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Interestingly, the original Bitcoin paper opened by addressing exactly these concerns: the origin of transaction costs in current payment systems consisting of
by sigil 14y ago
Interestingly, the original Bitcoin paper opened by addressing exactly these concerns: the origin of transaction costs in current payment systems consisting of middle-men (central trusted parties, in more charitable terms), paper forms, etc.
While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model. Completely non-reversible transactions are not really possible, since financial institutions cannot avoid mediating disputes. The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non reversible payments for nonreversible services. With the possibility of reversal, the need for trust spreads. Merchants must be wary of their customers, hassling them for more information than they would otherwise need. A certain percentage of fraud is accepted as unavoidable.
http://bitcoin.org/bitcoin.pdf http://bitcoin.org/bitcoin.pdf
- pyoung 14y agoThe emphasis on supporting small casual transactions seems to have created a number of problems for the bitcoin infrastructure. Mt. Gox charges a small % for transactions (rather than a flat fee), a by product of this is it allows people to flood the exchange with a ton of micro transactions without any additional penalty for the volume of orders. Seems like this could be part of the reason they have been having issues. Doesn't this also impact the block chain in some way? A ton of small transactions can flood the chain, requiring more computational energy to be spent than the transactions are actually even worth.
- tlrobinson 14y agoMtGox can currently process about 1 trade per second, which is utterly pathetic... https://bitcointalk.org/index.php?topic=174598.0 https://bitcointalk.org/index.php?topic=174598.0
- kang 14y agoIt is like 37 trades pers sec max which is still pathetic. http://www.reddit.com/r/Bitcoin/comments/1cc72b/the_maximum_number_of_trades_mt_gox_can_handle/ http://www.reddit.com/r/Bitcoin/comments/1cc72b/the_maximum_...