It's Wednesday, so I can FINALLY officially announce Mycelium's newest project that they have been working on so hard for the last... quite a while (if you're wondering why that feature you kept asking for isn't added yet, this is part of the reason).
This Wednesday, at the Inside Bitcoins conference in Berlin, the team behind the
Mycelium Bitcoin Wallet and the much anticipated yet continuously delayed
BitcoinCard, will demo a major new feature of their wallet, called Local Trader. This new feature is a person to person exchange, similar to LocalBitcoins.com, built directly into the bitcoin wallet software. As Jan Møller, one of Mycelium’s lead developers explains, “Mycelium Local Trader is a trading platform for the Mycelium Bitcoin Wallet which allows users to buy and sell Bitcoin. The initial idea comes from one of the biggest problems in Bitcoin: How to get your first bitcoins?”
The feature is still being finalized, but is fully functional on testnet, and is expected to be released later this month. At first, the trader options will be limited to “Continuous Seller,” where someone creates an offer to sell bitcoins and waits for buyers, and “Instant Buyer,” where someone who wants bitcoins right now can browse a list of sell offers in their area, and ping one to ask for a trade. When asked why the option to instantly sell bitcoins for cash was not available yet, Jan commented, “We wanted to attack what we believe is the most common problem: Getting your first BTC.”
To set up a sale offer, the user first has to load their bitcoin wallet with some bitcoins. Since both the wallet and the trading platform are within the same app, the seller profile actually knows if they really have coins to sell. Once the seller presses the “Sell Bitcoin” button, Local Trader automatically registers one of the wallet’s bitcoin addresses on the exchange server as the key associated with the seller account. Like PGP, this bitcoin address and private key are used to authenticate with the trading server, where your user id, sell offers, trade history, and reputation are stored. Likewise, the private key is used to authenticate API requests to the server, a method that may mitigate the
API key theft issues recently experienced by some exchanges, and in the future may be used to authenticate and possibly encrypt communications between users. For now, it just keeps all communications secure, and has the added benefit of being able to import your trade account, along with all its history, simply by importing the associated private key from a backup.
In the Sell Order menu, users can create sale orders that include their location (obfuscated to a 1km square block), the exchange used for the price, seller fee, minimum and maximum amount they are willing to sell, and a custom message that buyers will be able to see when they select their offer. Sellers are not limited to the amount of sale offers they can create, and can make sell offers with different fees for different amount traded, different locations, and even set negative fees if they need to swap their bitcoins for cash quickly.
For anyone looking to buy bitcoins, they just have to press “Buy Bitcoin,” and they are instantly presented with a list of 20 closest offers in their area, sorted by distance using their phone’s GPS. Here, buyers can see offer details, such as nickname of the seller, their rating, price, distance, and minimum and maximum they are willing to trade. Clicking on an offer also expands it to show any custom notes the seller may have included. Initiating a buy offer is as simple as typing the amount you wish to buy into the text entry field on the seller’s offer, and selecting Buy.
Once an offer is accepted, the seller’s wallet receives a notification, and the trading app switches to a window where the buyer and seller can see the amount and the price being offered, as well as a chat window they can use to negotiate the terms and location of the trade. The price can be changed and refreshed to the more recent exchange price as many times as the traders want before they agree on the trade, up to the point where they meet and swap cash. When each of them agrees on the terms, they hit Accept Offer, and the trade will only be considered accepted when both of them have agreed. However, the trade must go through within 24 hours of the buyer’s initial offer, otherwise it gets automatically aborted. Once the two traders meet, the buyer hands cash to the seller, the seller hits “Cash Received,” and bitcoins are automatically sent to the sellers wallet, minus whatever fees were negotiated on.
Another brand new feature that comes with Local Trader, which will likely be ported to other parts of the wallet, is the “Transaction Confidence” graph. Since Mycelium servers are connected to hundreds, if not thousands, of nodes, they are able to track transaction propagation through the network in real time. Transaction Confidence, expressed in percent, shows a close estimate of how much of the overall Bitcoin network has heard about the transaction. The idea is that, if most of the network has already heard about the transaction, double-spending it becomes much more difficult, and the chances of it being included in the next block approach 100%. So, if the confidence is high enough (it reaches high 90’s within a few seconds), you can be fairly sure that this transaction will be included in the block, and do in person trades with zero block confirmations. No more awkward waiting for 10 minutes (or sometimes as long as 50 as I had the unfortunate experience of at a local McDonald’s) just to make sure that both people are confident enough the transaction won’t fail.
Trader feedback is the only feature still undergoing the final stages of development, and will be automatically calculated based on the number and size of successful trades, response times, and trade aborts. For their part, Mycelium plans to charge about 0.5% per transaction for the service, but, like LocalBitcoin, will not object to people using the service to trade directly, bypassing the fee, since they believe enough people will find the convenience of trading directly through their system, along with maintaining a trade history and reputation, to be worth the small fee.
