David R. Vandervort

Challenges and Opportunities Associated with a Bitcoin-Based Transaction Rating System

It has been shown that seller ratings given by previous buyers give new customers useful information when making purchasing decisions. Bitcoin, however, is designed to obfuscate the link between buyer and seller with a layer of limited anonymity, thus preventing buyers from finding or validating this information. While this level of anonymity is valued by the Bitcoin community, as Bitcoin moves toward greater adoption there will be pressure from buyers who wish to know more about who they are doing business with, and sellers who consider their reputation a strong selling point, to allow greater transparency. We consider three different models by which a reputation/rating system could be implemented in conjunction with Bitcoin transactions and consider pros and cons of each. We find that each presents challenges on both the technological and social fronts.

Issues in Designing a Bitcoin-like Community Currency

The invention of the Bitcoin protocol has opened the door to new forms of financial interaction. One such form may be to adapt Bitcoin technology for use as a community currency. A community currency is a form of money issued by a non-government entity to serve the economic or social interests of a group of people, often in a small geographic area. We propose a model of a community cryptocurrency that includes a community fund from which community members may take out loans if the community votes to approve them. We consider possible vulnerabilities and mitigations to issues that would affect this community fund, including issues of identity, voting protocols and funds management. We conclude that these vulnerabilities are, in most cases, amenable to technological mitigations that must be adaptable to both community values and changing conditions, emphasizing the need for careful currency design.