Higher transaction fees lead to slower transactions:
That's right, but it is a problem only if a large majority of nodes do that and if some does:

Since transactions are spread all over the network, only the transactions' hash are transfered in blocks.
Nodes are supposed to already have the transaction in inventory, if they dont have, they wont validate
the block until they have received all.
Low block spread is bad for all nodes, but the block of someone that kept some transactions will be transfered
over the network slowly compared to others and could lose race.

(there is also a system to extend the transaction fee of an emited transaction, which could be used to
"award" nodes having it, if client see that transaction has been correctly spreaded)

Your way to solve that problem is good but each transaction would need to access to more accounts which have a cost in disk IO
also i use a one time signature scheme (using hash chains) which can't do that, an emited transaction can't be modified.

Enforced limits are not optimal and Not truly decentralized:
i haven't put limits, limits means doubts in the protocol capacity.

Unmanageable storage requirements:
Huge storage needs also means huge bandwidth needs.
By reducing this, we increase the network number of nodes, strenght
and reduce the transactions fees.

final result is similar (transactions are only stored 3month, all is kept in a list containing all accounts).
I differenciate account and addresses (address = public key, used to create an account).
Very old accounts without activity also have a small fee each year (these will be mostly account of users that have lost their private key)

The way i manage accounts and transactions is different, but I also think storage is a problem since it is the easiest way for someone to attack the network.
For example, without being paranoid, someone could use 1million $ to create transactions that will
take the most possible definitive storage in the chain, that could make serious problem to nodes.
And it could be far more, mass storage capacity is part of the network security.

(Assuming the network is a real p2p network and that nodes have average user disk storage, if there was only
few hundred nodes maybe they could handle, but the currency would not be "p2p" anymore)

No unnecessary difficulty:
I have keep the way bitcoin manage the block race, but with some optimizations and more challenge
between nodes that spread the block.

Proof-of-work as ’currency’:
the way b$ is done, i could not handle a non fixed number of units.
instead i have made the award proportional to the target a of block

Thanks for writing an interesting paper Steve. I need to think about some of its proposals more, but here are a few early comments:

Bitcoin already defines the winning chain to be the chain of highest total difficulty, not the longest.

The majority decision is represented by the longest chain, which has the greatest proof-of-work effort invested in it.

I think you are over-concerned about storage costs (I think Satoshi was too). Storage is incredibly cheap and the price has been falling for a long time. When I look at the costs involved with running a high speed Bitcoin node, the bottlenecks are things like CPU time and disk seeks, not number of bytes storable.

Removing script and simplifying the transaction format is superficially attractive, but would eliminate a lot of useful features that are helpful for a non-trust based financial system. The script language isn't really that hard to implement or review. Bitcoin is still millions of times simpler than, say, a web browser. My gut feeling is that Satoshi made the right flexibility:complexity tradeoff here.

The idea of allowing peers to peel off fees for themselves before relaying is very interesting. I think this is the strongest part of your proposal. I also suspect it's possible to implement on top of Bitcoin using the features that are already there, but I haven't thought about it enough to prove it.

Early adopter wealth might seem "unfair" but I don't think that's enough to convince people to switch to another currency. People who used Bitcoins when they were worthless deserve a reward for their efforts. Nobody is going to end up owning big chunks of the planet because it's so very unlikely Bitcoin will fully replace existing currencies within our lifetimes, perhaps never. Much more likely is that it finds a niche in the electronic payments space, grows to fill that niche then stabilises.

I didn't really understand your proposal about chain difficulty. Blocks have a cost associated with them, even though it's small, so allowing people to flood trivial blocks that then have to be stored and verified doesn't seem to help. It's just another DoS avenue.[/li][/list]

I like some of your suggestions, but I am not sure if the new transaction fee structure you propose will work. Also I am not really sure I understand how the new block-chain will work.

I don't think you are correct in claiming that
I don't see any significant shortcomings in bitcoin that will lead to its collapse. I think it suffers from the fact that the protocol is still not well defined and the implementation is overly complicated, but there are no major flaws that will lead to its collapse. The main idea behind it is very sound.

For any successor to bitcoin to actually have a following, I think it needs to provide some minimal backward compatibility with the current client. Even if a completely different protocol or a different blockchain is used, at the very least the current wealth distribution must be preserved, or there must be a smooth path to move current bitcoins into the new bitcoins. Lacking that, the new currency will probably have to start trading from zero and compete with the old implementation of bitcoin.