SafeCoin

Whitepaper
Version1.1 November27,2013 byJohnSegawa DocumentHistory TheProblem AboutThisPaper SafeCoinSolution SecurityOfFunds Lockcommand Exampleusagescenarios Usagescenario1Safekeepingandspending(mobile)wallet Usagescenario2Safekeepingandspending(mobile)walletwithabackup walletofaspouse,partnerorfriend Usagescenario3Chainofwallets HighDeflationAndRisingTransactionFees Q&A

Document History
Version 1.0 1.1 Date 2013.11.19 2013.11.27 Description Initialproposal Majorrewriteofadocumentwithahopetomakeitmoreclear. Lockcommandextendedtoincludemultiplelockaddresses,maxtotal andmaxdayamounts.

The Problem
WebelievethatBitcoinisgeniusinventionanditandothercryptocurrencieswillhaveahuge impactonglobalandlocaleconomiesandtheworld. WebelievethatBitcoinisapioneerandalthoughisgeniusitisnotperfect. Themaindrawbackswethinkare: 1. Securityoffunds AlthoughBitcoinasasystemisveryreliableandsecureitsnotthecasewiththeBitcoin wallet.HighsecurityofBitcoinsystemitselfneedstobeextendedtogiveausermeans toprotecthisorhervaluables.Highriskofkeepingandoperatingbitcoinsinacorporate environmentwithnopossibilitytorecover,traceorprosecuteleakedfundsand responsibleforitwillbeamajorobstacleformainstreambusinessestoembracethe

Bitcoin. WithaBitcoinpopularityrising,sowillrisethemalwarethatspecificallytargetsBitcoin wallets,collectsdata,logsuserkeys,stealspasswordsandprivatekeys. ThisissueneedstobeaddressedforBitcointogomainstream. 2. Highdeflation DeflationisinthecoreofBitcoinsystem.Thereisalimitedamountofbitcoinsthatwill everbeproducedandbitcoinsareoftenlostorforgottenandthereisnowaytorecover thosefunds.Althoughdeflationisbeneficialintheactivegrowthperiodattractingnew users,toohighdeflationwillhinderitsadoptionasaworldcurrencyinalongrun.The deflationneedstobemoderated. 3. Everdecreasingrewardforminerswilldrivetransactioncosthigher,whichwillnegatively affectthevalueofthesystemfortheenduser.

About This Paper

Thispaperproposesasetoffeaturesthataremeanttomakecryptocurrencysystemsafeand userfriendlyforawideconsumeraudience.ThissetoffeaturesisnamedSafeCoinandcan bereadasaproposaloffeaturesthatneedtobeimplementedinaBitcoinsystemorasa blueprintforanalternativecryptocurrency(SafeCoin).

SafeCoin Solution
Security Of Funds
Theusershouldbeabletolimituseofaparticularcoin.Thelimitwouldbevalidforadefined timewithnopossibilitytorevokeit.Itcouldonlybeextendedintimeormademorestrict.This insures,thatevenobtainingyourprivatekey,theperpetratorcannotremovethelimitssetbythe user.Thelimitswouldbesavedinablockchainitselfandwouldsharethesamelevelofsecurity asatransactionitself. Threelimitsshouldbeimplemented: 1. asetofaddressesthatthecoincanonlybetransferredto. 2. maximumamountthatcanbetransferredfromthecoinduringthewholelocktime. 3. maximumamountthatcanbetransferredfromthecoinin24hours.

Lock command
Lockcommandneedstobeaddedtothecoinnetworkprotocol. Lockcommandparameters: Parameter Lockexpirydate Addresses Explanation Thelastdayofalock Asetofaddressesintowhichthefundsfromthe Optional No Yes*

coincanbetransfered.0to100addressescan bespecified. Maxtotalamount Maxdailyamount Maximumamountthatcanbetransferredfrom thecoinduringthewholelocktime. Maximumamountthatcanbetransferredfrom thecoinin24hours. Yes* Yes*

*atleastoneoftheoptionalparametersneedstobegiven Lockcommandwillbeaddedintotheblockandhashedtogetherwithtransactions. Verificationprocesswillmemoriselockedcoinconditionsandwillrejectanytransferoperationof thiscointhatviolatessetlimits.Afterthelocktimehaspassedthelockwillautomaticallyexpire. Nounlockoperationwillbeavailable.

Example usage scenarios

Usage scenario 1 - Safe keeping and spending (mobile) wallet

Tocompromisethissystemtheperpetratorwouldneedtobreakbothwalletssecurities.That makesitmuchmuchlesslikely.Incombinationwithgoodpractices(notkeepingbothwalletson thesamecomputer,etc.)thissystemcanbeusedforaverysafestoringofyourcoins.

Usage scenario 2 - Safe keeping and spending (mobile) wallet with a backup wallet of a spouse, partner or friend

Usage scenario 3 - Chain of wallets

InthisexamplefundsfromSafekeepingwalletcanbeaccessedonlywiththreeprivatekeys

storedonthreedifferentworkstations!Nomalwareorthievewillbeabletobreakthat.Andifyou looseyourintermediateorspendingwalletyoucanstillrecoveryourfundsaftertheLockdate!

High Deflation And Rising Transaction Fees

ThispartcannotbechangedforBitcoinsoitcanonlybetakenasasuggestionforanewcoin. Therewardsystemforminersshouldstayatflatrateafterreachinglow1%newcoingeneration peryearlimit.Toachievethat,intheBitcoinrewardmodelifstartingcoingenerationfrom2013, fromyear2030rewardforminedblockshouldsettleat4coinsperblock.Thatwillmaintain approximate1%newcoingeneration.Notethat1%isnewcoingenerationisverylowandwill merelycompensateforthelostcoinswhilethecurrencywillstillbemoderatelydeflationary.At thesametime,continuousrewardsystemforminerswillkeepthetransactionfeeslowforallthe users.

Q&A
1. CanIlockSafeCoinwhileitisalreadylocked?Whathappensthen? Yes.Alockofacoincanbeextendedbyissuingalockoperationtothesameaddress thatitisalreadylocked.Newdurationreplacespreviouslockduration.Youcannot changethelockaddressforthelockedcoin,durationcanonlybeextended. 2. CanIusemySafeCoinwhileitislocked? Yes.Youcantransferneededamounttothelockaddressinthedifferentwalletandthen useitasyouwish. 3. CanItransferfundstothelockedSafeCoin? Yes. 4. WhathappensifIlosemyspendingwalletwithmylockaddressandkey? Youwillhavetowaitwhileyourlockdurationexpiresandthenuseyourcoinasyouwish bytransferringitorlockingagaintothenewlockaddress. 5. WhycantIunlockit?ItsmycoinandIhaveakey! Thatiswhythissystemissafe.Ifyoucanunlockit,socanthethieve. 6. Ifathiefcanstealandbreakonewalletcanthedothesamewithmultiplewallets? Having your wallets on different machines makes the possibility to even find and hack both of them much much less likely. For example you could have your saving wallet on your computer and spending wallet on your mobile. Any malware on your computer will have no clue where your spending wallet is.