[Cryptography] What has Bitcoin achieved?

[ianG]

On 5/06/2014 23:18 pm, John Levine wrote:
>>> 1. Bitcoin payments are irreversible.
>>> 2. Bitcoin's value is unmanaged.
>>> 3. Bitcoin payments are somewhat more anonymous.
>>> 4. Bitcoin payments are, for now at least, very cheap.


Bitcoin payments are hugely expensive, it's just that the payer doesn't
pay that price.  Instead, it's spread across the buyer's fee and an
inflation tax.  If the system were static, the fees would amount to
maybe $30-60, about the same as banks internationally.  Part of the
problem is that the mining rewards are incentivised upwards, a race to
the most expensive.  When the mining rewards stop there will be
interesting times/effects, because all that hardware has to be paid for
somehow.

Does that feel somewhat like credit cards, where the buyer doesn't pay
to get the free month's credit?


>>> Everyone agrees that #4 is an improvement, but for most people, #3 is
>>> indifferent and #1 and #2 are actively worse. It is not a bug that my
>>> credit card transactions can under some circumstances be reversed, and
>>> it is not a bug that central banks manage currency values to avoid
>>> large fluctuations. 
>>>
>>
>> Numbers 1 and 4 are tightly coupled, it is cheap exactly because it is irreversible. If you
>> don't have the cost of executing reversions, neither the infrastructure to do it, that makes
>> Bitcoin-like systems as a whole cheaper.
> 
> Executing reversions is easy -- you have some entity (the "bank") that
> can publish undo entries into the block chain when it has reason to do
> so.  The hard part is the non-crypto part of running the bank in a way
> that is sufficiently trustworthy that people are willing to accept its
> decisions.


Irreversible transactions are charge a 100% fee when you make a mistake.
 What is your percentage error rate, and what support is there in the
system to help that?

The debate goes back and forth on reversing transactions.  Cash works
fine and has no forcable reversion.  Mobile money tends to have it;
digital cash tends not to have it.

What my answer would be is that there has to be something to deal with
the dispute.  With e.g., e-gold, there wasn't anything realistic ("we
take court orders..."), and it didn't survive in part because of
specific complaints.  In contrast WebMoney had a very sophisticated
internal dispute system and it did survive.



>> I dare say we would be better off without transaction reversions, because in the end
>> reversions give people a false sense of security that makes them irresponsible and demands a
>> huge infrastructure to deal with it. The only ones gaining from it are those charging to
>> execute the service itself.
> 
> I believe that you feel that way, but it's quite clear that most
> people don't, since approximately nobody pays for stuff from a wallet
> full of cash.  (Do you?  If not, why not?)


In USA about 40 years ago that was true.  It's still true in many parts
of the world.  In some places they use cash or mobile money ...

> Crypto nerds often have a tendency to conclude that the reason the
> latest wonderful crypto-based scheme isn't successful is that people
> are too stupid to appreciate it.  This is rarely a productive line of
> argument.


Amen to that!




iang