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Author Topic: A Secure Offline Bitcoin Payment System  (Read 34 times)
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May 01, 2018, 06:23:33 AM
Merited by Hydrogen (1), centralbanksequalsbombs (1)

Physical Bitcoin or spending Bitcoin offline is a topic that has been discussed since 2010, from paper wallets to Casascius Coins to OpenDime. A point-of-sales (POS) terminal called Bitcoin Box was proposed in 2015, offline transactions using NFC, but seems like the project is dead. Offline Bitcoin payments posses a number of security challenges. A paper titled Secure Wallet-Assisted Offline Bitcoin Payments with Double-Spender Revocation was published last year. The paper proposes the first solution for secure Bitcoin offline payments using an offline wallet with several novel security mechanisms to prevent double-spending and to verify the coin validity in offline setting.

There are three phases:

1. Online Bitcoin preloading.

2. Offline Bitcoin payment.

3. Online redemption of coins and revocation of double spending attacks.

In the first phase, the payer X generates pre-loading transaction τl (step 1) that transfers some bitcoins from her standard Bitcoin account x to the offline wallet’s account w, so that the balance of w becomes positive. This is done by means of standard online Bitcoin transaction, for which the network generates n-transaction confirmation n -Tl. In the second phase the payer X requests W to generate an offline transaction τo with the desired amount destined to the account y (step 3). In the third phase, the payee Y redeems the bitcoins he received offline by broadcasting τo into the Bitcoin network (step 4) and optionally obtaining network confirmation n -To (step 5). The network confirmation will only be issued, if the network has not detected a double-spending attack against τo. Otherwise, the payee Y will trigger an optional double-spender revocation procedure, which includes sending a double-spender revocation transaction τr (step 6) to the Bitcoin network and obtaining corresponding confirmation n -Tr (step 7).

A secure offline Bitcoin payment system would be a big boost for adoption.

PS: I am not good with technicalities, but did understand the basic outline so hopefully no technical questions Grin

PS: To cover up for my lack of technical knowledge, there was another offline transactions idea proposed in 2013, quite simple to grasp, but might seem a tad absurd, How to use fiat currencies for Bitcoin offline transactions?

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