Hard Digital Currency versus Soft Digital Currency

[Stephen Gornick]

I had not seen the term "hard digital currency" used before, but this article describes it as:

With hard digital currencies, in contrast, there is no debt created when the currency is issued.

Soft digital currency, in contrast, allows payments to be reversed if accusations of fraud are involved.

[...] Credit card and PayPal transactions can be considered soft digital currency transactions.

[...] Decentralized systems are being developed which have not yet proven their effectiveness, and consist of peer-to-peer systems.

   http://www.finance-weblog.com/86193367/what_is_digital_currency.php


It is a good read.

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[ribuck]

reading the article, seems that the old e-gold would also qualify as hard digital currency (by the criterion of an irreversible transactions)

e-gold is a "fairly hard" currency, but it's still centrally controlled so in principle transactions could be reversed. It's only due to a policy decision that they aren't. This is in contrast to an anonymous cash transaction which cannot be reversed (without initiating violence).

Bitcoin is somewhere in-between those two. A transaction can only be reversed by action taken by >50% of the computational power of the network.

[ptd]

Bitcoin is somewhere in-between those two. A transaction can only be reversed by action taken by >50% of the computational power of the network.

Yeah, like that's ever going to happen.

[ribuck]

A transaction can only be reversed by action taken by >50% of the computational power of the network.

Yeah, like that's ever going to happen.

It has already happened. Someone exploited an integer overflow to create a huge amount of bitcoins. The transaction was accepted into the block 74638, but is no longer in the longest chain due to action taken by >50% of the computational power of the network.

[ptd]

A transaction can only be reversed by action taken by >50% of the computational power of the network.

Yeah, like that's ever going to happen.

It has already happened. Someone exploited an integer overflow to create a huge amount of bitcoins. The transaction was accepted into the block 74638, but is no longer in the longest chain due to action taken by >50% of the computational power of the network.

I was refering to as an attack.