On 6 June 2013 02:19, Peter Vessenes <peter@coinlab.com> wrote:
So, this http://www.americanbanker.com/bankthink/the-last-straw-for-bitcoin-1059608-1.html?pg=1 article got posted today, noting that FinCEN thinks irrevocable payments are money laundering tools.
It's great that this article quotes the first page of Sasoshi's white paper. There are some other text that they missed, though, which I think may be relevant.
[[
Completely non-reversible transactions are not really possible, since financial institutions cannot
avoid mediating disputes. The cost of mediation increases transaction costs, limiting the
minimum practical transaction size and cutting off the possibility for small casual transactions,
and there is a broader cost in the loss of ability to make non-reversible payments for non-
reversible services. With the possibility of reversal, the need for trust spreads. Merchants must
be wary of their customers, hassling them for more information than they would otherwise need.
A certain percentage of fraud is accepted as unavoidable. These costs and payment uncertainties
can be avoided in person by using physical currency, but no mechanism exists to make payments
over a communications channel without a trusted party.
What is needed is an electronic payment system based on cryptographic proof instead of trust,
allowing any two willing parties to transact directly with each other without the need for a trusted
third party. Transactions that are computationally impractical to reverse would protect sellers
from fraud, and routine escrow mechanisms could easily be implemented to protect buyers.
]]
[[
Completely non-reversible transactions are not really possible, since financial institutions cannot
avoid mediating disputes. The cost of mediation increases transaction costs, limiting the
minimum practical transaction size and cutting off the possibility for small casual transactions,
and there is a broader cost in the loss of ability to make non-reversible payments for non-
reversible services. With the possibility of reversal, the need for trust spreads. Merchants must
be wary of their customers, hassling them for more information than they would otherwise need.
A certain percentage of fraud is accepted as unavoidable. These costs and payment uncertainties
can be avoided in person by using physical currency, but no mechanism exists to make payments
over a communications channel without a trusted party.
What is needed is an electronic payment system based on cryptographic proof instead of trust,
allowing any two willing parties to transact directly with each other without the need for a trusted
third party. Transactions that are computationally impractical to reverse would protect sellers
from fraud, and routine escrow mechanisms could easily be implemented to protect buyers.
]]
I will hold my thoughts about the net social good of rent-seeking large corporations taking money from consumers over fraudulent reversals. Actually, I won't, I just said it.At any rate, it got me thinking, can we layer on revocability somehow without any protocol change, as an opt-in?My initial scheme is a trusted (hah) escrow service that issues time promises for signing. If it doesn't receive a cancel message, it will sign at the end of the time.The addresses would be listed by the escrow service, or in an open registry, so you could see if you were going to have a delay period when you saw a transaction go out.This seems sort of poor to me, it imagines that mythical thing, a trusted escrow service, and is vulnerable to griefing, but I thought I'd see if some of the brighter minds than me can come up with a layer-on approach here.When I think about it, I can imagine that I would put a good number of my coins in a one day reversible system, because I would have warning if someone wanted to try and spend them, and could do something about it. I'm not sure if it gets me anything over a standard escrow arrangement, though.Peter--
PETER VESSENES
CEOpeter@coinlab.com / 206.486.6856 / SKYPE: vessenes
71 COLUMBIA ST / SUITE 300 / SEATTLE, WA 98104
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