The Book of Bitcoin

bitcoin-otc

#bitcoin-otc is an exchange based on a Freenode IRC channel, a web of trust registry, and a cryptographic authentication system. #bitcoin-otc provides an IRC bot that assists with web of trust and authentication functions.

The design of the exchange is to promote peer to peer trading, without the use of any intermediary: trust data, bot software, order-book software and data are all open source.

Web of Trust

As a peer to peer exchange, bitcoin-otc faces a problem of individuals participating who seek to defraud others. To solve this issue, traders are encouraged to give each other ratings and review the ratings of others before participating in a trade. Individual traders maintain public trust ratings between each other, to help someone evaluate the risk. The encouraged usage of this design is for a user to determine a set of people that they trust, and then use this set of people to infer other people worthy of trust by seeing which other users might be trusted by proxy.

Users of this system are not advised to follow trust proxying beyond a single hop, so a user with many trusted ratings where none of those trusted ratings are in your trusted set should be considered as having no trusted ratings.

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