You're axioms seem reasonable.  But what if I want to 'consume' lots of time with my friends, clean water and air, and plenty of natural beauty?  Only the economy of nature (earth's economy) can provide clean net clean water and air.  Yes, we have air filters and can distill water, but those processes produce far more pollution than remove.

Are you saying that we have all have different wants and needs, and when things are for the greater good, as in meeting more wants than creating needs, than that is good for the economy?  In that case, slavery would be very good for the economy, so long as not more than 49% of people were enslaved.  And I suppose slavery was very good for lots of people.  But that should make it clear that a good economy is not something any self-interested individual would strive for, as they would strive for their own well being, and not the greater good.  There is also the confounding factor of people not knowing what they actually want, or being confused by advertising and bad advice.  Given these reasons, I will stick with the conclusion of my O.P., that a good or bad economy is not measurable concept and lies in the eye of the beholder.

+1

Centralization of mining.  Our current network is easily at the mercy of a government 51% attack.  It would take some global coordination, but it could probably be accomplished solely by seizing a handful of data centers.  Of course bitcoin would be forked in such a scenario and the concept of cryptocurrencies in general would live on, so I don't think the governments have a reason to do such a thing.  But if we accept that they could, then you have to ask yourself what is all the mining good for?  A high difficulty provides an easy way to verify that blocks came from the one and only bitcoin network, so some proof of work is essential.  But the cost of all the mining equipment is paid for by all bitcoin users and holders, so it is a reasonable question to ask ourselves how much hash power is enough?  Over 3 million new coins will come on to the network over the next 3 years.  At $1,000 per coin, that would be $3 billion of new value, so it would be reasonable to expect miners to spend, in aggregate, $3 billion to capture those coins.

Keeping in mind that with centralized mining, no amount of hash power will protect us from the government, is spending $3 billion necessary to protect the network from hackers?  Maybe, $3b does not seem totally unreasonable.  But lets say bitcoin goes to $5,000 per coin before this year is over.  Then we are talking about a $15 billion investment in mining equipment.  If our network's structure calls for an unnecessarily large investment in security, bitcoin would become vulnerable to a coin with a more economically efficient design.

Scalability.  I actually see this as more of a political issue.  The cost of transmitting, processing and storing bits will continue to fall as time goes on.  That should mean the number of transactions the bitcoin network can process per minute should increase as well, at least for a given cost.  Or put another way, the real costs per transaction should continually fall.  Eventually, micro transactions should be able happen on-chain.  Off-chain solutions will continue to exist, but those aren't really bitcoin offering a solution.  The more powerful off-chain systems become, the less reliant on bitcoin they will be.  As a bitcoin investor and holder, I want people to find use of bitcoin itself easy, cheap and irresistible.  If off-chain solutions come to dominate usage of bitcoin, not only will btc become less valuable, but there is even a greater risk that those off-chain providers switch to some other chain entirely.

I say it's a political issue because of the blocksize limit.

I wrote this for the comment section of the Economist article that covered bitcoin's deflationary aspect.  I know it has been discussed many times here, but we should probably keep discussing so we can continually educated ourselves and our growing community about this very broad and subtle topic.

http://www.economist.com/blogs/freeexchange/2014/04/money

The strength of the economy not a measurable concept, is in the eye of the beholder.  Your good economy might be my bad economy.  There are hundreds of millions of people around the world who disagree with the Western Governments conventional view of economic strength and progress.  If bitcoin could drive down over consumption as part of its macro-effects, I see that as a positive.  Others might disagree.  But if you think I should be pressured into a certain type of behavior, such as working 40 hours a week, or ‘investing’ my money, because it benefits your view of what a good economy is, than you are much more aligned with central planning and a lack of personal freedom than with free-market capitalism, where each can seek their own path with minimal interferance.

*put another way*

It really comes down to what your concept of an 'economy' is.  I consider the essence of an 'economy' to be about society enabling people to satisfy their needs and desires.  It doesn't necessarily have anything to do with the maximum material output and over consumption that currently drives mainstream western economic thought.  Imagine some future utopia, where only ten hours per week of work is needed for the typical person to fulfill their needs and desires.  Materiel consumption is almost nothing, as goods last a lifetime, and instead of shopping for new gadgets, people derive their happiness from hours of reading, spending time with their friends and children, making music and meditating. Who am I to tell these people they have a bad economy?

How about this:

Your a mining node, and you attempt to build a distance model of the network based on ping times.

Your model is compared against other models, and the models that best fit together to produce would share a reward.  Therefore, every miners best chance would be to submit the most accurate model they could build.

It would have to be a pretty sophisticated matching algorithm that compared the distance models, and of course it would need to be able to be verified by everyone.

As a miner, the models I submit to the network would need to include some proof of work and my a public key so I could receive and award if I was due.  The distance models would only be relayed if accompanied by sufficient proof of work.

You would also need to know and account for the future velocity of the bitcoin in the system.  This is a big unknown, and made all the more so by the fact that bitcoin was designed to be capable of a very, very high velocity.

The faster the bitcoin moves, the less of it would be needed to conduct a given daily transaction volume.  Tools could be developed to keep bitcoin moving at a very high velocity.

I don't know how velocity is expressed mathematically, but it is pretty easy to imagine that in a perfectly efficient bitcoin system, bitcoins can transfer every block, so the fastest possible cycle time would be 10 minutes.

If every coin transacted every 10 minutes, currently that would be $48 Billion per hour, $1.1 Trillion per day, or $400 Trillion per year.  Coins could move even faster with off-chain transactions that settle in seconds.  But if people keep savings in bitcoin, and considering permanently frozen bitcoins that add zeros when calculating the average velocity, it could be much lower as well.

I think forecasting what the velocity will be is the tricky part of answering your question.  It would be very sensitive to technological, social, and economic factors.  Speculative behavior itself would even impact the velocity.

That would be a way of accomplishing the main-in-the-middle defense part of what I proposed.  Difference is it is on a per-transaction basis instead of a per-address basis.


Its easier to fake just one thing than two.  The same logic is behind 2 factor authentication. Just because one thing (the payment address) has been compromised doesn't mean everything else has been too.  If the receipt of payment came over a different channel, say a sms or email, that would make the deception harder to pull off.

In no way whatsoever do that have to do with my protocol suggestion, which is about bitcoin, and not for how one might go about verifying the authenticity of communication with another party.


This is a logical trap you are trying to set.  You are in essence saying "options are bad, because how do you choose?".  Right now, everything is instant.  Instant would remain a choice, so if you didn't see any benefit in having any sort of time-lock, just keep all you coins instantly spendable.  Easy.  Other people might not feel so paralyzed by indecision, and realize there could be a worthwhile security benefit to having some of there coins take 12 blocks to confirm instead of the usual 6.  It's a tradeoff that every person could judge for themselves, and given a choice, people would come to different conclusions based on their individual circumstances.


It may be so the benefits are too minor.  I know other companies can and will offer such services on top of the blockchain.  Although having needed functionality as part of the chain can save us all from the counter-party risk and fees of turning to those companies to conduct our business.  I appreciate that you read my proposal.

Exactly!

Well you can't know your transaction was received by the intended recipient until you send it and they get it.  If you send some coins, and they are not received at the intended destination, you could potentially take corrective action.  Just waiting to send a transaction would not accomplish this at all.

Not the way I was proposing.  The first step would be to create a protected, reversible address.  Then you would fund it.  Any funds ever sent from that address would be reversible until the predetermined block limit had passed.  So if the private keys to your protected address were compromised, you would have a time window to undo it.

Only funds on addresses that were setup to be reversible would have any protection.  Regular address would subject to instant spend as is currently the case.

Title changed.  Original post the same.

I probably shouldn't have posted in the general forum, where the quality of the discourse has clearly degenerated to a point where it is hardly worth posting.

The one I checked was never loaded.

What if you were trying to send funds to Overstock, but an attacker spoofed the payment address?  You had control of your keys, you tried to pay Overstock, but they never got the funds?  What then?  That is an attack that this system could help to neutralize.

I think people have only read the title to my post, and not the proposal.    Seriously.

This is not about protecting the two parties in a transaction from each other!!.  This would be used to make sure your funds got to the intended destination or if your computer was hacked, you could recover the money, if you acted fast.

Do people understand there would be a time window of your choosing?  It could be as short as one block?  There are good points to make against this idea, but so far hardly anyone has addressed what I wrote.

I'll just restate again for people to lazy to read my OP - an address would be optionally designated by you, ahead of time, as reversible for a given time period.  If you were a merchant, or anyone else receiving funds, you see immediately upon receipt that the funds were provisional and could be rescinded.  You would not treat reversible funds as cleared / confirmed until the hold had expired.

Once the hold expires, they are no longer reversible.

This system would not in any way protect you from an dishonest merchant whom you sent fund to.

The disk and bandwidth constraints will fade with time.  The growth of credit card transactions at this point, must be more or less linear.

I think about it like this, there was once a point when written text could fill a computers drive.  Now, as least for human consumption, text takes up a trivial amount of even a smartphones resources.

Audio was next.  Computers can process, store, and transport all the audio the average person could ever want, almost trivially.  Storage space is a borderline consideration, but not for much longer.  Video is still being conquered, but we are getting there.

All of these formats have real world data-density saturation points based on the capabilities of us as humans to read, listen, and watch.  We have a natural saturation point for transactions as well.  There are only so many transactions we tend to make in a day!  Our computers' abilities are far outpacing the growth in human-based transaction count.  Of course this does not take into account computer driven transactions or micro transactions that we don't yet make.  Those will inevitably need to ride on different rails than the human-interaction transactions that visa and mastercard currently represent.

In a decade 100Mbps connections are going to very common.  That could easily handle 10,000 tps.

I am finding it amusing that half of the posts are saying optional reversibility would hurt bitcoin, and the other, more-informed half, are saying it is already doable through the protocol.

I'll read up more on the scripting possibilities.  I am a little bit skeptical they will be sufficient to address the hacking risk that I am trying lessen though my proposal.  Why are they not used to greater effect already?  In the current incarnation, the scripting solutions seem quite complex at best, leaving them as an option for experts or offered as third-party solutions.  Isn't it better if we can avoid third parties where possible?

Which original sender... do I have recourse if my private keys were compromised?

QuestionAuthority - I want to send you 1 BTC.  I am going to send it to you from an address I control that is setup with a 5 hour hold.  After 5 hours have passed, is this bitcoin less valuable to you than any other bitcoin?

The chargeback period would have a defined, mathematically enforced time limit.  You just have to wait out that time limit.  My proposal doesn't give either the merchant or the customer the upper hand over each other, it just gives them both the upper hand over hackers.  A merchant would have at least two options for removing all chargeback risk. 
1) Make it policy to not accept any transactions which are from reversible addresses or
2) Wait until the possibility of reversal had expired to ship the goods.

Option #2 is what merchants would do.  If you were silly enough to send a payment to Overstock that had a 1 week hold time, you would just have to wait a long while before they shipped your stuff.


Having an option to slow it down, yes, that is the point.  As my proposal states, you would create an address that was encumbered.  You would do this by choice because you wanted to give yourself time to review any and all outputs from that address.  You would do this to protect yourself against hacking.  The drawbacks of slowness would you be yours alone.  If you didn't think it was worth the marginal benefit, you wouldn't set up a encumber address and you wouldn't add any funds to it if you did.  You're right, hackers would steal the unreversible funds first.  It's up to you what kind of security you want to implement.

This system would primarily guard against hacking.  It is not about resolving disputes.  One example is the address-switch, where I was trying to pay a merchant.  I sent the funds, but the merchant never received it.  I would reverse that.

Another scenario would if your computer got hacked, and wallet emptied.  You had an alert system for your addresses, you noticed coins moved without your authorization, so you reverse it.

No merchant would suffer at all.  Every merchant would wait for your "hold" period to elapse before they consider the funds received.  If you wanted stuff instantly, don't sent money that has a hold on it.

I don't know if most of you even read what I wrote.

This would not alter the ability to send irreversible transactions.  That is one of the main reasons bitcoin is so powerful - I agree - and it seems most of you do to.

The point of this would be to add functionality.  It would add to bitcoin.  Could you please be more clear what you think it would take away from the system?

Keep in mind that every client and wallet would be updated.  If you received a reversible transaction you would be notified as soon as it was detected that it was reversible and you could act accordingly.

Obviously exchanges wouldn't credit your account until the reversibility period had passed + 3 confirms.  What would someone else loose in that situation?  You would have been the person to encumber your coins to protect yourself against hacks, so you can't argue that you would be loosing anything you didn't know you were giving up.

Optional reversibility at least.  I've heard a million times on these forums that third-party services will offer the needed features that consumers desire.  The more features that are built into the protocol, the less reliant we will be on those shady centralized services that want to "know us", hit us with fees, or just Gox us.

Here is the concept.  It's probably been discussed and dismissed already, but here it is anyway:

You would be able to predesignate an address as a reversible address.  Two variables would need to be set, the block-depth of the reversibility and the address to which any reversed funds would be sent to.  Since an address doesn't exist on the blockchain until at least one satoshi is sent to it for the first time, you would have to send that first satoshi along with the proper reversibility instructions to setup the address.

After the one satoshi spend was confirmed, you could verify on-chain the reversible properties of the address, which again, would be the block-depth of reversibility and the go-to address of any reversed funds.  You could proceed to load up the address with coins.  Spending would be as normal for the owner.  It would be publicly verifiable that any spends originating from for such an address would be reversible until they were 'X' blocks deep in the chain.

If you spent reversible coins and wanted to undo the transaction, you would have to broadcast a new transaction and have it confirmed in the chain before 'X' blocks had elapsed.  In order for that new 'double spend' to be valid, you would have to direct the funds to the same go-to address originally specified when you set up your reversible address.

The point of having a designated go-to address be different from the originating address is in case your private keys were compromised.  You would still be able to undo the transaction, as would the attacker.  But unless they were in control of the second address as well, they wouldn't end up with the coins.

There could be an upper limit to reversibility, perhaps a month.  There are pros and cons to encumbering your coins as such.  No vending machine would accept coins that could be reversed.  But an internet retailer would, they would just need to wait X blocks + 6 confirmations before shipping your stuff.  The nice part is you could get the email receipt from them that you paid and all was good before the reversibility window had passed.  If you didn't get the email, maybe because someone had man-in-the-middled the merchant's address, you could fix the mistake before it became permanent.

The blockchain is already highly optimized.  Compression only is effective when there are patterns in the data, or data that is not important for the end result that can either be summarized or discarded.  I doubt there is much information in the blockchain that fits into either of those categories.

I sent you an email last night about my interest in joining the suit.

As for what is a fair price for your legal services, that is a difficult question.  $1200 is certainly not exorbitant, but I also don't exactly understand what I would be getting.  When I think of the $1.2 million that your firm would be collecting, that is a lot of money.  I would think it could easily employ three attorneys and three staff to work on the case full time for a year.

If it is $1.2 million to file some papers and make some phone calls, and do a few weeks worth of work... well that might feel a little different.

Could you give any insight on why or why wouldn't you be willing to work for a percentage of what is recovered?

Perhaps a hybrid model, everyone pays 1 BTC to participate at first.  Beyond that initial payment, you are working for 10% of what is recovered.

That would give me more comfort because I have to pay out less initially and I would know our interests were aligned.  There is a chance you would end up getting a big payout for your services, so it seems fair to your firm as well.