Bitcoin Problem Analysis

[Gr.Green]

Hi Guys,

I've written a blog post about Bitcoin's problems as I see it.
There may be a few misconceptions because of my only recent introduction with the subject.

Please feel free to suggest answers or corrections if you have any.

http://bitcoinery.tumblr.com/post/6653365245/bitcoin-problems-that-need-to-be-fixed

Cheers!

[1714834003]

1714834003

[Clipse]

I will simply reply regarding your Early adoption problem.

Do some research on early adopters of GOLD mining and just how easy it was to mine yourself wealthy in the boom days, all you needed was a pan and a river bed.

Lots of wealthy families today came from just that mining, should we reclaim their gold aswell since they didnt build mine shafts and big mining industries who are doing the heavy lifting today?

This isnt a problem, its simply you(like most humans) who are envious and jealous of others having something that you dont have.

[Synaptic]

Hi Guys,

I've written a blog post about Bitcoin's problems as I see it.
There may be a few misconceptions because of my only recent introduction with the subject.

Please feel free to suggest answers or corrections if you have any.

http://bitcoinery.tumblr.com/post/6653365245/bitcoin-problems-that-need-to-be-fixed

Cheers!

Pretty good. There's actually a number of other cons that could be included, but you've picked a classy assortment of concerns to publish.

[elggawf]

The "not decentralized" is, I feel, a reasonably valid criticism - however your "solution" is ill-founded because it breaks the double-spend problem. While I wouldn't call it "centralized", Bitcoin does require a non-fragmented network as it's the only way to ensure you're receiving a payment that's not already double-spent. Massaging two forked chains together not only breaks this assumption, but it obliterates the idea of proof-of-work which is required to keep the distributed ledger straight in the first place.

It's more or less the responsibility of the person dealing with the transactions that they ensure they're not only connected to a small subset of the network - for example if your entire country falls off the internet, you would be a fool to accept any Bitcoin payments until connectivity is restored. Honestly though, in that sort of a situation, the vast drop in miners-vs-difficulty on the separated network is likely to mean that a block will never get solved, and almost certainly 6 blocks wouldn't so you probably wouldn't accept the transaction as completed anyway.

But basically all this boils down to "Bitcoin breaks without a functioning internet", to which the response is "no shit".

[Clipse]

I think arguing the decentralised issue is lacking the understanding of what decentralised mean.

Bitcoin isnt reliant on a single point/entity thus it is decentralised according to the meaing of decentralisation.

Bringing in an argument of, "Its meant to survive a nuclear attack" or anything like that is pretty daft. In the case of nuclear war, the last thing people will worry about is their money and I can promise you if there is one nuclear bomb hitting a powerfull nation then there would be one hitting every other powerfull nation which would cripple even the internet.

[bitclown]

If the design goals of Bitcoin is problematic to you, then you shouldn't use Bitcoins. It's like complaining about cars not being able to drive on water when what you actually need is a boat.</BadCarAnalogy>

[Timo Y]

1) Waiting for confirmation is only necessary if you don't trust the counterparty.
2) Without the early adopters securing the embrionic block chain, bitcoin might have failed and wouldn't be where it is today.
3) Transactions with paypal and credit card are even less guaranteed. In fact, a lot of them do get rejected and reversed at the whim of those companies.
4) User friendly backup tools will all but eliminate coin loss in practice
5) Bitcoin doesn't rely on the whole network to be intact. It could easily survive even just on a handful of clients running in the whole world.  Splitting the network requires hermetically sealing one group of clients from another group. That is extremely hard to do on the internet.
6) User friendly security tools will prevent most theft in practice
7) Nothing is backed by anything. Even promisory notes are only as trustworthy as person making the promise. With bitcoin you don't need to trust anybody.
8 ) Early speculation means that difficulty is higher than it would be without speculation, making bitcoin more secure in its early stage, making it more likely to succeed.
9) A lot of hoarders have started bitcoin business exactly because they have a stake.  There will always be free riders in life.
10) Do you really think people are going to care about a fixed 0.1 cent transaction fee? c'mon...
11) Bitcoin is just a tool. If some people use that tool for ideological purposes, why do you care? You can use it for whatever purpose you feel like.

[Gr.Green]

Nuclear argument is an extreme example. If you disconnect a city from the net for 24 hours the chain will be forked enough to make it unusable (by current propaganda). This is not acceptable if the aims are to be "the currency" of the world. If 10 minute transaction delay is bad, imagine 24 hours or a week.

But the block repackaging problem can be fixed without much pain and without voiding bitcoin warranty (i.e. no double spend, all still valid etc). There's so much mining power now, we can repackage anything in no time.

If the incentives are right we can have transactions approved within milliseconds because the network is very strong and can can be in a constant state of (useful) hashing and making blocks. Right now a lot of resources are wasted searching for random numbers by increasing the complexity of the hash.

The 51% computing power balance ratio will still hold true. You need to make lots of reasonably secure blocks all the time by a diverse group of packaging agents.