Hi everyone,

As some of you know, I am working on a complete open source replacement of
Bitpay for allowing merchant to accept cryptocurrency payments while having
a way to sell automatically.

A crucial, missing part, is fiat conversion. And I figured out a simple
protocol that exchanges (or adapters) can implement to allow any merchant
to cash out BTC in fiat while giving them the freedom to choose their own
payment processor solution.

This also have positive impact on scalability: Before, a merchant would
receive the bitcoin from the customer then would send to the exchange,
resulting in two transactions.
With this specification, it would be one transaction.

Special thanks to anditto and kallewoof for reviewing. I am waiting for
your feedback:

Github link:
https://github.com/NicolasDorier/bips/blob/master/bip-xxx.mediawiki

<pre>
  BIP: XXX
  Layer: Applications
  Title: Crypto Open Exchange Protocol (COX)
  Author: Nicolas Dorier <nicolas.dorier@gmail.com>
  Comments-Summary: No comments yet.
  Comments-URI: https://github.com/bitcoin/bips/wiki/Comments:BIP-XXX
  Status: Draft
  Type: Standards Track
  Created: 2017-12-20
  License: BSD-3-Clause
           CC0-1.0
</pre>

==Abstract==

A simple protocol for decoupling payment processor solutions from exchanges.

==Motivation==

Cryptocurrency merchant adoption is mainly driven by availability, ease of
use and means of acceptance.
We call such solutions `Payment Processors`.

Until now, payment processing solutions fall into one of the two following
categories:

# Self-hosted with the customer paying in cryptocurrency and the merchant
receiving it directly.
# Centralized, coupled with an exchange feature, with the customer paying
in cryptocurrency to the merchant, and receiving fiat or cryptocurrency on
his exchange account.

The self-hosted solution has two issues:

# The merchant becomes vulnerable to the wild volatility of
cryptocurrencies.
# It is wasteful of blockchain space, if the merchant does not pay
suppliers in crypto, as they need a second transaction to change to his
exchange,

The centralized solution has two issues:

# It locks-in the merchant to a particular payment processor whose
intentions might not be aligned (e.g. Bitpay who tried to redefine Bitcoin
as being a different chain, without merchant approval)
# It has to deal with local regulations (e.g. Bitpay does not provide fiat
CAD to canadian merchants)

The goal of this BIP is to specify a simple protocol which makes possible
decoupling of payment processors from exchanges.

We believe this BIP will gather a lot of interest among local exchanges
which do not have the resources to develop their own payment solutions.

Their customers can decide which payment processor solution they prefer,
while the exchanges give them a way to protect against cryptocurrency
volatility.

==Summary==

The merchant log in to its exchange website, go into "Address sources"
section of it, an click on "Create a new address source".

The address source creation wizard asks him questions about what to do when
crypto currency is sent to this the address source. (Cryptocurrency, Market
sell order, limit order of past day average etc...)

The merchant receives an "address source URI" which they can input inside
the payment processor.

An exchange compatible with the Crypto Open Exchange Protocol would reply
to any HTTP POST request to this  "address source URI" returning the
following information (more details in the Specification part)

# A deposit address for accepting a payment
# The current rate
# Optional: If the exchange is willing to take the risk of rate
fluctuation, until when this rate is guaranteed and under which conditions.

<img src="bip-xxx/overview.png"></img>

===Interaction===

* Manny (the "merchant") wants to accept Bitcoin payments on his e-commerce
website.
* Manny chooses the payment processor "PROCCO" which has a powerful plugin
for his e-commerce website.
* Manny is based in Canada and already has an account on the exchange
"MYCOIN" which supports the Crypto Open Exchange Protocol.
* Manny connects to the exchange website, and creates a new address source.
* In the configuration screen of the address source, for each payment sent
to this address source, Manny decides to keep 30% in Bitcoin and place a
market sell order for the remaining 70% of the amount.
* "MYCOIN" creates the address source, and gives the "address source URI"
to the merchant. (e.g. https://example.com/addresssources/abd29ddn92)
* Manny copies the address source URI and goes inside "PROCCO" settings,
and configures his store to use this address source URI.

Now a customer, Carol, wants to order a brand new phone for 0.01 BTC on
Manny's store and decides to pay in Bitcoin.

* The E-Commerce website plugin requests the creation of an invoice from
PROCCO.
* PROCCO queries the "address source URI" and retrieves the rate, the
expiration of this rate and conditions.
* PROCCO can now show the Bitcoin Payment Checkout page.
* Carla pays.
* PROCCO marks the payment as paid and redirects to the e-commerce website.
* MYCOIN, under its own policy (typically after 6 confirmations), credits
Manny's account of 0.01 BTC and simultaneously creates a market sell order
of 0.007 BTC on behalf of Manny.

==Specification==

The payment processor sends a POST request to the "address source URI", the
response from a Crypto Open Exchange Protocol exchange would be:

If the exchange does not guarantee the rate:

    {
        "depositAddress" : "13....abd",
        "currencyCode" : "CAD",
        "cryptoCurrencyCode" : "BTC",
        "rate" : "15600",
        # When the merchant account get credited on the exchange
        "requiredConfirmations" : blockcount
    }


If the exchange guarantee the rate:

    {
        "depositAddress" : "13....abd",
        "currencyCode" : "CAD",
        "cryptoCurrencyCode" : "BTC",
        "rate" : "15600",
        "requiredConfirmations" : blockcount
        "conditions" :
        {
            # When the transaction should be seen on the blockchain to
guarantee the rate
            "receivedBefore" : timestamp,
            # When the transaction should be confirmed on the blockchain to
guarantee the rate
            "confirmedBefore" : timestamp
        }
    }


The payment processor is responsible for giving feedback to the customer if
the fees of the received transaction are not enough to guarantee the rate.

==Note on adoption==

While local exchanges have incentives to implement this simple protocol, it
is not strictly needed.

An alternative is to develop an adapter server which expose Crypto Open
Exchange Protocol endpoint and connect to underlying exchange's API.

The only downside is that the rate can't be guaranteed.

==Copyright==

This document is dual licensed as BSD 3-clause, and Creative Commons CC0
1.0 Universal.


Nicolas,