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Freicoin Over The Counter (Decentralized)


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If anyone else is interested in helping me fund a functional FRC OTC post below. I will ask Arcurus to help us set up Freihours for this.

https://github.com/nanotube/supybot-bitcoin-marketmonitor

https://en.bitcoin.it/wiki/OTC_Exchange

 

OTC Exchange

 
 

OTC Exchange offers convenient low-fee escrow service and a marketplace to perform currency exchange operations between PayPal funds and Bitcoin. The escrow service is using automated verification procedures thus providing payment/funds delivery guarantee for both trading parties.

OTC Exchange marketplace does not require its members to maintain any kind of internal balance and employ deposit/withdrawal procedures. Funds are only kept by the marketplace till order fulfilment. Should order originator wish to close non-fulfilled or partially fulfilled order, correspondent Bitcoin amount is sent back to its respective owner. PayPal funds are not kept by the marketplace at all, they go directly member to member.
 

How It Works

General Information

OTC Exchange escrow service employs delivery confirmations and timeouts in its work process, which means that both seller and buyer parties are guaranteed to either have their funds delivered promptly or the deal being reversed literally making no one loose a penny. Please note that in case of order fulfilment the marketplace could only guarantee funds delivery. Still it cannot guarantee (nor anybody else could) the persistence of received PayPal funds on your account. See the important chargeback notice.

Bid Limit Orders

With current marketplace work process there is a single trading scenario where member A initiates an offer by transferring correspondent BTC amount to our system account. Once payment is confirmed and verified by Bitcoin network, offer becomes available for fulfilment by other members.

  1. Buyer registers a Bid Limit order, specifying the PayPal amount wanted for purchase and the desired price. Marketplace provides buyer with a WalletID and an exact BTC amount to be sent.
  2. Buyer sends the requested BTC amount to the marketplace.
  3. Once transaction is confirmed by Bitcoin network, the order becomes publicly visible.
  4. Other marketplace members are now able to post Sell Market orders as a fulfilment of the given Bid Limit order.

Sell Market Orders

Continuing the scenario started above, member B willing to fulfil the offer fully or partially is requested to place correspondent reserve and perform PayPal funds transfer following marketplace instructions. Once the PayPal transfer is performed and cleared, marketplace gets automatically notified by PayPal integration services. Our escrow engine then starts a safety delay countdown and sends Bitcoin payment to member B once the countdown hits zero. Should member A feel suspicious on PayPal transaction received, he/she notifies the maketplace of the potential problem before the safety delay expires.

  1. Seller registers a Sell Market order based on one of Bid Limit orders available on the marketplace.
  2. Marketplace puts a reserve on the selected Bid Limit and provides Seller with a link to follow in order to perform PayPal transfer. The engine expects the transfer to be completed in 10 minutes, failure to act in a timely manner results to the reserve removal and the Sell Market order cancellation.
  3. Seller uses the link provided to perform PayPal funds transfer directly to the correspondent Buyer. Seller is provided with a pregenerated and tamper protected transaction template link and only able to confirm the ongoing payment. Resulting Paypal transaction does not disclose deal details nor it reveals a Bitcoin exchange deal. It only says Order#XXXXX.
  4. Paypal engine automatically notifies the marketplace on the transaction occurred. Should all sensitive transaction info match expected, marketplace considers funds transfer as successfully completed and starts a countdown (currently 24 hours) to send out deal BTC amount to Seller
  5. Should there be no Complaint requests on Paypal transaction from Buyer during the countdown, marketplace finally releases the Bitcoin amount to Seller.

Important Notices

  • When sending PayPal funds, one should use the same account they have on file under member settings. Performing a transfer using a different PayPal account will result the transaction considered invalid by our marketplace. Invalid transactions are not honored by marketplace work process so there'll be no Bitcoin payment follow. To request a refund on such transfers please contact recipient directly.
  • One is required to send PayPal funds using instant payment methods. Things such as E-Check will take 3-5 days to clear thus having the marketplace releasing Bitcoin offer reserve because of timeout.
  • Attempt to manually tamper with PayPal transaction currency, amount, payment recipient address or other sensitive information will result the marketplace flag the transaction as invalid and suspicious. Since such behavior violates the marketplace's Terms of Service, tampering member may be restricted or completely banned at the support team discretion.

Chargeback Notice

Credit card transactions are vulnerable for chargebacks. PayPal transfer operation funded by CC transaction is automatically being reversed once chargeback notification comes from the cardholder issuing bank.

Bitcoins as a Currency, PayPal as a Commodity

Note that OTC Exchange treats Bitcoins as a currency and PayPal as a commodity, not vice versa. It means that in the terms of the marketplace you actually sell or buy PayPal for Bitcoins. So the desired price you see at bitcoincharts should be inverted. Example: MtGox price 5.00 means 1 BTC is worth $5.00. To place an order with this rate on OTC Exchange, you should calculate the price of $1 and enter this as a deal price. For the case shown, the deal price would be 0.2 BTC (per $1).

Fees and Safety Delays

OTC Exchange charges 1% fee for a Buy Limit order and 0% for correspondent Sell Market orders. In case of a Buy Limit cancellation a is refund issued right away and 0.01 BTC processing fee is collected.

The marketplace puts extra delays on all ongoing BTC payments. Current processing delay is 24 hours. Depending on member reputation and trading volume it can be decreased or fully eliminated.

Trust Levels

Marketplace trust levels are assigned during registration procedure based on whom the invitation came from. Those are explained right below:

  • Trusted - Member's trustworthiness and identity documents were physically verified and confirmed by marketplace administration team. Trusted members are allowed to invite unlimited number of users.
  • Reliable - Member was invited to join the marketplace by one of Trusted members. Reliable members are allowed to invite three users.
  • Invited - Member was invited to join the marketplace by one of Reliable members. Invited members are not allowed to invite others.

The trust level could be increased after 180 days for a member showing regular trading activity and high reliability. The decrease of member's trust level can only happen in case of a fraud attempt originated by one of their invitees.

Membership

The service is now working in invite-only mode which means one can only become a member using an invitation sent by one of the existing trusted users. As a guest one is only allowed to overview marketplace resources, activities and trading events.

If you reasonable believe you could prove your trustworthiness as a currency trader in order to become a marketplace member, you should contact the OTC Exchange support team directly to consider inviting you.

 

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Git repo is located here : 

https://github.com/eddef/supybot-bitcoin-marketmonitor

I will work on creating a new module based on BitcoinData. 
https://github.com/eddef/supybot-bitcoin-marketmonitor/tree/master/BitcoinData

The current plugin uses heavily on the blockchain.info website to gather data about the coin, this i need to rewrite to act against freicoind. Hopefully i will get alot of that done today., 

Of course anytbody who wants to help, please do. The BitcoinCentral folder and mtgox monitor folder retrives market price data from exchange, this we need to write our own that uses in example bter and askcoin to retrive the data. At least there is alot of code that can be reused to create plugins for each exchanges.

As we use github its easy to fork and make pull request on changes.

If anybody need developer access to development server please let me know, i can set up enviroment to play in.

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