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Cc: Bitcoin Development <bitcoin-development@lists.sourceforge.net>
Subject: Re: [Bitcoin-development] Paper Currency
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I had a long discussion recently with somebody who wants and has resources
to do exactly this - paper currency representing bitcoins. Yet we've been
thinking mostly about a centralized solution, where one party is producing
and maintaining paper currency, with bitcoins tied to each note verifiable
via blockchain.
The points we've ended up is that it needs to be:
- reloadable
- NFC based
So anybody can verify any notes instantly by just touching it with his
phone, and so merchants could redeem the notes at the moment of accepting
it, convert it into fully online bitcoins and avoid costs of maintaining
paper money turnover. Probably merchant would sell back redeemed
empty notes to the issuer for a price of the note issue, and issuer will
recharge it and put back into circulation.
One problem we couldn't figure out here though - how to protect the notes
from unauthorized redeem. Like if someone else tries to reach your wallet
with his own NFC - how can we distinguish between deliberate redeem by
owner and fraudulent redeem by anybody else with custom built long
range NFC antenna? Any ideas?
Best regards,
Alex Kotenko
2014-05-17 17:40 GMT+01:00 Gregory Maxwell <gmaxwell@gmail.com>:
> On Sat, May 17, 2014 at 9:07 AM, Chris Pacia <ctpacia@gmail.com> wrote:
> > I can't really just hand someone the note and walk away
> > because they have to scan it to see if it is actually valid.
>
> Not just scan it, but they actually must successfully sweep it=E2=80=94
> otherwise they can be trivially double spent. This is especially bad
> since any prior bearer can perform such an attack. E.g. record the
> private key of everyone that passes through your hands and then
> doublespend race any redemption that happens >24 hours after you spend
> them. The wrong person would likely be blamed and even if you were
> blamed you could plausibly deny it ("Must have been the guy that gave
> it to me!").
>
> Othercoin seems to have much better properties in the space of offline
> transactions: https://bitcointalk.org/index.php?topic=3D319146.0
>
> Separately, Cassius also ran into some regulatory issues selling
> physical bitcoin artifacts. Especially printing things that seem to be
> redeemable for a named USD value sounds especially problematic.
>
> Some random comments=E2=80=94 The base58 encoding is fairly human unfrien=
dly.
> It's fine for something being copy and pasted, but I've found typing
> or reading it works poorly due to mixed case. I expect the A/B side
> to be difficult to educate users about. "This side is private" is more
> easily understood, you could just pick one of your sides and call it
> private. I find it kind of odd that this design seems to have no
> facility for checking its txouts without recovering the private key,
> though considering no one should rely on such a measurement without
> sweeping perhaps thats for the best.
>
> (As far as the numbering goes, I think you should be calling these
> draft-felix-paper-currency etc. As a matter of hygienic practice I
> will not assign a matching bip number for something that went public
> with a number outside of the assignment.)
>
>
> -------------------------------------------------------------------------=
-----
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--047d7b5d84ef6c2d2304f9ab37b2
Content-Type: text/html; charset=UTF-8
Content-Transfer-Encoding: quoted-printable
<div dir=3D"ltr"><div class=3D"gmail_default" style=3D"font-family:'cou=
rier new',monospace;color:rgb(0,51,0)">I had a long discussion recently=
with somebody who wants and has resources to do exactly this - paper curre=
ncy representing bitcoins. Yet we've been thinking mostly about a centr=
alized solution, where one party is producing and maintaining paper currenc=
y, with bitcoins tied to each note verifiable via blockchain.=C2=A0</div>
<div class=3D"gmail_default" style=3D"font-family:'courier new',mon=
ospace;color:rgb(0,51,0)"><br></div><div class=3D"gmail_default" style=3D"f=
ont-family:'courier new',monospace;color:rgb(0,51,0)">The points we=
've ended up is that it needs to be:</div>
<div class=3D"gmail_default" style=3D"font-family:'courier new',mon=
ospace;color:rgb(0,51,0)">- reloadable</div><div class=3D"gmail_default" st=
yle=3D"font-family:'courier new',monospace;color:rgb(0,51,0)">- NFC=
based</div>
<div class=3D"gmail_default" style=3D"font-family:'courier new',mon=
ospace;color:rgb(0,51,0)">So anybody can verify any notes instantly by just=
touching it with his phone, and so merchants could redeem the notes at the=
moment of accepting it, convert it into fully online bitcoins and avoid co=
sts of maintaining paper money turnover. Probably merchant would sell back=
=C2=A0redeemed empty=C2=A0notes to the issuer for a price of the note=C2=A0=
issue, and issuer will recharge it and put back into circulation.</div>
<div class=3D"gmail_default" style=3D"font-family:'courier new',mon=
ospace;color:rgb(0,51,0)"><br></div><div class=3D"gmail_default" style=3D"f=
ont-family:'courier new',monospace;color:rgb(0,51,0)">One problem w=
e couldn't figure out here though - how to protect the notes from unaut=
horized=C2=A0redeem. Like if someone else tries to reach your wallet with h=
is own NFC - how can we distinguish between deliberate redeem by owner and =
fraudulent redeem by anybody else with custom built long range=C2=A0NFC ant=
enna? Any ideas?</div>
<div class=3D"gmail_default" style=3D"font-family:'courier new',mon=
ospace;color:rgb(0,51,0)"><br></div><div class=3D"gmail_default" style=3D"f=
ont-family:'courier new',monospace;color:rgb(0,51,0)"><br></div><di=
v class=3D"gmail_extra">
<div><div dir=3D"ltr"><span style=3D"color:rgb(0,51,0);font-family:'cou=
rier new',monospace">Best regards,=C2=A0</span><div><div><div style=3D"=
text-align:left"><font color=3D"#003300" face=3D"'courier new', mon=
ospace" style=3D"text-align:-webkit-auto">Alex Kotenko</font></div>
</div></div></div></div>
<br><br><div class=3D"gmail_quote">2014-05-17 17:40 GMT+01:00 Gregory Maxwe=
ll <span dir=3D"ltr"><<a href=3D"mailto:gmaxwell@gmail.com" target=3D"_b=
lank">gmaxwell@gmail.com</a>></span>:<br><blockquote class=3D"gmail_quot=
e" style=3D"margin:0px 0px 0px 0.8ex;border-left-width:1px;border-left-colo=
r:rgb(204,204,204);border-left-style:solid;padding-left:1ex">
<div class=3D"">On Sat, May 17, 2014 at 9:07 AM, Chris Pacia <<a href=3D=
"mailto:ctpacia@gmail.com">ctpacia@gmail.com</a>> wrote:<br>
> I can't really just hand someone the note and walk away<br>
> because they have to scan it to see if it is actually valid.<br>
<br>
</div>Not just scan it, but they actually must successfully sweep it=E2=80=
=94<br>
otherwise they can be trivially double spent. This is especially bad<br>
since any prior bearer can perform such an attack. E.g. record the<br>
private key of everyone that passes through your hands and then<br>
doublespend race any redemption that happens >24 hours after you spend<b=
r>
them. The wrong person would likely be blamed and even if you were<br>
blamed you could plausibly deny it ("Must have been the guy that gave<=
br>
it to me!").<br>
<br>
Othercoin seems to have much better properties in the space of offline<br>
transactions: <a href=3D"https://bitcointalk.org/index.php?topic=3D319146.0=
" target=3D"_blank">https://bitcointalk.org/index.php?topic=3D319146.0</a><=
br>
<br>
Separately, Cassius also ran into some regulatory issues selling<br>
physical bitcoin artifacts. Especially printing things that seem to be<br>
redeemable for a named USD value sounds especially problematic.<br>
<br>
Some random comments=E2=80=94 The base58 encoding is fairly human unfriendl=
y.<br>
It's fine for something being copy and pasted, but I've found typin=
g<br>
or reading it works poorly due to mixed case. =C2=A0I expect the A/B side<b=
r>
to be difficult to educate users about. "This side is private" is=
more<br>
easily understood, you could just pick one of your sides and call it<br>
private. =C2=A0I find it kind of odd that this design seems to have no<br>
facility for checking its txouts without recovering the private key,<br>
though considering no one should rely on such a measurement without<br>
sweeping perhaps thats for the best.<br>
<br>
(As far as the numbering goes, I think you should be calling these<br>
draft-felix-paper-currency =C2=A0etc. As a matter of hygienic practice I<br=
>
will not assign a matching bip number for something that went public<br>
with a number outside of the assignment.)<br>
<div class=3D""><div class=3D"h5"><br>
---------------------------------------------------------------------------=
---<br>
"Accelerate Dev Cycles with Automated Cross-Browser Testing - For FREE=
<br>
Instantly run your Selenium tests across 300+ browser/OS combos.<br>
Get unparalleled scalability from the best Selenium testing platform availa=
ble<br>
Simple to use. Nothing to install. Get started now for free."<br>
<a href=3D"http://p.sf.net/sfu/SauceLabs" target=3D"_blank">http://p.sf.net=
/sfu/SauceLabs</a><br>
_______________________________________________<br>
Bitcoin-development mailing list<br>
<a href=3D"mailto:Bitcoin-development@lists.sourceforge.net">Bitcoin-develo=
pment@lists.sourceforge.net</a><br>
<a href=3D"https://lists.sourceforge.net/lists/listinfo/bitcoin-development=
" target=3D"_blank">https://lists.sourceforge.net/lists/listinfo/bitcoin-de=
velopment</a><br>
</div></div></blockquote></div><br></div></div>
--047d7b5d84ef6c2d2304f9ab37b2--
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