Re: [Bitcoin-development] Instant / contactless payments

[Joel Kaartinen <joel.kaartinen@gmail.com>]

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I think a reputation network is more complicated than is needed for
this. This can be solved by the market.

What is needed is a simple method for each individual user to mark
certain merchant as trusted. For example, if your device gets an
untrusted payment request, it'll make a small sound, light up the screen
and ask the user to authorize the payment. The user then has the choice
of adding the merchant to trust list, authorizing just a single
transaction or not paying (and perhaps adding to the user's publicly
shared untrusted list?).

This way, even lacking a trust architecture, only the first payment to a
merchant needs to take several seconds. If trust is granted, the next
payments will be swift.

The lack of chargebacks presents a clear risk to the customer, though,
so a need for a third party that can keep the merchants honest exists.
This opens up markets for transaction insurance companies. Even though
bitcoin transactions are final, if a transaction insurance company
offers to cover your losses in the event of fraudulent charge, the risk
is practically eliminated.

Such an insurance company would have a strong incentive to make sure the
merchants they insure for behave. Otherwise they'll suffer the losses. I
think this would result in an equally trustworthy but more decentralized
system than with credit cards.

- Joel

On 06.03.2014 16:20, Brooks Boyd wrote:
>
>
> On Mar 6, 2014 3:47 AM, "Mike Hearn" <mike@plan99.net
> <mailto:mike@plan99.net>> wrote:
> >
> > I just did my first contactless nfc payment with a MasterCard. It
> worked very well and was quite delightful - definitely want to be
> doing more of these in future. I think people will come to expect this
> kind of no-friction payment experience and Bitcoin will need to match
> it, so here are some notes on what's involved.
> >
> > 3) Have some kind of decentralised reputation network. I spent some
> time thinking about this, but it rapidly became very complicated and
> feels like an entirely separate project that should stand alone from
> Bitcoin itself. Perhaps rather than try to make a global system,
> social data could be exchanged (using some fancy privacy preserving
> protocols?) so if your friends have decided to trust seller X, your
> phone automatically trusts them too.
>
> A reputation network might be an interesting idea, or several
> different networks with different curators (to prevent complete
> centralization), like how the US credit score system has three main
> companies who track your score. Something like a GPG ring of trust,
> with addresses signing other addresses would work well, if some sort
> of Stealth address or HD wallet root was the identity gaining the
> reputation, then address re-use wouldn't have to be mandatory.
>
>
>
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