[Cryptography] On the 'regulation proof' aspect of Bitcoin

[Phillip Hallam-Baker]

On Thu, Mar 31, 2016 at 11:10 AM, Alfie John <alfie at alfie.wtf> wrote:
> On Thu, Mar 31, 2016 at 10:19:11AM -0400, Phillip Hallam-Baker wrote:
>> > Without mining, what you're talking about is simple data replication. You might
>> > want to have a look at the the BitTorrent protocol, or even rsync.
>>
>> Well the Merkle chain is remarkably resilient by itself.
>>
>> Consider a situation in which we have ten independent notaries
>> maintaining separate public chains. Every day they take the output
>> from every other chain and enroll it as an input. Any attempt at
>> rollback now requires every notary to collude and even then the
>> defection will be obvious to anyone keeping notes.
>
> So how do you choose your notaries, and how does someone wanting to join the
> network become a notary themselves?

That is the great thing. It really doesn't matter. All a notary needs
to do is to establish an agreement with at least one other notary to
enroll their data and to furnish customers with a proof chain to that
notary. Once those have happened, the transaction is fixed.


> The great thing about having a single blockchain is that there are no hurdles
> to participate in the network. Mining prevents collusion without the need to
> elect these special notary nodes.

At a cost of using more electricity to mine than the island of Malta.

$400 million a year is not something you can simply dismiss.

The cost of participation in the Mesh is remarkably low in comparison.
Just find one source that will provide a connection.


In practice, I would expect some sort of consortium to emerge that
creates a single, dependable chain that essentially becomes the
network standard.


>> It is pretty easy to see that any system that has chained notaries
>> will quickly end up making interchange agreements and that these will
>> rapidly converge into one system.
>
> What happens when a single notary is down as syncing happens between notaries?
> You're not going to be able to calculate on all chains needed for the mesh, and
> so you end up with network lag.

As I said, I would expect a hierarchy of chains to emerge naturally
with some being considered 'core'. All you need to do to get to ground
truth is to get your data enrolled in a network that feeds into a core
chain and then record the proof chain to the core.

For financial transactions there are a number of different time points
of interest:


1) When is the transaction initiated?
2) At what point does the transaction become immutable?
3) At what point does the immutability of the transaction become public?

To give an example, I sell you some widgets for $10. At what point do
I know that I will get the money and at what point can I then spend
the money?

The two have to be different in a real financial transaction because
clearing a payment and settling it are different things.

I understand that you want the transactions to be instantaneous and
irrevocable. There are very good reasons why such capabilities don't
exist in the current payments infrastructure.