Topic: A proposed method to facilitate p2p trading between fiat and cryptocurrencies (Read 2293 times)
May 26, 2013, 12:00:38 PM
can you not just make a namecoin "Name", and call it a coloured coin, and transfer it around?
May 26, 2013, 11:59:18 AM
dUSD already exists, it's called Liberty Reserve
Apparently I spoke about 5 minutes too soon.
Liberty Reserve officially does not exist anymore...
May 26, 2013, 11:21:18 AM
This decentralization is where capitalism excels: Turning fiat into crypto is a profitable a business model and there are a dozen unexploited ways to do it at the local level, through as many separate business entities as desire to do it. It's simple buying and selling, the only snag being that reversible payment methods don't suit it.
If credit cards are out, what's left? Paying in-store for the aforementioned bitcoin cards, using 900 numbers, texting services, even adoption by existing IRL currency exchanges, to name a few.
If credit cards are out, what's left? Paying in-store for the aforementioned bitcoin cards, using 900 numbers, texting services, even adoption by existing IRL currency exchanges, to name a few.
May 25, 2013, 11:15:43 PM
What I meant is guerrilla warfare against the fiat system, as-in small portable devices that are so widespread you can literally go down the street and purchase some BTC from the first person that walks by.
Yes, I understood that. Of course you mean "against" the fiat system, so do I (what else would it mean?.)
Someone else has also proposed that portable device idea (or maybe it was you, I forget).
It improves convenience (if you live in a populated area), but I don't think it addresses the main disadvantages of the in-person model. In this post I described the safest possible localbitcoins-type transaction, and the obvious flaw:
https://bitcointalksearch.org/topic/m.2255327
Would be interested to hear your feedback. Can the safety of in-person be improved further? Even if so, a P2P with wire transfer would to my mind be far superior if it could be made to work.
May 25, 2013, 10:48:11 PM
Any form of trading based on existing non physical fiat (e.g. computer debt) is unstable. The only solution seems to be to create an efficient person-to-person transfer device and then guerrilla warfare that fiat system.
Your assertion that the "guerrilla warfare" must be based on physical fiat is based on what?
If you read my post a few posts up and follow the links, I hope you can see that leveraging the power of P2P software and using it *specifically* to create a fiat to crypto transfer using wire transfer is likely to be much more powerful than in person exchanges.
What is constantly happening on this forum is people saying "I've solved it!" then describing a purely crypto currency solution for real time decentralized exchange. Great (if they can actually do it), it's a fascinating and worthwhile project. But what happens next is always "this does not address the fiat transfer problem". Because most of us understand that it's not only a matter of convenience, we need decentralised transfer of fiat into crypto to stop the banks shutting Bitcoin down.
By the way I don't deny that in person physical exchanges addresses this; I just think it's worth finding a better way. The average man on the street is never going to feel very comfortable with it, for obvious reasons.
What I meant is guerrilla warfare against the fiat system, as-in small portable devices that are so widespread you can literally go down the street and purchase some BTC from the first person that walks by.
May 25, 2013, 08:13:33 PM
Any form of trading based on existing non physical fiat (e.g. computer debt) is unstable. The only solution seems to be to create an efficient person-to-person transfer device and then guerrilla warfare that fiat system.
Your assertion that the "guerrilla warfare" must be based on physical fiat is based on what?
If you read my post a few posts up and follow the links, I hope you can see that leveraging the power of P2P software and using it *specifically* to create a fiat to crypto transfer using wire transfer is likely to be much more powerful than in person exchanges.
What is constantly happening on this forum is people saying "I've solved it!" then describing a purely crypto currency solution for real time decentralized exchange. Great (if they can actually do it), it's a fascinating and worthwhile project. But what happens next is always "this does not address the fiat transfer problem". Because most of us understand that it's not only a matter of convenience, we need decentralised transfer of fiat into crypto to stop the banks shutting Bitcoin down.
By the way I don't deny that in person physical exchanges addresses this; I just think it's worth finding a better way. The average man on the street is never going to feel very comfortable with it, for obvious reasons.
May 25, 2013, 04:53:26 PM
Any form of trading based on existing non physical fiat (e.g. computer debt) is unstable. The only solution seems to be to create an efficient person-to-person transfer device and then guerrilla warfare that fiat system.
May 25, 2013, 02:31:29 PM
So is there a way to use mintchip as an avenue to solve some of these problems? Don't get me wrong; I do not like mintchip and was against it from the start but if it can be used as a loophole to do fiat conversions then I am all for it.
May 25, 2013, 02:28:27 PM
I could be wrong, but isn't mintchip pegged to the Canadian dollar?
If you can convert mintchip back to usd without having to register as a "money transmitter" then that would solve your liquidity problems on a p2p exchange (or any exchange for that matter)
If you can convert mintchip back to usd without having to register as a "money transmitter" then that would solve your liquidity problems on a p2p exchange (or any exchange for that matter)
Of course it is.
May 25, 2013, 02:24:15 PM
I could be wrong, but isn't mintchip pegged to the Canadian dollar?
If you can convert mintchip back to usd without having to register as a "money transmitter" then that would solve your liquidity problems on a p2p exchange (or any exchange for that matter)
If you can convert mintchip back to usd without having to register as a "money transmitter" then that would solve your liquidity problems on a p2p exchange (or any exchange for that matter)
May 25, 2013, 01:43:02 PM
As interesting as all these ideas are, the dUSD "counterfeit" issue is pretty unavoidable.
Really all you need is a big-name, trusted vendor to distribute and sell bitcoin cards in stores, much the same way as you would buy Vanilla MasterCard or any gift card or calling card. Scratch off to see private key and/or qrcode, and you can claim it with almost any old wallet. Adding an intermediate step would allow said company to perform the exchange at the time of redemption, selling the cards based on USD value alone. There are really a hundred ways to do this. EDIT: As an added bonus, gov gets their sales taxes, makes them happier.
Really all you need is a big-name, trusted vendor to distribute and sell bitcoin cards in stores, much the same way as you would buy Vanilla MasterCard or any gift card or calling card. Scratch off to see private key and/or qrcode, and you can claim it with almost any old wallet. Adding an intermediate step would allow said company to perform the exchange at the time of redemption, selling the cards based on USD value alone. There are really a hundred ways to do this. EDIT: As an added bonus, gov gets their sales taxes, makes them happier.
May 25, 2013, 09:11:45 AM
Yes, this is a major problem. As soon as you create dUSD, you are directly violating the law. Regulators are still not sure what to do about bitcoin, as it lives in a grey area. But creating digital dollars is in direct contravention of the laws about minting currency.
By far the most important is how to transfer fiat into the P2P system. Everything else will fall into place once this is solved.
I have been discussing it here:
http://www.reddit.com/r/Bitcoin/comments/1doeih/idea_for_solving_the_exchange_problem_just_add/
here:
https://bitcointalksearch.org/topic/m.2210078
and with dansmith, the use of SSL to verify fiat payment here:
https://bitcointalksearch.org/topic/m.2266271
Wire transfer, I think, is key, because it has been designed to be irreversible (after a certain time) because it involves deposit into current/checking accounts, which are good-as-cash by design.
By far the most important is how to transfer fiat into the P2P system. Everything else will fall into place once this is solved.
I have been discussing it here:
http://www.reddit.com/r/Bitcoin/comments/1doeih/idea_for_solving_the_exchange_problem_just_add/
here:
https://bitcointalksearch.org/topic/m.2210078
and with dansmith, the use of SSL to verify fiat payment here:
https://bitcointalksearch.org/topic/m.2266271
Wire transfer, I think, is key, because it has been designed to be irreversible (after a certain time) because it involves deposit into current/checking accounts, which are good-as-cash by design.
May 25, 2013, 08:35:03 AM
dUSD already exists, it's called Liberty Reserve
Apparently I spoke about 5 minutes too soon.
May 24, 2013, 11:16:24 AM
dUSD already exists, it's called Liberty Reserve. it's centralized, but for the most part it works, and it is a good test example of your system. certainly, it works, but you still have the problem of converting USD into dUSD. if you can find a way to turn cash into dUSD, that's the first hurdle. the next is paypal and credit cards, since you run into the inevitable "one is reversible, one is not" problem. IMO the only way to solve that is with centralization, i.e. trust in a specific entity, or a distributed web of trust like #bitcoin-otc's WOT. but if you can solve the paypal or credit card/reversible --> digital dUSD/irreversable problem, no matter the form, you'll be a bitcoin hero.
May 24, 2013, 07:06:07 AM
This system will work if you use services like webmoney/paypal/liberty reserve etc... Then it will work very well!!
And if people are worried about being scammed, just brake the transaction into several pieces and do 1:1 ratio of sending to receiving.
So if Bob wants to to exchange 10usd with Alice, once the transaction is initiated the first portion say 3 is sent, then Alice has to send 3 dollars back to Bob for the next sum to be sent and unless all the amounts are sent back and forth then Alice can't get anything (so Alice can't have access to any money until all the transfers are made and confirmed by both parties). Otherwise if Alice does not reply in timely manner the whole transaction is blocked and refunded to the sender. So the receiving party can not just take part of the sum and run.
So a protocol where the party that send money first can cancel the whole transaction if there is a part missing.
And if people are worried about being scammed, just brake the transaction into several pieces and do 1:1 ratio of sending to receiving.
So if Bob wants to to exchange 10usd with Alice, once the transaction is initiated the first portion say 3 is sent, then Alice has to send 3 dollars back to Bob for the next sum to be sent and unless all the amounts are sent back and forth then Alice can't get anything (so Alice can't have access to any money until all the transfers are made and confirmed by both parties). Otherwise if Alice does not reply in timely manner the whole transaction is blocked and refunded to the sender. So the receiving party can not just take part of the sum and run.
So a protocol where the party that send money first can cancel the whole transaction if there is a part missing.
May 24, 2013, 02:58:23 AM
escrow is exactly what bitstamp/mtgox/etc are.
if some bank account is going to receive more then $1000 a day from a multitude of people, without a wire transfer licence. then the banks will investigate it. if the story of "its personal use" is given. the taxman will nibble at each transaction.. plus by having an escrow/third party used as a trusted bank. you have now just demolished the whole idea of p2p transactions.
the only way it would work is having a bank that has API tools to inform of payment transactions. and communications with bank managers that it will only deal with small amounts under $1000 thus avoiding the identification requirements. but even then the OP's project may end up requiring users to register their ID when signing up to the project.
after all FIAT is involved so you cant make up your own rules or pretend the government rules dont apply.
if some bank account is going to receive more then $1000 a day from a multitude of people, without a wire transfer licence. then the banks will investigate it. if the story of "its personal use" is given. the taxman will nibble at each transaction.. plus by having an escrow/third party used as a trusted bank. you have now just demolished the whole idea of p2p transactions.
the only way it would work is having a bank that has API tools to inform of payment transactions. and communications with bank managers that it will only deal with small amounts under $1000 thus avoiding the identification requirements. but even then the OP's project may end up requiring users to register their ID when signing up to the project.
after all FIAT is involved so you cant make up your own rules or pretend the government rules dont apply.
May 24, 2013, 12:51:52 AM
Yeah maybe some sort of 2 party escrow like BIP38? Or adding the third party in for more traditional escrow? As soon as you have electronic forms of funds transfer you have problems verifying because of how everything is setup. The system I've proposed here makes OTC trading a lot easier because its more about converting to digital fiat 1:1 as opposed to bartering goods, services and currencies at a BTC market price which chops and changes all the time. So here we're converting to digital fiat as opposed to exchanging money. Since that's simplified its easier to do the OTC work, and that will be left up to the discretion of the local exchanger. Perhaps Alice can advertise that she only accepts irreversible wire, SEPA, ACH, BPAY, or cash in person.
May 23, 2013, 07:54:47 PM
I still can't get my head around one particular thing. Maybe it's a weak spot, or maybe (hopefully) I'm just not seeing it. Can you please explain:
What prevents Alice from running away with Bob's 1001 USD, or claiming she never received it? (thus refusing to send him the 1000 dUSD)
Or vice versa, what prevents Bob from saying he wired his 1001 USD to Alice (thus claiming she should send him the 1000 dUSD), whereas he actually never did?
"The system" has no way of verifying whether a wire transaction between bank accounts actually took place or not.
He finds Alice through the crazy magical OT system and then he wires Alice 1001USD for 1000dUSD. He has now suddenly given his fiat money access to the entire global OT economy!
Except he needs to trust that Alice will acknowledge receiving his 1001 USD. Or Alice has to trust that Bob will actually wire the 1001 USD that he promises to send.What prevents Alice from running away with Bob's 1001 USD, or claiming she never received it? (thus refusing to send him the 1000 dUSD)
Or vice versa, what prevents Bob from saying he wired his 1001 USD to Alice (thus claiming she should send him the 1000 dUSD), whereas he actually never did?
"The system" has no way of verifying whether a wire transaction between bank accounts actually took place or not.
Escrow(?) I'm half asking
May 23, 2013, 07:32:52 PM
I still can't get my head around one particular thing. Maybe it's a weak spot, or maybe (hopefully) I'm just not seeing it. Can you please explain:
What prevents Alice from running away with Bob's 1001 USD, or claiming she never received it? (thus refusing to send him the 1000 dUSD)
Or vice versa, what prevents Bob from saying he wired his 1001 USD to Alice (thus claiming she should send him the 1000 dUSD), whereas he actually never did?
"The system" has no way of verifying whether a wire transaction between bank accounts actually took place or not.
He finds Alice through the crazy magical OT system and then he wires Alice 1001USD for 1000dUSD. He has now suddenly given his fiat money access to the entire global OT economy!
Except he needs to trust that Alice will acknowledge receiving his 1001 USD. Or Alice has to trust that Bob will actually wire the 1001 USD that he promises to send.What prevents Alice from running away with Bob's 1001 USD, or claiming she never received it? (thus refusing to send him the 1000 dUSD)
Or vice versa, what prevents Bob from saying he wired his 1001 USD to Alice (thus claiming she should send him the 1000 dUSD), whereas he actually never did?
"The system" has no way of verifying whether a wire transaction between bank accounts actually took place or not.
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