General question: Physical Bitcoin transfers, what's the best solution?

[ssaCEO]

After reading about the fake Chinese restaurant and now Bu.mp, I'm trying to think of creative ideas for physical spending of Bitcoins -- not from an exchange, but from your own wallet. What would make them as easy to spend as cash? What would be easy for the merchant? Without buying prepaid cards, without necessarily even having a cell phone, without QR codes...without any third parties whatsoever, which is the whole beauty of Bitcoin. There should be some kind of system that makes it really easy.

I have a kind of half-baked idea about this, but I need some help fleshing it out, so please comment on this to help me. Here's what I thought of:

Suppose you kept your wallet on a memory stick, and there was a program that merchants could use, to type in a USD amount, that read the amount and converted it to Bitcoin at the current exchange rate, and then said "Insert memory stick". When the stick was inserted, the program would ask the user to type in a PIN code that was stored in a hashed file on the stick called "pin.dat". If it was accepted, the program would then load a key file that would decrypt the wallet.dat on the stick, transfer the correct amount, encrypt it again, and print a receipt for the transaction.

The downside to this is that it would require you to walk around with the most recent copy of your wallet in a relatively weak encryption format. Otherwise, it's very physical and could be streamlined to be really fast. What do you think?

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[evoorhees]

Suppose you kept your wallet on a memory stick, and there was a program that merchants could use, to type in a USD amount, that read the amount and converted it to Bitcoin at the current exchange rate, and then said "Insert memory stick". When the stick was inserted, the program would ask the user to type in a PIN code that was stored in a hashed file on the stick called "pin.dat". If it was accepted, the program would then load a key file that would decrypt the wallet.dat on the stick, transfer the correct amount, encrypt it again, and print a receipt for the transaction.

The downside to this is that it would require you to walk around with the most recent copy of your wallet in a relatively weak encryption format. Otherwise, it's very physical and could be streamlined to be really fast. What do you think?

How is that any easier than just having Bitcoins on your mobile phone and paying via: http://www.youtube.com/watch?v=YZ-pqo0cLcE

Seems even easier than using physical cash (no issues of denomination).

[greyhawk]

. There should be some kind of system that makes it really easy.

There is. It's called cash.

[ssaCEO]

Bitpay's nice. I don't have an iphone and haven't tried it. But again, scanning QR codes seems like a really hackish implementation. I'm trying to think of ways around that -- to access the wallet directly without the wallet owner giving up private keys, but in a way that gives the merchant instant verification that the coins were really in the wallet, really in the blockchain, and really sent right then.

[bitconformist]

There is. It's called cash.

I hate carrying cash.

I can hold it for you. $5/month for the service and I'll take great pains to look after it - Mybitcoin was an inspiration to me!

[ssaCEO]

If it was accepted, the program would then load a key file that would decrypt the wallet.dat on the stick, transfer the correct amount, encrypt it again, and print a receipt for the transaction.

If the program has access to your wallet, what is preventing it from making a copy?

The program would require a PIN that decrypted the wallet; the receipt would show the amount taken out by the program and your remaining balance.

[greyhawk]

There is. It's called cash.

I hate carrying cash.

I completely understand. It might get stolen or lost after all.

Can't happen with phones or USB sticks.

[ssaCEO]

This got a little off-track, because transferring your most recent wallet to the "thing" in your pocket is always going to be a problem. But what if the thing in your pocket was automatically encrypted, and could only be decrypted when you punched in a pin code at a merchant who plugged it in, and only for an amount you agreed to in person? Wouldn't that kind of solve the problems?

[Xenland]

TL:DR

I think that best way would be to create a blank wallet, send those Bitcoins to that newly created blank wallet then take a usb drive and plug it into a merchant terminal that merchant then downloads the wallet and then sends the change back to your return Bitcoin address.

You could do what ssaCEO said in combination with mine, as ssaCEO's way of doing it would allow the merchant to extract your Bitcoins after you've typed in your password the merchant could copy your wallet and steal your bitcoins, so this way would require some USB stick that has some Bitcoin Builtin encyprtion of some wore speciifally for giving up bitcoins and send them through the USB slot.

I personally like the idea of smart phones carrying a small amount of BTC and scanning a QR code to send them.
Very high tech but dosen't appeal to everyone as everyone dosen't have smart phones!

[error]

This got a little off-track, because transferring your most recent wallet to the "thing" in your pocket is always going to be a problem. But what if the thing in your pocket was automatically encrypted, and could only be decrypted when you punched in a pin code at a merchant who plugged it in, and only for an amount you agreed to in person? Wouldn't that kind of solve the problems?

To do this reasonably securely you would have to put a whole (at least lightweight) Bitcoin client on the device, and by then it's going to cost you as much as a smartphone anyway. Nice idea, but economically impractical. Get used to scanning QR codes, I guess...

[Mike Hearn]

QRcodes are a temporary hack. They aren't terrible but NFC works much better. I've done what is probably the worlds first NFC Bitcoin transaction some months ago. It boils down to:

1) Take phone from pocket
2) Unlock the screen
3) Touch it against the person receiving payment (could be linked to a point-of-sale device like a cash register)
4) Press confirm

The main downside of paying this way is that if your phone runs out of battery, you're out of luck. Also current implementations require both sides to have an internet connection. That's not technically required. The receiver can provide the connection, the sender doesn't require one.

Smartphones are selling so fast, within a few years ~everyone who might use Bitcoin will have one.

[payb.tc]

QRcodes are a temporary hack. They aren't terrible but NFC works much better.

i agree with that if you're talking phone<->phone but in some other thread we were talking about having a QR printed on your paper bill which is brought to the table.

you can't use NFC with a piece of paper, yet.

[BkkCoins]

There's no way anyone should plug in their flash stick with wallet and trust that the contents will be there after. It's just too easy to compromise/hack/steal and not have any recourse.

You plug in your stick.
Enter some PIN into an untrusted system.
You trust whatever it says on screen.

Later you find your wallet empty.
Back to shop..."I had 200 BTC and now it's gone"...
Shop: "Not me. And how do I know you had 200 BTC and prove I took it."

Forget that whole idea of a stick you plug in. You'll never be able to trust your wallet on some unknown system.

[Xenland]

QRcodes are a temporary hack. They aren't terrible but NFC works much better. I've done what is probably the worlds first NFC Bitcoin transaction some months ago. It boils down to:

1) Take phone from pocket
2) Unlock the screen
3) Touch it against the person receiving payment (could be linked to a point-of-sale device like a cash register)
4) Press confirm

The main downside of paying this way is that if your phone runs out of battery, you're out of luck. Also current implementations require both sides to have an internet connection. That's not technically required. The receiver can provide the connection, the sender doesn't require one.

Smartphones are selling so fast, within a few years ~everyone who might use Bitcoin will have one.

Ive never thought of cell phone battery dying, thats an interesting dellima. i would think if eveyone was accepting bitcoins with smartphone scanning that by then wireless recharging will be mainstream as well then you could be at a restruant and eating or at the mall, and bam your phones charging while you shop or enjoy your food.

[Cryptoman]

Why not have a future client capable of printing Bitcoin notes worth 0.25, 0.5, 1 BTC, etc?  The client would transfer part of your balance to a new address and then print out a note with a scanable code containing the public/private keypair.  You would present a series of notes in payment, slightly more than your bill, and the notes would be scanned in and verified by the merchant.  The change would be sent to your receiving address, also encoded on the notes.  Didn't someone already do something like this about 6 months ago?

[TTBit]

you show me a qr code with a private key on it which has 2.0 btc on it, with change address. When scanned, a website asks how much to send. Punch in 1.23 to your address, and 0.77 goes to change address. Note is now garbage. Website doesn't hold any coins (but must be trustworthy enough to facilitate the transaction)

Or, send coins to BTCWebsite.com. BTCWebsite.com prints out notes for you, with QR codes for whoever scans them. You lose them, they are gone, same as cash. Have to trust the website, as they now hold coins. Maybe if notes are not spent by 4:00am they are returned to your personal wallet.

[Mike Hearn]

Why would anyone print a qrcode on a paper bill? Anywhere hi-tech enough to accept Bitcoins can easily bring a phone to your table for receiving the payment.