The idea came to me when I read the TOR thread about trading mining hashes rather than actual bitcoins to incentivize TOR nodes in a more anonymous way. I'm not sure it's entirely feasible though so I need some input on the idea. But lets say a pool started an internet wallet service where you can deposit bitcoins. You deposit 10 BTC, and the pool credits you with future proof of work worth of 10 BTC. When you want to spend your bitcoins to someone else you get a bitcoin adress, give this to the pool, who then diverts 10 BTC worth of hashing power towards this adress (minus an arbitrary fee). The 10 BTC you initially deposited would be used to reward the miners so they don't lose anything from diverting the hashing power. Once you get the hashes, you give these to the person you wanted to pay who can check their integrity to know their value. (and that person may actually be part of a pool himself and relay the hashes to it so he gets bitcoins without variance).
I have no idea if this is actually a good idea or even technically reasonable, but it seems to me like this would be a way to remove the block chain link between payer and payee. The payer would only be linked to the pool he deposited at. The pool wouldn't even know who it is contributing hashing power to. And the payee would get newly minted bitcoins straight from a block reward, or from another pool.
Now is the time you rip this suggestion to pieces.
What problem are you trying to solve with this?
The point is that paying with mining hashes have some advantages and some disadvantages over paying with bitcoins. The problem I'm trying to solve is any situation where the advantages outweigh the disadvantages. Right now though, I'm just trying to wrap my head around how valuable the advantages are and how you can minimize the disadvantages.
Mining hashes can be instantly verified. You don't need to wait for a confirmation.
It will leave no public link between payer and payee in the block chain. Most hashes won't be of a valid block. It's just proof-of-work of a specified value. Those hashes that do create a valid block will be hidden among all regular mined blocks.
It allows microtransactions to a bigger degree than bitcoin itself.
One example where all of these properties could be useful is to pay for bandwith in an anonymous network in real time.
There are also some disadvantages.
The most prominent as far as I can see is that the payer needs to trust the payment processor to make good on their promise. However, the payee still does not. This could possibly be solved through smart contracts somehow.
If the pool server gets compromised, payment information could become public, but no more than what would normally have been in the block chain. This risk could also be minimized by making mining hash payments between multiple pools before sending to the true destination as I mentioned in my previous post. Then all of the pools need to be compromised to link payer to payee.
Couldn't you "deposit" money at the pool by giving them a transaction with a fee of the amount you want to deposit?
Then you're just getting your and other people's coins back, same as a regular mixer.
The point is you're not getting any coins back. You are getting mining hashes back directed towards an adress of your choice at a time of you choice, that may or may not create a valid block. Say I have an account at "the deepbit payment processor pool" and I want to make a payment to you. You give me an adress. I give the adress to deepbit who diverts the mining power of the pool to create hashes of the expected value of the payment. I get the hashes and give them to you. You can check that they represent real proof-of-work the same way a pool operator does.
The point I wanted to make was that the money availible for mining is not fixed. It can be increased if the standard method to deposit at pools where to make it through mining fees. If you wanted to deposit at a pool and I wanted to make a payment of the same sum, then the miners that gets to create my hashes could be compensated by your fee to the pool.