So, I have been thinking for a while on ways to spend bitcoins in places like convenient stores, supermarkets, and other physical places and what it would take to get them to accept coins, give fast and safe transactions, keep user's wallet safe and keep the fundamental P2P backbone of bitcoin in place, and think I may have found a solution.
First I am going to explain the problems with bitcoin at the moment (as I see them):
- Block size getting growing exponentially . - I do not think this will be a problem for merchants and believe it will be resolved before it gets out of hand.
- Government adoption - I would not say this is a problem, they just need to be conferrable with it and the way it works. Adoption will come as citizens adopt it.
- Speed of confirmations - see below
- Double spending protection - see below
- Easy access to internet - see below
So for me I wanted to see how I could solve the last two and here is what I came up with:
First I am going to explain the product/idea. What I am suggesting is to create an open-standard for communication between a dongle-style device (similar to a yubikey) which a user could take with them and plug into any merchant that accepted bitcoins (that had a device that could use the dongle) and pay at their terminal with their dongle.
Second let me explain some of the specs on how it works... A user could buy a dongle (should be relatively cheap... probably around $5.00USD) and take it home and load a private key onto it using software that is downloadable. The device will also require a pin number similar to ATM which they will need to use every time they use the dongle. The dongle will not allow any sending of the private keys once they are on the device and would only store a set amount of wallets/private keys. The merchant's machine will do a request to the dongle telling it how much it wants to pay, which the dongle responds with a hash and waits for another input of the pin number from the customer (dongle owner). The hash will be displayed to the user (and if user would like can verify with a phone style app that the merchant is charging the proper amount). Once the user inputs the pin into the merchant's machine the merchant's machine will send the pin to the dongle which the dongle will respond with the wallet address it will be extracting money from. The merchant's machine will then lookup the needed blocks to be able to process the charge and then the dongle will verify the amounts are equal the original amount sent to the dongle and then the dongle will sign the message and return the signed message to the merchant's machine. The merchant will then (optionally, if they pay for it) connect to a pool of trusted nodes in the network. These nodes are other merchants that are paying for this service held and maintained by a central service (there can be many competitors of companies that offer these services) and send the transaction to all the nodes in the network first. If any nodes object to the charges possibly due to double spending the merchant will deny the transaction.
I hope I explained my idea well enough. I am not 100% set on dongles, but they would do the work and are relatively cheap to make. The problem with using a RFID chip is that I am not 100% certain on the costs of a wireless style device, with costs and electrical needs.
This idea is designed to give the user of the dongle piece of mind because if the merchant supplies a bad pin code it will erase the data on the dongle after a set amount of failures. The merchant will not only be able to accept coins but be able to send coins to users in exchange for cash using a different protocol.
Now to the actual reason for this post...
I am considering developing such a project and looking to see if there is interest in it. If there are enough people interested I might setup a non-profit company and then setup a kickstarter style fund to try and fund the idea... The early estimates are around $50,000USD to get a prototype of the dongle produced, but I have not sat and done all the business math to figure out exactly how much it will take.
My goal of this is
NOT to make money from this project... My goal is to increase the overall value of bitcoin/lightcoin so we, early adopters, can make the largest profits from it. All the source code of the device and specifications would be publicly available.
I do not want to see multiple devices like this be made and merchants have to choose which to use.I welcome comments/ideas on this idea... Please, shoot the idea down and I will try and solve them.
Thanks,
-Nathan
