet apps, etc?

@molecular: I'm sure we will see fractional reserve bitcoin banking if bitcoin takes off. I don't know if it's a good idea, but there's nothing stopping it.

[flug]

I see the ecosystem evolving more along the lines of having thousands of small banks, connected via a few transaction centers (clearing houses? not sure of the terminology) to facilitate transactions between the seller's bank/wallet and the buyer's bank/wallet.

In terms of the power relationship, it's loosely analogous to having thousands of miners collected via mining pools. If one of the pools goes 'bad', the individual miners can switch to another pool.

Similarly, if one of the big transaction centers goes bad,  people can stop using it and do transactions using a different one, but still store their bitcoins in their small bitcoin bank.

This for me is the beauty of Bitcoin. Because of its digital/distributed nature we can create networks of small banks that are resistant to centralization. The geek in every family can set up the family's own bank using some open source bitcoin banking software.

Yes, we need to be able to get over the security issues and have instant + reversible transactions, but we don't want to centralize this to a single ClearCoin database. We need a distributed ClearCoin system run by thousands of individual/companies.

EDIT: Re-reading OP, I see that the intention is to have anyone being able to setup a ClearCoin payment processor. The problem comes when there are thousands of such ClearCoin installations around. The is why the idea of separating the 'bank' and 'payment processing' is important

[gigabytecoin]

Best of luck with the easycoin project. Hope it's as good as the talk show 

Lol. All sarcasm aside...

Are you fucking kidding me Atlas?

Your idea is to create a central database for bitcoin worth to back against?

And you have over 1,500 posts?

Do you have any idea what the "core values" of bitcoin are or are you just talking out of your ass? You do have about 10+ posts per day so maybe it is the latter.

Just because he has 1,700 posts people... doesn't mean you should listen to him. He does not speak for the majority of the community, on this issue at least, trust me on that one.

1) Define "average person"?

2) My funds cannot easily be stolen. Eventually Bitcoin banks will become more prevalent and used than they are today, but until then computer illiterate people should stay away.

3) I could buy bitcoins when I found out about them back in march, and I can still buy them today. It's actually much, much easier today than it was 3 months ago, and I expect the same in another 3 months. Just because it's not as easy as swiping your credit card to buy bitcoins... doesn't mean we are in a crunch of a crisis or suffering from some kind of problem.

The "credit industry" took hundreds/thousands of years to mature to it's current state. Give Bitcoin another few months and I bet we will have made some great strides.

[ctoon6]

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Overall this seems like a bad idea, how are we to know that the website/server is not using modded software to inflate, whats the purpose of bitcoins if we are not trading them, it would be exactly the same thing we have now.

I am not against web services, but for me to agree with it, it MUST transfer real coins in the network, not some pseudo database jumbo jumbo make believe coins.
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[hiVe]

Best of luck with the easycoin project. Hope it's as good as the talk show  

Lol. All sarcasm aside...

Are you fucking kidding me Atlas?

Your idea is to create a central database for bitcoin worth to back against?

And you have over 1,500 posts?

Do you have any idea what the "core values" of bitcoin are or are you just talking out of your ass? You do have about 10+ posts per day so maybe it is the latter.

Just because he has 1,700 posts people... doesn't mean you should listen to him. He does not speak for the majority of the community, on this issue at least, trust me on that one.

1) Define "average person"?

2) My funds cannot easily be stolen. Eventually Bitcoin banks will become more prevalent and used than they are today, but until then computer illiterate people should stay away.

3) I could buy bitcoins when I found out about them back in march, and I can still buy them today. It's actually much, much easier today than it was 3 months ago, and I expect the same in another 3 months. Just because it's not as easy as swiping your credit card to buy bitcoins... doesn't mean we are in a crunch of a crisis or suffering from some kind of problem.

The "credit industry" took hundreds/thousands of years to mature to it's current state. Give Bitcoin another few months and I bet we will have made some great strides.

I completely agree on all arguments gigabytecoin.
All the latest rant and forced attempt at improving bitcoin as it is, is pointless.

Im no geek and I could easily buy btc, sell btc, and purchase goods with bitcoin a day from initially starting to use it.

[flug]

I am not against web services, but for me to agree with it, it MUST transfer real coins in the network, not some pseudo database jumbo jumbo make believe coins.

I agree. Any payment processing service that offers simple, instant and reversible payments must execute a corresponding real transfer of bitcoins at some point in the process. This is why having thousands of banks is important. Transfer from one account to another should be generally across banks and performed by bitcoin exchanges.

[Andrew Vorobyov]

Are you fucking kidding me Atlas?

Your idea is to create a central database for bitcoin worth to back against?

And you have over 1,500 posts?

Do you have any idea what the "core values" of bitcoin are or are you just talking out of your ass? You do have about 10+ posts per day so maybe it is the latter.

Thanks man... you nailed it - such epic fail....

[flug]

Im no geek and I could easily buy btc, sell btc, and purchase goods with bitcoin a day from initially starting to use it.

Good for you. But however non-geeky you think you are, most people out there are 1000 times more non-geeky. Atlas is trying to get over some real problems, but his proposed solution seems far too centralized to me.

[sunyag]

So what are Bitcoins for then?

Digital Gold backing. They enable sound money...

"Digital Gold backing"
"sound money"

So EasyCoin reaps the upside through instant exposure, massive first-mover advantage, growing marketshare, fees & profits, and fantastic structural support from Bitcoin. And meanwhile Bitcoin will take the heat if, when, there is "sound money" monetary downside.

This sets Bitcoin up for some nasty blowback while dramatically limiting Bitcoin's upside.

They enable...possible anonymity if you use an anonymous EasyCoin service.

EasyCoin wants the anonymous market too?

EasyCoin just an overlay that makes it easier to get into Bitcoin in the first place and enables the average person to pay with them.

"...just an overlay..."

From the perspective of Joe6Pack and soccer mom, the overlay-IS-THE-currency (what central bankers have always known, and exploited).

This isn't getting people into Bitcoin. It's getting people into Easycoin. Bitcoin is an afterthought for them, if that.

And if at some point, having successfully captured market share (and having rendered Bitcoin a mere background 'vault' coin), EasyCoin feels UNeasy about its relationship with Bitcoin, then Easycoin can be working on developing its own blockchain.

What Bitcoin needs are better GUIs and apps. Not a competing currency.

Furthermore, this from grau...

With disputable payments you lost low transaction costs, with credit card association the anonymity, and you require me to trust an operator and expect me to believe that it is backed by gold ....

... for all that I have a choice of currencies, that already have the infrastructure and need no explanation.

Grau accurately depicts the matter.

And IF there is to be a 'backing' mode, I suggest it go from virtual to physical, rather than a virtual daisy-chain.

It's not for everyone. Heck, it's better than a dollar not backed by gold at all.

Bitcoin is not gold. And stacking a currency on top of Bitcoin does not make Bitcoin gold (though it could open up a Bitcoin legal can-of-worms against claims of being an underlying commodity).

If (as I believe) Bitcoin is the digital best-in-show, then let's keep Bitcoin front and center...and keep making it more user friendly.

And this from chodpaba...

How do you bind virtual credits to Bitcoin transactions to prevent fractionalization?

You really can't. It's a matter of built trust. Again, this is why I want this software to be open-source.

Trust. I've had my fill, thank you.

And open source is not a panacea. With massive first-mover advantage, subsequent developments, strategic partnerships, momentum and hot investor $$ could make mincemeat out of the wannabes trying to play catch-up.

Look, let's be honest. This is a direct competitor to Bitcoin. Easycoin is a currency; it front-ends Bitcoin as a currency and therefore will be perceived as a currency and therefore will be a currency. What is a currency if not perception? And Easycoin would not be a "sub"-currency in the sense that the term is misleading. If anything, it's an "over"-currency because it sits OVER Bitcoin.

If Easycoin runs to its logical conclusion, Bitcoin will become a cul-de-sac for everyone but the underworld and digi-techies (heck, we already have them)...with Easycoin being the central bank access road. 

The window for Bitcoin to emerge into ITS OWN with the online mass market is now.

If the argument is that some private interest is going to do this anyway, then let them. But if we lose focus, and begin to write-off, outsource, the Bitcoin interface with the public to Easycoin, or anyone, then we've handed over the most valuable asset - the growing (albeit infant) perception of Bitcoin as THE online lingua franca currency.

This is exactly the moment where techies could short-change themselves on just how unbelievably valuable, and game changing, this thing really is. Surely there is enough new found $$ with Bitcoin holders & sellers in this community that bounties can be setup to race ahead with interfaces.

I say stay focused on Bitcoin, front and center.

[flug]

I do believe we need a layer of services on top of Bitcoin which provide such services as security, escrow, instant payments, reversibility. To do these, bitcoins will need to be shadowed in a database somewhere. MtGox at present shadows bitcoins in its database. Wasn't this how it was hacked? Hacking the bitcoin amount in the database and spending those coins internally?

The point is, at what point do the entries in the database become the currency and not the bitcoins on the network?

[david4dev]

Well I agree with the problems but not the solution. Bitcoins aren't easy enough for most people yet and it's difficult to buy/sell/spend bitcoins but creating a whole new layer of currency isn't really needed to solve these problems. IMO the concept of a currency backed by another currency is more confusing than a 'pure' currency like bitcoins. It's this kind of confusing abstraction that leads to our financial problems today.

I think a much better solution is to provide a set of services around bitcoins as a currency - this is already being started. I'm personally in favour of the bitcoin banking proposal outlined here.

[lemonginger]

While I agree with some of the criticisms above, I think the criticism about it being "another currency" is a bit much. Even if it was, isn't that exactly what we should want at this point in the game? Competing block chains (as wall as, perhaps, non block chain cryptocurrency technologies) /before/ there is significant amounts of lock-in? You know - markets, competition, driving innovation, etc etc?

[mouse]

Atlas, please ignore the haters.

I support the idea of a currency backed in bitcoin, alongside bitcoins, for a number of reasons. First, they can represent different concepts. Here's an example: bitcoin = savings, easycoin = day to day payments. This allows easycoin to exhibit different properties to bitcoin, whilst still being backed by it. For example, easycoin can be provable anonymous. OR, it could chose to be anonymous, except in the case of double spend attempts, or have any other number of properties, all by picking different blinding signature schemes.
Transactions for an additional currency can also be instant (no need to wait for confirmations), and be extended to support micropayments with minimal fees (opening up new markets).

I could go on, but I wont. Instead, here is a list of various open source projects that you should be familiar with, concept wise, before starting your venture (so that you can make informed design decisions):

Projects

Open Transactions
https://github.com/FellowTraveler/Open-Transactions/

OpenCoin
http://opencoin.org/

Voucher Safe
https://www.voucher-safe.org/tiki-index.php

Loom
https://loom.cc/

TruLedger
http://truledger.com/

Concepts

Blind Signatures
http://en.wikipedia.org/wiki/Blind_signature
See also:
Lucre
http://anoncvs.aldigital.co.uk/lucre/

Triple Entry Accounting
http://iang.org/papers/triple_entry.html

Ricardian Contracts
http://iang.org/papers/ricardian_contract.html


There is more, but this represents some of the fundamentals.

Good Luck

[Eri]

after reading through this thread and trying to think of a way to make everyone here happy.. this is what i came up with. the way i see it, if you have a trusted service that simply holds your money and verifies for others "its still here" and Only sends out BTC, removing the value from your account at the same time it sends the BTC out, you don't have to worry at all about any type of interconnectivity, BTC is still the up front value that is traded. let the inherent security of BTC work for us.

so if your going to go out to a store or something you send bitcoins to a MiddleMan service, they store the ones you plan to use for Free and if you go to a store you can let them scan your QR code(which contains the sites url and your username) or they can manually type it in and then they request via the service the payment, the service then lets you know via cell phone(?) "olive garden 1653" has requested to deduct "4.3 BTC(80$)" from your account, you simply "OK" it and the service sends the appropriate amount of bitcoins and deducts the amount from your "on the go storage". the store is then confident they will get their funds because this trusted 3rd party says they will and the funds themselves are on the way from the 3rd party(in the form of a normal BTC transfer). the user can Not double spend them. the service itself would take some small fee and pay the transaction fee.

the store wouldn't add Any extra features at all and would simply be a trusted middle man, Anyone can be a middle man, pricing will compete for lowest and best. depending on cost and backing, it may not be Easy to be a middle man, but if you can get a few local services to trust you, enough users to trust you, and your rating goes high enough then others that are not so local will trust you, but more then likely their will be a few 'major' ones, likely a few international, a few country wide, a few state wide, and a few city wide, all accessible by the internet. only charging fees if you send the money to someone, never for simply sending it to them and having extra sent back. they would even encourage you to keep your money in /your/ wallet not theirs 'in case of a hacking' since they hold /no/ liability in cases of theft and only make money from actual sales.

in the 'vending machine' scenario, you punch in the code for what you want, type in the web address for the site and your username (or let it scan your QR code if you have one handy, which would contain the site name and your username), the eending machine then requests this money from the service, the request pops up on your phone and you "ok" the funds being deducted from your account. the BTC is sent, the trusted site replies with "funds have been sent" and the machine gives you your funyons. this does require a internet connection and a 3rd party site, as well as some kind of cell phone for the user, even a older cell phone would work with a "press 1 to accept, or 0 to reject the transfer".

i may be over simplifying, but this seems Simple, has no interconnected services we need to worry about, the only transfer of funds that happens is in BTC. the retailers simply trust the 3rd party service to send out the BTC. not any different from trusting a credit card company to send them their money, or trusting paypal to credit your account etc.

[nazgulnarsil]

the problems of FRB are much mitigated by the public ledger and the fact that there are low costs to holding hard BTC yourself.

[flug]

Atlas, please ignore the haters.

But please don't ignore the large number of posts offering constructive criticism, reasons why Easycoin might dilute the Bitcoin concept and alternatives like a layer of open source distributed banking services which may do away with the need for an extra layer of currency.

I wonder how resilient bitcoin will prove to be in resisting attempts to centralize and control it through various financial artifacts. I'm hoping it's a very wild and uncontrollable beast indeed.