[Cryptography] What has Bitcoin achieved?

[John Levine]

>One of the most important results of Bitcoin, for me, is that it's
>pushing us back the other way. Distributed digital cash is something
>that should be *impossible* to most people, and yet it's in the news
>every day now. Whether they realize it or not, folks are slowly starting
>to understand that this "crypto" thing means more than just scrambling
>and unscrambling data.

It's certainly true that people don't understand crypto or Bitcoin
very well, but it's not just that.  Bitcoin differs from ordinary
online payments like credit card or Dwolla in a few significant ways.

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.

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.  

I expect individual readers of this list will disagree about those two
(we need a modified Godwin's law substituting "Zimbabwe" for
"Hitler"), but if you look at the way that ordinary people behave,
paying for a $2 coffee with plastic rather than cash, it's clear
what's important to them.

I expect the main practical effect of Bitcoin will be to put pressure
on conventional payment systems to improve their slow and inefficient
processes, and to reduce the often large margin between the cost of
the underlying service and what they charge the customers.  In the UK,
online payments clear in an hour or two, and never cost anything.  In
the US they take two or three days and often cost a dollar.  What do
they know that we don't?

R's,
John

PS: There's a separate issue of things like zero-knowledge proofs.
It's all very well that it's possible to create software that tells
two people they're near each other without leaking any info to anyone
else, but when you're running the PrivateNearMe app on your device,
unless you are a heavy duty nerd who can snoop on and interpret the
traffic to from the device, there's no way to tell whether it's
actually doing that, or the app's author is logging everything.