I've done a little research on this, and I think the way to go is to use a smartcard with an integral LCD display and at least one button.  These are on the market already.



http://www.nidsecurity.com/

Basically, the POS terminal just sends the balance due to your card, which displays it for you.  You then press the button to verify, and the card creates the transaction and signs it.  No need to trust anything.  The card can keep track of your balance, and you can verify it via some other trusted channel just like you do with debit cards now.

Whose design?

Not if it has multisig protection. Just activate your backup card. The lost card is worthless.

I can see really two problems with the smart card proposal.

With a smartphone, you can have your home desktop computer act as a server for your phone's app and then it's easy to limit the liability of how much money you can lose if someone steals your phone.

With a smartcard you could do basically the same thing, store the private/public keypairs for some pre-made accounts that you want to spend from along with the reference txOuts, and some software for negotiating/signing tx.

However, in order to make this work, you have to have your own smartcard reader to load it with money, which may or may not be expensive for your average user (or maybe not?).

The other thing is the sneaky merchant problem. Most smart cards are designed to be used with a tap of your wallet, so a screen would basically defeat the point, and a button on the card would be too easy to accidentally activate (or too easy for a thief to use). The only way to completely circumvent that problem is to have something with basically the capabilities (and independent power source) like a smartphone, where the merchant has no direct control over what is sent. Or else a card with a screen, a pinpad, a cancel button and a "lock price" button, which wouldn't be so easy to use one way or the other and isn't available since most banks can just do a chargeback instead.

I don't really get it. If you don't have a smart card interface to your computer, how do you load any coins onto them? By going to some centralized bank? Certainly the grocery store isn't going to offer deposit services for bitcoin cards. If you do have a card interface for your computer, you could set up your pin securely from there and load whatever coins you wanted from your online or offline wallets.


I don't see how a contact based smart card would be any better than an RF card security wise. Neither has a large enough range to allow someone to steal your money remotely, and in both cases you're trusting that the manufacturer of the card reader has made it so that the merchant can't charge more than they said they would without retyping your pin.

AFAIK (from the few RF smartcard readers I've seen, and McDonald's is about the only place I've seen them) most RF card readers don't even require even so much as a pin input, which would be a disadvantage vs contact cards, but the card itself could require a pin to mitigate that problem. On the other hand, requiring a pin would be a disadvantage for small token purchases, like the original usage of smart cards as subway tickets.

Although the price tag of a smart card is way more affordable than a smart phone, I don't think they're well suited to the technology and usage of BTC.

1. You load simply by sending BTC to the address of the card - you don't need a smartcard programmer to load it.

2. The card receives a transaction request and if you see the right checksum returned from the card, you give your pin.

3. Provided the pin, the card now signs the earlier transaction with a unreadable private key on the card and sends this signed message to the terminal.

4. The terminal publishes the signed message to the network.

ANYONE see any holes in this?

Yeah seen it; already added my proposal with checksums instead of LCD screens (not that those aren't cool! I had no idea that could be done)

Anyway we can create a complete BitCoin economy system here:
1. Bitcoin client is your bank and online payment device.
2. Smart card is your wallet and credit card.
3. Simple terminals accept payments.

That's it! And its physically impossible for a merchant to hack your card.

Lets do a mailing list or facebook group with people who support this and have programming skills.

I'm busy now, but in the summer I can program for this project.

Since ?Cascious? has done this sort of thing before he should probably be the lead dev and we just help where we can and with promotion.

I don't see any point in developing new hardware. Bitcoin is the most adaptable currency invented (I consider it the ninja currency) and should use whatever is already ubiquitous. Magstrip readers are plethera, barcode scanners too. I don't see many smart card scanners in America, though it's probably because I live in a rural area. I'm sure there are a lot of magstrip haters here, so I probably shouldn't have mentioned it. I'm sure many other countries are technologically way ahead on the smartcard trend to buy their bullet train tickets. I hate to be a pessimist, but I see the way most average Joes behave and they won't be using iPhones, smart cards, or any other new gadget any time soon in the retail environment. They will be using magstrips and paper. If Bitcoin cannot adapt to magstrips, paper, and sms, then it will require bucking the system. It's too expensive to try to educate the masses about new gadgets.

tl;dr  Bitcoin is the most adaptable currency and should use what is already ubiquitous, because it's too expensive to educate a market.

Guys the adoption rates on new merchant POS devices is an S curve. As for adapting existing hardware, merchants tend to be VERY reluctant as the POS device typically links into inventory management or at a minimum the G/L.  Incidentally, the Europeans have been trying to get the Americans to adopt Smart Cards for almost a decade. They've kind of given up on the retail payments side, but it's my understanding that they are now pitching it as a medical records management solution.  Doubt it'll work there either, as the developing world is leapfrogging over smart cards to mobile (Smart cards are too expensive for both consumer and doctors/pharmacies/clinics/hospitals to implement.) As for working through the card processor, not very likely as you have to have a BIN to join the network. The big banks, Paypal, and new retail payments entrants like Google are using competing protocols to fight over share of wallet, and they typically look to devise solutions that erect barriers to entry (friction and fees)

Personally, I think a card based solution that leverages tradition POS technology is a mistake, as the entire systems is in flux; (thus crappy dongle technology like Isis and Square) and the merchants seem to be waiting on a dominant design to emerge before yet another upgrade to their POS hardware. As you know the banks are trying to shove NFT down the merchants' throats, haven't heard of any positive news un uptake rates beyond markets serving the top 1%.

I think solutions should be forward looking and with an eye toward creating some sort of universal adaptor should demand support the need for backwards integration.  My early sketches suggest that the cost structure of a "universal adaptor" would not be competitive, so how do you get the merchants to accept a more expense system with increased settlement risk (yes it's non reversible, but 10 mins is 9 min 50 seconds too long meaning you've got to build a middle office to hedge that risk) So to whom does one pass on costs in excess of the industry average 2.8%.

Don't mean to sound like a nay sayer, I think about this problem rather frequently, and I too find myself frustrated by the timing differences between the evolution of BTC, the lagging implementation of mobile money (the US is woefully behind, search "M-Pesa" 9MM users in 3 years), and the lack of vision and defensive genuflecting by the big banks when it comes to next generation retail payments solutions. 

Sorry about the delayed response.  Any design leveraging the card processing network. Any network that registers debit or credits in USD. It you co-locate a private BTC only network that doesn't talk to the merchant's cash register then you may as well move straight to mobile as the merchant will then have to reconcile by hand all BTC trade, since they well need some sort of paper trail for the accountants/ auditors.