BlackHalo, NightTrader launched
One of the scariest things about participating in the Bitcoin economy is the necessity of putting your money in the hands of strangers who run exchanges when you want to trade one cryptocurrency for another or liquidate your holdings for cash. As Mt. Gox reminds us, the trustless elements of Bitcoin are important, as strangers on the internet really will, occasionally, take you for everything you’ve got. Then there are risks associated with peer-to-peer transfers.
However, the BlackCoin development team announced last month that one of its members, David Zimbeck, had “created a new method for eliminating risk during peer-to-peer transfers” – a “revolutionary protocol, called BitHalo for Bitcoin and BlackHalo for BlackCoin” -, adding, “The BitHalo and BlackHalo applications will become the basis for an umbrella app [or a decentralized exchange] called NightTrader.”
BlackHalo and NightTrader have now been launched.
BlackHalo is a platform for developing smart, escrow-enforced contracts. The idea is simple, and leverages multi-signature wallet technology, which allows the creation of Bitcoin wallets that depend on two secret keys, which can only be unlocked by the consent of both involved parties. In order to create a smart contract using BlackHalo, two or more parties agree on a set of terms, and submit a quantity of BlackCoin to serve as escrow (BlackCoin is used by default due to its fairly rapid transaction verification – the Bitcoin version is called BitHalo). When both parties are invested in the account, they complete their trade, and when both are satisfied that the contract is fulfilled, they use their keys to release the escrow, get their stake back, and continue on their ways. The technology also supports using other cryptocurrencies as escrow, to allow the exchange of large quantities of money from a small stake, bootstrapping the transactions into more escrow.
The creator described the BlackHalo platform in a press release sent to CoinReport last month, saying:
“The protocol uses risk, reward and agreement to circumvent malleability, which was ironically once thought to prevent these types of protocols. Almost every sector of the economy that involves third parties runs the risk of loss to the consumer. This protocol now gives individuals full control over who they decide to trust and how they decide to structure that trust.
“I chose BlackCoin because of its fast transaction times, a massive advantage when engaged in contracting. Bitcoin transactions can take well over ten minutes for their first confirmation, while BlackCoin normally confirms in well under a minute. Trust and agreement are the basis of society so this technology affects everyone.”
One use of this technology is to use smart contracts to let users securely trade one cryptocurrency for another – or for USD, if you use a money-changing scheme that doesn’t permit chargebacks. That’s where NightTrader comes in.
NightTrader is a decentralized cryptocurrency exchange that supports arbitrary cryptocurrencies, and requires no central broker to enforce transactions. In other words, there’s nobody to disappear with the bag, and you still don’t have to trust the parties you’re doing business with.
While “decentralized” and “trustless” have become something like buzzwords in the cryptocurrency community, this is a case where there is absolutely a need for a truly decentralized, trustless solution, and NightTrader might be it. The best businesses are the ones you can trust because there is no fallible human element anywhere in the loop: Cryptography is more reliable than law enforcement, and it’s wise to depend on it when you can.