MoonShadow
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December 30, 2010, 10:41:35 PM |
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Actually there is a very good reason for Bitcoin-backed banks to exist, issuing their own digital cash currency, redeemable for bitcoins. Bitcoin itself cannot scale to have every single financial transaction in the world be broadcast to everyone and included in the block chain. There needs to be a secondary level of payment systems which is lighter weight and more efficient. Likewise, the time needed for Bitcoin transactions to finalize will be impractical for medium to large value purchases.
Bitcoin backed banks will solve these problems. They can work like banks did before nationalization of currency. Different banks can have different policies, some more aggressive, some more conservative. Some would be fractional reserve while others may be 100% Bitcoin backed. Interest rates may vary. Cash from some banks may trade at a discount to that from others.
George Selgin has worked out the theory of competitive free banking in detail, and he argues that such a system would be stable, inflation resistant and self-regulating.
I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash. Most Bitcoin transactions will occur between banks, to settle net transfers. Bitcoin transactions by private individuals will be as rare as... well, as Bitcoin based purchases are today.
Very good point, I'm a little new so I was unaware that large transfers would take restrictively longer. I was aware transaction would eventually take longer, but not that it would be so long as to be prohibitive. Wouldn't this then rather lead to competitive crypto-currencies overtaking Bitcoin in popularity if they are capable of solving this restriction? Doubt it. That's not a bug, but a feature. |
"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."
- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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It is a common myth that Bitcoin is ruled by a majority of miners. This is not true. Bitcoin miners "vote" on the ordering of transactions, but that's all they do. They can't vote to change the network rules.
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Sjalq
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December 30, 2010, 10:58:23 PM |
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Doubt it. That's not a bug, but a feature.
Okay, but a feature in that it simply takes longer or in that it incentivizes people to add transaction fees? |
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Hal
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December 30, 2010, 11:20:01 PM |
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What I meant about purchases taking longer would be in the range of several hundred to several thousand dollars. Today you can go into Best Buy and get a new TV for $1000, put it on your VISA and walk out. For a Bitcoin transaction in this range, the seller would probably want to wait for 2 or 3 confirmations to be safe against double spending, which would take 20-30 minutes. That's pretty inconvenient.
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Hal Finney
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ColdHardMetal
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December 30, 2010, 11:28:49 PM |
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What I meant about purchases taking longer would be in the range of several hundred to several thousand dollars. Today you can go into Best Buy and get a new TV for $1000, put it on your VISA and walk out. For a Bitcoin transaction in this range, the seller would probably want to wait for 2 or 3 confirmations to be safe against double spending, which would take 20-30 minutes. That's pretty inconvenient.
You could walk in and pay for it with bitcoins and then leave. While waiting for the store to deliver it there would be plenty of time for the confirmations to get processed, and for you to be notified of any problems, without any real delay in the time between purchase and enjoyment of your new tv. |
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MoonShadow
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December 31, 2010, 12:35:26 AM |
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Doubt it. That's not a bug, but a feature.
Okay, but a feature in that it simply takes longer or in that it incentivizes people to add transaction fees? A little of both. There are two different delays that you are addressing here, the delay of comfirmations and the delay getting into a crowded block. Big ticket items, for which the seller would be unwilling to accept a valid transaction on faith, will require confirmations. Your desire to get it over with will often compell you to add a smig of a fee to jump the line, ensuring that you get into the next block so that you can start counting confirmations to your seller's satisfaction. I would expect this kind of thing to be common for anything more valuable than an average guy's net weekly paycheck, say a high end gaming computer or a car. As far as the computer is concerned, you could offer your ID as evidence of who you are if you didn't wish to wait for other confirmations. But if you desire to remain just another anonymous customer, then at least one confirmation is likely. However, for most anything less than a week's paycheck, a vendor does not need to wait for even the transaction to get into a block, as it is possible that a bitcoin POS client would be able to rapidly check the validity of the transaction, and then check the transaction pool for any other possible double spends, ship the transaction out onto the network and wait a few seconds looking for double spends, and if it doesn't see any within about ten seconds, it's probably not going to. For that matter, the same methods could be used for large ticket items, depending on the risk tolerance of the vendor, but an individual trying to sell his car person-to-person is going to insist on a confirmation or two. |
"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."
- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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MoonShadow
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December 31, 2010, 12:38:25 AM |
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What I meant about purchases taking longer would be in the range of several hundred to several thousand dollars. Today you can go into Best Buy and get a new TV for $1000, put it on your VISA and walk out. For a Bitcoin transaction in this range, the seller would probably want to wait for 2 or 3 confirmations to be safe against double spending, which would take 20-30 minutes. That's pretty inconvenient.
That depends upon how anonymous you intend to be, in addition to the scenario I mentioned above, Bitcoin credit rating agencies could exist to serve the same function as they do now. |
"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."
- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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Sjalq
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December 31, 2010, 07:08:13 AM |
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I understand that the current system does not allow for a near immediate secure update, but wouldn't a system that can, in addition to full security, provide a faster clearing time be preferable to bitcoin and end up supplanting it?
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MoonShadow
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December 31, 2010, 04:33:29 PM |
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I understand that the current system does not allow for a near immediate secure update, but wouldn't a system that can, in addition to full security, provide a faster clearing time be preferable to bitcoin and end up supplanting it?
Only if it can do it with all the other advantages of Bitcoin, without adding in other issues. This I consider unlikely. |
"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."
- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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gohan
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January 06, 2011, 12:35:21 AM |
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Today you can go into Best Buy and get a new TV for $1000, put it on your VISA and walk out. For a Bitcoin transaction in this range, the seller would probably want to wait for 2 or 3 confirmations to be safe against double spending, which would take 20-30 minutes. That's pretty inconvenient.
That depends upon how anonymous you intend to be, in addition to the scenario I mentioned above, Bitcoin credit rating agencies could exist to serve the same function as they do now. Well, that's something a bitcoin bank could be doing. Forgive me if this is a silly question, but, isn't it possible for me to directly transfer bitcoins to someone I'm face to face with, without a transaction getting recorded in the block chain? |
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davout
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January 06, 2011, 12:36:29 AM |
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Forgive me if this is a silly question, but, isn't it possible for me to directly transfer bitcoins to someone I'm face to face with, without a transaction getting recorded in the block chain?
No, unless you're on a system that uses some sort of accounts and pools deposits. |
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jgarzik
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January 06, 2011, 01:20:48 AM |
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Forgive me if this is a silly question, but, isn't it possible for me to directly transfer bitcoins to someone I'm face to face with, without a transaction getting recorded in the block chain?
Yes. You could give someone a wallet.dat file. Or you could transfer person-to-person using websites such as https://mtgox.com/ or https://www.mybitcoin.com/ |
Jeff Garzik, Bloq CEO, former bitcoin core dev team; opinions are my own.
Visit bloq.com / metronome.io
Donations / tip jar: 1BrufViLKnSWtuWGkryPsKsxonV2NQ7Tcj
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MoonShadow
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January 06, 2011, 01:24:00 AM |
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Forgive me if this is a silly question, but, isn't it possible for me to directly transfer bitcoins to someone I'm face to face with, without a transaction getting recorded in the block chain?
Only if both of you are using the same online wallet provider. Such as you both have accounts on Mybitcoin.com, and are both using those accounts in the transfer. In such a situation, Mybitcoin.com becomes your trusted third party. |
"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."
- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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gohan
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January 06, 2011, 05:54:40 PM |
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So, from what I understand, even if you give someone the private keys (a wallet.dat?), since you might still be keeping copies yourself, the recipient will still have to transfer the coins to his address through the network so that the network knows that he's the rightful owner. Hope this is correct.
Ah, and another use for banks could be scheduled payments and such.
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davout
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January 06, 2011, 06:04:13 PM |
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So, from what I understand, even if you give someone the private keys (a wallet.dat?), since you might still be keeping copies yourself, the recipient will still have to transfer the coins to his address through the network so that the network knows that he's the rightful owner. Hope this is correct.
yup |
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Sultan
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January 12, 2011, 11:48:47 PM |
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Only reason for a bank would be as a safe place to store my money. And MyBitCoin.com does that for free with an easy-on-the-eye user interface that is compatible with mobile phones.
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MoonShadow
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January 13, 2011, 12:00:46 AM |
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Only reason for a bank would be as a safe place to store my money. And MyBitCoin.com does that for free with an easy-on-the-eye user interface that is compatible with mobile phones.
Another reason for a bank is rapid resolution of transactions. |
"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."
- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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davout
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1davout
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January 13, 2011, 09:32:10 AM |
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Only reason for a bank would be as a safe place to store my money. And MyBitCoin.com does that for free with an easy-on-the-eye user interface that is compatible with mobile phones.
Another reason for a bank is rapid resolution of transactions. And maybe other services we didn't think of yet  |
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jgarzik
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January 13, 2011, 05:27:39 PM |
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Banks can offer a central authority for resolving bitcoin electronic checks.
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Jeff Garzik, Bloq CEO, former bitcoin core dev team; opinions are my own.
Visit bloq.com / metronome.io
Donations / tip jar: 1BrufViLKnSWtuWGkryPsKsxonV2NQ7Tcj
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Sultan
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January 13, 2011, 05:36:08 PM |
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I'm not sure how MyBitCoin's infrastructure works.
I mean if the BitCoins were on a database, and transactions between MyBitCoin users occured instantly and then were batch processed at the end of the day (ie. transfered into their relevant addresses) this would save processing time, and also provide insta-money.
Obviously it would be different for withdrawls etc.
It would be very much like transfering money from your HSBC bank account to your landlord who also has a HSBC account.
Unless th eprofit a bank makes is used to have a huge mega-cluster of computers to resolve the majority of transactions.
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