Today, Mycelium announced that their Local Trader App has successfully made it through Beta testing and is now ready for the general Bitcoin populace. Mycelium Local Trader App allows users to create geographically tied sell orders. You can choose an exchange rate from BitStamp or Coinbase or BTC-e, then set a percentage above that which you would like to sell your Bitcoins at. Mycelium Local Trader App users in the area will be able to see the sell listing, and the potential buyer and potential seller are able to communicate within the Mycelium Local Trader App. The communication between the two parties in completely encrypted end to end, not even the Mycelium App can see what the two parties are saying. Furthermore, instead of passwords and logins, Mycelium uses the private key associated with each users’ Mycelium wallet as the only form of authentication and registration on Mycelium’s servers. This is an intentional move by Mycelium to emulate the pseudonymous nature of the Bitcoin Blockchain to create a “decentralized exchange.”
When you create a Mycelium Local Trader sell order, the terms and conditions appear:
Mycelium Local trader is a tool that allows buyers and sellers to trade bitcoin for cash. Trading requires buyers and sellers to meet physically as part of the exchange.
Mycelium only acts as a means of communication between parties, and is not in any way responsible for any actions taken by the trading parties before, during, or after physical meetings.
The Mycelium software guides the trading parties, but they themselves are responsible for exchanging the correct amount of cash and bitcoins and their validity thereof.
Mycelium charges a small 0.2$ fee to both sides of any trade. This fee is subject to change in the future.
Transaction Confidence Graph
Currently, users are only allowed to set sell orders; however, Mycelium has stated that buy order functionality will soon be released. Buyers are not required to wait for even one full confirmation from the Bitcoin blockchain. Mycelium has included a Transaction Confidence Graph that displays the probability that the transaction that sends the coins to the buyer’s wallet will be included in the next block. Mycelium servers will track the transactions propagation through the network while simultaneously checking for double-spends, transaction malleability, unconfirmed inputs, transaction fees, and other possible issues. Users have reported that transaction confidence will go into the high 90’s within a few minutes. Technically, this type of functionality could allow anyone to become a walking ATM. In fact, this is the same functionality that BTC China wishes to implement with their Picasso Web Wallet (ATM). The full functionality of the Picasso Web App will be harnessed soon. As of now, it doesn’t serve the functionality of Mycelium’s app; however, Picasso has the advantage of being accessible from any device through a web browser.
A few months ago, I wrote about this very mathematically viable way to accept zero confirmation transactions when Mycelium first announced their Local Trader App for beta testing. I also postulated that Bitpay also used a similar method to accept zero confirmation transactions in their payment processing services. Of course, the Transaction Confidence Graph is in no way a guarantee, and there is no other payment option in this world that is as irreversible as 1, or 3, or 6 confirmations on the Bitcoin blockchain.
As /u/Rassah from MyCelium concluded in his announcement to Reddit:
TL;DR: This is the most decentralized exchange you can use today. Decentralize ALL the things.
Warning: Trippy Video.