[Proposal] Dark Net Bitcoin Multi-Sig Exchange

Some context

Hello DMM's. I was last on Tor in around May 2011 as a vendor on the original SR1, so this brings back memories. I was small time, selling home grown shrooms. At the peak I had 2 orders a week but it was about all I was comfortably managing (and I couldn't produce anymore than that). I think the Bitcoin price was around $6, then it begin increasing quite a lot around that period and I remember getting excited. When I stopped vending it had been at $30 for ages and I don't think anyone expected it to go past that. Had a major incident in my personal life, and realized I couldn't continue vending because of it, no time to be driving around putting packages in postboxes all over the state, even if it was only 2-4 a week at most. By the end of 2011 I'd left SR completely. My real life situation improved and I ended up getting a "legitimate" income.

Exchanging Bitcoin for fiat is going to get more difficult

My point is, when I was vending it wasn't very easy to turn Bitcoin back into dollars. In the early days I used moneygram on Bitinstant, and then later MtGox. I see that neither of these appear to be around nowadays, but I may be wrong. I cashed out a fair bit but ended up accumulating a ton of Bitcoin that just sat there in my Bitcoin client for 2 years, I knew I had it but it wasn't worth that much at the time, it was over a thousand dollars though. Obviously... 2013 came and the price explosion was all over the local and regional news, so I sold most of it on Localbitcoins and kept some as crypto just in case it kept going up.

I've been watching cryptocurrency events quite closely recently and what seems apparent to me is governments are making it increasingly harder to buy and sell Bitcoin. In my day MtGox didn't have any restrictions, limits or checks that I was aware of. I've heard how LE are watching LocalBitcoins like a hawk and all the exchanges force you to use your ID and become verified. This is bad news for vendors, because it limits our ability to launder proceeds from vending. Since the governments are having a hard time cracking the Tor Network or compromising the markets, they are slowly cutting off the weakest and most vulnerable aspect of vending: currency exchange. Bitcoins are worthless unless you can actually cash them out. I think it's going to get increasingly harder for vendors to sell illegitimate Bitcoin gained from vending.

Could a dark net exchange remedy the difficulty of selling / buying Bitcoin?

Why not have a dark net currency exchange of some description? We have the sellers, and the buyers, we just need the medium / platform.

The benefits are (that I can see): Immune from government surveillance/subpoenas, can stay completely anonymous (No showing of ID + use of Tor), no logs or user activity will be kept, no restrictions of limitations, decentralized multi-signature wallets.

An exchange would likely hold a lot of money, so the multi-signature wallets and transaction processing would have to be 100% external (not passing through the website servers at all), and all data generated independently by the designated buyer and seller, to avoid any website operator interference or theft completely. Of course, dispute resolution would be paramount which in turn generates a small fee for the operator.

Such a service would allow people with Bitcoin to discreetly sell their coins to buyers who want to discreetly purchase those coins. Of course, the exchange is not directly linked or has any knowledge of any criminal activity, tumbling of coins would also be implemented (integrated with Grams Helix?). It would certainly fall foul of the law, potentially, but since it is not directly involved in criminal activity, it is simply a currency exchange. In essence, a currency exchange is not illegal. Even if it was, this one is located on the Tor Network and immune from government interference (period).

Conclusion and questions

My only intention is simply to facilitate the buying and selling of Bitcoin without the needless restrictions that some governments have imposed upon the currency. The Tor Network seems ideal for this project, and I think the community here would be strengthened by such a utility if implemented correctly and with zero possibility of the operator absconding with any funds. I'm not exactly proposing to build such a service, yet, but I would love to hear opinions on whether this would be possible. My main concern is of course how the actual sale would happen, step by step, how the operator could determine if the sale was successful. If anyone has also considered or is building a dark net currency exchange do consider contacting me. I'm perfectly willing to fully finance or even develop myself, (by hiring the necessary expertise) to build and sustain this service. Currently this is only a proposal to gauge interest and receive opinions and criticism (which I'm sure will expose severe faults in this plan, but if they can be resolved then I will pursue this project).

What about using the same model as DNM's use for transactions? Cash is sent through the mail with a low chance of being intercepted - since it's cash. All the while the cryptocurrency is held inside the multi-sig address and will be released on arrival of the cash funds.

tl;dr why not build a multi-sig dark net currency exchange to make it easy to buy and sell Bitcoin anonymously?

Update: Test server online to show I'm serious: http://boostfqofcqw2jra.onion


Comments


[6 Points] None:

[removed]


[3 Points] Shelbylawson:

I think the only problem with this is that a) requires a central escrow figure. B) how do you mediate a claim of "the package only contained $5, not $5000!"? C) if the Feds wanted to, they could still claim it as illegal money laundering through the usps. How do you resolve these?

I don't mean to shoot down your idea at all. Bitcoins are clearly becoming more and more difficult to exchange particularly for a lot of users who don't live in or near major metropolitan areas. I just want to provide some possible issues to discuss.


[1 Points] D15EA5ED:

There was a darknet exchange called TorATM a while back. I used it a handful of times before it vanished, but it did work and had escrow (before multisig was really a thing). There isn't really a lot of need for a dedicated site though most marketplaces have vendors who provide the service. /u/bankofquark is one such vendor I know of.


[1 Points] hrmbus:

Basically a darknet LBC. Hmmmm. Well I'm game.


[1 Points] None:

Congrats. You just invented Localbitcoins F2F model. It serves the same purpose as a multi-sig exchange.

Seriously though, I am not trying to be a smartass but your service is redundant to a conglomerate of better funded exchanges and services already operating.

This ever expanding BTC ecosystem also has some of the greatest talent out there. Not just great in terms of BTC developers, but great as in these people could keep up with the greatest tech minds in any business on the planet. So, snag you some talent and you have a shot at maybe making a small profit. Without the talent on board, early BTC adopters will view you as nothing more than an annoyance.

JMHO - no disrespect intended!