[Cryptography] Cryptocurrency Exchange without a trusted third party

[Ray Dillinger]

On 01/14/2017 10:08 AM, Ron Garret wrote:
> 
> 
> What I still don’t understand is why people don’t want to use trusted third parties.  
> A TTP is vastly more efficient than a block chain.  

"Trusted" means "Someone who can screw you over by acting in bad faith."

People prefer hash chain solutions because that would mean that a bunch
of people (more proportionate to time since transaction they're
screwing with)  would have to act in bad faith to screw people over,
and the maximum practical size for a conspiracy is rapidly exceeded.

People prefer block chain solutions because that sharply limits the time
window during which someone acting in bad faith could screw them over,
and imposes significant (possibly insurmountable in practice) hardware
requirements and expense on bad-faith actions.

Block chains mean that someone cannot act in bad faith without making a
substantial investment that is not justified by the rewards of the
action.  Block chains, in fact, mean that the "trusted" party cannot
even be INDUCED OR COMPELLED to act in bad faith by blackmail, bribery,
extortion, or force of law.

Yes, the block chain is a "distributed trusted third party."  No, it
isn't free.  Unlike most "trusted" parties, however, there is a good
reason to believe that it can be trusted.

					Bear


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