From 11 coins to 2!.. BTC and PPC win for me and here's why.

[hope2907]

I can understand your view that Mincoin could be viewed as a clone of Litecoin but it can never be a pump and dump coin because it takes far too long to create a large portion of coins from which to dump.

The number of coins created is completely uncorrelated to the potential of pumping value into the coin then dumping it for a quick profit.

You can take any coin and label a multiple or fraction of that coin as the common unit to transact in.  Presto you get the psychological effect you are looking for without really having to change anything at all, certainly without needing an entire new coin to be created and marketed etc.  Forget the whole coin cap psychological effect and go back to the drawing board on all your ideas.

The only psychological appeal most alt coins bring is that of opportunity to buy it cheap before it rises and makes you rich.  People aren't jumping en mass on board these coins because of the logo or name or whatever other marketing fluff.

Prove it. And no it's not just the total number of coins created but also the rate of creation that contributes to pump and dump. If you create 50,000 coins a week from one coin then that one coin is going to have a lot of people trying to dump it at the end of the week because the supply will outpace the demand. What I want is for the demand to always outpace the supply so that these coins will have reasonable prices and be released at a reasonable rate and while miners might not be able to get quick profits I think it's better to slow the pace of inflation down. The total cap should be small because of psychological effect but the rate of inflation isn't just a psychological appeal to coin collector instincts but is real mathematics and is in my opinion really bad for markets. The rate of inflation has to be slowed and with Feathercoin and Chinacoin this did not happen and the result is these coins are now over mined, very cheap and psychologically a cheap coin has less people demanding to buy it.

Because why is are people all over Litecoin? It's nothing more than a well marketed coin catering to GPU miners. It's not more secure than Bitcoin. It's got a larger total cap for marketing purposes so people feel richer, it's allows for GPU mining so miners can make money, it has a catchy name and a really nice logo. It's in second place while PPcoin which actually is very innovative, is at best in third place. It's debatable if you think Proof of Stake will work but at least it's significantly different from Bitcoin and for security reasons not just to make miners happy or make speculators happy like with Litecoin and Mincoin.

In my opinion people jump on in mass because of marketing. Coins which have terrible marketing or no logo have less support and PPcoin is perfect example of such a coin with very good technology and ideas behind it and very little marketing which proves technology doesn't market itself.

what make you think litecoin is less secure than bitcoin

ppc have two billion. so people will feel richer,according to your point arent they

[1715097805]

1715097805

[1715097805]

1715097805

[1715097805]

1715097805

[hl5460]

From Sunny King's paper on PPC design, I have to agree that PPC is best imitation of actual gold supply among all alt coins. PPC has some unique properties that might be valued in a not so distant future:
1. IPO. If you are stock market player, you will realize that PPC is really ambitious in becoming the one and only currency by not setting up limit in coin supply. Also such design provides a fair opportunity for the late comers to embrace PPC.

2.  1% interest. According to Sunny, this is designed to imitate the natural supply of gold. However, it's more like an incentive for PPC holders to keep PPC in their wallet, thus making supply and demand on a relative balance to avoid the inflation.

FYI ONLY.

[ictin]

BTC works - it really does work well. So, why would a real world merchant need to use another coin? Please, tell me why.

BTC = long term investments, big transactions (like buying a car or real estate)
LTC = everyday use for small transactions.

BTC is just too slow for everyday use with small amounts. LTC wins here IMO.

Is not enough. I think we need a coin with a supply of 100*(world population) roughly in the end in order to be used in every day life. If you want to buy a pack of biscuits for example you want to spend between 0.1 and 10 of everything (dollar, euros, bitcoins). If the pack of biscuits will costs 0.0000001 or 10000000 the psychological impact will be to big to ignore.


There are multiple cases around the world when a currency was getting to much zeros, for examples spending 20.000 for a pack of biscuits, the national bank has cut the zeros and started the denomination in order to be easier for the people to work with the currency.

Working with mini-Xcoin ar satoshi and micro-Xcoin and so on is not acceptable. The public will ignore any currency that is to low or to high in supply and is forcing them to make transformations and other things.

Remember, most of the people are not nerds, and especially not the clerks.

From this point of view all of the crypto-coins are broken. They are only investment and saving currency, but they don't represent a true currency that can be spend by normal people in everyday life.

[davidpbrown]

So, some coins use scrypt.. so what.....

in short, any coin using anything other than SHA that my ASIC cant mine is worthless. They are scam

I don't mine or have an ASIC. Also ASICs apparently will be able to do scrypt later.
No, I just don't see yet what LTC offers, that is distinct enough not to be simply bound to BTC fate.

It's widely accepted that miners like LTC.. go figure.. but is that sufficient?

[Luckybit]

I can understand your view that Mincoin could be viewed as a clone of Litecoin but it can never be a pump and dump coin because it takes far too long to create a large portion of coins from which to dump.

The number of coins created is completely uncorrelated to the potential of pumping value into the coin then dumping it for a quick profit.

You can take any coin and label a multiple or fraction of that coin as the common unit to transact in.  Presto you get the psychological effect you are looking for without really having to change anything at all, certainly without needing an entire new coin to be created and marketed etc.  Forget the whole coin cap psychological effect and go back to the drawing board on all your ideas.

The only psychological appeal most alt coins bring is that of opportunity to buy it cheap before it rises and makes you rich.  People aren't jumping en mass on board these coins because of the logo or name or whatever other marketing fluff.

Prove it. And no it's not just the total number of coins created but also the rate of creation that contributes to pump and dump. If you create 50,000 coins a week from one coin then that one coin is going to have a lot of people trying to dump it at the end of the week because the supply will outpace the demand. What I want is for the demand to always outpace the supply so that these coins will have reasonable prices and be released at a reasonable rate and while miners might not be able to get quick profits I think it's better to slow the pace of inflation down. The total cap should be small because of psychological effect but the rate of inflation isn't just a psychological appeal to coin collector instincts but is real mathematics and is in my opinion really bad for markets. The rate of inflation has to be slowed and with Feathercoin and Chinacoin this did not happen and the result is these coins are now over mined, very cheap and psychologically a cheap coin has less people demanding to buy it.

Because why is are people all over Litecoin? It's nothing more than a well marketed coin catering to GPU miners. It's not more secure than Bitcoin. It's got a larger total cap for marketing purposes so people feel richer, it's allows for GPU mining so miners can make money, it has a catchy name and a really nice logo. It's in second place while PPcoin which actually is very innovative, is at best in third place. It's debatable if you think Proof of Stake will work but at least it's significantly different from Bitcoin and for security reasons not just to make miners happy or make speculators happy like with Litecoin and Mincoin.

In my opinion people jump on in mass because of marketing. Coins which have terrible marketing or no logo have less support and PPcoin is perfect example of such a coin with very good technology and ideas behind it and very little marketing which proves technology doesn't market itself.

what make you think litecoin is less secure than bitcoin

ppc have two billion. so people will feel richer,according to your point arent they

Litecoin is less secure because GPU mining while it might be more profitable is not going to secure a network as quickly as ASICs. This is just basic knowledge, if you have ASICS already developed then all you really have to do to keep the network secure is distribute the ASICS to as many people as possible. ASICS do not cost a lot of electricity and run at 30 watts or less compared to GPU which costs much more in terms of electricity and is much more inefficient. So just on energy efficiency and overall efficiency alone ASICS are better in my opinion for security. Also the complaints about confirmation time are psychological complains from people who don't like the idea of having to wait 30 minutes to an hour for the security to go through. These people would rather sacrifice a degree of certainty for transaction speed. There is no proof right now that Litecoin offers any security advantage over Bitcoin. My conclusion is that Litecoin is a well marketed coin catering to the miner demographic.

I communicated with SunnyKing himself. He says that PPcoin has no set in stone amount but that it will adhere to the model set by Bitcoin and Litecoin. Basically it's not generating a whole lot of coins at a very fast rate and eventually will be Proof of Stake so it's going to take a long time to reach 2 billion even if that is the cap and I don't think it is as he said he is only using that number internally for consistency. If you ask me what I think Sunny King is doing I think he's going to position PPcoin to be more scarce than Litecoin no matter what and competitive with Bitcoin in terms of the per capita amounts in circulation.

[Luckybit]

BTC works - it really does work well. So, why would a real world merchant need to use another coin? Please, tell me why.

BTC = long term investments, big transactions (like buying a car or real estate)
LTC = everyday use for small transactions.

BTC is just too slow for everyday use with small amounts. LTC wins here IMO.

Is not enough. I think we need a coin with a supply of 100*(world population) roughly in the end in order to be used in every day life. If you want to buy a pack of biscuits for example you want to spend between 0.1 and 10 of everything (dollar, euros, bitcoins). If the pack of biscuits will costs 0.0000001 or 10000000 the psychological impact will be to big to ignore.


There are multiple cases around the world when a currency was getting to much zeros, for examples spending 20.000 for a pack of biscuits, the national bank has cut the zeros and started the denomination in order to be easier for the people to work with the currency.

Working with mini-Xcoin ar satoshi and micro-Xcoin and so on is not acceptable. The public will ignore any currency that is to low or to high in supply and is forcing them to make transformations and other things.

Remember, most of the people are not nerds, and especially not the clerks.

From this point of view all of the crypto-coins are broken. They are only investment and saving currency, but they don't represent a true currency that can be spend by normal people in everyday life.

In the US Dollar we have cents to represent the 1.**, why don't we just get rid of cents and make it psychologically easier? Better yet why not get rid of 20 dollar bills, 10 dollar bills, 5 dollar bills, and just trade in 100 dollar bills to make it even easier still?

The reason I think is you lose an amount of precision in exchange for that psychology. How do you handle micropayments without that added precision?

[ictin]

BTC works - it really does work well. So, why would a real world merchant need to use another coin? Please, tell me why.

BTC = long term investments, big transactions (like buying a car or real estate)
LTC = everyday use for small transactions.

BTC is just too slow for everyday use with small amounts. LTC wins here IMO.

Is not enough. I think we need a coin with a supply of 100*(world population) roughly in the end in order to be used in every day life. If you want to buy a pack of biscuits for example you want to spend between 0.1 and 10 of everything (dollar, euros, bitcoins). If the pack of biscuits will costs 0.0000001 or 10000000 the psychological impact will be to big to ignore.


There are multiple cases around the world when a currency was getting to much zeros, for examples spending 20.000 for a pack of biscuits, the national bank has cut the zeros and started the denomination in order to be easier for the people to work with the currency.

Working with mini-Xcoin ar satoshi and micro-Xcoin and so on is not acceptable. The public will ignore any currency that is to low or to high in supply and is forcing them to make transformations and other things.

Remember, most of the people are not nerds, and especially not the clerks.

From this point of view all of the crypto-coins are broken. They are only investment and saving currency, but they don't represent a true currency that can be spend by normal people in everyday life.

In the US Dollar we have cents to represent the 1.**, why don't we just get rid of cents and make it psychologically easier? Better yet why not get rid of 20 dollar bills, 10 dollar bills, 5 dollar bills, and just trade in 100 dollar bills to make it even easier still?

The reason I think is you lose an amount of precision in exchange for that psychology. How do you handle micropayments without that added precision?

Yes, you have cents and dollars, and only cents and dollars, not mini-dollar and micro-dollars and others things.

This is true also with euro, there is euro, cents, and the precision is good enough, because nobody cares for 1 cent coin if is lost.

Also when you go to do groceries to pay something in the amount of 20.xx or 50.xx, if is in the amount of 100, you already dismiss the last decimal point, and is 100.x. All that is over 1000, is just 1000 without any decimal point, you just ignore it. And you know, for example, that you are paid 2000 a month, and you spend for groceries 20, and for a pack of gum 0.5. Now imagine this thing with bitcoin. You get a pay of 20 bitcoin and you spend for groceries 0.2, and for a pack of gum 0.005. Adding a third decimal point is to much.

I get that you live in the US, so you don't know the psychological in Europe when some countries have switched from the local currency to euros. After years the people where still converting the euros to the old currency to determine the real value.

Or how was in other countries with high inflation how hard was to deal with multiple digit currency, when buying groceries was something like 1.234.224, not to mention when buying a car was 173 millions. Was to difficult to handle for the most of the people. And was also hard after the denomination when the cut 4 zeros and to 3, and 10.000 was transformed to 1.

If this was hard, bringing a currency with multiple divisions and a lot of decimal digits will simply fail for every day use.

[hope2907]

I can understand your view that Mincoin could be viewed as a clone of Litecoin but it can never be a pump and dump coin because it takes far too long to create a large portion of coins from which to dump.

The number of coins created is completely uncorrelated to the potential of pumping value into the coin then dumping it for a quick profit.

You can take any coin and label a multiple or fraction of that coin as the common unit to transact in.  Presto you get the psychological effect you are looking for without really having to change anything at all, certainly without needing an entire new coin to be created and marketed etc.  Forget the whole coin cap psychological effect and go back to the drawing board on all your ideas.

The only psychological appeal most alt coins bring is that of opportunity to buy it cheap before it rises and makes you rich.  People aren't jumping en mass on board these coins because of the logo or name or whatever other marketing fluff.

Prove it. And no it's not just the total number of coins created but also the rate of creation that contributes to pump and dump. If you create 50,000 coins a week from one coin then that one coin is going to have a lot of people trying to dump it at the end of the week because the supply will outpace the demand. What I want is for the demand to always outpace the supply so that these coins will have reasonable prices and be released at a reasonable rate and while miners might not be able to get quick profits I think it's better to slow the pace of inflation down. The total cap should be small because of psychological effect but the rate of inflation isn't just a psychological appeal to coin collector instincts but is real mathematics and is in my opinion really bad for markets. The rate of inflation has to be slowed and with Feathercoin and Chinacoin this did not happen and the result is these coins are now over mined, very cheap and psychologically a cheap coin has less people demanding to buy it.

Because why is are people all over Litecoin? It's nothing more than a well marketed coin catering to GPU miners. It's not more secure than Bitcoin. It's got a larger total cap for marketing purposes so people feel richer, it's allows for GPU mining so miners can make money, it has a catchy name and a really nice logo. It's in second place while PPcoin which actually is very innovative, is at best in third place. It's debatable if you think Proof of Stake will work but at least it's significantly different from Bitcoin and for security reasons not just to make miners happy or make speculators happy like with Litecoin and Mincoin.

In my opinion people jump on in mass because of marketing. Coins which have terrible marketing or no logo have less support and PPcoin is perfect example of such a coin with very good technology and ideas behind it and very little marketing which proves technology doesn't market itself.

what make you think litecoin is less secure than bitcoin

ppc have two billion. so people will feel richer,according to your point arent they

Litecoin is less secure because GPU mining while it might be more profitable is not going to secure a network as quickly as ASICs. This is just basic knowledge, if you have ASICS already developed then all you really have to do to keep the network secure is distribute the ASICS to as many people as possible. ASICS do not cost a lot of electricity and run at 30 watts or less compared to GPU which costs much more in terms of electricity and is much more inefficient. So just on energy efficiency and overall efficiency alone ASICS are better in my opinion for security. Also the complaints about confirmation time are psychological complains from people who don't like the idea of having to wait 30 minutes to an hour for the security to go through. These people would rather sacrifice a degree of certainty for transaction speed. There is no proof right now that Litecoin offers any security advantage over Bitcoin. My conclusion is that Litecoin is a well marketed coin catering to the miner demographic.

I communicated with SunnyKing himself. He says that PPcoin has no set in stone amount but that it will adhere to the model set by Bitcoin and Litecoin. Basically it's not generating a whole lot of coins at a very fast rate and eventually will be Proof of Stake so it's going to take a long time to reach 2 billion even if that is the cap and I don't think it is as he said he is only using that number internally for consistency. If you ask me what I think Sunny King is doing I think he's going to position PPcoin to be more scarce than Litecoin no matter what and competitive with Bitcoin in terms of the per capita amounts in circulation.

"There is no proof right now that Litecoin offers any security advantage over Bitcoin" doesn't mean litecoin is less secure than bitcoin, ASICs for bitcoin are not widely use, according to your point of view, 8 month ago, bitcoin is less secure compared to now because GPU mining

GPU mining while it might be more profitable, wrong, GPU move from bitcoin to litecoin day by day, if you see statistics 8month ago, only 20thash bitcoin network(litecoin now 75%), when litecoin mature ASIC soon or late will hit them

something with less technology innovations compared to others doesn't mean it won't be success, or thing with more technology innovations will be success, take over other, real market have already proved that

[Luckybit]

BTC works - it really does work well. So, why would a real world merchant need to use another coin? Please, tell me why.

BTC = long term investments, big transactions (like buying a car or real estate)
LTC = everyday use for small transactions.

BTC is just too slow for everyday use with small amounts. LTC wins here IMO.

Is not enough. I think we need a coin with a supply of 100*(world population) roughly in the end in order to be used in every day life. If you want to buy a pack of biscuits for example you want to spend between 0.1 and 10 of everything (dollar, euros, bitcoins). If the pack of biscuits will costs 0.0000001 or 10000000 the psychological impact will be to big to ignore.


There are multiple cases around the world when a currency was getting to much zeros, for examples spending 20.000 for a pack of biscuits, the national bank has cut the zeros and started the denomination in order to be easier for the people to work with the currency.

Working with mini-Xcoin ar satoshi and micro-Xcoin and so on is not acceptable. The public will ignore any currency that is to low or to high in supply and is forcing them to make transformations and other things.

Remember, most of the people are not nerds, and especially not the clerks.

From this point of view all of the crypto-coins are broken. They are only investment and saving currency, but they don't represent a true currency that can be spend by normal people in everyday life.

In the US Dollar we have cents to represent the 1.**, why don't we just get rid of cents and make it psychologically easier? Better yet why not get rid of 20 dollar bills, 10 dollar bills, 5 dollar bills, and just trade in 100 dollar bills to make it even easier still?

The reason I think is you lose an amount of precision in exchange for that psychology. How do you handle micropayments without that added precision?

Yes, you have cents and dollars, and only cents and dollars, not mini-dollar and micro-dollars and others things.

This is true also with euro, there is euro, cents, and the precision is good enough, because nobody cares for 1 cent coin if is lost.

Also when you go to do groceries to pay something in the amount of 20.xx or 50.xx, if is in the amount of 100, you already dismiss the last decimal point, and is 100.x. All that is over 1000, is just 1000 without any decimal point, you just ignore it. And you know, for example, that you are paid 2000 a month, and you spend for groceries 20, and for a pack of gum 0.5. Now imagine this thing with bitcoin. You get a pay of 20 bitcoin and you spend for groceries 0.2, and for a pack of gum 0.005. Adding a third decimal point is to much.

I get that you live in the US, so you don't know the psychological in Europe when some countries have switched from the local currency to euros. After years the people where still converting the euros to the old currency to determine the real value.

Or how was in other countries with high inflation how hard was to deal with multiple digit currency, when buying groceries was something like 1.234.224, not to mention when buying a car was 173 millions. Was to difficult to handle for the most of the people. And was also hard after the denomination when the cut 4 zeros and to 3, and 10.000 was transformed to 1.

If this was hard, bringing a currency with multiple divisions and a lot of decimal digits will simply fail for every day use.

I do know the psychology. I've switched from dollars to Bitcoins. In my opinion the added precision is a good thing because for the Internet micropayments are essential. Just because you don't care about losing a cent it doesn't mean in the future when a Bitcent is worth more than a Euro or dollar cent that we won't care about losing that. When a Bitcent is worth 10 bucks we are going to really l care about losing the Bitcent and that added precision will matter. At the same time micropayments will allow us to get paid all over the Internet in Bitcent which today might seem ridiculous, we can get paid in fractions of a penny for Internet content with Bitcoins easier than breaking a penny up into smaller and smaller fractions but those micropayments will be very valuable to us and we will care about them even if we don't right now.

What I'm saying is it's probably beneficial for us to think more about those zeros. It is a change but it's not that hard, right now a Bitdollar is 0.01*, in the future it will be 0.0001* and it will take months or years to get to that. So I'm not really having much difficulty thinking in Bitcoin already. To me it's actually more natural to think in smaller and smaller amounts but I admit maybe it's just me, also I don't mind using a calculator prior to matching a purchase and I don't see how it's difficult to display the dollar amount next to the Bitcoin amount to help train people.

The increased precision might be psychologically difficult for people but it also means more money in your pocket which eventually you'll be able to use to buy stuff and then it will be associated with those products in your brain.

"There is no proof right now that Litecoin offers any security advantage over Bitcoin" doesn't mean litecoin is less secure than bitcoin, ASICs for bitcoin are not widely use, according to your point of view, 8 month ago, bitcoin is less secure compared to now because GPU mining

But it's not my job to prove Litecoin is less secure. It's Litecoin's job to prove it's more secure and it doesn't. In my personal and professional opinion it's less secure, but I accept that I could be proved wrong. Do you believe Litecoin is more secure?

I'll offer my perspective, I believe the security of the network depends on how widely and evenly distributed the hashing power is on the network. I think ASICs if not quickly distributed to as many people for as cheaply as possible, could actually compromise the security of Bitcoin. Basically what this comes down to is whether or not you think SHA256 or Scrypt is a better hashing algorithm and whether or not you think Bitcoin/Litecoin will be vulnerable to a 51% attack.

I don't think either Bitcoin or Litecoin will be vulnerable to these attacks provided they have enough network hashing power and it's widely distributed.

[ictin]

When a Bitcent is worth 10 bucks we are going to really l care about losing the Bitcent and that added precision will matter.

What I'm saying is it's probably beneficial for us to think more about those zeros. It is a change but it's not that hard, right now a Bitdollar is 0.01*, in the future it will be 0.0001* and it will take months or years to get to that. So I'm not really having much difficulty thinking in Bitcoin already.

 To me it's actually more natural to think in smaller and smaller amounts but I admit maybe it's just me, also I don't mind using a calculator prior to matching a purchase and I don't see how it's difficult to display the dollar amount next to the Bitcoin amount to help train people.

The increased precision might be psychologically difficult for people but it also means more money in your pocket which eventually you'll be able to use to buy stuff and then it will be associated with those products in your brain.

Well, this is exactly my point. Loosing one cent or an euro cent is not a problem, loosing a bitcent is a big problem. And people need to start thinking in large numbers, and i can tell you that they are not ready for this. This will not help replacing the fiat with crypto-coins. Yes, for some of us is easy, is easy also when are in front of you PC and you do some math before purchasing.

But imagine that you are at a groceries store, and there is line and the clerk tells you that you have to pay 0.0000023 bitcoins, and you start doing the math, because if you don't figure the exact number of zeros, you may end paying 10 time more, or 100. And you start counting the zeros, and the people at line are shouting: "hurry up buddy!". Do you think that the groceries stores will switch from fiat to this?

With crypto coins there can be a future, but not like this. 99% of the world population are not geeks, and they don't want big changes and they don't want to count zeros after the decimal point. They want simple things.

[Michael_S]

Subject: Block generation speed not so important long-term (and the analogy between future bitcoin payment system and today's central banks, AND what is different (=better) with bitcoin!)

[bitcoin, future vision, long-term, online wallet services, banks, wallet accounts, retailers, stores, payments, block chain size, block size, transaction fee, tx fee, scalability, confirmation time, fiat, central bank, analogy]

Hello again,

it has been talked a lot by alleged mathematicians or psychopathslogists about whether the number of zeros before or after the decimal dot and the value of the nominal cap limit of a coin is important or not, and if yes, in which direction. I am tired of that discussion, there is no more substance added to it.

So today I am writing about something completely different, which is neither "mathematical" nor "psychological", but rather "economical" and "technological". I have thought about how the future may look like, taking into account technical constraints of bitcoin (or actually "anycoin!") and market developments:

Bitcoin block size is limited. There is currently a limit of 250 kBytes ("soft-limit"), and the final hard-limit of the protocol is 1 MByte. There is some speculation whether that limit will be eventually lifted, but this is very unlikely, because this would not only mean a protocol change, it would also accelerate the growth of blockchain size without fundamentally changing anything, because the next limit would be reached soon, and you cannot increase the limit indefinitely.
Today the block size in the blockchain has already increase a lot recently, it is now at around 210 kBytes average, after about 50 kBytes around 1 year ago, as you can see here. So we are going to hit the 1 MByte in a not very distant future.

This means that the number of transactions that can be carried out over the bitcoin network per every 10 minutes is limited. What will happen (and actually already has started happening) is that transaction fees will start increasing in free competition. If your tx fee is too low, your bitcoin transmission will not make it into the blockchain, because miners will prefer other transactions with higher fees.

This applies for transactions that actually get carried out over the "real" bitcoin network.

Moreover, we have online wallet service providers like "Mt.Gox", "blockchain.info/wallet" and many others. If you make a transfer from your online wallet account to another account of the SAME wallet provider, you do not need to transfer bitcoins via the blockchain! Instead, you just need to know the "address" (username or whatever) of the recipient. It is like in banking today: If you make a wire transfer to another account of the SAME private bank, this bank just changes some entries in its ledgers, but the central bank does not get involved. However, if you transfer the money to an account of another bank, then your bank has to actually transfer "real money" (=central bank money) to the receiving bank. That's how banking works all over the world today. So what is the "central bank" in fiat world, that is the bitcoin network/protocol/infrastructure in the bitcoin world.

So what does this mean in practice for the normal consumer that wants to buy his bread, milk, or new trousers at the retailer around the corner in bitcoin?

Well, the retailer has the following signs sticking at the entry door:
  VISA ACCEPTED
  MASTERCARD ACCEPTED
  AMEX ACCEPTED
  Mt.GOX ACCEPTED
  BLOCKCHAIN.INFO/WALLET ACCEPTED
  XYZ WALLET SERVICE ACCEPTED
  DIRECT BITCOIN TRANSFER ACCEPTED

So you as the customer have the choice. Maybe you do not have an account at "MT.GOX" or "XYZ", but you do have a "BLOCKCHAIN.INFO/WALLET" account (and the corresponding app on your smartphone), and you may also own some "real" coins accessible via your smartphone app "bitcoinspinner" or "android wallet".

When you go to the checkout to pay your bread and the liter of fresh milk, the cashier asks you: "How would you like to pay?"
You say: "blockchain.info, please".

Alright, so you pay with your blockchain.info app to the retailer's "local" blockchain.info-address, and the payment will be confirmed almost instantly by the blockchain.info server at the retailer's blockchain.info wallet account. So you can walk away with your bread and milk quickly.

This transaction was free of tx fees, because you did not pay via the bitcoin network. You could have payed via the bitcoin network ("DIRECT BITCOIN TRANSFER"), but then you would have been required to wait, or you would have had to buy a voucher of this store in advance and would have paid with the voucher now. Another disadvantage of the direct bitcoin transfer method is of course that you would have had to pay transaction fees to get your transaction into the network in the first place. By that time (depending on how long we are looking into the future), the tx fee might take a considerable part of the purchase, if you just bought a small bread.

So the big idea is that all the retailers will have (free) accounts with all the major wallet service providers, such as to make sure that every possible customer will be accommodated.


This is my vision of the future, and I think it is not just a possibility, but a bare necessity that we have exactly this kind of development of the bitcoin (or any "non-niche-coin") ecosystem, given that bitcoin succeeds. And this is not at all enforced by the 10 minutes long transaction times of the Bitcoin network, but by the pure scalability problems, as explained in the beginning (block chain size, block size limit and resulting increase of tx fees).

Now some Q&A, to prove wrong the statement "but I don't like this, then I can equally well stay with today's fiat money":

Q: But this means that I, as a customer, have to have my bitcoins in my XYZ wallet provider's account (or another wallet provider) if I want to pay in retail stores. I don't like this. I do not trust any wallet provider. I want to keep my bitcoins locally, in my own wallet, with my own private keys.
A: Don't worry. You do not need to (and actually should not) move ALL your bitcoin savings to your XYZ provider's account. Instead, you are advised to move just as many bitcoins as necessary to your XYZ wallet as you need for your next shoppings (maybe for 1 week or 1 month). Then, if XYZ gets hacked (or claims so), your loss is limited - it is just as if you loose your wallet with your cash today (or rather... 20 years ago, because today you have cards, not cash, in your wallet ). You may also carry some "true bitcoins" with you in your smartphone's "bitcoin wallet (or bitcoinspinner)" app, in addition. Then, if you find out during your Saturday's shopping tour that you run out of bitcoins on your XYZ wallet's account, you can just recharge your XYZ account from your bitcoin spinner during your coffee break (of course with some tx fees), just like you had to go to an ATM in "pre-credit-card-accepted" times to continue your shopping tour.

Q: In this "vision of the future", it looks to me as if the wallet service providers act like banks: The customers open a (bitcoin-)bank account called "online wallet" and deposit (some of) their bitcoins, and then payments are carried out via these bank accounts. Isn't this a mere copy of our current banking system?
A: There are indeed parallels, exactly as you describe it in your question. And you can take the comparison even further: Like the money that you have on your bank account today, also the bitcoins that you have on your wallet provider's account is not actually true money, but just a liability of the bank/wallet provider to you, the customer. True money is only "central bank money" that the private banks have in their accounts with the central bank, or money bills and coins. In the bitcoin analogy, one owns true money when one is in sole control of a bitcoin private key. A major difference between today's money system and the bitcoin money system is this: In today's money system, private persons or companies cannot open electronic "true money accounts" at the central bank. This is a privilege of the private banks. If a private person or a company wants to store some true money, this can only be accomplished by hoarding bills or coins. This entails some risks of loss or theft, which is the main reason why most people still have their money at the banks today (despite almost zero interest rates). Instead, in the bitcoin world, "true electronic money" is accessible by every market participant ("banks=wallet services", companies, private persons) alike, they just need to own a private key and have some bitcoins sent to the corresponding address. This makes safe storage easy, simple, safe and cost-free, and nobody needs to fear to loose a big fraction of money due to a bank run or bankruptcy of a bank.

Q: I see, but I still don't like this future, because these "wallet services" could run a fractional reserve system, just like today's private banks (legally) do, thereby inflating the amounts of bitcoins.
A: True, the wallet providers could run a fractional reserve system. But there are two big differences to today's fiat money system:
(1) First, they would have to be much more cautious than today's banks, because they cannot be bailed out by the central banks (who can "print" as much "true"(!) money as they need) to keep up liquidity. Instead, in the bitcoin world, the amount of "true" money is limited to 21 Million, and that's it. So you cannot create money bubbles by printing more "true" money. Instead, the "bank" (=wallet service) would crash in due time, with some (limited) damage to the customers (which is why they should keep their big savings in their own private keys, not in online wallet accounts), but after such a thunderstorm the air is clean again, without an ever-growing money bubble poisoning the economy.
(2) Secondly, there is a mechanism by which any wallet service provider can reasonably convincingly prove that he is NOT running a fractional reserve system. I have described this method here (note at the time of writing this the whitepaper in version 0.1 is published. I soon want to publish another whitepaper with some additional improvements). Of course, no wallet service provider can be obliged to do this, but if the community is sufficiently aware of this problem and the method to prove it, it will hopefully become a competitive advantage.

Q: What would be the business model of these wallet services ("bitcoin banks")?
A: There are many possibilities. One idea is that they act as exchange services (like MtGox) and payment processors (like bitpay) and offer the wallet service as additional free(!) service to both businesses and private persons.


Conclusion:
After all, I pointed out that on the long term, if a crypto-coin succeeds and gets used at large scale, the main "business" is going to take place outside the block chain, with bitcoin accounts of wallet service providers. This evolution is unavoidable due to scalability issues (blockchain size and amount of transactions per time) that any crypto-coin would face. Also, the tx fees of the bitcoin network will grow considerably compared to today, due to the competition of the transactions trying to get into the block chain.
With "main business" I am mainly referring to purchases at retail stores or online stores, but also micro-payments or small donations over the internet, i.e. all payments that are small relative to the tx fees.
Bitcoin payments on the blockchain will still be used for example to load or withdraw funds to/from an online wallet, or to make greater transactions were tx fees do not matter. Also payments between wallet providers (that may happen once per day, e.g. like payments with central bank money between private banks today) will still use the block chain of course.

Given this, it becomes evident that confirmation time (i.e. block generation speed) is not very relevant for the successful long-term development of a crypto-coin, and for sure the 10 minutes confirmation time of bitcoin is not too long to be a problem. 10 minutes is just as good as 1 or 2 minutes or 10 seconds, because the main business is anyway going to take place outside the block chain. Note that anyway also a 1 minute average(!) confirmation time is too short to be practical for retail stores.

A 10 minute confirmation time, like for bitcoin, combined with a reasonable block size limit, even gives an incentive to the community to develop wallet services, as outlined above, in due time, especially to circumvent the pain of increasing tx fees. Such wallet services will first predominantly be used online, as usual, but once such services exist, they are likely to ACCELERATE the more wide-spread introduction of bitcoin payments in retail stores. So after all, the slightly "longer-than-actually-necessary" confirmation time (10 min), combined with a "tighter-than-perhaps-needed" block size limit (1 MByte), could even turn out to be an accelerator of the evolution of bitcoin infrastructure and wide-spread bitcoin adoption.

I would not be surprised if Satoshi has carefully thought about all this well in advance and designed the system parameters accordingly.

[calian]

But imagine that you are at a groceries store, and there is line and the clerk tells you that you have to pay 0.0000023 bitcoins, and you start doing the math, because if you don't figure the exact number of zeros, you may end paying 10 time more, or 100.

They ought to tell you you owe 2.3 microBTC or 230 satoshi. It's easy; no one's going to be using a huge string of leading zeros.