I highly suggest you look at this (
https://bitcointalk.org/index.php?topic=307922.0) , which
solves all Fiat transfer problems except fraud (anonymity, reversal, suspicious transactions, bank closure, reporting, etc.) by actually
extending the scope of the project to allow spending of Bitcoin on anything.
Thanks for sharing, interesting project.
But more a way to get in BTC into those shopping platforms. It serves good for buying BTC but you cannot sell BTC to Fiat (only for articles from those shops).
I think I have seen some similar idea a while ago. As far as I remember it got closed because of legal issues/pressure form the merchants (don't remember the name and the details).
I think if that idea would scale large they would also run into problems with the merchants, as it will probably break some TOC and it is relative easy to track such transactions (BTC buyer send goods to many different recipients). Maybe it even would trigger AML issues?
Also, I have independently developed something (Truthcoin) which could be adapted for decentralized arbitration (ie, deciding who is right in the event of breach-of-contract). This would make the process completely decentralized.
Need a bit more time to read your paper and the thread, just quickly read in the thread a bit... sounds very interesting.
My first thoughts on that is:
Does a majority really creates truth?
Galileo Galilei was right even the huge majority was thinking something completly different.
I think consensus used for a decision process is weak and should only be used if we cannot find a solution with mathematical proof.
But of course there are many fields where no mathematical proof is possible so all the human complexity comes in again ;-)...
In real life I guess models with more complex structures works best, like e.g. liquid democracy which is used by the pirate parties. I think flat structures like simple voting are not very powerful for the difficult task to find "truth".
But need to read more about that idea... was just my first reaction...
This coinffeine idea is stronger from a game-theoretic point of view, because you'll notice that it is essentially a repeated version of what has been proposed with the collateral OVER the transaction amount. Blackmailing is therefore riskier (but still possible). Counter-intuitively, it might be best if the parties could never contact each other at all.
Yes the idea to stream the fiat tx is interesting, but I think it will suffer from practical problems and risks (single point of failure).
- There are only a few payment processors with open APIs in contrast to a huge amount of normal banks (without those APIs). So these payment processors are more exposed to political pressure.
- The payment processors can easily track those txs (clear pattern with those micro-payments).
- The idea only works if there are no bank tx costs, which is mostly true for those payment processors, but it might violate their TOC where a limited number of tx/time interval might be considered as "fair use". At the end every tx creates costs for them, so they would be stupid to tolerate that.
- The Banks need to report any suspicious bahaviour, and those micro payments could be considered suspicious to them.
RE: "... if the parties could never contact each other at all":
Thats a good point.
I was thinking initially of that strategy to prevent/mitigate blackmail.
The only solution I came up was to use a asymmetric collateral in the beginning.
So Alice has to pay 1.1 BTC collateral and Bob 0.1 BTC + 1 BTC payment = 1.1 BTC (with the values from my example...).
So both have the same money to lose if Alice does not pay the Fiat. So Alice has no advantage for a blackmail anymore.
Then when Bob has received the Fiat he would have an even stronger position to blackmail as Alice has to lose 1.1 BTC + 1000USD -> 2.1 BTC and he only 0.1 BTC + 1 BTC - 1000USD -> 0.1 BTC.
If we can manage to remove the communication channel at that point a blackmail could be prevented.
But the bank details reveal the name so they can find the other peer, even the software does prevent communication.
If we use a pool of traders and the payout will be randomized than the communication link would be broken.
So if 10 traders (all with same volume and price) will be in the pool and Bob release the BTC at the end to a random peer, a blackmail attempt to his initial trading partner will be in-effective, as Alice will get the money from any random peer (1 to n chance that it is really Bob).
That would at least decrease the probability for blackmail, but of course introduce the complexity and limitations of a pool.
So I did not follow that idea further, but maybe somebody get inspiration for a better solution out of that?
