Still trying to get my head around all this. But it seems like the philosophy of trying to maintain perpetual traceability of all bitcoin transactions must imply an evr-growing body of data. Doesn't matter that the records are encrypted to prevent falsification of the records, they still have to get bigger forever.
Can it really be true that these ever-growing records must be constantly processed to maintain the system?
This seems unworkable in the long run to me.
I believe it is possible for Bitcoin to only have to download relevant branches of the Merkle tree in respect to your transactions. I think in the whitepaper I read something like 4MB/yr increase in the database file ?
Even so if you downloaded it in its entirety initially, you shouldn't have to worry about size/workability considering the rapid pace of advancements in technology (Moore's law).https://en.bitcoin.it/wiki/Vocabulary
Every transaction has a hash associated with it. In a block, all of the transaction hashes in the block are themselves hashed (sometimes several times -- the exact process is complex), and the result is the Merkle root. In other words, the Merkle root is the hash of all the hashes of all the transactions in the block. The Merkle root is included in the block header. With this scheme, it is possible to securely verify that a transaction has been accepted by the network (and get the number of confirmations) by downloading just the tiny block headers and Merkle tree -- downloading the entire block chain is unnecessary. This feature is currently not used in Bitcoin, but it will be in the future.
Bitcoin transactions are intentionally irreversible--unlike credit cards or PayPal where chargebacks can invalidate a payment that has already been made. And there are no middlemen. Transactions are completed directly between the sender and the receiver via the peer to peer network."
As said earlier, MtGox didn't roll back the transaction log your implying, but I can see why its confusing.
However, there are benefits and drawbacks to irreversible transactions for both seller and buyer parties.