Subject: Re: [Bitcoin-development] Paper Currency

From: Natanael <[email-masked]>
Date: Sun, 18 May 2014 15:50:08 +0200

Now you are talking about Trusted Platform Modules. Like smartcards,
actually. Devices that won't leak their keys but let the holder spend the
coins. It could even have it's own simple SPV wallet client to make it
easier to handle. And they'd use the attestation features provided by the
TPM to prove the software it's unmodified top the current holder.

But then you still have to trust the manufacturer of the device, and you
have to trust it has no exploitable side channels.

- Sent from my phone
Den 18 maj 2014 13:52 skrev "Alex Kotenko" <[email-masked]>:

> 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 <[email-masked]>:
>
>> On Sat, May 17, 2014 at 9:07 AM, Chris Pacia <[email-masked]> 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—
>> 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=319146.0
>>
>> 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— The base58 encoding is fairly human unfriendly.
>> 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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