[cryptography] bitcoin scalability to high transaction rates
decoy at iki.fi
Tue Jul 19 18:02:34 EDT 2011
On 2011-07-20, Ian G wrote:
> To answer OP, typically all trading is done on a delayed and netted
> settlement. Which is to say the trade might be done real time but the
> settlement is batched for later, typically after market closing. No
> money changes hands until later. This is especially true as you get
> closer to liquidity or speculative trading, because of the nature of
> the parties having no skin in the game, and trading on credit.
Yes, and I should have touched this as well. The problem is, the biggest
thing driving Bitcoin adoption is that it cuts down on the middlemen,
and their cost. Government involvement, of course, but also the
financial establishment. If you then have to rely on trusted third
parties/marketplaces/settlement agency, even with Bitcoin, that
nullifies half of the promise the currency has in the first place.
I also think the potential problem could be rectified rather simply:
just build a suitable hash tree of transactions and only subject the
root to the proof-of-work timestamping machinery, while offloading the
millisecond by millisecond processing and storage to auxiliary sites.
That way even high transaction densities would end up being a bona fide
part of the shared log, but only summaries/hashes would need to be
broadcast. Most of the hard, costly work of hashing and publicly storing
those more frequent transactions could be done in a decentralized and
less-trusted fashion, so that the middleman would be at least subjected
to full competition.
> I suppose we might try a bit-commit style of bilateral exchange but it
> would need to overcome the speed and cost advantages of the TTP.
The Bitcoin economy seems to work somewhere in between. Both in
efficiency, and as everybody knows, privacy as well. At least to me the
question then is, is Bitcoin really at the Pareto frontier with regard
to efficiency, privacy, latency and whathaveyou, at the same time. I'm
not too sure it is.
> It's not likely that the remaining of the population could appreciated
> it, sure :)
Then on the other hand, would any sane Bitcoin user divulge hir
ownership of 1/21th of the globe's wealth? If lottery winners with mere
millions hesitate to do that, both via talk and action, why would
somebody who's more likely to get the big picture go there either?
If so, it'd be phenomenally difficult to do anything more sensational
than current billionaires do with their wealth. I mean, if you went and
bought a midsized nation, that'd sort of leave a footprint. Then you'd
cease to have a life because, let's say, your wallet file would suddenly
be in rather high demand. Especially online, I think such considerations
rule out extreme spending with nasty effects on the market. And then, if
you can't spend willy-nilly, anything you just keep off the market is as
good in the medium run as something that never existed in the first
place; money really doesn't help you much unless you can spend it, which
for the most part makes the entitlement worries moot.
Sampo Syreeni, aka decoy - decoy at iki.fi, http://decoy.iki.fi/front
+358-50-5756111, 025E D175 ABE5 027C 9494 EEB0 E090 8BA9 0509 85C2
More information about the cryptography