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If you're willing to accept some zero-knowledge centralization, then the feature set of things like Bitcoin begin to look very weak. Bitcoin spends so much ene

by nly 12y ago

If you're willing to accept some zero-knowledge centralization, then the feature set of things like Bitcoin begin to look very weak. Bitcoin spends so much energy solving the double-spend problem that other desirable aspects of a monetary system (transacting offline, fast transactions, provisioning for lines of credit, anonymity) are largely not addressed. Stefan Brands described a digital cash system using zero-knowledge signatures more than 20 years ago that provides far greater payer and payee anonymity than the blockchain, and is fully distributed with no requirement for full-time network connectivity to engage in trade. The only real downside is it requires a traditional bank at the backend to act as an honest reserve. http://groups.csail.mit.edu/mac/classes/6.805/articles/money/nsamint/nsamint.htm http://groups.csail.mit.edu/mac/classes/6.805/articles/money... - half way down, under the heading "PROTOCOL 5" for a high level description of operation. Many people don't realise that the only substantial benefit unique to Bitcoins Blockchain architecture is the lack of central issue from a reserve bank.

Cyther606 12y ago
It's only when you _badly_ want to forego the need for centralized trust that decentralized solutions begin to make sense. There's a large cost to decentralization, which is why Bitcoin isn't nearly as interesting as a mere payments innovation, vs. a distributed economic system that operates outside the purview of the State. Calling Bitcoin a "payments innovation", while technically true, completely glosses over its fundamental value. [1] [1] http://cointelegraph.com/news/112183/bitcoins-political-neutrality-is-a-myth-amir-taaki-interview http://cointelegraph.com/news/112183/bitcoins-political-neut...
- api 12y ago
  The other day I wondered if Bitcoin might not be considered a kind of AI. The fundamental value of Bitcoin is in the fact that the block chain is itself a trustable third party. Does that make it a citizen? A nation state? Still... I wonder how Bitcoin would stand up to a serious attack. Imagine the Chinese government wanted to kill it. They could build 51% worth of ASIC in secret and spring it on the network all at once, taking over the net and maybe just wrecking it. It might cost them so much it would not be economically beneficial, but if it were done for political reasons they might not care about actually profiting from it. It would be a military attack. Of course flying a plane into the Federal Reserve headquarters is also possible. At some point you have to accept that any system can be attacked.
  - erikpukinskis 12y ago
    The other thing to keep in mind is that 51% doesn't let you destroy the network, it just lets you spend money twice maybe. And if the Chinese government double spent, or helped other people double spend, it would all be on the public ledger. There would be a record of the forks, and there would be people to testify "I sold X to Y and the tree forked". So it's not so much that Bitcoin would be destroyed, as a new avenue for theft would open up. Probably temporarily, as other groups would respond by fighting back with more computational power and probably with ad-hoc blocking.
tomjen3 12y ago
Could you use that system as a connection point to the bitcoin network? Would the bitcoin network then be able to check for any double spending shehenigans while I am using that node? That way I only have to trust it until I can get a message from the bitcoin network crying foul that some double spending has happened.
- nly 12y ago
  Brands system doesn't prevent double-spends, it merely detects them and identifies the culprit. In a traditional bank system your bank will then debit your account a second time, and they have the contractual authority to charge you for an overdraft, and ultimately take you to court or send in the debt collectors if you don't pay off your debt. To do this in an online context you'll need to establish some sort of reputation system to ensure cheaters can't move between banks. Ultimately, it needs to be backed by system with a monetary policy, since whatever fraction of double-spending you cannot prevent effectively causes inflation of the money supply.

by nly 12y ago

Cyther606 12y ago

It's only when you _badly_ want to forego the need for centralized trust that decentralized solutions begin to make sense. There's a large cost to decentralization, which is why Bitcoin isn't nearly as interesting as a mere payments innovation, vs. a distributed economic system that operates outside the purview of the State. Calling Bitcoin a "payments innovation", while technically true, completely glosses over its fundamental value. [1] [1] http://cointelegraph.com/news/112183/bitcoins-political-neutrality-is-a-myth-amir-taaki-interview http://cointelegraph.com/news/112183/bitcoins-political-neut...

api 12y ago
The other day I wondered if Bitcoin might not be considered a kind of AI. The fundamental value of Bitcoin is in the fact that the block chain is itself a trustable third party. Does that make it a citizen? A nation state? Still... I wonder how Bitcoin would stand up to a serious attack. Imagine the Chinese government wanted to kill it. They could build 51% worth of ASIC in secret and spring it on the network all at once, taking over the net and maybe just wrecking it. It might cost them so much it would not be economically beneficial, but if it were done for political reasons they might not care about actually profiting from it. It would be a military attack. Of course flying a plane into the Federal Reserve headquarters is also possible. At some point you have to accept that any system can be attacked.
- erikpukinskis 12y ago
  The other thing to keep in mind is that 51% doesn't let you destroy the network, it just lets you spend money twice maybe. And if the Chinese government double spent, or helped other people double spend, it would all be on the public ledger. There would be a record of the forks, and there would be people to testify "I sold X to Y and the tree forked". So it's not so much that Bitcoin would be destroyed, as a new avenue for theft would open up. Probably temporarily, as other groups would respond by fighting back with more computational power and probably with ad-hoc blocking.

tomjen3 12y ago

Could you use that system as a connection point to the bitcoin network? Would the bitcoin network then be able to check for any double spending shehenigans while I am using that node? That way I only have to trust it until I can get a message from the bitcoin network crying foul that some double spending has happened.

nly 12y ago
Brands system doesn't prevent double-spends, it merely detects them and identifies the culprit. In a traditional bank system your bank will then debit your account a second time, and they have the contractual authority to charge you for an overdraft, and ultimately take you to court or send in the debt collectors if you don't pay off your debt. To do this in an online context you'll need to establish some sort of reputation system to ensure cheaters can't move between banks. Ultimately, it needs to be backed by system with a monetary policy, since whatever fraction of double-spending you cannot prevent effectively causes inflation of the money supply.