P2P Bitcoin exchange [pdf]

&gt; If anyone doesn&#x27;t meet the transaction contract (send the money or send the bitcoins), both lose the deposit.<p>Am I understanding this correctly that if a buyer tries to scam the seller in whatever way (i.e. will initially sign the transactions but ultimately doesn&#x27;t pay) then the seller will lose his deposit? If that&#x27;s the case then it won&#x27;t work. I ran a P2P Bitcoin exchange and it&#x27;s a pretty common thing to have &quot;fake buyers&quot; who place offers but ultimately don&#x27;t fulfill them. With a third party you can resolve these kind of situations easily, it&#x27;s much harder without them.

An exchange is not just a transfer, it is a transfer at a price. Sure, you can transfer 1 BTC to 100$, but how do you determine a price? If A wants to buy 1 BTC from B, what is the transaction? 1$,5$,1000$? You need to integrate with the fiat system and you need a limit order book. I would suggest Harris book on microstructure for an understanding of exchange markets (ISBN 0195144708).

Paper is not clear on how their scripts work because they don&#x27;t show exact scripts <i>per output</i>.<p>Meanwhile, using bilateral deposits you can insure any sorts of contracts, not just currency exchange. In my scheme scripts are symmetrical: <a href="http://blog.oleganza.com/post/58240549599/contracts-without-trust-or-third-parties" rel="nofollow">http:&#x2F;&#x2F;blog.oleganza.com&#x2F;post&#x2F;58240549599&#x2F;contracts-without-...</a><p>The coolest part is when this sort of thing is used in autonomous programs that randomly connect to each other and establish contracts. In such case there&#x27;s no place for extortion - there&#x27;s no human to negotiate with. Based on this idea you can build never-seen before networking protocols. For instance, a micropayment network that propagates IOUs from peer to peer where each pair of peers is mutually insured to repay all accumulated debt when it reaches 50% of insured amount. It&#x27;ll be like a global distributed clearing house with as little fees as humanly possible (and instant confirmations!).

Don&#x27;t know the relation, but I&#x27;ve heard <a href="https://en.bitcoin.it/wiki/Ripple" rel="nofollow">https:&#x2F;&#x2F;en.bitcoin.it&#x2F;wiki&#x2F;Ripple</a> is catching on as a p2p bitcoin exchange.

On a similar line, you may also find this interesting: <a href="http://sx.dyne.org/anontx/" rel="nofollow">http:&#x2F;&#x2F;sx.dyne.org&#x2F;anontx&#x2F;</a>

I guess the code should be available in the future here:<p><a href="https://github.com/pauvorg" rel="nofollow">https:&#x2F;&#x2F;github.com&#x2F;pauvorg</a>

That&#x27;s the kind of stuff we need to make Bitcoin really take off.<p>I&#x27;m really looking forward to seeing more of this.

&gt; 5. Homer sends to Lisa the transaction and Lisa adds some inputs to the transaction &gt; as it happens in this example:<p>At this point, has Lisa paid Homer yet? If not, what will force her to do so?

How do I know if Lisa provided me with the correct amount of money in OKPay account before transaction?