2019 FATF Recommendations

This week the G7 Financial Action Task Force (FATF) announced new virtual currency “recommendations” that lay the groundwork for an extensive new worldwide regulatory regime for cryptocurrency exchanges. Once enacted into law by member countries these laws will require bitcoin exchanges, and even individual traders, to collect invasive KYC/AML information on their clients. They will also require that this information be shared with national regulators and other regulated exchanges. These sorts of rules put every bitcoin trader’s privacy at risk and lay the groundwork for attacking Bitcoin’s role as a fungible permission-less global store of value.

Bytabit

The Bytabit team is building a new way for bitcoin buyers and sellers to exchange bitcoins and preserve their privacy in the face of attacks by groups like the FATF. Our mobile app facilitates the exchange of bitcoin for fiat currencies directly between users. Bytabit never has custodial control over either the national currency or bitcoin traded with our app. Bitcoin is held by a two-of-three multi-signature bitcoin transaction until the national currency is received by the bitcoin seller directly from the buyer via a bank transfer. Each trader controls one key of the multi-signature transaction and Bytabit controls a third key that can only be used if one of the traders requests arbitration. All details about the trade are encrypted locally by the app before a trade is initiated so that this information can only be seen by the traders involved. …

Sometime on or after January 3rd, 2009, Satoshi Nakamoto created the genesis block. Six days later he mined the first block and released the open source Bitcoin client software. And on the seventh day (we hope) he rested.

To mark the ten year anniversary of Satoshi’s gift to mankind, the Bytabit team has decided to also release the source code to our mobile bitcoin exchange app today (January 9, 2019). For those of you who are technically inclined the Git repository is here (please note we are still in early development so the app is only meant to be used on testnet). …

The mission of the Bytabit team is to provide one of the most secure, private, and convenient ways to buy and sell bitcoin. In this post I demonstrate (via video clips) the first version of our mobile bitcoin/fiat exchange app. The Bytabit app currently runs on Android phones and this alpha version demonstrates the “happy path” for exchanging bitcoin for national fiat currency without using an intermediate custodian for any part of the trade. This demo was performed on the public Bitcoin testnet3 network.

In place of a fully custodial, centralized exchange the Bytabit app holds the bitcoin (BTC) for each trade in a unique per trade 2 of 3 multisig address (P2SH). This “escrow account” is controlled jointly by the buyer, seller, and an arbitrator. The fiat currency payment for a trade is performed outside of our app using any non-reversible, person to person payment method such as the popular Swish network in Sweden. In the case of a non-contested “happy path” trade the buyer and seller sign the final transaction to release the purchased bitcoin to the buyer. If the the seller doesn't receive the expected fiat payment, or the buyer sends the payment but does not receive their bitcoin, then an arbitrator will collect evidence from both parties and provide the second signature to either refund the seller's bitcoin, or payout the bitcoin to the buyer. …