[Cryptography] What has Bitcoin achieved?

[John Levine]

>But none of them will have the property that their currency is not
>under their control. Other than the obvious head start bitcoin has
>in the digital currency game, that is what bitcoin offers
>philosophically... freedom from control.

I realize that's the theory, but in reality, there is a mining pool
that could easily grow to be more than half of all the miners, at
which point it could start ignoring blocks from outside the pool,
which would be to the benefit of people inside the pool.  So long as
the cost of joining the pool remained small, e.g., if you join you
still get 98% of the coins you mine, this looks to me like it would be
a stable situation, no matter how much outsiders complained about how
awful it was.

There also remain long term questions about the technical viability of
Bitcoin, most notably whether people will still find it interesting
after the transaction cost rises.  (If a transaction costs a dollar,
there's a lot of other options with much less price volatility.)

To me Bitcoin is very interesting as an experiment.  It shows that
within certain parameters, the distributed proof of work model is
viable.  I doubt that anyone anticipated the grotesque amount of
computing resources that people would throw at it, or that there would
be mining pools.

The model is likely useful for applications like distributed notary,
particularly if there are several mutually suspicious groups
participating which makes it less likely that any one of them could
take over.

It's also impressive to see the number of economically ignorant
enthusiasts who imagine there is something innovative or disruptive
about a commodity bubble, which is what Bitcoin is.

R's,
John