Topic: Physical bitcoins, take 4 - page 2. (Read 10907 times)

A single-piece plastic token containing a private key inside.... good idea! They'd still have to be hard to counterfeit, so that you'd know the token really was issued by a trustworthy source (else you might be unpleasantly surprised when you try to break the token open and redeem it).

Another low-cost idea: those security mailers that are used to send out debit card PINs and the like. Put a private address inside, or a QR code for a transaction. Making this simple enough for an average user might require some additions to the client software, but the average user would probably be satisfied bringing the note to a local bank or computer-savvy friend.

No high technology is needed to encode the private key---a simple text printout is good enough.

I point out that I'm still nervous about these ideas. Speaking for myself as a potential guarantor, if I'm going to be held responsible for other peoples' bitcoins, I want to be in control of how they leave my possession. If I issue self-redeeming notes I will have to disclaim responsibility for missing deposits.

Yes, it is not clear from the Wiki how Real Bills would be related to this ... here is a better link. There was a big controversy in academic economic circles about it .... credit money, like BTC, lends itself naturally to true real bills of exchange.
http://www.thedailybell.com/1237/Real-Bills-Revisited.html

Or like those scratch and win Instant Lotto cards or some mobile recharge cars ... underneath is the address that contains the denomination of BTC printed on the front. While the scratch is intact it is tradeable.

The only risk is that the issuer might assign a certain amount of bitcoins to more than one bill.

I'm confident that a concerted engineering effort will yield a secure, redeemable bitcoin note whether or not it employs invisible ink.

A strip of mylar would probably due. Makes me think of fortune cookies.

Plastic casino chip like tokens would work well too, and could use RFID tags inbedded into the plastic to hold the public key.  And even the private key could be micro-etched onto a thin piece of metal imbedded into the plastic, so that the holder of the plastic token could tear it apart to get at the private key.

So this would be a bitcoin "check" or giftcard that anyone could clear.  Great for a one time usage scenario.  I promote bitcoin by handing out bitcoin "checks" with 5BTC on them.  And once redeemed they would be valueless and useless.

In theory you could pass on the "check" without actually redeeming it, but this would be dangerous as you wouldn't know if anyone up stream had copied the private key on the check.  Nor is there a guarantee that the check issuer did not retain a copy of the private key.

This is not the same as a physical bitcoin backed currency.

Ooh,  I just thought of something.  Public key hardened checks.  I write you a check and sign the amount over to your public key.  The bank only clears the check if you can sign a deposit slip with the corresponding private key.  Maybe too much work for a system not generally regarded as broken.

@SunAvatar, I like you....   You have an uncommon amount of common sense. 

I've been told, just today, of the details of another project that I've been asked to keep quiet for now.     But I can tell you....  Lots of exciting projects are popping up like weeds!   Great new products, apps, and services are coming out of the woodwork!

Also...   I contacted the number one security paper manufacturing company in the US this morning.   The guy already knew all about Bitcoin... and is very enthusiastic about helping us with this project!   

He is Fedex-ing samples to me which I'll have by tomorrow morning. 

After TIT (thinking it through) more...   I believe that such a paper currency would PRIMARILY be used as a novel way to introduce new people to Bitcoin. 

Sort of like handing out business cards that have inherent value.

I'll keep you all informed here in this thread... and on the new weekly "The Bitcoin Show" on http://OnlyOneTV.com

But I'm beginning to think that we might have (at LEAST one) "working version" of the Paper Bitcoin in time for the Bitcoin Conference & World Expo in NYC. 

Is there really an invisible ink that lasts forever (or for years at least) and absolutely cannot be revealed by any method that doesn't render it permanently visible? If so, I suppose that works. The issuer wouldn't even need to retain his own ability to access deposits, if he was willing to let some bitcoins be potentially lost forever. If not, then the idea doesn't work, no matter how cool it would be.

I'm wary of any attempt to make notes self-redeeming, because it is basically DRM---you are giving out the keys to the vault in an obscured form, so that people can only use them in the way you would like. We all know how well this has worked for software and movies. I'm smart enough to know I'm not the smartest man on the planet---and whatever scheme I come up with for hiding private keys, one of those smarter men will find a way to reveal them without voiding the note. If he's smart enough to keep his mouth shut, he could do this for years before anyone even notices there's a problem. It would be negligent of me as a guardian of deposits to leave them vulnerable like that.

Anyway, here's a proposal: If I attend the upcoming conference, I can design and print some notes for use there. No expensive high-security mechanisms, unless someone else wants to foot the bill---copy-proof paper and my personal signature will suffice. I'll keep the design secret until the conference itself, and require redemption within a week or two, so there's no opportunity to counterfeit. The idea will be to use them at the conference itself and cash in before leaving, with a short grace period in case you forget. I'll eat the cost of printing---consider it market research.

whatever you do Paper metal or digital your in for a bumpy ride as this is what all will be up against.

“Attempts to undermine the legitimate currency of this country are simply a unique form of domestic terrorism,” U.S. Attorney Tompkins said in announcing the verdict. “While these forms of anti-government activities do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country,” she added. “We are determined to meet these threats through infiltration, disruption, and dismantling of organizations which seek to challenge the legitimacy of our democratic form of government.”

 The way to make anything possible is to have 100% backing of the people. !

This thread makes me realize how hard it is to understand that something is impossible.

To understand that something is possible, basically all you need is to imagine how it can be done.

But to understand that something is impossible, you need some deep understanding of the whole thing you are considering, and basically what you need is some kind of a mathematical proof.


That why I predict we'll always have people trying to design some physical instance of a bitcoin.

If the serial number on the paper is a public key then any client can verify that real bitcoins back up the paper. The key would have to own exactly the stated amount on the paper.

Any holder of paper can go back to the issuing institution and "transfer" the value to a new piece of paper with a new key on it. The holder can verify that the transaction went through on the real bitcoin side. This action would render any "duplicate" pieces of paper useless because if they now check their keys there is no value behind them. It would take a real juggling act for the issuing institution to keep any fraud from showing.

It wouldn't take too many people regularly checking their paper bitcoin to ensure the issuing institution is backing the paper with 100% real bitcoin.

I had thought of notes that one could peel to reveal a private key and while also voiding the bill, kind of like those stickers on PlayStation 2's. But they require glue which one can defeat with heat. Now, if the note was designed such that one would have to tear it to redeem it, that would be the best way to go.

I somehow don't expect that a bitcoin-backed paper currency (even if 100% backed) will ever succeed.

However, I'll give it a go.  Let's start with one-time paper currency.  i.e. it is issued by some "bank" and, at it's first use, the paper is destroyed and the value it represents is received by the seller of goods.

First, we'll need some widespread smart-phone software which can recognise those two-dimensional barcodes (what are they called - QR codes, right?).  Next we'll need some double-layered paper, with the top layer being transparent.  Now, you send some bitcoins to a bitcoin address.  The private key, as a QR code, is printed on the lower layer of paper.  The address, also a QR code  (but a special one), is printed on the upper layer, directly on top of the lower QR code, but here's the cute bit: you're actually seeing a mix of both QR codes together.  So what you need, is that both QR codes, seen together, represent the public bitcoin address, but you can't tell which part of the pattern belongs to the which QR code.  You scan this with your smartphone, your smartphone checks out the bitcoin block explorer and verifies the value at that address.  You accept the paper as payment, tear off the top layer, scan in the private key and immediately transfer the bitcoins to your address.

Of course, as long as people are willing to trust that the issuing bank has either deleted all the private keys in these paper notes, or will not sneakily transfer the bitcoins out, then there's no actual need to tear off the top layer, and so, the note can be re-used.

Any good?

To get paper currency from bitcoin, very simple method i believe is to have a software, which prints your SENDER address & amount in paper & give it to RECEIVER.
For acknowledgement, the receiver gives a print out with his received address & amount.
That software must be able to run on a very small device like cellphone.
The printer is debit/credit card receipt printer or even smaller one.

Another way , a software for cellphone which send the sender address & amount to any other(Receiver) cellphone number through SMS.

I say don't put 40 BTC on it, put 1 Troy Oz on it.  Silver should be its own currency in itself, with troy oz being the unit of exchange.   There never would have been the great depression if everyone used physical silver instead of using silver backed notes.  So you have 2 currencies, not competing currencies, operating at the same time.

What's the point of putting 40 BTC on it?  Who will accept the coin and give you 40 BTC if 40 BTC is worth more?  Who will use the coin if it is worth more than 40 BTC? 

I think you will discover the difference between commodities and currency.  BTC could crash at any time.  Silver will always be silver.  I think the 1 oz round is the official currency of the silver currency.   From that 1 oz you can convert to BTC at any time.  So you could make a 1 oz round with the bitcoin symbol, but instead of calling it 1 BTC, or 40 BTC, you call it 1 troy ounce.  Thus, there are no links and you could still trade the silver as silver.  However, you could make your own symbol if you like.

I'm comfortable with expiration dates as long as I don't have to even contact the issuer to redeem the note. That's why I like having a private key hidden on each note and I'd have to void the note to read it.

moa, I followed your link and read, but I don't see the connection to what we're talking about. The real bill doctrine seems to be that, if a note is in principle payable on demand, then its issuer can issue as many notes as it wants as long as those notes are balanced by assets accrued.

An example would be if Big Bank Inc. promised to redeem its notes in bitcoin, and perhaps even kept some bitcoins on hand for redemption purposes, but also disbursed loans in note form without holding enough bitcoins to cover them. The bank would then book the loan itself as an asset. In case of a run, the bank would either call in accounts early, liquidate assets, or borrow against its accounts receivable.

This system works, sort of, but becomes unstable when the note/reserve ratio grows too high. The danger is simply that assets can be lost, particularly assets that are only accrued and not yet received. In the above example, some debtors will default and their loans will be written off, reducing the bank's assets while leaving its liabilities untouched. Charging interest on loans provides some protection against this, but given enough time the bank is quite likely to have a long run of bad luck and become insolvent.

Anyway, that's not the sort of thing I was planning. I'm interested in a 100% reserve kept safe by multiple offsite backups and strong encryption---the most mucking about I'd allow for is a sort of very short-term bond system wherein the bank might issue notes payable at the end of the month, and secure the bitcoins before then, in the interest of fixing very short-term liquidity problems. As long as this was stated up front on the notes I don't think it would be a serious problem.

As for expiration dates, you people are far more accepting of the idea than I would have guessed. Of course they'd have to be both prominently written and easy to predict---perhaps notes could be released in batches that expire at the end of a calendar year, with "VOID AFTER DECEMBER 2013" written in large print on the reverse. The revenue from unredeemed notes would easily make up the printing costs--if we assume each note costs 0.1 BTC to print, a single unredeemed 50 BTC note would cover the cost of 500 notes printed. Given the amount of cash destroyed in every year, not to mention the number of people who can't manage to mail in a $100 rebate form, issuing cash could be very profitable indeed.

Because of Bitcoin's technology, you can expect greater transparency from a bitcoin note issuer than you can from an issuer of notes that represent anything else. There's no block chain for gold.