Trustless exchanges: how we can make them now, and call to action
In light of what has happened in the last month, I hope that it is clear to everyone here that we need trustless exchanges, and we need them now. Fortunately this is not a new problem, and there are solutions. Let's take a look at what a trustless exchange will look like:
Users deposit external assets (e.g. national currency) into the system by means of a gateway. Cryptographic receipts, zero-knowledge proofs, and bank statements to demonstrate non-fractional holdings of the gateway without revealing sensitive customer balances. Bearer tokens are provided in exchange which anyone can trade separate from and without trusting the gateway.
Users deposit bitcoins and other crypto assets by means of an audited gateway or pegging mechanism. At no point are keys to these coins held by anyone other than their owners, who are also free to move them back through a gateway, peg, or atomic swap to their respective block chains at any time.
A series of hard-fork changes on a side-chain enable signing of bids, asks, and other smart contract types entirely without trust. Users exchange orders directly over a peer-to-peer network, and the miners combine these orders into matching trades which hit the block chain without any counterparty risk. We call this proposal "frei markets" - frei meaning free as in freedom, liberté. It is not specific to Freicoin, just free software code that could be deployed on any bitcoin-based chain (including Bitcoin itself). It requires zero trust of any participant, and cannot be shut down. You can read more about our proposal here:
https://bitcointalk.org/index.php?topic=278671.0
We have the capability to do this now. We have worked out the engineering designs, and we have the right people. We just need the ability to devote the 9 months to a year of focused development time that is required to implement this. We've budgeted this to require $125,000 USD. If you believe as we do this is what bitcoin requires now, please consider donating.