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September 20, 2014, 08:40:11 PM |
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I've always thought that Bitcoin had one major flaw, there is no entity that has a profit incentive to improve the Bitcoin protocol itself. Yes the code is open-source, yes each user has an indirect incentive to find flaws, but there is no entity that receives payment for generating more secure and user-friendly code. The problem with having an entity that receives profit from securing the code is the problem of centralization, in other words how do you give a single entity control over the code, without granting a monopoly? The answer seems to me to be competing Bitcoin networks that all have separate protocols, meaning there may be thousands of Bitcoin networks, each with different security, user-friendliness, and protocol for Bitcoin transfers. This would be akin to the separation between banks and the U.S. dollar, every bank uses the same product, U.S. dollars, but they all have different protocol for doing the same work, transferring and storing money. In a competing Bitcoin network system, each separate Bitcoin network would have protocol of how to accept Bitcoin's from another protocol, and in some cases they may not accept other Bitcoin network's Bitcoins especially in the case of negligent and fraudulent networks. In this way you could have different networks specialized for certain tasks, miner networks specialized to the needs of miners, merchant networks specialized to the needs of merchants, etc, etc. Each network would charge a small fee, and because these networks would not have to record the transfers themselves, but are charging a fee for maintenance of the network itself, they would still be able to do so for less than the traditional banking system.
Bitcoin already has applications, such as coloredcoins, that could be used to tag each coin and the network it belongs to. I'm not an advanced programmer so I don't know many of the technical details, but it seems something like this could be possible. This wouldn't centralize Bitcoin because each user would choose a network or they could stick with the original non-competitive network, it wouldn't add large fees because the only fee would be for the upkeep of the network, and without this fee the network would be less stable so (as with any trade) you would get more out than you put in, and finally there would be no governmentally mandated restrictions, because the nature of Bitcoin network would make it impossible to stop competition in the market for Bitcoin networks.
Maybe I'm missing something here, but it seems like competitive networks are the way to go. If I'm wrong please tell me because I've started to take real steps in putting together how you could structure these networks so as to protect users against fraud without incurring additional fees, and if there is something wrong with this idea that makes it unsuitable to the market, or if some internal part of Bitcoin's structure makes this impossible if you could tell me I would save myself wasted effort.
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