Thanks Adam for the detailed information!

One response to the point of criminals (stolen bank accounts):
Any online service which deals with money is confrontated with that problem (Ebay, localbitcoin,…).
So that cannot be prevented completey (also not with KYC).
But a very natural protection against that is to use small trading volumes and to be careful.
The criminal want to cash out from his stolen bank account in one big tx, as the risks with every bank tx that it gets closed. So he will not be interested in small trades with a few 100 EUR.
There will be also some support for reputation systems or something similar.
It is still not clear what we will use, but the most simple could be that the traders exchange some evidence of their real life ID before doing risky trades (higher volumes).
They could meet on skype and make a video session to show each other a document, or exchange facebook/twitter/g+ accounts and prove that they are the owner of that account.
BTW: that could be used for proof of bank tx as well (to use in a skype video session a manipulated online-banking session is way too much effort to be practical).

One point to emphasis is that the privacy between the traders is broken. With the fiat exchange you have to know at least the receivers ID (with mail address).
If a trader wants to stay anonymous (use PO Box or number bank accounts) you need to take additional care to be sure to trade with a honest and non criminal trader.
I am not sure how the legal situation is her if you accept a trade with a complete anonymous person without checking any evidence about his identity and the source of the money?
I could imagine that this could cause some troubles.

Also it will be recommended to not use the primary bank account for trades, as a blocking of that would cause much more problems. There are many possibilities to create easily a new Bank account (mostly free like OKPay, etc…).
One open problem is how to prove that you are not involved with a crime in cases the other peer is a criminal. To use a legal contract in the trade which is signed by both via the deposit tx and encoded in the blockchain, could help, but its not sure yet if that would be enough and if it would be accepted by a court. Also to introduce a dependency to a external system (law) is not intended, but may be necessary for such cases.
Any ideas how to solve that are welcome. I am not expert in legal issues at all…

br,
Manfred


Am 19.02.2014 um 12:47 schrieb Adam Gibson <ekaggata@???>:

> Signierter PGP Teil
> > On 02/19/2014 07:27 PM, Benjamin Cordes wrote:> the problem you
> > have
> here is called the double spending problem. every
> > bank transaction is reversible. it clears through institutions
> > called central banks. banks and central banks interact through a
> > complex inter-banking network. so its quite easy for some authority
> > to shut down certain transactions, nodes, etc.
>
>
> The situation is a little more subtle than that.
> First, there do exist irreversible payment methods within the banking
> system. At the highest level are RTGS (real time gross settlement)
> systems which are intended to allow large banks to clear payments via
> central bank ledgers immediately. Similarly but not as absolute (and
> no real time) are the netting systems in clearing systems like
> Euroclear that allow banks to net out positions with other banks on a
> daily basis. These systems are to all intents and purposes
> irreversible, and have to be, otherwise banks could not square their
> books.
>
> A layer down from that is the SWIFT network, which is accessible to
> most people and organizations with a bank account. Settlement in SWIFT
> is slower (from a few hours to a few days) but is almost completely
> irreversible. To reverse a SWIFT transaction, especially if the
> counterparties are in different countries, is basically impossible,
> but if the counterparties agree they can execute a reversing
> transaction of course.
>
> A layer down from that are the kind of consumer level cheap wire
> transfer implementations like SEPA and ACH. These are advertised as
> irreversible transfers of cash but they are not cleared immediately.
> Banks will reverse them (mostly I think they first freeze the
> receiving and sending accounts and then launch an investigation) in
> special cases.
>
> Alternatives to wire transfer are interesting - things like OKPay
> which try to mimic cash transfer but of course they can at any time be
> subject to government sanction. Many such systems have been shut down
> over the years.
>
> As to how all this fits in with attempts to do P2P fiat exchange -
> there is a positive and a negative. The more completely decentralised
> a P2P exchange system is, the more difficult it is for banks to
> recognize the nature of the transfer. A transfer of $500 from Bob to
> Alice over SEPA cannot be subject to a blanket ban without completely
> banning people from sending each other money. If the system is
> decentralised, what signals can be used to flag the transaction.
> The negative side is that anonymity attracts criminals (as you pointed
> out), meaning that such systems could end up with a high percentage of
> people trying to launder (let's ignore the problem with that concept
> for now).
>
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