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"(preventing double-spending without the use of a trusted authority requires transaction validators (miners) to employ large amounts of computing power to compl

"(preventing double-spending without the use of a trusted authority requires transaction validators (miners) to employ large amounts of computing power to complete "proof-of-work" computations); there is only probabilistic finality of settlement; and all transactions are public. These features are not suitable for many financial market applications." The words "only probabilistic finality" makes it sound uncertain, whereas in reality the uncertainty of a bitcoin transaction is insignificant compared to the uncertainty of a trusted entity, which they advocate. In other words, they still don't understand it.

rmah 9y ago
They understand it just fine and you simply wrong. Proof of work validation IS probabilistic and central agency validation is not probabilistic. But it does require trust in that central agency. You may not trust that central agency, but that doesn't change the facts.
- runeks 9y ago
  Using your definition, all cryptography is also probabilistic. It's technically correct, ie. there's a risk that someone guesses your AES key, but it's practically irrelevant because the probabilities involved are so small (and key sizes can be adjusted to make guessing as improbable to succeed as we want).
  - andrewla 9y ago
    This is not the aspect that is considered to be probablistic. The problem is that forks can happen by design -- blocks can be orphaned and the tree can be reorganized. So a transaction is only final so long as it is on the main chain; if the main chain switches to a forked chain that does not contain your transaction, then it is not settled; the resulting coins cannot be spent. There are attack scenarios, but even without those it is possible for forks to occur; single-block forks are common (so-called "orphaned blocks") due to some combination of network latencies and chance. Longer forks may be possible if there are more dramatic breaks in network connectivity. The original whitepaper originally advocated waiting for six blocks before a transaction is considered "settled". That's probably high, but the guarantees are strictly probablistic; any software dealing with bitcoins has to be aware of the possibility of reorganizations.
- gtrubetskoy 9y ago
  But I could argue that central agency validation _is_ probabilistic, because there is a probability that the central agency can collapse, be overtaken, go rouge, etc. And that that actually might be more probable than the blockchain 51% attack or split or whatever. I don't know what the actual math here is, I think that the essential difference is that in case of proof-of-work such a probability is computable relatively easily, while we don't know how to measure the trustworthy-ness of a third party reliably (it depends on laws, military strength, level of corruption, etc, lots of variables)

rmah 9y ago

They understand it just fine and you simply wrong. Proof of work validation IS probabilistic and central agency validation is not probabilistic. But it does require trust in that central agency. You may not trust that central agency, but that doesn't change the facts.

runeks 9y ago
Using your definition, all cryptography is also probabilistic. It's technically correct, ie. there's a risk that someone guesses your AES key, but it's practically irrelevant because the probabilities involved are so small (and key sizes can be adjusted to make guessing as improbable to succeed as we want).
- andrewla 9y ago
  This is not the aspect that is considered to be probablistic. The problem is that forks can happen by design -- blocks can be orphaned and the tree can be reorganized. So a transaction is only final so long as it is on the main chain; if the main chain switches to a forked chain that does not contain your transaction, then it is not settled; the resulting coins cannot be spent. There are attack scenarios, but even without those it is possible for forks to occur; single-block forks are common (so-called "orphaned blocks") due to some combination of network latencies and chance. Longer forks may be possible if there are more dramatic breaks in network connectivity. The original whitepaper originally advocated waiting for six blocks before a transaction is considered "settled". That's probably high, but the guarantees are strictly probablistic; any software dealing with bitcoins has to be aware of the possibility of reorganizations.
gtrubetskoy 9y ago
But I could argue that central agency validation _is_ probabilistic, because there is a probability that the central agency can collapse, be overtaken, go rouge, etc. And that that actually might be more probable than the blockchain 51% attack or split or whatever. I don't know what the actual math here is, I think that the essential difference is that in case of proof-of-work such a probability is computable relatively easily, while we don't know how to measure the trustworthy-ness of a third party reliably (it depends on laws, military strength, level of corruption, etc, lots of variables)