Multiple Bitcoin Networks Running Simultaneously?

[Imerman2]

Even though the Mt. Gox fiasco was not a hack of Bitcoin, in that the blockchain was not messed with, it still allowed 6% of all Bitcoins in existence to be misdirected (specific details are still unclear).  This exposed what I believe may be a serious flaw in Bitcoin's design, the fact that there is no direct market for securing the code for any specific Bitcoins.  Every owner of Bitcoins, or third-party who holds other people's Bitcoins wants their Bitcoins to be secure, but there is no direct profit incentive for fixing issues such as transaction malleability in the code.   This problem can be fixed by implementing multiple networks through which Bitcoins may be transfered, and it should be possible using a program such as Coloredcoins.  The main problem multiple networks would solve is protecting users from inept management as seems to be the case with Gox, Bitcoin is very secure, the actions of executives of large Bitcoin companies may not be so, and these networks would transfer the burden of security from each individual Bitcoin user (whether a whale like Gox or minnow like me), to the institution controlling a network on which Bitcoins can be traded.  Finally it would also give users a much greater chance at recompense in the scenario of a loss of Bitcoin because if some Bitcoins were lost on a network, the institution in charge of that network would be liable, instead of the current Gox scenario where there is nothing users can do as Gox's Bitcoins were lost as well.  Furthermore, Bitcoin users would be free to choose which networks to use or they could just use the original Bitcoin network, so this does not centralize the network, it just allows for market competition and if Bitcoin is already secure enough, no one would use it and there would be no harm.

The idea is that because the Bitcoin code is open-source, anyone can copy it and make changes to the code to enhance security, meaning that there could be multiple Bitcoin networks running simultaneously.  Currently the only way to do so would require that each network has its own unique 21 million Bitcoin that will be released specifically for that network.  However, I think it should be possible to create networks that do not release their own Bitcoins, but are simply compatible with the original Bitcoin network, meaning Bitcoins can transfer from one network to another.  That way, one network may be more suitable for small transactions where security may be more lax to allow for easier use, and others may be used by whales and exchanges where they can have incredibly tight security, at the cost of some ease of use.  So if something akin to the malleability issue happened then other networks could show that malleability did not affect and market competition and the profit incentive would create continuous improvements in Bitcoin's security.

Here's how you do it.  As stated above, anyone who wanted to could create their own Bitcoin network, then they could advertise the benefits of their network over others and try to attract users to transfer their Bitcoins to this network.  They could then tag any Bitcoin's running on their network with a specific color to differentiate the Bitcoins on their network from another.  Users could determine the security of the Bitcoins by simply looking at the color of the Bitcoin.  That way, there would be less necessary education needed to use Bitcoin (let's be honest the learning curve is pretty steep for your average person who still thinks dollars are a great form of money) and users could focus more on using Bitcoin to be productive rather than trying to figure out how to use their Bitcoins securely.  The task of securing Bitcoins would become a specialized task, currently the only real solution I've heard from the community on how to avoid Goxxing's is to educate yourself, which is not something everyone is interested in or has time for, this makes Bitcoin less appealing to the public at large. 

Maybe this idea isn't necessary, but it seems odd that a money dedicated to decentralization, has a single network on which it runs.  To make an analogy, Bitcoin right now is similar to the internet as it is currently run with a few institutions controlling the strings, such as ICANN (part of the reason for the introduction of Namecoin).  The decentralized nature of the internet means this isn't much of a problem, but governments or institutions can still theoretically pull the plug because there are places of centralization.  Again as is the case with Bitcoin, the internet is very secure, but because it has points of centralization it can be controlled through legislation such as SOPA.  So although the internet is basically decentralized, it could theoretically be killed or controlled by a single institution.  Bitcoin right now is very decentralized and generally doesn't run into problems, but its code is centralized in a similar way to the internet.  If the code were decentralized with some sort of system similar to what I outlined above I don't think it would be possible to kill Bitcoin, if one network went down others would already be there ready to handle the issues.

Let me know what you think, but the single Bitcoin network makes me uneasy, though I may be over-thinking it.

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[greenlion]

Destroying any semblance of frangibility and network effects in order to protect people from something that should be their responsibility in the first place is not a good idea.

[_tenletters]

You can get all of the benefits of this without most of the disadvantages with entirely different coins and the ability to change between them.

[Imerman2]

Destroying any semblance of frangibility and network effects in order to protect people from something that should be their responsibility in the first place is not a good idea.

I understand the meaning of the word frangibility, but I'm not entirely sure that I'm interpreting your use of the word here correctly, if you could explain it a little more that'd be great.  Also, the entire point of a market is to make things easier for people, not to tell them that they have to do extra work to use a good.  They should be responsible for their funds yes, but they shouldn't have to understand Bitcoin's code to use it.  I use windows daily and haven't got a clue what the internal coding is and thats the point of a market, specialization, so I think that argument misses the point.

[Imerman2]

You can get all of the benefits of this without most of the disadvantages with entirely different coins and the ability to change between them.

Not the benefit I'm talking about, I want market competition within each coin, not just from one coin to the next.  And it might not be useful to have multiple networks running and so people may just switch from one coin to the next, but introducing multiple networks can't hurt.  But a market will eventually use one good as money because money is defined as the universal medium of exchange.  So if Bitcoin becomes money, there may be other mediums of exchange, but it will have no competitors as money and then you can't switch to other coins.  The whole point of multiple networks running the same coin is to make that single coin more resilient, your option means that the original coin will fail, which is the problem I'm trying to avoid.