Ninjastic
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Re: Decentralised trading (not what NXT/Ethereum or anyone is doing at the moment)
by
k99
on 13/02/2014, 15:27:17 UTC
Quote from: Sukrim on February 13, 2014, 03:11:54 PM
Quote from: Polvos on February 13, 2014, 02:57:30 PM
Quote from: Sukrim on February 13, 2014, 02:54:31 PM
Quote from: k99 on February 13, 2014, 02:40:40 PM
Quote from: Sukrim on February 13, 2014, 01:33:11 PM
This "decentralized trading" idea can only work with digital assets (e.g. blinded Bitcoins...), not fiat money. There is no way to "digitalize" a dollar bill without introducing a third parts (called bank, escrower, gateway, exchange...).

Here is a solution using collateral to build a system for trust-less fiat-btc trading:
https://bitcointalk.org/index.php?topic=462236
The bank transfer(s) can be reversed after the BTC are released. Alice Will steal Eve's bank data, send 1k USD to Bob, pocket the BTC and then Eve gets Bob in trouble. This happens often enough on both localbitcoins and bitcoins.de already right now (since that's the exact same system these are operating under).

The bank transfer network is the third party in that scheme and it sucks compared to Ripple for example, since transactions between banks are reversible. It would only work with cash-in-mail and even then you need to trust the postal services.

Also if BTC prices fall more than 10% until the BTC are sold, Bob is better off never releasing the coins. Using this system is like shorting BTC on reversible bank transfers no less. Good luck with that.

I agree, but with the Nash equilibrium solution posted here, you don't need to trust the banking system. You can perfectly send cash money by snail-mail.
No you can't.

We both put up 50 BTC, I send you a couple dozen self-printed 500€ bills and claim the post man switched them. Heck, I can even take pictures and whatever you want of me putting in real money beforehand. If you want to, I'll even make a video, uncul, of me stuffing 100% real money in an envelope, sealing it, writing your name on it and handing it in at the post office, no problem. You'll still receive ony fake money and after some time our 50 BTC each will either have to be returned or destroyed. I still have proof and go to court, also your reputation on that exchange is destroyed.

Also I could send real money. With the GPS tracker from the last bank robbery still inside (or not, doesn't really matter if the serial numbers are tracked). Roll Eyes

I think you are still missing the most important point!
The collateral on both sides guarantees that both will loose money if they are behaving inhonest.
It is not a question of proving the other party anything. If Alice has done the bank tx and she knows that it was successful and Bob received it but tell her "no I didn't get the fiat money" Alice cannot do anything about it, but Bob will loose his collateral when not signing the payout tx and that would lead to a bad deal for him.
There are exact 2 situation where they could behave unfair. In both nobody could steal money from the other but both will losse money. Once Alice would loose 0.1 BTC and Bob 1.1 BTC, and then Alice would loose 1.1 BTC and Bob 0.1 BTC (if you convert the USD to BTC). See the paper all that is covered....