The Royal Canadian Mint just announced a new alternative to BitCoin

[unabridged]

With MintChip there is no blockchain. There is no central ledger (centralized or decentralized).

Why do you think this? I thought the description made it pretty clear there is a central clearinghouse for all transactions. Your money is not on the chip, the chip is just an account# and keys to spend. The balance is recorded in the central clearinghouse. The devices are just able to check that transactions are signed by the certificate authority without having to ask the clearinghouse themselves, basically it means the business you are transacting with can give you a receipt that proves they sent/received the money.

Well three possible outcomes:
a) they crash and burn because it honestly is a real difficulty problem.
b) they figure it out and we copy them.
c) they figure it out but we can't copy them so we buy BTC with MintChips.

Honestly I think a is going to happen but any of the three is a win.

c
Western Union currently does this, they make it clear to banks any money sent to them is nonrefundable (they are large enough to negotiate such an arrangement unlike other smaller processors and thus banks have serious limits on how much they allow you to send to western union and probably more sensitive fraud detection) or they require you to hand money over in person. There is no reason why a government could not tell banks in its country that any money sent to mintchip cannot be reversed, and leave it to the bank to decide how much they want to risk.

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[Stephen Gornick]

With MintChip there is no blockchain. There is no central ledger (centralized or decentralized).

Your money is not on the chip, the chip is just an account# and keys to spend. The balance is recorded in the central clearinghouse. The devices are just able to check that transactions are signed by the certificate authority without having to ask the clearinghouse themselves,

Well, there will be a ledger recording issuance and redemption I'm presuming, it just won't be real-time.

For instance, the broker will know which MintChip id the funds went to.  So the Mint's "centralized ledger" will probably show that.

After that, the broker doesn't and can't know if the funds have then been spent to another MintChip though.  Those transactions are from one MintChip to another MintChip and don't have to to be checked against a central ledger to see if the funds are good.  

Only when a person or merchant redeems the funds on its MintChip back to a broker (in exchange for fiat) does the trail of transactions become known to the broker or Mint.

So technically there is a centralized ledger, it just isn't complete with real-time information as to which MintChip has what funds.

[DeathAndTaxes]

With MintChip there is no blockchain. There is no central ledger (centralized or decentralized).

Why do you think this? I thought the description made it pretty clear there is a central clearinghouse for all transactions. Your money is not on the chip, the chip is just an account# and keys to spend. The balance is recorded in the central clearinghouse.

Absolutely nothing indicates that.  Nowhere in the docs, descriptions, API.  Nowhere.

Tx are person to person.

Receiver chip makes a request. Sender chip uses that to create a credit, sign it, and give it DIRECTLY to the receiver.  Receiver chip updates internal balance and senders chip reduces internal balance.

Please indicate anywhere that indicates tx between users are recorded to a clearinghouse.

[DeathAndTaxes]

Well, there will be a ledger recording issuance and redemption I'm presuming, it just won't be real-time.

For instance, the broker will know which MintChip id the funds went to.  So the Mint's "centralized ledger" will probably show that.

After that, the broker doesn't and can't know if the funds have then been spent to another MintChip though.  Those transactions are from one MintChip to another MintChip and don't have to to be checked against a central ledger to see if the funds are good.  

Only when a person or merchant redeems the funds on its MintChip back to a broker (in exchange for fiat) does the trail of transactions become known to the broker or Mint.

So technically there is a centralized ledger, it just isn't complete with real-time information as to which MintChip has what funds.

Well technicalities or not the point is that when User A is paying user B, user B is relying on the fact that user A "can't" break the chip.  The chip ensures security.  If User A has extracted private keys and can generate thousands or millions of duplicate tx at will there is nothing user B can do to detect that.  To user B chip the tx looks as valid as any other valid tx.  

[Gavin Andresen]

Well technicalities or not the point is that when User A is paying user B, user B is relying on the fact that user A "can't" break the chip.  The chip ensures security.  If User A has extracted private keys and can generate thousands or millions of duplicate tx at will there is nothing user B can do to detect that.  To user B chip the tx looks as valid as any other valid tx.  

If I'm reading their specs correctly, if A manages to break the chip she could generate duplicate transactions for the full value stored on the chip to B and C and D (and E and F and...).

But she wouldn't be able to double-spend the same funds to B, because B's chip is able to detect that attempted double-spend.

Eventually, I assume the Mint would figure out that the same funds were spent at B and C and D and... etc, just like the Mint eventually figures out when a lot of counterfeit paper notes are being spent in a particular area. And I imagine they'd deal with it the same way, interviewing merchants to ask them if they have a record of who made a transaction at a particular time, etc.

And assuming B/C/D/... did nothing wrong I bet the Mint honors all of the the A -> B/C/D/... transactions, so B/C/D/... don't lose any money. The Mint eats the loss (it just shows up as inflation in the money supply, so really EVERYBODY pays for the fraud), and if the problem gets large enough they declare version 1.0 of their chips obsolete and come out with a New and More Secure version.

It all looks pretty nifty to me, I hope it is a big success; it could be a great way to buy Bitcoins (non-reversible, cash-like...).

[DeathAndTaxes]

Well technicalities or not the point is that when User A is paying user B, user B is relying on the fact that user A "can't" break the chip.  The chip ensures security.  If User A has extracted private keys and can generate thousands or millions of duplicate tx at will there is nothing user B can do to detect that.  To user B chip the tx looks as valid as any other valid tx.  

If I'm reading their specs correctly, if A manages to break the chip she could generate duplicate transactions for the full value stored on the chip to B and C and D (and E and F and...).

But she wouldn't be able to double-spend the same funds to B, because B's chip is able to detect that attempted double-spend.

That is my understanding also based on the limited information.  My issue would be the track record of "secrets on a chip" is pretty bad.  It really is only a matter of when not if the chip gets hacked.

I bet the Mint honors all of the the A -> B/C/D/... transactions, so B/C/D/... don't lose any money. The Mint eats the loss (it just shows up as inflation in the money supply, so really EVERYBODY pays for the fraud), and if the problem gets large enough they declare version 1.0 of their chips obsolete and come out with a New and More Secure version.

That is what I am thinking.  Would they just raise fees (to remove the surplus currency from the economy) or would they eventually be forced to lower the exchange rate (i.e. 1 mintchip dollar = 0.97 physical dollars).

[casascius]

Well technicalities or not the point is that when User A is paying user B, user B is relying on the fact that user A "can't" break the chip.  The chip ensures security.  If User A has extracted private keys and can generate thousands or millions of duplicate tx at will there is nothing user B can do to detect that.  To user B chip the tx looks as valid as any other valid tx.  

I would expect someone who gets a chip's private key could just mint their own money without needing to double spend. Afaik when a chip signs a message to transfer value, it has no burden of proof that it ever received that value from somewhere else, it is simply trusted to only sign payments out of its balance and to not sign payments without sufficient funds. With a hacked chip or compromised private key, one could simply issue new transactions without limit, they wouldn't need to be double spends.  Such fake transactions could be used to top up real non-hacked cards.

[adamstgBit]

Well technicalities or not the point is that when User A is paying user B, user B is relying on the fact that user A "can't" break the chip.  The chip ensures security.  If User A has extracted private keys and can generate thousands or millions of duplicate tx at will there is nothing user B can do to detect that.  To user B chip the tx looks as valid as any other valid tx.  

I would expect someone who gets a chip's private key could just mint their own money without needing to double spend. Afaik when a chip signs a message to transfer value, it has no burden of proof that it ever received that value from somewhere else, it is simply trusted to only sign payments out of its balance and to not sign payments without sufficient funds. With a hacked chip or compromised private key, one could simply issue new transactions without limit, they wouldn't need to be double spends.  Such fake transactions could be used to top up real non-hacked cards.

where are you getting the information for the chips technical details?

are you just assuming it works like you think it would?

[rjk]

Well technicalities or not the point is that when User A is paying user B, user B is relying on the fact that user A "can't" break the chip.  The chip ensures security.  If User A has extracted private keys and can generate thousands or millions of duplicate tx at will there is nothing user B can do to detect that.  To user B chip the tx looks as valid as any other valid tx.  

I would expect someone who gets a chip's private key could just mint their own money without needing to double spend. Afaik when a chip signs a message to transfer value, it has no burden of proof that it ever received that value from somewhere else, it is simply trusted to only sign payments out of its balance and to not sign payments without sufficient funds. With a hacked chip or compromised private key, one could simply issue new transactions without limit, they wouldn't need to be double spends.  Such fake transactions could be used to top up real non-hacked cards.

This seams plausible, I wish they would issue some detailed information about how it works so that we could determine the actual failure modes of the setup.

[marcus_of_augustus]

Well technicalities or not the point is that when User A is paying user B, user B is relying on the fact that user A "can't" break the chip.  The chip ensures security.  If User A has extracted private keys and can generate thousands or millions of duplicate tx at will there is nothing user B can do to detect that.  To user B chip the tx looks as valid as any other valid tx.  

I would expect someone who gets a chip's private key could just mint their own money without needing to double spend. Afaik when a chip signs a message to transfer value, it has no burden of proof that it ever received that value from somewhere else, it is simply trusted to only sign payments out of its balance and to not sign payments without sufficient funds. With a hacked chip or compromised private key, one could simply issue new transactions without limit, they wouldn't need to be double spends.  Such fake transactions could be used to top up real non-hacked cards.

This seams plausible, I wish they would issue some detailed information about how it works so that we could determine the actual failure modes of the setup.

Open Source it and let's see how "great" it really is ..... if it can't survive in  the free market for ideas it probably can't survive long term.

[cbeast]

It should be worth a chuckle to see what problems they face with adoption. Perhaps we'll have a Bit-Minstant service before long for people that want an e-cash that's easier and friendlier to use.

[benjamindees]

Three words:  exploding chipcoin implants

That could be made into a promotional video.  Chipcoins use advanced tamper-detection technology to protect against counterfeiting hackers.  Oh no, Barbara's chip accidentally self-destructed.  Ted didn't pay a parking ticket, so his chip was deactivated.  Choose freedom.  Choose Bitcoin.  Don't get chipped.

Seriously, though, this is probably good for Bitcoin.  There's that theory that, you know, having a wingman who kind of looks like you, but is less-attractive, is a benefit.  It might be limited to small transactions.  It's not going to be anonymous.  There will be chargebacks.  Obviously it will be inflationary.  I'm looking forward to it.

[Phinnaeus Gage]

One thing that strikes me as very odd, is the amount of marketing and press releases put forward into MintChip, even though the service isn't readily available. If you Google both words, MintChip & Bitcoin (without quotes), you'll be surprised by the total search results.

http://www.engadget.com/2012/04/05/royal-canadian-mint-aims-to-kickstart-digital-currency-with-mint/

Bitcoin may not have yet grown much beyond a relatively small base of enthusiasts, but it looks like the Royal Canadian Mint is hoping that its backing will help its own new digital currency catch on in a bigger way.

Followed by 47, and counting, comments. A good read!

[DeathAndTaxes]

Yeah it is called astroturfing.  The good news is most astroturf attempts fail when the money stops.  Everyone has a budget ... well I am not sure that applies to central banks given they can just print more money.

[Phinnaeus Gage]

Just found an ass-long read, and I'm still reading, but wanted to share the link nonetheless: http://news.ycombinator.com/item?id=3797977

One thing I learned:

One thing that you might not know is that in Canada, we don't have "debit cards" per se, but INTERAC cards, which can't be used for online purchases. This means that you must use a credit card for online purchases, which makes online transactions prohibitive for people who don't want or otherwise can't have credit card (i.e. kids).

Bitcoins don't have IDs - it's only amounts being transferred between addresses. If I have 5BTC in my wallet, I have no way to differentiate between let's say the 0.01 "canadian" and the 4.99 ordinary BTC. i could not specify which ones to send in a transaction.

That said, if MintCoin gains momentum I'm sure there will be plenty of MC-BTC exchanges popping up.

~Bruno~

[kwukduck]

Didnt you know? Canadian bitcoins are worth at least twice as much as normal bitcoins! Dafuq is that sht?!

[Phinnaeus Gage]

Took some digging, but discovered what backs the MintChip:

[DeathAndTaxes]

what makes you think that?

[Raoul Duke]

what makes you think that?

His sense of humour I would say

[acoindr]

what makes you think that?

His sense of humour I would say

Indeed.

The Bank of Canada Has Virtually No Gold Backing the Canadian Dollar