Standards and Protocols

[andyc]

I really like the idea of bitcoins. From what I've read, the bitcoin implementation seems solid.

I think the ecosystem can use a lot of work, though.

Currently I'm not satisfied with the means of finding bitcoin-supporting businesses. Also, I don't really see a good way for exchanges to talk to eachother. This is critical in estimating the exchange rates of bitcoins. Also, it is essential to get exchanges competing against eachother on spreads.

I propose that we come up with a few standards and protocols, and host those documents at bitcoin.org.

There are a couple of protocols that I think would help the ecosystem immeasurably:

• bitcoin robot metadata (to be located at HOST.com/bitcoin.xml). We should allow bitcoin-supporting merchants/service providers to place a bitcoin.xml file on the root of their webhost. This XML document would simply state that the host does support bitcoin transactions, and it should outline what products/services are offered. Additionally, I would propose that this XML document allows a merchant to direct a robot to visit other, fellow bitcoin merchants. This serves a dual purpose. First, it allows the spider to crawl to another known bt merchant directly, so that it does not have to crawl the entire web first, which would be possible but inefficient. Secondly, it allows the spider to roughly figure out a network of trust. If MerchantA.com/bitcoin.xml says that MerchantB.com is a fellow and (roughly) trusted merchant, then this allows the spider service to create an index that can be invaluable for consumers to find the products and services they desire. The end goal here is to allow any 3rd party to set up a bitcoin products search engine or other similar service. These will be invaluable in helping customers buy into bitcoin.
• bitcoin exchange protocol. In this case, I want to see a protocol that allows bitcoin currency exhanges to talk to eachother. It should be a realtime event protocol. This could possibly be built atop XMPP to save a lot of duplicated effort. Basically we want to get exchanges pushing out realtime trade information so that we can begin to get a general, realtime consensus on the value of a bitcoin relative to other currencies. The world does not currently run on the bitcoin currency, so this is really an important thing. If we want people to take bitcoins seriously, then we need to give them confidence that their wealth can translate back to local currencies quickly and efficiently, so that they can pay their taxes, utilities, etc.

I've got a zillion and a half more ideas, but these are the two that I see as being absolutely crucial right now. It will be really easy to get these things set up. All we need is a draft XML spec for the bitcoin robot metadata, and the same for the realtime exchange protocol. I'm willing to write the first draft documents if I get some indication that this community will take the idea seriously.

I can also create a bitcoin market search engine and add make it publicly available, but first I need to be able to crawl everyone's businesses.

[lachesis]

I like both of those ideas a lot! Welcome to the community, andyc.

[Strofcon]

Sounds like a good start to me. I'm anxious to see what you come up with!

[andyc]

Thanks.

I'm also willing to write some open source software to help any joe put up his own merchant site on his own host. I don't want to do this until the above things are implemented, because I think anyone selling goods will want to have a good estimate of the exchange rate with his local currency.

I also would like to implement an open source checkout system that integrates with the exchanges out there. The idea is that, at checkout, a customer can purchase in any currency he'd like. If he hasn't heard of bitcoins, he can use his CC or bank account, in which case the transaction will run through an exchange that the merchant trusts as part of the checkout process. I realize there's a million subtleties to this, but I want to let you guys know where I'm headed with all of this.

I want to allow the average joe to set up a host in 10 mins, start taking photos of his xbox games, and start selling them to anyone anywhere. This joe becomes a merchant. He can choose from any web host (even out of his house). If he trusts certain exchanges, then he can instantly have a checkout process that allows customers to purchase however they'd like. Also, the bitcoin.xml file allows for a dead simple way to set up a trust network between merchants. I realize there's better ways to solve that, but this simple one works well. It leans on the security of DNS, SSL, etc, which is already in place.

[FreeMoney]

This sounds pretty awesome. Keep us updated.

[Babylon]

I see 1 problem with directing through an exchange.  There is not currently a lot of liquidity on the exchanges, a merchant dealing with high value items or in high volumes could accidentally cause some severe price distortions that would correct and end up with that merchant being paid less than he or she should.

This should correct as more people enter the economy however.

Another very handy software widget would be something which converts bitcoin prices to dollars at the current market rate at the merchant's preferred exchange.  That way dollar denominated customers using a credit card or paypal or what have you would see an accurate price without the merchant having to adjust it constantly  (this could also work for people wishing to set prices in dollars and have them displayed in bitcoins, probably more useful right now since bitcoin value has been fluctuating (upwards) much more rapidly than dollar value fluctuates.)

[Anonymous]

I see 1 problem with directing through an exchange.  There is not currently a lot of liquidity on the exchanges, a merchant dealing with high value items or in high volumes could accidentally cause some severe price distortions that would correct and end up with that merchant being paid less than he or she should.

This should correct as more people enter the economy however.

Another very handy software widget would be something which converts bitcoin prices to dollars at the current market rate at the merchant's preferred exchange.  That way dollar denominated customers using a credit card or paypal or what have you would see an accurate price without the merchant having to adjust it constantly  (this could also work for people wishing to set prices in dollars and have them displayed in bitcoins, probably more useful right now since bitcoin value has been fluctuating (upwards) much more rapidly than dollar value fluctuates.)

This.It is essential to compete with paypal to implement ease of calculating exchange rates without having to continually monitor it.