How The BitWasp Project Could Add Major Value To Bitcoin

Journalist:
Gordon Hall
April 7, 2014

Bitcoin price now languishes in the doldrums, the winds of favourable fortune having departed. But the wind always changes. Right now a slight breeze is stirring which could grow to the storm that sends the next major wave of adoption.

The BitWasp project is developing open source marketplace software, with privacy and security built-in and community-reviewed. The promise of BitWasp is being recognised, it was recently voted best project of Winter 2014 on BitcoinTalk. Conceits of the Northern Hemisphere aside, BitWasp won for good reason.

Good Marketplaces Are Essential To Bitcoin’s Success

Right now, the Bitcoin economy is under pressure from a lack of faith in exchanges. If acquiring cryptocurrency is risky or expensive, it’s hard to attract new entrants. As to expense, in South Africa the Rand market premium on Bitcoin and Litecoin is sheer banditry, approaching 20%. Volume is proportionately tight. The situation may well be similar in many other emerging countries – let me know (GordonHall at Safe-Mail dot Net) if you happen to live in one.

SA prices at press time. As Preev puts the ZAR price at R4886, these aren’t prices to bring the emerging market into Bitcoin.

Most developed nations have access to fairly-priced Bitcoin however. Sure, the risk issue still looms large, especially in the wake of Gox, but that makes it a well-known problem at least. There is great economic incentive to solving it, so I’m confident that secure, decentralized exchanges will emerge “soon.”

Another less-recognized bottleneck is the lack of good public marketplaces. This is a very similar problem, an exchange being a specialized marketplace after all.

Again, the developed world has better access, especially to good private marketplaces like Overstock. But where are the trustworthy public bazaars? Since Bitmit and the Silk Road were taken down, trade in goods (and bads) has suffered. While some believe the closure of Silk Road and similar black market operations has improved Bitcoin’s image, ultimately a currency depends more on the substance of trade than the appearance of respectable conformity.

Trade and exchange are the lifeblood of any currency, marketing types notwithstanding. And if there are no safe, convenient ways to trade Bitcoin for goods or vice versa, there is less utility to owning Bitcoin.

The Potential of BitWasp

Marketplace software is readily available. What’s currently unavailable is marketplace software which is:

  • free,
  • open,
  • secure,
  • private and
  • independent of third party payment processors like BitPay (whose increasing dominance is exposing Bitcoin trade to regulatory vulnerability).

This combination of features, if it can be achieved, will allow the Bitcoin economy to expand beyond current constraints. A platform which allows anyone, anywhere, to set up a trustworthy marketplace for anything – this is the necessary flip-side to the Bitcoin.

Developments in Multi-Sig Transaction Security

Marketplace escrow wallets are a tempting target, as many marketplaces besides Bitmit have learnt the hard way. BitWasp is making strides with a multi-sig solution which essentially keeps the escrow process between buyer, seller and blockchain. No longer having to trust the staff or security of a marketplace to secure your trades removes a huge barrier to trade.

DPR’s comments after the Silk Road 2 (apparently) succumbed to a hot-wallet hack are clear:

Never again store your escrow bitcoins on a server.

Silk Road will never again be a centralized escrow storage.

This week has shown the collateral damage we can cause by being a huge target and failing in just one unforeseen area.

I am now fully convinced that no hosted escrow service is safe.

If I cannot trust myself to keep a hosted escrow solution safe, I cannot trust anyone.

Multi-signature transactions are the only way this community will be protected long-term.

BitWasp: often mentioned in articles about anonymous marketplaces with accompanying sinister imagery. BBC’s fiery code / skull / crosshair is a pretty rad example.

Legitimate Business

Trade is too important to human survival to be constrained by the (double) standards of the power elite. Whatever your opinion on unofficial trade conducted through anonymous marketplaces, it’s worth noting that in countries where the fiat system has broken down, the black market is often the only way to make ends meet. As the fiat system is increasingly at risk of serious disruption if not general collapse, I’d rather such markets be tried and tested before they become necessary.

Further Features

Bitwasp encrypts all private messages between traders as well scrubbing all identifying data from uploaded imagery. PGP two factor authentication ensures a higher level of security. There are also live exchange rates for Bitcoin to major currencies… As per the feature list on the developer forum, it’s shaping up to be a very complete package.

Support BitWasp

19EkDTAaGWySZv1QsWxyWwYMZpo7jpvPYe is their Bitcoin donation address.

Last modified (UTC): April 7, 2014 00:01

Gordon Hall

Former swing trader of equities and daytrader of futures, out to make it in this crazy crypto world. I'll be doing some chart-reading aka fortune-telling, plus some interviews with crypto developers and miners. And maybe even some cartoons. If you like the cut of my gib, visit my website (goldrhino.tk) and pick up a Ⓑ keychain or Ⓑ leather mousepad.