What is Coin Locker?

The Coin Locker web site facilitates discovery of free market time preference for Bitcoin.

There is no guarantee of technical support, no guarantee of uptime, no guarantee of competency, no guarantee of privacy nor honesty. Don't trust Coin Locker. It is important to verify every transaction before signing and to always keep a backup of your transactions and keys. Only use this service if you are an expert in finance, communications, information security and C++ and know exactly what you are doing.

How does Coin Locker discover market time preference?

Coin Locker provides offer matching and market data for Distributed Deposit contracts. Traders pay a small premium to provably keep holder coins from the market. Holders receive this premium for not spending their coins for the duration of the contract. Each contract is enforced by a time-locked multi-signature transaction on the blockchain. The contract can be thought of as an un-cancellable non-transferrable fixed rate zero-coupon bond, except that the issuer can not spend the capital. Coin Locker generates and signs the technical transactions for offer placement, expiry and execution, without gaining full control of transacted coins. Offers shown on Coin Locker are ready for execution on the blockchain.

What is the benefit for traders?

The price of coins is subject to demand and supply. If a coin is locked, it cannot appear on the supply side of the equation for a known amount of time. Locked coins are a short-term opportunity cost for the owner, paid to the network. Because there is no risk of default, holders may choose to be compensated for this at very low rates. Bitcoin price exposure can then be hedged by cheaply coaxing coins out of circulation. As a thought experiment, what would you pay to keep 100,000 coins off the market for a month?

What is the benefits for holders?

Holders interested in holding coins for the long term can get a guaranteed bonus. Lending and investing coins typically carries a large risk of default. However, with correctly formed multi-signature transactions, the holder does not need to give away full control of the coins. While it is up to the holder to manage the operational risk, there is no counterparty risk in the contract. As a thought experiment, what would you charge to lend 100,000 coins for a month if you had the mathematical proof of getting them back, while your public commitment gave a positive price signal to the market?

How does it work?

To place an offer, a participant must produce their public key, then and sign the locking transaction with the ANYONECANPAY signature type. The transaction redeem script contains the OP_CHECKLOCKTIMEVERIFY opcode binding the nLockTime of any following transaction to be later than the duration of the contract.

To lift an offer, a paticipant must add an input to one of the existing offer transactions on the system, and sign it with the ANYONECANPAY signature type. Once there are enough inputs to finalise the transactions, it is broadcast to the Bitcoin network.

To cancel an offer, the participants must race to spend the source coins in a different way, before the transaction is finalised.

To spend previously time locked coins, participants are welcome to use their own tools, or a patched version of the Bitcoin software.

What are the risks?

The biggest risks are operational risks. Neither mutual agreement nor legal action can reverse the transactions. The contracts are loans to the network which according to the Bitcoin protocol, and cannot be defaulted upon.

Like Bitcoin, Coin Locker does not require trust. There are no accounts and no passwords, just sign the intended transactions with your Bitcoin key. Coin Locker does not lend nor borrow coins, and does not store coins for others.

The simplest way to steal coins from Coin Locker would be to quietly hijack the site and make modifications to trick people into signing malicious transactions. You must not trust Coin Locker, and verify transactions for yourself. Real security derives from your brain and your wallet, not our server. Caveat signator!

Like classic Bitcoin transactions, Distributed Deposit contracts are irreversible. Contracting to the wrong duration or amount is a significant risk. Participants must do due dilligence on every transaction before signing. Participants must keep a copy of each Expiry transaction for their own record, in case Coin Locker becomes inaccessible. There is a small risk that Bitcoin protocol may evolve to dishonour time-locked transactions in the future. There is a small risk of a bug in Bitcoin's time-locked transactions. Only use this service if you are an expert and you know what you are doing.

What are the fees?

For each successful lock, Coin Locke charges a fee of 0.0002 BTC, of which about 0.0001 BTC is used to pay the Bitcoin mining fee.

What is the minimum/maximum contract size and duration?

This is mainly to prevent spam, and is subject to change without notice.

How long does it take to lock coins with Coin Locker?

The transaction is sent to the Bitcoin network as soon as enough capital and premium is signed for by the participants.

Can locked coins be kept in a paper or brain wallet?

Yes, locked coins will become spendable after the lock duration. The transactions and private keys can be kept on any media. There is no convenient brain-wallet.

Can a placed offer be amended?

Currently, offers cannot be amended.

Can this service lock alt-coins?

Currently not.

Offers

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Existing offer

Locking BTC for a premium of BTC for days.

Source address (must have exact utxo amount):  

Contribute utxo towards the premium:

New offer

Source public key ("pubkey" from ./bitcoin-cli validateaddress <youraddress>):  

Lock BTC for a premium of BTC for days

Coin Locker executions

Coin Locker expiries

CHECKTIMEVERIFY on the blockchain

Statistics

Offers

Executions

Coins locked on the blockchain

Weighted coin lock duration

Coin unlocks