Author

Topic: Bitcoin 101 (Read 204 times)

legendary
Activity: 2926
Merit: 1386
October 27, 2017, 12:43:24 PM
#7
Why was Satoshi opposed to trust?
This has been in my personal text for a while.

"The cost of mediation increases transaction costs, limiting the minimum transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for non-reversible services".

Relying on a third party increases the possibility of betrayal, and finding the right third party to oversee the transaction can be an expensive hassle.

Even though BTC is not particularly practical for microtransactions right now, it may be with the introduction of the Lightning Network and offchain solutions, which still do not give any third party access to your coins during the process.


Agreed. We seriously need a solution to USD1-10$ transactions and micropayments.
legendary
Activity: 2926
Merit: 1386
October 27, 2017, 12:39:28 PM
#6
Satoshi Nakamoto's paper.

Bitcoin: A Peer-to-Peer Electronic Cash System - Bitcoin.org

https://bitcoin.org/bitcoin.pdf

"Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model. Completely non-reversible transactions are not really possible, since financial institutions cannot avoid mediating disputes. The cost of mediation..."

Why was Satoshi opposed to trust?

Why did you stop reading? Satoshi told you why in the next few sentences.

"The cost of mediation . . . "

YES!

It's not that I stopped reading. I started reading Satoshi's paper five years ago and I am still reading it.

This thread is exactly what the title says. Bitcoin 101. For newbies/anyone who wants to learn.

I propose going through his 9 page paper one paragraph at a time, spending as little or as long on each as is useful.
legendary
Activity: 1946
Merit: 1007
October 27, 2017, 10:08:39 AM
#5
In addition to the comments before, you are trusting a party that can change the rules at any time without you being able to oppose to them.

This leaves you vulnerable to being exploited.

legendary
Activity: 3472
Merit: 4801
October 27, 2017, 10:08:08 AM
#4
Satoshi Nakamoto's paper.

Bitcoin: A Peer-to-Peer Electronic Cash System - Bitcoin.org

https://bitcoin.org/bitcoin.pdf

"Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model. Completely non-reversible transactions are not really possible, since financial institutions cannot avoid mediating disputes. The cost of mediation..."

Why was Satoshi opposed to trust?

Why did you stop reading? Satoshi told you why in the next few sentences.

"The cost of mediation . . . increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for non- reversible services. With the possibility of reversal, the need for trust spreads. Merchants must be wary of their customers, hassling them for more information than they would otherwise need.  A certain percentage of fraud is accepted as unavoidable. These costs and payment uncertainties can be avoided in person by using physical currency, but no mechanism exists to make payments over a communications channel without a trusted party.
hero member
Activity: 938
Merit: 559
Did you see that ludicrous display last night?
October 27, 2017, 10:06:13 AM
#3
Why was Satoshi opposed to trust?
This has been in my personal text for a while.

"The cost of mediation increases transaction costs, limiting the minimum transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for non-reversible services".

Relying on a third party increases the possibility of betrayal, and finding the right third party to oversee the transaction can be an expensive hassle.

Even though BTC is not particularly practical for microtransactions right now, it may be with the introduction of the Lightning Network and offchain solutions, which still do not give any third party access to your coins during the process.

newbie
Activity: 3
Merit: 0
October 27, 2017, 10:02:22 AM
#2
Trust can be betrayed...

I have fiat money in the bank, and a card with which I can withdraw the money. But if my bank or government runs off with my money, nobody is going to give me money or goods or services by virtue of me showing them my bank card and saying this (former) bank owes me.

Case in point: have a look at what happened in Cyprus: https://en.wikipedia.org/wiki/2012%E2%80%9313_Cypriot_financial_crisis

With crypto, you don't need a trusted "middle man" or bank to do business, as long as a network of peers exist to validate transactions and therefore ownership of assets.
legendary
Activity: 2926
Merit: 1386
October 27, 2017, 09:48:02 AM
#1
Satoshi Nakamoto's paper.

Bitcoin: A Peer-to-Peer Electronic Cash System - Bitcoin.org

https://bitcoin.org/bitcoin.pdf

"Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model. Completely non-reversible transactions are not really possible, since financial institutions cannot avoid mediating disputes. The cost of mediation..."

Why was Satoshi opposed to trust?
Jump to: