[Cryptography] What has Bitcoin achieved?

[ianG]

Having been in the biz for a while, I feel your pain.  It is
counter-intuitive.  I've always thought that the job of financial
cryptographers was to steer clear of carnival tricks.

Why did it work?  How did it work?  (Take it from me -- it succeeded,
and it is probably unstoppable at this stage.)



1.  The success of Bitcoin is based in part on the bounty that was
delivered to everyone, weighted to early adopters.  Quite what to make
of this is something harder to say;  detractors call it a ponzi scheme
and proponents call it fair rewards.

It is worth noting that Paypal did something similar.  When it took on
its first investment, it gave out $10 to each account opened.  I know
someone who tried to open a thousand accounts... later on the bounty
dropped down to $5 per new account.

2.  We can definitely achieve the same *tech result* without the waste.
 I've been doing it all along, and so have a few others here (James for
one).  But again, notice how the waste was cunningly turned into rewards
that are paid by new adoptors (see 1).  This is a neat trick.  I always
valued clear and honest transactions;  I never would have credited the
mining rewards and bubble mechanics as a credible proposal;  but the
market speaks.  FWIW, new designs are tending towards "proof of stake"
because there is begrudging recognition of the waste, but only Ripple
has really reduced it down to the levels that we technologists would say
are reasonable.

3.  The marketplace of early adoptors is a suspicious lot;  they want to
be able to do things completely at their own discretion.  Bitcoin
appeals to them, they think others can't control them.  The same
anti-control aspect appealed to the blinded crowd in the 1990s.

4.  Also the marketplace of early adopters wants geewhizbangfireworks.
Back in the good old days, that was the blinding formula.  So crypto, so
sexy, so little undersood!!  Many thousands flocked to its call, but
few, maybe a handful? a dozen? understood that beneath the light and
fireworks, blinding delivered only a vague handwave of untraceability.
It didn't matter, the promise was everything.

We've seen this 'marketing-stretch' in other aspects of successful
crypto systems as well.  Same today with the magic blockchain and PoW.

Now compare your 32 notaries design.  Where's the light?  The bang?
Compared to smartcontracts, blockchains, p2p, silk road .. you've got
nothing.



These generalisms are repeated in the copy-cat issues that followed
after Bitcoin.  Each repeats most of the above factors in some sense or
other.  Success does not go to the best technical solution, it goes to
the best marketing solution.

For that, we have a problem;  how many of us understand marketing?

iang



On 2/06/2014 12:50 pm, Phillip Hallam-Baker wrote:
> On Sat, May 31, 2014 at 11:22 AM, ianG <iang at iang.org> wrote:
>> Talking about proof of work and so forth, seen on the net:
>>...
> Why do we have to make such a fetish of the block chain being computed
> by 'wading through treacle'?
> 
> BitCoin has achieve notoriety and fame but little else. it is a
> complete failure as a currency, the float is purportedly worth $5
> billion but nobody would claim that anywhere near $5 billion of
> bitcoin commerce has occurred. Most of the transactions are endless
> churning to create the illusion of activity.
> 
> We can achieve a robust notary infrastructure that is proof against
> defection for considerably less money. Let there be 32 independent
> notary log maintainers who maintain a Harber-Stornetta style hash
> chain log (i.e. what is used in Certificate Transparency). Each notary
> has very limited defection opportunities and any defection would be
> quickly noticed.
> 
> Now let each notary include the outputs from the other notaries once
> an hour. Now it requires every notary to defect for a defection to
> succeed without being noticed.
> 
> 
> 
> Unlike the BitCoin system, this one does not waste more electricity
> than is used by some nation states (currently they are consuming more
> electricity than Cyprus). Further the possibility of the log being
> rewritten is considerably less, the system is always predictable.
>