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On 10 April 2014 06:44:32 GMT-04:00, Tamas Blummer <ta...@bitsofproof.com> 
>Thanks, Peter and you convinced me. I run away with a thought.
>It’d be great to find a spot to deploy payment channels, but I agree
>this is not it.

No problem!

I'm sure we'll see payment channels implemented sooner or later
the form of "hub and spoke" payment networks. The idea there is you have one or 
more centralised hubs who in turn have payment channels setup to and from 
payors and payees. So long as the person you want to pay is connected to the 
same hub as you are, or in more advanced versions connected via a ripple style 
chain, you can push payment to the hub and get proof they did the same for the 
recipient. Your loss is always limited to the incremental payment amount and 
payment is essentially instant.

Of course, it's got some disadvantages compared to standard bitcoin 
transactions - its less decentralised - but when compared to other forms of 
off-chain payment in most situations its a strict improvement, and having the 
capability available is always a strict improvement. Like fidelity bonded banks 
the trust required in the hubs is low enough that with some minor effort 
applied to anti-DoS you could probably get away with using even hubs run by 
anonymous actors, making the centralisation less important. (hubs are 
essentially interchangeable) Unlike pure fidelity bonded banks the effort 
required to build this is relatively minor!

You can even combine it with chaum tokens for anonymity. You'll want to hold 
the tokens for some amount of time to thwart timing analysis, leaving you 
somewhat vulnerable to theft, but in that case fidelity bonded banking 
principles can be applied. Other than that case the idea is probably made 
obsolete by micropayment hubs.

Regulatory issues will be interesting... If you wind up with a few central 
payment hubs, without chaum tokens, those hubs learn all details about every 
transaction made. Obviously if a big actor like BitPay implemented this there 
would be a lot of pressure on them to make those records available to law 
enforcement and tax authorities, not to mention marketing and other data 
mining. Equally I suspect that if an alternative more decentralised version was 
implemented there would be strong government pressure for those approved hubs 
to not interoperate with the decentralised hubs, and equally for merchants to 
not accept payment from the decentralised hubs.

But all the same, if widely implemented this reduces pressure to raise the 
block size enormously, keeping the underlying system decentralised. So the net 
effect is probably positive regardless.

Oh yeah, credit goes to Mike Hearn for the payment channels, and if I'm 
correct, for the hub concept as well.

Amir: You should think about adding the above to dark wallet. It'd be good if 
the protocols are implemented in an open and decentralised fashion first, prior 
to vendor lock in.
Version: APG v1.1.1


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