Virtually every bitcoin user already uses third parties, and trusts them to some extent.  Doing so is a trade, cost for risk.  In the future, I expect it to be even more complicated.  Imagine a credit card denominated in bitcoin.  With that, you'd be paying for them to assume transaction risk for you, while right now the model is mostly the opposite with you getting a discount for assuming the risk that the third party may bail with your bitcoins.

Every bitcoin transaction has a cost associated with it, and we don't have a very good idea at all what that cost really is.  The mad scientist in me thinks that we should wait until the 1 MB limit is met and sustained for a while before we raise it.  That way we'd get some real world experience with how the system (including the people!) react.  Hopefully, that would lead to a better understanding of the forces that will eventually drive the equilibrium.

Two common solutions are suffixes (m-, u-, n-) and spaces ( 0.00001 -> 0.000 01 ).

Even in cultures that use arabic numerals, the radix designator is not universally standardized.  Plenty of people would have written my example as 0,000 01, and it gets worse if you also have a bunch of digits to the left.

I think this is the most useful direction to take the discussion.

Being able to send 0.00982 BTC to the coke machine is a cool trick, but really should be seen as the sort of stuff that doesn't belong in the global network.

Give me a list of your 24 bytes, and I'll give you a partial list of capabilities you've thrown away.  Without knowing your scheme, I'd guess that some subset of "secure", "useful", "decentralized" is not possible with the information you are keeping.  Most likely, you've lost at least two of those.

If we've had the scripting debate before, I'll just refer you back to that.  I'm not sure how many people there are out there that think it wise to upgrade every node in the network all at once for every new transaction type.  I thought that one was too many.

A scripting system lets everyone figure out what they need without needing any (new) help from the rest of the network.  Writing new software for each transaction does in theory, allow more transaction types, and in that sense can be more "powerful", but it just isn't going to happen in a decentralized system.  Do you also argue that no one should own a horse because a pegasus would be much better?  In this case, the horse is just a pony, but the pegasus is still not real.

Not a deficiency, troll.  Bitcoin has no notion of a sender, because it doesn't need that idea.  You are free to collect whatever out-of-band information your GAAP-obsessed brain thinks you need.

Are you also pissed that your paper money doesn't tell you who gave it to you?

This doesn't save as much (of anything in particular) as you'd hope.  The problem is that you are comparing the pathologically bad case of bitcoin to the pathologically good case of the alternative.


This is perverse logic.  You are again comparing the worst case in one system to the best case in another.

I personally don't see much difference between goods and currencies, from this point of view.

I know that various types of brokerages have to follow the same KYC laws as banks.  Does anyone know if they have to register as money transmitters too?  They perform the same function (money arrives in one pocket, magic happens, money leaves in a different pocket).  Seems a bit silly if they do,   Perhaps the answer to that question may point to a more sensible regulatory scheme for exchanges.

In regards to the gox thing, at the conference, in the legal/regulatory track, it was mentioned several times that the AML/KYC type laws typically are concerned with changes of ownership.  This is an odd way to look at "money transmission", but one that at least makes a little sense.

They don't care about the armored car that hauls entity A's money from place B to place C.  Nor do they care about the bank that "transmits" the same money electronically from branch D to branch E.  What they do care about is the service that collects funds from entity F, and transfers ownership of those funds to entity G.

In this view, it clicks a bit better.  A bitcoin exchange is a place where funds come in under one person's name, and then leave under a different person's name.  They view it as a black box because they don't have visibility inside.  They can just see that money has been transmitted (using their newspeak version of "transmitted").

The problem is that this is fundamentally no different from a consignment shop.  And yet, I've never heard of a general requirement that all such black boxes be required to register.  In a world with justice, that similarity, and the resulting selectivity of enforcement, would be important, perhaps even crucial.  In practice, maybe not so much.

MSantori:  Am I wrong about that?  Are physical consignment shops required to register as money transmitters?  Why don't internet consignment shops exist?  Bitcoin exchanges appear to be the only example of such a thing that I can think of.  They accept merchandise (BTC) on account of customer A, and cash on account of customer B, then facilitate the sale of A's BTC for B's cash while pocketing a commission.  Ebay/paypal comes to mind as another example, but they operate at arm's length.

You seem to be living under the peculiar delusion that accounting is primary, and that money exists to facilitate accounting.  However popular that delusion may be among accountants, around here, it just makes you sound silly.

I assure you that a business that wants both accounting and bitcoin can have both easily.

I'm not really sure what your argument is.  Either GAAP is flexible and can work with bitcoin, or bitcoin is incompatible with GAAP.  You can't seem to make up your mind.

Personally, I think that the profession of accounting will adapt to bitcoin just fine.  They may need to throw out some of their generally accepted principles*, the ones that make no sense in a bitcoin world, but new ones will take their place.

P.S.  In no way have you "shown" anything in your incoherent posts, far less "in detail".  If someone else has "showed in detail" your mythical ~80% savings, please feel free to point me to it.  Note also that my posts were about the technical problems with ledger-summary cryptocurrencies as compared to ledger-journal systems (like bitcoin).    If you feel that I'm wrong about them, you are free to make your own GAAPcoin and we'll see how the two systems fare in the arena.

*  Note that I make a clear division between accounting, and a body of standards that accountants use when dealing with the fiat world (GAAP).  This is not an accidental division, but an intentional one.  To argue that bitcoin is incompatible with accounting would be silly.  To argue that bitcoin must conform to present systems for accounting is just as silly.

Regular users have no particular storage requirements in either system.
Miners need either the full UTXO set or the current ledger.  These are essentially the same thing, the same information.

If someone chooses to fully validate, they will need either the full transaction list since block 0, or the full transaction list since block 0.    The trust/verification tradeoff is a bit different between the two systems, but in either case, you need essentially the same data to be able to perform similar verification.

The UTXO set is somewhat larger than the summary ledger in the degenerate case where someone is willing to operate with very little verification.  But that is a single-shot savings (per node), while the summary ledger is necessarily larger than just the delta from the previous version (which is what bitcoin really boils down to) leading to higher ongoing costs.

Are you passing an empty array, or an empty string?

'[]'

Essentially, the ledger system offers no advantages (or only fictional advantages), and has a host of disadvantages.  This really has been discussed to death.  I'm not making that up to get rid of him, I just don't want to rehash the whole topic for the 99th time.

There are two main problems, and plenty others that are more subtle.

First, a ledger system provides no meaningful resources savings (no reduction in storage space, no reduction in memory usage, no reduction in network traffic, no reduction in CPU usage) because we are already very lean, meaning that our transactions are very close to the absolute minimum amount of information necessary.

Second, a ledger system is necessarily less flexible and useful.  None of Mike's contracts would work in a ledger system without adding trusted third parties.  You could regain that functionality by emulating the current scripting system with the scripts attached to disposable accounts rather than disposable transactions, but why bother?  Bitcoin puts the complexity where it belongs, in the transaction.

As for accounting, there is nothing about bitcoin that is incompatible with it.  The problem seems to come up when you try to map accounting functions to bitcoin functions based on their names.  "Transaction" means something totally different in bitcoin than it does to an accountant.  Same with "account", "balance", etc, etc.  All of the ideas are compatible, as in, you can take an accounting-account and find an analogy in bitcoin, but that analog won't be a bitcoin-account, or a bitcoin-address, it will be something else, and that something else may not be "real" in bitcoin world.

I find the whole accounting discussion to be particularly tedious because the same thing is true in the real world, and yet, no one shows up on banking forums whining that bank-accounts are not exactly the same as accounting-accounts.

Erm, I'm pretty sure you need to pass in an empty array there, and not the string "null".

If you find any serious deviation from uniformity in SHA or scrypt, we all have some big problems.  And I don't mean bitcoin, I mean the entire world.  See here for a little bit on testing non-cryptographic hash functions.  The crude tests described should be taken as "step 0" when looking at cryptographic hashes.  Anything that performs poorly on them isn't worth the effort of explaining to the author why you aren't going to do a serious analysis of his pet function.  Note that you've probably never heard of any of these algorithms, with the possible exception of spooky.

Also, this is the inverse of the idea in the original post.  If there is an actual bias in the hashing function (and we hope there is not), then you can use that bias to make your mining more efficient.  Of course, if everyone does it, then difficulty just ends up somewhat higher than it "should" be.

No, this is completely wrong.  That's why we call it a fallacy.    The expected distribution will be uniform, no matter what happened in the past.

This is the gambler's fallacy.  It will approach a uniform distribution over an infinite number of trials, but not necessarily on the next trial.

I hope you don't take it personally that I'm using your post to demonstrate the pathetic level of economic debate on the internet.  Many of us have seen posts nearly identical to this one over and over again.  I can't speak for anyone else, but I personally wish that people would stop writing junk like this.


This is circular.  Excess implies bad, and [bad]X is not good.


You cannot assume that anyone here will agree with this.  Many of us are interested in bitcoin because we suspect that this assertion is false.  (Note that an assertion is different from a conclusion.)


No one has presented any evidence (as far as I'm aware) that the price action of the last few months has had a negative impact on bitcoin commerce.  The data that I've seen show bitcoin activity on an upward trajectory, nearly unrelated to the meandering of the exchange rate.


Essentially, this is the matter currently under discussion.  Asserting your side is not an argument.


This is a logical impossibility.  Mainstream adoption requires a dramatic increase in value.  It also confuses cause and effect, since the cause of the recent volatility is the low valuation of bitcoin.


No one that likes bitcoin is interested in hidden taxes.  We prefer that forced wealth distribution happen on TV, with guns drawn,  so that everyone can see what is really happening.  Thus, we reject inflation's "uses".

Do you really think that anyone would starve because they figured their money would buy more food when they are dead?  How about let their mortgage go into default because their money would be worth more after they are homeless?  We can extrapolate these extreme examples down into more reasonable conditions and it will be obvious that trade will always happen.

Deflation in bitcoin will be both less severe and more predictable than the inflation that every currency in the world is experiencing today.  And again, no one imagines that commerce will grind to a halt as people refuse to accept dollars for their goods, even though their dollars are losing value.

You can't possibly have searched for this.  I'd be amazed if there were less than 100 threads on this topic, many of which include "deflation" right in the title.

Basically, commerce happens between present values.  You buy something using bitcoin when your present value of the something (which includes your own expectations of future value) is greater than your present value of the bitcoin you are spending (which inclues your own expectations of future value).

If you don't believe that...  You currently possess some dollars (or whatever your local currency is).  Those dollars (or whatever) are inflationary.  They are worth now less than they were yesterday, and they will be worth even less tomorrow.  Why do you hold them, when everything else is gaining in value relative to them?

Bitcoin is in no way incompatible with GAAP.  Your incorrect understanding of bitcoin appears to be incompatible.