please delete

[jtimon]

The question is, why would a company want to use another technology for anti-counterfeiting?

There are several possible answers:

1) Anti counterfeiting is expensive. Colored Bitcoins can be a very cheap and reliable solution. Consider liberty reserve. Presumably they have overhead expenditures.
Turn liberty reserve dollars to colored bitcoin and you would greatly reduce overhead. Only redemptions with the company directly have to be handled by the company. The company would not even have to agree to process redemptions below a certain minimum value. There is very little that the company would actually have to do on a day to day basis. Transfers between users would have very small txn fees, i.e. whatever you need to pay to transfer some satoshi.

2) Colored bitcoins would be like bearer bonds, except that they can be exchanged digitially. Nothing like this really exists right now. Bearer bonds aren't even really legal anymore. The company could access demand for its notes by tapping this niche market.

3) A colored satoshi could be more easily traded than something on GBLSE. With GBLSE there are two counterparties. With colored bitcoins and P2P exchanges, you have the same functionality as GBLSE, but only one counterparty. No need to worry about attacks (hackers, gov't, etc.) on GBLSE anymore.

These points are valid arguments in favor of using colored coins. My question was actually...when do you want something else?

You also mention that more privacy would be good. That's true. Making bitcoin anonymous would help here. However, I doubt we could get to a state where a public investment in something like Silk Road would be a safe endeavor.

You don't want to be anonymous for everyone (like silk road) when issuing credit but that doesn't mean that you want the whole world to monitor the loans you make to your friends neither. Two companies may know each other but not want to publish their mutual balance.
Obfuscating btc movements is easier because it's cash, but this is harder for credit. For example, with ripple, a network of trust is advertised and that could reveal the meaning of the balances in the chain. User's may be ok with revealing who they trust but not necessarily their current balances.

[Bitcoin Oz]

There is no way around the "scamming" issue and needing to trust humans to pay back debt will lead to more of it.

[jtimon]

There is no way around the "scamming" issue and needing to trust humans to pay back debt will lead to more of it.

I guess you never have make a deposit in a bitcoin exchange if you're that afraid of credit. Because your balance in one of them is just that, credit. the same applies for banks and for the cash in your hands, which is credit from central banks. The same applies for a voucher "this is valid as payment for 1 beer at my pub" or a prepaid phone card.
Credit is not bad per se: look at mutual credit based currencies, for example.

[cunicula]

There is no way around the "scamming" issue and needing to trust humans to pay back debt will lead to more of it.

The best way around the scamming issue is the emergence of long-term players that earn a significant and publically verifiable income stream via bitcoin business activity and thus have something too lose from destroying their reputation in the bitcoin world.

Mt. Gox, Silk Road, and Satoshi's Dice, I think, are the only examples of such players in the bitcoin economy currently.

[Bitcoin Oz]

There is no way around the "scamming" issue and needing to trust humans to pay back debt will lead to more of it.

I guess you never have make a deposit in a bitcoin exchange if you're that afraid of credit. Because your balance in one of them is just that, credit. the same applies for banks and for the cash in your hands, which is credit from central banks. The same applies for a voucher "this is valid as payment for 1 beer at my pub" or a prepaid phone card.
Credit is not bad per se: look at mutual credit based currencies, for example.

I can go and visit the bank in person. Theres a difference between that and being able to verify some anonymous internet identity.

I very rarely deposit to exchanges and only use people who are subject to fair trading legislation in my own country. People with something to lose by being dishonest such as spendbitcoins.

[Bitcoin Oz]

There is no way around the "scamming" issue and needing to trust humans to pay back debt will lead to more of it.

The best way around the scamming issue is the emergence of long-term players that earn a significant and publically verifiable income stream via bitcoin business activity and thus have something too lose from destroying their reputation in the bitcoin world.

Mt. Gox, Silk Road, and Satoshi's Dice, I think, are the only examples of such players in the bitcoin economy currently.

Sure. I agree with that.

It also explains why glbse is moving away from anonymous security issuers - those days are over.

[jtimon]

There is no way around the "scamming" issue and needing to trust humans to pay back debt will lead to more of it.

I guess you never have make a deposit in a bitcoin exchange if you're that afraid of credit. Because your balance in one of them is just that, credit. the same applies for banks and for the cash in your hands, which is credit from central banks. The same applies for a voucher "this is valid as payment for 1 beer at my pub" or a prepaid phone card.
Credit is not bad per se: look at mutual credit based currencies, for example.

I can go and visit the bank in person. Theres a difference between that and being able to verify some anonymous internet identity.

I very rarely deposit to exchanges and only use people who are subject to fair trading legislation in my own country. People with something to lose by being dishonest such as spendbitcoins.

Your balance at the bank is still credit from the bank to you.
If it is about laws, you can link a legal contract to a cryptographic keypair. Thus colored coins could have legal value on courts.

[Zangelbert Bingledack]

Trader A puts BTC up for sale. The BTC is signed with two keys, one stored in Trader A's account, the other stored in he P2Coin chain where Trader A has no access to it (unless the trade expires, or the trade is canceled)

What exactly does "other stored in P2Coin chain" mean? Who has access to it? Can it be read by any person or any program? Who has access to source code of such programs? Can they modify it to steal it?

Trader B, either manually, or with the use of a more convenient TraderBot, transfers USD into Trader A's account.
This step automatically notifies P2Coin  (<----- This is the bottle-neck/security issue. Can someone come up with a slution?)
P2Coin releases the second private key to Trader B
Trader A releases the first private key to Trader B, giving them access to BTC.
<snip>
Trader A fails to release the first private key to Trader B. Trader A received USD, but has lost BTC. Trader B lost USD and doesn't have BTC. Since Trader A already got paid, and lost his BTC, there is no reason for him to release the first private key, unless he wants to be a big jerk.

As you noted, what if Trader A figures out how to send a fake notification?
And what ensures Trader A will ever release his private key to Trader B? Just look around this board, the world is full of jerks.

Trader B fails to send USD.
Trader A does not notify P2Coin of cash receipt
Transaction is canceled. After some time the second private key is released back to Trader A

How long before non-receipt is the transaction cancelled? What about a network delay? Can I exploit this arbitrary condition to get the cash but not send the cash receipt to keep my bitcoins and the cash?

Ideally, we should eliminate the risk but we may be able to get away with fragmenting it to tiny pieces and distributing it.

No just have the two traders create a new wallet where each has one half of the key and put the BTC in there, not in the p2coin system!

The solution to Trader A being a big jerk? Trader B *also* creates a multi-key address (in such a way that each trader only knows one of the two keys) and puts a small "guarantee fee" in it. Then after Trader A has received the funds, he will not be a jerk and fail to give Trader B the second key to the large wallet, because he'd lose out on the extra few BTC in the small guarantee wallet.

Trader B could of course be a jerk and not send Trader A the other key to the guarantee wallet, but that would be a much smaller issue that could be handled through reputation, etc. since there would be no systematic benefit to doing so. Furthermore, Trader A would not even be afraid of this very much since is still making some money on the spread.

This seems to make a p2p exchange work, as well as eliminating the need for escrow (and if escrow was ever needed, the level of trust needed for the third party could be minimized through this same "dual locked boxes" method).

Please correct if this is in error, but it seems foolproof.

EDIT: Here's a chart illustrating the incentives of each trader: https://bitcointalk.org/index.php?topic=118418.0

[EskimoBob]

Thank you for running the exchange but your bid/ask columns (Sell Orders and Buy Orders) are switched bid is usually on the left and Ask is on the right.
Really confusing.

[markm]

There is no way around the "scamming" issue and needing to trust humans to pay back debt will lead to more of it.

The best way around the scamming issue is the emergence of long-term players that earn a significant and publically verifiable income stream via bitcoin business activity and thus have something too lose from destroying their reputation in the bitcoin world.

Mt. Gox, Silk Road, and Satoshi's Dice, I think, are the only examples of such players in the bitcoin economy currently.

Do you actually think Silk Road will not simply vanish with all the loot it can some day?

There was a gold based currency on anonymous net too years ago, great reputation, worked well etc.

But when time comes to retire or whatever, why not take the loot?

-MarkM-

[cunicula]

You don't want to be anonymous for everyone (like silk road) when issuing credit but that doesn't mean that you want the whole world to monitor the loans you make to your friends neither. Two companies may know each other but not want to publish their mutual balance.
Obfuscating btc movements is easier because it's cash, but this is harder for credit. For example, with ripple, a network of trust is advertised and that could reveal the meaning of the balances in the chain. User's may be ok with revealing who they trust but not necessarily their current balances.

Sure, businesses may not want transparency because they benefit from keeping secrets. However, this doesn't mean that the world wouldn't be better off if their secrets were revealed to the public.
This is particularly true in credit markets. More transparency -> More stability.

[cunicula]

There is no way around the "scamming" issue and needing to trust humans to pay back debt will lead to more of it.

The best way around the scamming issue is the emergence of long-term players that earn a significant and publically verifiable income stream via bitcoin business activity and thus have something too lose from destroying their reputation in the bitcoin world.

Mt. Gox, Silk Road, and Satoshi's Dice, I think, are the only examples of such players in the bitcoin economy currently.

Do you actually think Silk Road will not simply vanish with all the loot it can some day?

There was a gold based currency on anonymous net too years ago, great reputation, worked well etc.

But when time comes to retire or whatever, why not take the loot?

-MarkM-

Because you can sell the marketplace to someone else and the untarnished reputation will be worth more than all the loot. If the FEDS come, however, then take the loot and run.

[jtimon]

Sure, businesses may not want transparency because they benefit from keeping secrets. However, this doesn't mean that the world wouldn't be better off if their secrets were revealed to the public.
This is particularly true in credit markets. More transparency -> More stability.

If there are two otherwise equal alternatives they'll chose to keep their secrets. I think we will use both pseudonymous-public and private transactions. But that's for credit. Bitcoin needs to be "transparent" to be cash which at the same time makes it easier to obfuscate.
I think privacy is a desirable feature for both cash and credit protocols but there's more smart property use cases that require the tokens to be publicly traceable like the smart and securely transferable bolt key (for cars and doors).
We'll definitely use both schemes.

[cunicula]

Sure, businesses may not want transparency because they benefit from keeping secrets. However, this doesn't mean that the world wouldn't be better off if their secrets were revealed to the public.
This is particularly true in credit markets. More transparency -> More stability.

If there are two otherwise equal alternatives they'll chose to keep their secrets. I think we will use both pseudonymous-public and private transactions. But that's for credit. Bitcoin needs to be "transparent" to be cash which at the same time makes it easier to obfuscate.
I think privacy is a desirable feature for both cash and credit protocols but there's more smart property use cases that require the tokens to be publicly traceable like the smart and securely transferable bolt key (for cars and doors).
We'll definitely use both schemes.

The creditor generally wants transparency. The borrower wants secrecy. However, accepting the transparent market as a borrower should allow you to borrow at lower interest rates. Obviously people can go out and get 'secret' loans in the real world, but just closing off secret markets in BTC loans should help to lower interest rates.

[jtimon]

The creditor generally wants transparency. The borrower wants secrecy. However, accepting the transparent market as a borrower should allow you to borrow at lower interest rates. Obviously people can go out and get 'secret' loans in the real world, but just closing off secret markets in BTC loans should help to lower interest rates.

Good point. I'm probably one of the few persons here who likes low interest rates as you may have noticed from my signature. Just in case, I don't like manipulated (usually by central banks) rates: that's only moving rents around instead of suppressing them.

But, for example, I get and give ripple loans to/from people I trust at zero interest using villages.cc.
Having that service decentralized would be great, but I will still want to maintain some privacy.

[dansmith]

I would like to share some raw thoughts and get feedback.

Having read http://stackoverflow.com/questions/3469628/banking-api-protocol and cursorily examined the OFX protocol, it seems that it is possible for the seller to get confirmation from the buyer's bank that funds have been sent to the seller's account.

This way it is pure p2p transaction. Of course the buyer will not remain anonymous, since the bank transfer will be made into his account.

But then I read in the very first post

Seller: Send Bitcoins to Trading Wallet (the software's own Bitcoin wallet).

Maybe we should first think how it would be possible to secure the private key to that wallet? And where will the Trading Bot run? It can't run "on the internet", it's got to be somebody's physical machine.

[alberthendriks]

Hi all,

I have done some research on p2p bitcoin exchanges. As far as I understand, the project of this topic does not have any code yet. There's another p2p exchange project which does have code: DarkExchange (https://bitcointalk.org/index.php?topic=27055.140). However it's running into troubles and they haven't figured out yet that coloring is the solution. Actually the bitcoinx project did find that out, AND it has code AND it has a website. I've discussed matters with user "ConceptPending" and it looks like we're joining the bitcoinx project. I'm sorry if I'm stealing away people now, but at least you should be aware of similar projects.

[dansmith]

I'm excited for you,
I'm doing my p2px research as well, trying to join forces on a viable project.
Kindly provide relevant info regarding bitcoinx internals etc.

[xeverse]

I don't get it. Is this alive? Any code available?

[glendall]

I think this is the best idea I've heard in a while. I hope this comes together. Could do wonders for the bitcoin world. Will be following...