How to use crypto-currency to verify value and secure your PM trading.

[SilveriteFX]

Dear Members of The Silver Forum,

 

As a fellow silver stacker, numismatics collector and long-term supporter and user of digital 'crypto-currencies', such as Bitcoin and Litecoin - I hope to present to you an easy and perhaps revolutionary concept in " How to use crypto-currency to verify value and secure your PM trading."

 

Aside from the actual benefits of crypto-currency as 'money' or as a 'store-of-value', most people are perhaps unaware of the added security or proof-of-ownership potential when buying and selling goods and/or services online (or in person) that crypto-currencies can already facilitate.

 

Watch:

- How to sign and Verify messages with your Bitcoin Adress from your Software wallet

 

- https://www.reddit.c...d_verification/

 

Practical use cases:

 

Lets imagine that you want to make a trade with someone on this forum (you don't even need to make the payment using crypto-currency or even hold a balance in said crypto-currency to sign and/or verify messages).

 

You could request that the seller posts a 'signed' message of an address that they own and includes it with a screen shot of the actual item that they are selling, thus presenting cryptographically verifiable proof-of-ownership to you as the buyer.

 

As the buyer proposing to purchase an item with crypto-currency you can also demonstrate to the seller that you have the currency/money to pay them and/or that you own the particular wallet address.

 

As an online vendor (whether choosing to accept crypto-currencies for sales or otherwise) you could present screen shots of physical bullion to your potential buyers of items which are signed and verified as being your own wallet address.

 

Lets say that you are selling a 5 Kilogram Silver Bullion Bar - you can post a screen shot of this item on your website with a signed statement that you own this bullion. This is 100% verifiable to anyone who verifies your message.

 

To further build trust as an individual seller or as a vendor you can sign the statement to include both the item type and weight and even back it with an address containing the corresponding denomination in crypto-currency. So, in the case of the 5 Kilogram Silver Bullion Bar you could present a Bitcoin address that also contains £2000 to £2500 worth of Bitcoin (approx. example at the current silver price).

 

This is also providing a potential buyer (or investor) with proof-of-value or proof-of-capital. If you are a small retailer of 1 Oz Silver coins then you might post a signed image and statement to verify said stock.

 

In short, this is a better way to do online trading in precious metals. It is more secure for both the buyer and the seller.

 

...

 

With regards to the above I endeavor to build up a fully decentralized Proof-of-Value network on top of an existing crypto-currency known as cryptobullion.

 

Here is my post on the Bitcoin Talk Forum - cryptobullion thread topic, where I first announced this concept:

 

https://bitcointalk....494#msg11844494

 

Proof-of-Concept - Back-to-Basics - Phase 1

CBX Proof-of-Value Network Certification - Building a Decentralized Value Network using the CBX blockchain.

 

CBX Wallet Address:

5aPRwXQXXBaZF9WDv3FWD8fRc9fxgQsQCh

http://blockexplorer.cryptobullion.io/a/5aPRwXQXXB

Message:

I BitcoinFX hereby back 1000 CBX with 10 Troy Oz of .999 Fine Silver.

Should I divest either my CBX and/or physical bullion holding then this statement is automatically considered null and void within the CBX Value Network.

I hereby endeavour to provide a separate notification should I divest this personal holding.

Verify Message:

IMUhmkIFFnWEJ9APS+CXnEFCEN3P42N6puqZlQzEqVsg3vBilnpeAa+svSMsQcAYbs3lSo4xRTafd2pPh9HBR24=

Obviously, this message is only verifiable using the CryptoBullion wallet software and not with the Bitcoin or Litecoin software, as each crypto-currency chain uses its own signing message and verification system linked to that chains address system and applied cyptography. You could however choose to use any crypto-currency with said signing and verification system built in, being agreed by the buyer and seller.

 

...

 

I look forward to community discussion and participation in this unique concept.

 

Kind Regards,

 

SilveriteFX / BitcoinFX

[lightjaw]

looks interesting. I need to look at this when i have more time though as it seems that i need my concentration hat on

[HighlandTiger]

[HawkHybrid]

are you sure it's not easier to just get forum members

that you've traded with before to vouch for you?

 

HH

[SilveriteFX]

looks interesting. I need to look at this when i have more time though as it seems that i need my concentration hat on

 

Great! It might all seem quite complex at first, it is actually very easy to do in practice.

[SilveriteFX]

...

 

"Never leave your Bitcoins in third party wallets".

 

100% correct. That would be exactly the same as paying for SIlver storage or buying iShares SLV instead of owning and holding the physical silver yourself.

 

To clarify: CryptoBullion is a separate chain (currency) independent to Bitcoin and Litecoin. It is not a 3rd party wallet web wallet.

 

You also dont need to mine CryptoBullion, unlike Bitcoin or Litecoin. CBX is a PoS (Proof-of-Stake) crypto-currency:

 

https://wikipedia.org/wiki/Proof-of-stake - similar to Peercoin - https://wikipedia.org/wiki/Peercoin

[SilveriteFX]

are you sure it's not easier to just get forum members

that you've traded with before to vouch for you?

 

HH

 

Yes and no. It depends on how the individual or business wants to trade. What I have presented in the OP allows anyone to prove ownership of precious metal.

 

Building and establishing a fully decentralized proof-of-value network is something that cannot be achieved in quite the same way when using a web based 'trust' system alone. It is something unique to crypto-currency and blockchain technology.

[MikeOxlong]

It proves you have the item, you still have to trust the guy will post it 

[mr-dead]

Does it add any benefit to just writing your forum username and date on a piece of paper and placing the item for sale on it?

[HighlandTiger]

Think I'll stick with good old fashioned real money. ............ You don't need several pages of instructions to use real money...

 

I find it strange that there are people into PM's who advocate holding physical metal are also interested in crypto-currencies which, when you boil it all down to their basic premise, are really just figments of peoples imaginations

[SilveriteFX]

Does it add any benefit to just writing your forum username and date on a piece of paper and placing the item for sale on it?

 

Yes. If a new seller has also proven ownership of their Bitcoin address (or other crypto-currency address), by signing a separate message to that effect.

 

This does not only demonstrate ownership of the precious metal (beyond almost all reasonable doubt). It also proves ownership of the Bitcoin (crypto-currency) wallet address.

 

Therefore, if the seller does not trust that the buyer owns the payment address, then this can also be verified with a signed message to the seller, checking the buyers balance for the address using an online block explorer and/or requesting that the buyer sends a 'test' payment of say 0.00006000 BTC.

 

If you look at the CBX address I posted on the official block explorer, you can see that it maintains a balance above 1000 CBX, for example.

 

- http://blockexplorer.cryptobullion.io/a/5aPRwXQXXB

[SilveriteFX]

Think I'll stick with good old fashioned real money. ............ You don't need several pages of instructions to use real money...

 

I find it strange that there are people into PM's who advocate holding physical metal are also interested in crypto-currencies which, when you boil it all down to their basic premise, are really just figments of peoples imaginations

 

I can appreciate your sentiment in regards to 'real money'. The only thing crypto-cyrrency perhaps lacks most is tangibility, as property.

 

However, money is:

 

- A medium of exchnage.

- A unit of account.

- Portable.

- Durable.

- Divisable.

- Fungible (Interchangeable).

- A Store-of-Value.

 

Bitcoin (crypto-currencies) are all of the above.

 

Unlike FIAT currencies (paper money) Bitcoin also has rarity and scarcity value due to the finite number of 21 Million Bitcoins.

 

Bitcoins are not just 'numbers on a screen' that can be added to or created out of thin air, unlike paper money.

 

"A Corrosive Money System | Zeitgeist: Addendum (Part I)" - https://www.youtube.com/watch?v=MiCv6KTJs50

 

https://en.bitcoin.it/wiki/Block_hashing_algorithm - https://wikipedia.org/wiki/SHA-2 - https://wikipedia.org/wiki/Cryptography

 

Mining Bitcoin, like gold or silver extraction requires both time and energy, two concepts which at the very base level are a Bitcoins 'value'.

 

You cannot replicate a Bitcoin. You cannot double spend a Bitcoin.

 

Origins:

 

"How to make a mint:" - https://groups.csail.mit.edu/mac/classes/6.805/articles/money/nsamint/nsamint.htm  ?

 

"Bitgold" - http://unenumerated.blogspot.co.uk/2005/12/bit-gold.html  ?

 

"Bitcoin: A Peer-to-Peer Electronic Cash System" - https://bitcoin.org/bitcoin.pdf

[HawkHybrid]

 

However, money is:

 

- A medium of exchnage.

- A unit of account.

- Portable.

- Durable.

- Divisable.

- Fungible (Interchangeable).

- A Store-of-Value.

 

Bitcoin (crypto-currencies) are all of the above.

 

I disagree that bitcoin is A Store-of-Value.

 

what's to stop the creators from printing bitcoin?

complicated paper contracts backed by a signature?

 

HH

[HighlandTiger]

I won't repeat what I've gone over in other threads but if anyone actually believes that bitcoins cannot be faked or stolen then they are sadly deluding themselves. We are relying on trust to accept there is a finite number of bitcoins but I can guarantee someone somewhere is working on or has worked on a way of creating bitcoins indistinguishable from the real thing. After all it is nothing but clever programming. Where there is a program there will be someone trying to hack it.

[SilveriteFX]

I disagree that bitcoin is A Store-of-Value.

 

what's to stop the creators from printing bitcoin?

complicated paper contracts backed by a signature?

 

HH

 

Bitcoin has a mathematically controlled and finite supply. The process of mining further secures the network transactions.

 

- https://en.bitcoin.it/wiki/Controlled_supply - Controlled supply

 

- https://en.bitcoin.it/wiki/Myths - Myths

 

Whilst it would be possible to issue paper contracts on top of the finite 21 million Bitcoin total money supply, doing so would technically be classified as being a derivative or even quantitative easing. It would not be actual Bitcoin.

 

- https://wikipedia.org/wiki/Derivative_(finance)

 

- https://wikipedia.org/wiki/Quantitative_easing

[HawkHybrid]

'Bitcoins are created each time a user discovers a new block....'

'Users who use their computers to perform calculations to try and discover a block are thus called Miners.'

 

can I borrow your computer... any current super computer

will do?   

 

you also have to trust that the creator of the bitcoin used the

algorithm that he stated he used with no modifications or

back doors.

 

'Bitcoins are worthless because they aren't backed by anything'

'One could argue that gold isn't backed by anything either.'

 

gold is backed by the physical metal itself which can be

used in many applications that make use of gold's unique

properties. gold has inherent practical value in the form

with which people own it.

 

HH

[SilveriteFX]

'Bitcoins are created each time a user discovers a new block....'

'Users who use their computers to perform calculations to try and discover a block are thus called Miners.'

 

can I borrow your computer... any current super computer

will do?   

 

you also have to trust that the creator of the bitcoin used the

algorithm that he stated he used with no modifications or

back doors.

 

'Bitcoins are worthless because they aren't backed by anything'

'One could argue that gold isn't backed by anything either.'

 

gold is backed by the physical metal itself which can be

used in many applications that make use of gold's unique

properties. gold has inherent practical value in the form

with which people own it.

 

HH

 

Most 'home' Bitcoin miners are currently mining with Antminer S5's from China see: https://www.bitmaintech.com/productDetail.htm?pid=00020150303095018716e2uWKIA70662

 

They are very loud indeed and push a lot of heat! They also take a while to return on investment. You also need a 650W to 750W PSU to run one. Its also quite technical.

 

...

 

Bitcoin software and code is 100% open source (and always has been) - which means that anyone can review all of the code to see exactly how it all works, compile it from source for themselves (if they know how) and even suggest improvements to be tested and or brought into the main code.

[AuFinger]

So all this crypto ledger stuff is provide a way for a buyer to prove they have 'some' money... but they still may never pay you.

And for buyers wanting proof from a seller, all it does is prove they own something to sell you, but may never post it, or just be good with photoshop.

All you've done is add reassurance where it won't prevent bad people from later still going back on a deal.

If you trust enough to go forward with a transaction at all, then these initial two reassurances add little because they become irrelevant the moment you move to the next step and post stuff/transfer funds irreversibly.

Better to just deal with trusted people via feedback you slowly build up with people.

I'm all for btc etc, but this seems like a bad use of it for generating trust before going through with a transaction. Indeed all I think it's do is build a false sense of security.

[SilveriteFX]

So all this crypto ledger stuff is provide a way for a buyer to prove they have 'some' money... but they still may never pay you.

And for buyers wanting proof from a seller, all it does is prove they own something to sell you, but may never post it, or just be good with photoshop.

All you've done is add reassurance where it won't prevent bad people from later still going back on a deal.

If you trust enough to go forward with a transaction at all, then these initial two reassurances add little because they become irrelevant the moment you move to the next step and post stuff/transfer funds irreversibly.

Better to just deal with trusted people via feedback you slowly build up with people.

I'm all for btc etc, but this seems like a bad use of it for generating trust before going through with a transaction. Indeed all I think it's do is build a false sense of security.

 

Sign / Verify cryptographic signatures exist within the Bitcoin software (and other crypto-currency software) to increase security between a buyer and a seller and do help to resolve any trading disputes. These features exist because they do work very well already.

 

I'm simply demonstarting to members of this forum how these features can be used in precious metals trading and can even be used in addition to an existing 'trust' based system, such as the feedback system used on this forum.

 

 

I'm also looking to build up a fully decentralized Proof-of-Value Network using Sign / Verify cryptography on top of the CBX network.

 

Compared to a debt based monatary system, as someone has described in the Bitcoin Talk Forum CBX thread topic, this is a move towards:

 

"Collateralized Asset Certification (as opposed to collateralized debt obligation)"

 

If you like Bitcoin technology, physical prescious metals and concepts of 'sound money' then you should be able to recognize this as something with great potential.

[HighlandTiger]

Putting the word Bitcoin and sound money together is a bit of an oxymoron in my opinion. If the 's ever hits the fan and society collapses.Along with the Internet and power. then good luck spending or accessing your "sound money".

[AuFinger]

Bitcoin is only as safe as your access to the ledger is.

It's value is only as high as the confidence in it is.

Just like PM it may be legislated against in future. Only issue is once legislation has lifted PM have intrinsic value.

The btc ledger needs faith from owners of btc to retain value. I'm not sure that would happen with btc any better than it'd happen with someone suddenly saying Monopoly money has worth.

That said I'm hanging onto some btc in the view that at some point in the future I'll be able to sell them for much more than they 'cost' me today, in order to buy something useful like a house!

[SilveriteFX]

Putting the word Bitcoin and sound money together is a bit of an oxymoron in my opinion. If the 's ever hits the fan and society collapses.Along with the Internet and power. then good luck spending or accessing your "sound money".

 

Dependant on the level of said devastation and/or total society collapse, humanity would most likely continue to be resourceful with regards to block chain technology.

 

Perhaps the most likely solution would be from Mesh Networking using radio's: https://wikipedia.org/wiki/Mesh_networking

 

- Free Network Foundation - https://thefnf.org

 

- Free the Network: 'Hackers' Take Back the Web - https://www.youtube.com/watch?v=Fx93WJPCCGs

[HawkHybrid]

Dependant on the level of said devastation and/or total society collapse, humanity would most likely continue to be resourceful with regards to block chain technology.

 

Perhaps the most likely solution would be from Mesh Networking using radio's: https://wikipedia.org/wiki/Mesh_networking

 

- Free Network Foundation - https://thefnf.org

 

- Free the Network: 'Hackers' Take Back the Web - https://www.youtube.com/watch?v=Fx93WJPCCGs

 

what I think he means to say is that bitcoins and all

of the other made up currencies are no better than

paper currencies. people spend resources creating

this 'bitcoin' that does... nothing. it's only purpose is

to be created as a currency. it has no inherent uses

and random ideas and uses has to be created for it.

 

 

mining blocks is a waste of resources that could be

used elsewhere. the only reason mining blocks uses

these resources is to try and give it some value.

problem is that the value that comes out is not

always equal to the resources put in.

 

gold can be used to solve real life problems. bitcoins

solves nothing except the financial problems of those

that have benefited from it's creation.

 

(there, I've said what I think many are thinking ie

that I think bitcoins are useless. before anyone asks

the bottom line with fiat money is that it's still useful

whilst it can still be used to pay taxes and bills)

 

 

HH

[AuFinger]

The critical issue is that if something really bad does happen then Bitcoin may not make it through a rough spot in global socio-economic-disaster outcomes.

 

Bitcoin or other crypto currencies like it could be really great one day but for now it's still quite a novelty.

 

 

Simple things like national encryption policy and white listing in the UK for example, could render it useless in the UK or other countries.

 

A CME across a large portion of the globe could make anything relying on the internet as we know it completely useless. Worse still how it'd work for months or years where the internet may be regionalised before becoming fully global again.

 

 

While disasters can occur, and while governments ultimately serve the very wealthy few, no store of value or money is really safe. Infact bitcoin is probably more risky than most we already have!