Bitsquare is an open-source desktop application that allows you to buy and sell bitcoins in exchange for national currencies, alternative crypto currencies.
P2P infrastructure without servers: No single point of failure and no privacy breach due transaction monitoring possible. National (or alternative crypto) currency are transferred directly from one user’s payment account to the others payment account without any intermediate party. Support for alternative crypto currencies to be exchanged with Bitcoin. No registration or identification process. Decentralized arbitrator system as primary protection mechanism.
Trader’s security deposit refunded after successful trade or used as payment for the arbitrator in case of a dispute. Arbitrator anonymous and randomly assigned. Resolves disputes between traders. Arbitrator’s security deposit locked when the arbitrator is registered and released upon stepping down. Contract blinded non-refutable proof of trade details. Fraud report – reports by arbitrators with proof of clear cases of fraud.Trade volume limitation limits to maximum trade volume in order to reduce potential gain from fraud.
Bisq is not company, but open-source project that aims to fill a gap in the cryptocurrency ecosystem: to provide an exchange platform which follows the same principles as Bitcoin itself. A unique incentive mechanism is set up to support the project. Transaction fees go in part to the developers and in part to the arbitrators in the event of disputes, arbitrators collect the security deposit of the losing party (or in some cases half the deposit of each party).
Bisq protects the privacy between trades by separating each trade with a different set of addresses. No addresses will be used across multiple trades avoiding coin merge and de-anonymisation vectors. The user needs to further take care when doing the deposit from and withdrawal to his external wallet to avoid loss of privacy due coin merge (e.g. usage of Coin Join solutions). An arbitration system will serve as primary protection mechanism and is also described in a separate document.
The security deposit will be derived from the arbitration fee which will be used as payment to the arbitrator only in case of a dispute resolution. If no dispute is opened, this deposit is returned in whole to each trader. The security deposit serves also as an incentive to follow the protocol (e.g. to ensure Bob is not lazy or careless and forgets to release the payout transaction) as well as a mechanism to ensure a dishonest trader is forced to pay the costs for arbitration.
The fees are necessary for protection against offer book spam, market manipulation and identity harvesting. They are also needed as payment to the arbitrators for their services. Arbitrators are compensated for agreeing in advance to be available to arbitrate a trade even in the case the trade is not disputed. Initially the fees will be kept to a minimum. Later as the trading community grows the fees will be adjusted as needed to make the arbitration system sustainable and to adjust to the level of observed fraud activity.
The desktop application implements protocol for the trading process. When broadcasting an offer, the offering peer agrees to accept any take-offer request which fulfills the terms defined in the offer. The take-offer process requires that the Bisq applications of both traders are running. They do not need to be physically present at their computer, but the software needs to be online to react to the take offer request. The Bitcoin seller will release the deposit after he has confirmed the receipt of the national currency.
Manfred Karrer FOUNDER
Mihail Mihaylov COMMUNICATIONS
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