I highly suggest you look at this (
https://bitcointalk.org/index.php?topic=307922.0) , which
solves all Fiat transfer problems except fraud (anonymity, reversal, suspicious transactions, bank closure, reporting, etc.) by actually
extending the scope of the project to allow spending of Bitcoin on anything.
It serves good for buying BTC but you cannot sell BTC to Fiat (only for articles from those shops).
I think I have seen some similar idea a while ago. As far as I remember it got closed because of legal issues/pressure form the merchants (don't remember the name and the details).
I think if that idea would scale large they would also run into problems with the merchants, as it will probably break some TOC and it is relative easy to track such transactions (BTC buyer send goods to many different recipients). Maybe it even would trigger AML issues?
You can't directly sell BTC to Fiat, but you can anonymously spend BTC on whatever you wanted to buy, which is in some cases better. Moreover, I expect the BitBuyer to overpay which means that the BitSpender gets to shop online at a huge discount.
I'm not sure that ANY direct Fiat transfer will ever be scalable and fraud-resistant in the way that this idea is.
You may be thinking of BitSpend.com, which failed precisely because they had to move large Fiat (this idea solves that problem completely).
Merchants would love this as it generates sales in the form of 'Gifts', which to them look just like normal sales. Merchants never break AML or otherwise know they are doing anything out of the ordinary.
You are correct that it may trigger AML issues, which is one reason why we did not move forward with it. However, every other idea in this thread also breaks the same US AML laws (unless the BTC-seller is going to do KYC on the buyer) so I just assumed you lived outside the US or otherwise didn't care.
Also, I have independently developed something (Truthcoin) which could be adapted for decentralized arbitration (ie, deciding who is right in the event of breach-of-contract). This would make the process completely decentralized.
Need a bit more time to read your paper and the thread, just quickly read in the thread a bit... sounds very interesting.
My first thoughts on that is:
Does a majority really creates truth?
Thanks for your interest. Outcome is not ONLY decided by vote. There is an incentive system with (theoretically) a unique Nash Equilibirum where everyone votes truthfully. The mechanism is designed such that I actually do expect every single voter to vote exactly the same way (but of course, I designed it primarily with deviant actors in mind, as off-path reasoning is crucial to the game-theory of something like this).
Yes the idea to stream the fiat tx is interesting, but I think it will suffer from practical problems and risks (single point of failure).
- There are only a few payment processors with open APIs in contrast to a huge amount of normal banks (without those APIs). So these payment processors are more exposed to political pressure.
You can just use your existing system for one single transfer, yet set the collateral OVER the transfer amount. It will have almost the same incentive effect, although of course it requires users to tie up more capital.
RE: RE: "... if the parties could never contact each other at all":
More fiat transfer problems you can avoid with the 'Gift' idea.
Banks may respond strategically to your Fiat-transfer ideas, but I can't see any merchants or politicians ever banning "The Gift Basket". I feel that direct BTC to Fiat transfer is siren music.
If the service is good enough, rich people might contract someone to spend time pushing their large amounts of money through the exchange for BTC. This upper-tier institution could then develop into a decentralized exchange, with multiple "fiat-rich-person-contractors" attempting to swap Fiat for BTC and developing professional relationships to do just that. These organizations and networks would only exist if there was a foundational reason to tie up Fiat in an exchange-attempt. Improve only a few things at a time, and the project will remain possible.