Topic: Mint Chip Technical Details (Read 6124 times)

Canada no longer uses pennies

but i'm still getting some back in my change, i think i might start paying cash to get my penny collection bigger lol!

I believe that Canada has a limit of 50 pennies for any single cash transaction.

That is a mismoner.  No entity is required to accept legal tender in all forms (like for example a dump truck, or even any cash) they are just obligated to accept payment in some form of legal tender.  

As an example, my mortgage is held by a non bank entity.  They have no offices/locations open to the public and federal law prohibits mailing cash (in any form).  My old method of satisfying the debt is by check draft, money order, cashiers check, ACH, or bank wire.  That doesn't violate any legal tender statutes. Now if the "bank" demand payment in gold or chickens it would.  However them placing restrictions of what forms of payment they will accept are not unlawful.

The purpose of legal tender laws is to ensure that a debtor holding legal tender has SOME mechanism to repay that debt not to obligate creditors to asinine restrictions (like requiring they accept a dump truck of pennies).

Now the legal tender laws in Canada may differ.

From the source (US Treasury)

I picked that example on purpose.

for example, if you are in a restaurant and have already consumed your meal, your are in debt and by legal tender laws he is required to accept it.

Actually, you picked exactly the wrong example of why legal tender laws don't matter. People are legally obligated to accept legal tender (even in ridiculous forms, such as a dump truck full of pennies) for the payment of debts (eg, taxes, mortgages, bills, etc) (however, non-legal tender may still be used to pay off debts if both parties agree to it). The reason for legal tender laws is that if someone refused to accept payment for a debt and the case went to court, the judge would be extremely annoyed to learn that the debtor actually is willing and able to pay his debt, and that his attempts to do so were refused for arbitrary reasons.

However, legal tender laws do not apply when the transaction is not a payment of a debt (eg, retail purchases, bank deposits, etc), so people are not obligated to accept legal tender in these situations (which includes most of the transactions that MintChip will be used for).

I suspect that individual MintChips can be revoked (distinct from reversible). That would explain the 500 transaction limit (and record) before reset.

If I am correct, the $100 MicroSD cards in the dev kit will be worth $0 at the end of the contest period. It also makes counterfeit chips a very big problem. With the private key, you can transmit unlimited funds with no transaction limits. At least until 2 people get their mintchip reset (after 250 transactions on average) and the double spending is noticed. I assume businesses would be resetting their chips daily if not hourly.


Edit: "Those who do not understand Unix are condemned to reinvent it, poorly.
        -- Henry Spencer"

Remove Unix, insert Bitcoin

The legal tender issue is an interesting one but I doubt it will have any practical impact.  Legal tender doesn't obligate someone from accepting currency in any specific form (for example the bank isn't required to accept a dump truck of pennies to pay off your mortgage).

As far as counterfeiting.  If the royal mint doesn't offer 1:1 exchanges even with inflation due to counterfeiting then I imagine the entire system fails.  Who would choose a chip which may lose 10% to 50% of its value due to no fault of their own when they can just keep using "cash" instead.

As far as what happens to the dollars my guess is that the brokers will be contractually obligated to hold in reserve 1 CAD for every 1 mintchip CAD token issued.   Similar laws exist for things like casino chips.  Casino must have $1 dollar in reserve for every $1 in chips held by customers or on the floor. Failure to meet the 1:1 ratio at all times can result in them losing their license.

For largest brokers if the system ever become widespread that means a significant amount of revenue from float.

High level of interest IIRC is > 500 registrations.  They only had 500 developer kits which were offered at no cost. 

I wonder when we'll see this:

Due to the very high level of interest in Bitcoin, bitcoiners will no longer be able to submit ideas on its main forum outlining ways to make it more viable.

~Bruno~

Sounds like a whole lot of new Bitcoin exchanges are being developed. 

http://www.winnipegfreepress.com/business/new-coins-causing-headaches-for-vendors-147422815.html


Now that (bold) is interesting!

http://mintchipchallenge.com/


~Bruno~

First thing I'd do would be to give one of these µSD cards to my university for dissection... we have quite good crypto geeks there!

All in all though I am surprised how nice and well handled MintChip runs so far - developers post on their forums, no NDA for developers, some fun included and they didn't go berserk on the multiple Bitcoin posts that inevitably popped up on their site. Just sad that they don't expose all their backend + workings right away (and probably never will...) and they didn't release their API etc. as open source, but that might be a bit much asked from a mint.

I don't think this has been posted yet, but here are devkit photos and some details.

http://burnsmod.com/development/2012/04/14/MintChip-DevKit-Pictures-And-Information/

You leave a much larger "paper trail" though, similar to an IP address. Maybe it can be compared with cookies/unique IDs on websites or the IMEI in GSM phones.

I don't think they are interested in exaclty tying 1 MintChip to 1 physical person but keeping tight profiles and the ability to be able to identify persons if needed or at least follow their paper trail seems to be in the system design. With cash this is also possible btw. but nearly no business I know of cares about logging serial numbers and logging which customer got which bill.

You get it from someone one time and now you have anonymous money that you can use to pay anyone anywhere right? That's way different than cash.

I'm just saying if the chips don't require ID to use there isn't any way for anyone to be sure who is using it now.

I guess you'd hardly be able to get one without any links to anything, but let's assume you have:
Latest 499 transactions of the "linked" chip later, the mint will know you sent X $ to the anonymous chip with ID#12345.
Also any purchase you make with that anonymous chip will likely reach the mint, even if you never ever reset your chip yourself.

You would need a 2nd "unmarked" chip where you transfer the funds from chip #1 and destroy that one afterwards. This way the mint only knows that X $ were sent to Chip #12345 but never got to know the transaction of X$ from #12345 to #23456. In the end though you will have to use that chip with someone who resets his/her chip eventually (merchant accounts for example are most likely even online 24/7) and depending on the transaction design it's likely that then you can backtrace all previous transactions to your "generation transaction" when you gave the bank X $ and received a chip for it. This could work similar to Bitcoin, where you can calculate for every coin that you get in which block it was originally generated.
As soon as all X $ from your generation transaction have reached the bank again, they could "prune" that transaction from their books (or in reality: archive them inhouse and at the NSA). I can only speculate what will happen if someone comes with another valid transaction originating from the same X $ generation transaction after already all X $ were spent - in Bitcoin it would be simply rejected, in MintChip (depending on fees and actual system design) they either won't care about these peanuts and write it off, won't find out because the system is badly designed or won't pay you, risking bad publicity.

* I used "mint" as "central authority" here, it could be a bank or a sub business from the canadian mint in reality. All of the above is speculation and might not reflect the actual system design at all.

I doubt they will issue a MintChip not linked to any banking institute, but we shall have to see.

This is interesting! Let's say I have a MintChip account set up where I fund it via my bank account. I then have another MintChip account not linked to any banking institute. I transfer funds from the first account to the second one. How anonymous/pseudo-anonymous am I now?

~Bruno~

I think this also shows the importance of developing physical Bitcoin devices that are cheap (or re-useable) and secure.

If I can get a physical MintChip from someone else, I could get cash too...

One could carry 2 chips: 1 to pay, 1 for transferring excess money to. Anyways I guess except for some people who like fancy NFC applications, physical exchange of fiat value is not one of the strongest points of anything but cash money (100% no transaction fees, hard enough to fake for the average person, no limits, quite anonymous).

I personally don't even care that much about anonymity in digital currencies - I have bitcoin for that. My biggest and foremost concern is the chance to end up with less digital money than you paid in fiat money for whatever reason (reversed transaction, double spend reversal after the "Reset" by the bank/mint, horrendous fees, chips being invalidated and me unable to cash back out...). Who assures me that the Canadian Mint won't "do a Dwolla" and suddenly after some time start to reverse transactions or claim they were illegal/invalid after they happened? If this is somehow part of an e-money system I would even buy it if every coin has my face on it - as soon as I buy Bitcoins with it subsequently, it won't matter anyways any more.