I want a solution which can give me something approaching the confidence I have in precious metals under times of stress.
I say that when (not if) there is another financial crisis of the type which (according to legend) incited Satoshi, and it cannot be controlled with bail-outs and such, it is a near certainty that alternates to whatever solution we are funneled into will be attacked vigorously. This includes gold and Bitcoin.
I say that these attacks are nearly certain to include pressure on corporate internet infrastructure providers and leveraging of the monitoring framworks known to be available to entities such as our NSA.
I say that when (not if) there is another financial crisis of the type which (according to legend) incited Satoshi, and it cannot be controlled with bail-outs and such, it is a near certainty that alternates to whatever solution we are funneled into will be attacked vigorously. This includes gold and Bitcoin.
I say that these attacks are nearly certain to include pressure on corporate internet infrastructure providers and leveraging of the monitoring framworks known to be available to entities such as our NSA.
There is no way to achieve the goal you want through the methods you're proposing.
If you want a currency that can store value, then it needs to be used by other people. That means it has to support the kind of usage levels that you're afraid of.
If remains too small to be effectively attacked, then it will also be too small to retain any kind of monetary value.
Safety through smallness is a dead end, which leaves safety through growth.
That might not work, but staying small for certain won't work.
Gold in modern societies counters your argument, but I agree that wide use is desirable. Not necessarily for security but more for humanity. This is exactly why sidechains are so important. They're promise is a cryptographically strong and thus near perfect proxy for Bitcoin which is then free to hide out. That it hides out significantly under the care of people with the skills to protect it is a good thing and a key to it's robustness. Again, not at all unlike gold.
The sidechains where Bitcoin use flows among the masses are highly flexible to fill a variety of niches (e.g., a 'safe' monitored and controlled currency for use within the mandates of the state.) They are also dispensable which addresses the single-point-of-failure problem. What I never did envision was the crypto methods which could allow individuals using a successfully attacked sidechain to reclaim their original BTC eventually. Brilliant!
Gold in modern societies proves justusranvier's point. The total value of all monetary gold is massively undervalued to the total value of monetary instruments. The reason is because gold is not used as money by 99.9% of the population and so gold is not valued as money by 99.% percent of the population. The gold bug's dream from 1933 of the rest of the population finally waking up and re-valuing their gold to it's proper level has never happened because of this.
It takes a version of Bitcoin that scales to the point that every person on the planet can interact with it directly, to achieve the status that gold once held. To get there requires that bitcoin scales, while maintaining it's decentralized and thus independent nature.
One option to get there is to let the blockchain scale to accommodate everyone, this could look like the following and still be OK. This was Satoshi's vision according to my interpretation of his comments. This option is secure because the miners are highly distributed, decentralized and independent. They are what provide security. In many ways this is how Bitcoin looks today, except for the smaller blocksize.
- ~10GB sized blocks every 10 minutes
- ~100 P2P nodes that are independently sponsored and paid for to perform validation (these would be several large institutions such as MIT, remember it only takes 1 node to flag cheating)
- ~10 pools that receive fees from billions of transactions and are located in several regions (or preferably behind tor or something similar)
- ~100,000 small independent miners connected by stratum to pools, the true location of each miner is easily hidden. These miners live off of the massive number of fees generated
Another option to get there is to take transactions off-chain. This is the SC / lighting network path. The problem with this option is the bitcoin main chain is starved for fees, and so the mining security mechanism is too small to effectively secure the network. This thought process that small blocks will cause fee pressure and that will support a large mining community is just wrong. What will happen is bitcoin will not be used to the extent that it needs to be used to be secure.
A bitcoin with 10s of billions of transactions a day each generating 1 penny in minimum transaction fee, will be much more secure than a bitcoin with a small number of transactions and slight fee pressure (at best) and where most fees are captured by SCs.
Noone of the 1MBers was able to compete with that: