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>The cost of regulating any network actually goes up exponentially with the number of nodes that must be monitored (you need a hierarchy of systems to perform ‘
by zeteo 14y ago
>The cost of regulating any network actually goes up exponentially with the number of nodes that must be monitored (you need a hierarchy of systems to perform ‘guard labor’ to make sure systems are behaving within declared parameters).
This is at the core of the argument and doesn't make any sense. Worst comes to worst, the cost of monitoring all interactions between n nodes is O(n^2) even when adding monitors on top of monitors etc. The way banking is organized, it's even less. Alice doesn't transfer money directly to Bob: she talks to her bank, who talks to Bob's bank, who then talks to Bob. The banks have to monitor one-on-one interactions with their customers and the government monitors interactions between banks. This all is well within O(n), where n is the total number of customers.
I'm not saying Bitcoin doesn't have any advantages, but easier monitoring of fraud is not one of them. How do you even know the coins were indeed stolen?
- hollerith 14y ago>I'm not saying Bitcoin doesn't have any advantages, but easier monitoring of fraud is not one of them. I took that to be about whether the government will be successful in shutting Bitcoin down, not about fraud. (Even then, I do not know what he means by "exponentially" -- I decided to assume it is an inexact, not-mathematically-valid use of the word.)
- kbenson 14y agoI believe he was stating that it's exponential as designed when used P2P. Large exchanges acting as banks reduces this, but by reducing some of the benefits of the design/protocol.
- zeteo 14y ago>exponential as designed when used P2P That's not any clearer than the original. Please, do explain.
- kbenson 14y agoYou know, after looking into this some more, I'm not sure my assumptions about how the system works are founded in much, so you can safely ignore me (I didn't intend my second sentence to come across as authoritative as it may seem). I was thinking that the exchanges act as verified sub-networks, reducing the amount of verification and policing requires if transactions were within or in some way linked to those networks. I do't really have enough knowledge about how it works to be making any such assumptions though, so I should have kept my mouth shut...
- polarix 14y agoMoreover, we should expect the zerocoin strategy to "solve" the traceability of stolen funds.
- A1kmm 14y agoEven limitations legislation will allow stolen Bitcoins to eventually re-enter legal circulation. For example, under New Zealand law, if someone (party A) stole BitCoins from someone else (party B), kept them for 6 years, and then used them to buy something from someone else (party C), party C would have be the sole legal owner of the Bitcoins, because Party B lost their legal right to the property (i.e. right to use the Bitcoins) by losing possession for more than 6 years. Party A could be charged with theft even after the 6 years, but Party C could not be charged with possession because they did not have possession at any point in the first 6 years. Party C could be compelled to identify Party A if they had evidence about Party A's identity. With Bitcoin, Party C and Party A might be the same people, but using different Bitcoin addresses, and it might be hard to definitively prove that they are not the same, especially if Party C puts forward a credible and difficult to disprove transaction in which they obtained the Bitcoins. Disclaimer: IANAL.