Quote from: oleksii on October 23, 2016, 10:26:29 AM

Quote from: nixoid on October 22, 2016, 07:21:25 PM

I'd like to explain bitcoin transaction signing in more detail.

1. Bitcoin balance will be secured by bitcoin multisig. 4 of 6 or something close to that. We will post a detailed security model with risk analysis once we get to implementation. Here is an example of similar work of ours:
https://ambisafe.atlassian.net/wiki/display/AS/Wallet4

2. Ethereum contract will be aware of Bitcoin wallet balance.
3. Once event occurs that should trigger BTC transaction, Ethereum wallet will create transaction as an event, with the BTC address as one of the ethereum event parameters. In this way we are creating a "master record" of what should actually happen.

4. Our multisig wallet server software will be listening to the Ethereum contract events. Once Bitcoin-related event occurs, unsigned bitcoin transaction will be created. All signatories will get an email notification that something is waiting for their signature.

5. Every insurance committee member will sign in and sign transaction sequentially.

6. Once transaction has been posted to Bitcoin network, we can provide a cryptographic proof to Ethereum smart contract that transaction has been executed. Similar thing is already implemented in BTCRelay (https://github.com/ethereum/btcrelay)

We can semi-automate this schema by involving several bitcoin security companies. I'll explain other options in more detail tomorrow.

To investigate other solutions, one needs to learn about concepts of sidechain/drivechain and hybrid models (like Rootstock). What all of them have in common, is that there is no perfect implementation exists yet, so they all heavily rely on a number of assumptions. Rootstock for instance plans to use notaries, i.e. pre-selected authorities that will hold a single key each of a multisig bitcoin wallet, and will sign the transactions only when sure that everything is correct on a sidechain. This approach is the same as proposed by Andrey. There is no any better solution on the market yet, AFAIK.

Thank you for the extended and substantial replies. I wanted to clarify for myself that the BTC funds within InChain will be controlled by people, not by the smart contracts. Smart contracts will maintain the transparency and accountability of the InChain inner transactions. But public audit of the BTC-related transactions seems to be a very complicated task. Will there be any tools to cross-check ethereum records and the corresponding BTC transactions? Maybe some transaction ID's that will be the same in both blockchains?

Did you consider another blockchains except Ethereum? What Ethereum benefits exist if its smart contracts don't control the funds but monitor them only?