We can make crypto tangible and spending private using smart contracts: here's how

What if you could hold crypto like cash? Wouldn't that be awesome?

It is beyond a necessity that crypto becomes tangible even whilst being a decentralized magic internet money and it should not be difficult to implement when smart contracts are a thing.

If you care about freedom then you'd certainly care about tangible crypto.

Unlike fiat, tangible crypto cannot be counterfeited making it easy for businesses to adopt it. Also, such development would be crucial considering that we are effectively in a process of transitioning into a cashless economy.

Tangibility generally means being perceptible to touch, and the only form of money that fits the description is fiat because it's paper money before it ever became digital. Every other traditional representation of money is just a proxy of it.

Tangible crypto however would not be fiat by proxy. It wouldn't even be fully tangible unless explicitly made so by the individuals that own it. The general idea here is that we can create a way to spend crypto without having to always manually use our wallets on our devices to initiate a transaction.

Now before you think about crypto debit cards, those require some level of centralization(intermediaries essentially) that we don't need as crypto users. So, without further ado, let's dive into how we can leverage smart contracts to make crypto tangible and our spending private.

Smart contracts-based bearer asset system

To make understanding the concept easier, let me quickly define what we want to achieve with this system and how.

—We want a way for users to spend crypto without signing transactions with their wallets.

Solution: we outsource the signing(essentially validation of authorities over specific assets) to a separate smart-contract wallet with assets funded by us.

—We want tangibility but also security of our assets.

Solution: the smart contracts handling our assets will require keys and data only known to us.

—We want nothing to do with liquidity centralization.

Solution: we use proxy contracts that self-destruct if the conditions are met, avoiding the risks of one contract holding large amounts of numerous users' assets.

What we achieve in what is summed up above allows individuals to be able to visit a store for instance and pay with crypto without having hardware wallet on or mobile devices to perform manual transfers.

But beyond that, we are bringing the sense of paying with “cash” which is private and free.

How the system would work in practice

Given that this is generally an idea exploration, I'm going to keep it simple.

We will name our user: Serah. We will not use any known blockchain network to avoid ignoring limitations that may already exist in the system so let's call our chain Tivate.

Our chain's native asset is TVE. Tivate is a smart contracts compatible chain that can handle any operations imaginable, so we're so lucky to have it. Now, let's explore the concept.

Serah has a crypto net worth of $4,000,000 and she does not want to travel the world with devices holding sensitive data to her crypto wealth. For her to be comfortable on her trip, she needs $10,000.

Serah maps out her trip, breaking cost through each stage to understand how to spread out her budget. But it isn't just about the budget, it's about building a mind map for how to allocate her crypto into contracts that make it tangible.

With everything mapped out, she comes up with 14 stages of costs lined up as: $2,900.78, $2,027.48, $564.20, $493.13, $56.34, $39.84, $70.99, $167.68, $1,284.30, $588.44, $813.19, $297.53, $551.53, and $144.55.

To keep the real values private, she adds $475 atop the lowest 8 and $200 to the rest(6), bringing the total to $15,000.

Now to the fun part. To make her crypto tangible, Serah initiates 14 lock-up transactions, essentially deploying 14 proxy contracts on Tivate.

The process involves serah creating a secret key(phrase or whatever) only known to her for each of those 14 lock-up TX, and also defining the virtual claim value in TVE for each of those TX.

Note: the virtual claim value is costs outlined above excluding the additional amounts that were added for privacy reasons. For simplicity for the chain, the values have to be defined in TVE, Tivate’s native asset.

Moving on, the blockchain generates two 256-bit hash, let's call it R & A, which Serah downloads. Furthermore, both hashes are rehashed with Serah’s personal secret phrase and virtual claim value. The hash derived from this operation is what is tied to the transaction recorded on the chain.

What we've achieved is that we've split $15,000 into 14 different proxy contract addresses. Of course these transactions don't happen all at once. $5,000 out of those funds are not really needed for this trip, but it is there for two reasons.

The first reason is that it misleads people reading Serah’s address on the blockchain to think any of those values are accurate when really $5,000 will be reverted to new addresses, effectively creating a total ghost wallet for future spending.

The second reason is that it deceives attackers that may try to steal the funds locked in the proxy addresses. How? Well, let's get to the spending part to explain that.

The smallest proxy smart contract wallet holds $514.84 where $39.84 is the only amount needed.

Let's say this wallet was specifically meant for buying a couple of things from the Supermart. For Serah to pay with the crypto in this wallet without using her devices, she simply needs to present the cashier with the R & A hash, her secret phrase for that wallet and the virtual claim value, which is $39.84.

Note: her R & A for this wallet could have been written down, making it tangible, while other values are just known to her because she created them.

Without any of this information, it's impossible for anyone, even a smart contract exploiter, to gain access to the funds within the proxy wallet, provided the contract is well written.

By sending more than what is really needed(the virtual claim value) we effectively avoid giving attackers any piece of information included in our hash(by concealing the real value), which is needed to withdraw the funds to any address.

Using double 256-bit hashes with further personal keys(phrase) makes it computationally expensive for the attackers to try and guess the values of the hashes and data — which is essentially the claim proof the smart contract needs to release the funds to any address.

Certainly, the system can be designed to allow Serah to reverse the lock-up at any time in case she loses access to the R & A hashes or a time limit can be set to autonomously refund assets to the original address if not used. And in the case where the assets are claimed, as intended, the proxy smart contract wallet can self-destruct, effectively becoming useless and freeing up the chain.

There are more technical ways all of this can be explained but I wanted to keep this simple.

A system like this can prove crucial in a cashless economy where centralized stablecoins dominate payments and the government tries to watch every of our moves, but of course it will need some optimization to check all ethicality and legal boxes otherwise we risk getting arrested because merely reading the process, if you paid great attention, you'd spot a detail that makes this perfect for laundering money.

There's truly so much we can do with smart contracts and it's truly refreshing to know that we can build tangibility into crypto that acts as a safety net for us as we spend crypto daily.

Of course, merchants have to adopt softwares that enables them to accept payments from contracts like this, but I imagine that enough demand would result in them taking action.

That said, all of this may seem "too much" for the average person, but people who appreciate tangibility and privacy would totally love it.

Posted Using INLEO