Topic: rpietila Altcoin Observer - page 113. (Read 387552 times)

SPV adds an increment of trust which MBC avoids.

The ideas there aren't new ones— much more comprehensive things, with better and clearly stated security assumptions, have been proposed elsewhere... but short of some massive improvements in ZKP technology an system that super-linearly reduces the amount of data transferred to a node must reduce the security model.
If you find reduced security acceptable— bitcoin has SPV already, which has near optimal performance.
Things which are in between may well be interesting, but they need to be able to clearly express what their security model and tradeoffs are (e.g. if it's no better than or even worse than SPV, why bother?) and thats a place where this proposal was lacking considerably a few months ago.

The argument is that some will always archive the whole chain. But that is what you also get with SPV. You can verify the chain yourself (at least to some level of confidence) but without the full chain, and there are still some full nodes "somewhere" with the full chain (perhaps only in large data centers).

I need my old transactions archived and verifiable, what do I do?

"Scale horizontally" means adding more nodes.  I guess you are talking about a future where individual blockchains constitute nodes in a greater cryptomoney gestalt?

If XCN truly "adds little if anything" to SPV, BitFreak wouldn't have gone through the trouble and expense of creating, launching, and nurturing it, nor gathered so much support along the way.

The block headers are kept as a PoW record but all old transactions can be discarded.

I see another possibility which is simply many separate blockchains, along with highly liquid and safe trading between them (probably decentralized). If bitcoin can't scale up and there is huge demand for crypto then what will happen is that some number of alts (and maybe that number is very high) will also gain in value and liquidity.

i.e. scale horizontally.

EDIT: regarding XCN, the people who actually understand the technology better than you and me have weighed in and said that it adds little if anything on top of bitcoin-type chains with SPV.

http://cryptonite.info/wiki/index.php?title=Mini-blockchain_scheme

The mini-blockchain scheme is a variant of the Bitcoin protocol which aims to eliminate the need for storing a full blockchain and overcome the "blockchain bloat" problem. The mini-blockchain is essentially like any other Bitcoin-based blockchain except that old blocks can be pruned from the chain. The block headers are kept as a PoW record but all old transactions can be discarded.

Address balances are managed separately in a hash tree structure called the account tree which is essentially a self-contained balance sheet designed to keep track of all non-empty addresses. New blocks act upon the entries in the account tree to perform transactions and the master hash of the account tree is embedded into the block headers to ensure consistency and agreement between nodes.

Since a proof-of-work is required for each new block, the account tree is updated in relatively periodic intervals of time. Since the master hash of the account tree is embedded into the block headers, the mini-blockchain helps to protect the account tree from malicious changes. However if we're discarding old blocks the mini-blockchain is not secure unless we keep the block headers.

So to secure the whole system from attackers, we use a chain of interlocking proof-of-work solutions termed the proof chain. The proof chain is simply a chain of block headers which encapsulate all the energy expended by the network on a given chain. The chain of block headers feeds into the mini-blockchain and acts to secure it and the account tree against attackers, even without old transactions.

The mini-blockchain, the account tree, and the proof chain, form the 3 core components of the overall scheme and work together to create a highly secure and robust P2P transaction system very much like the Bitcoin system but with a much better level of scalability, bandwidth, and speed. By optimizing each core component to perform a certain function of the blockchain we achieve unparalleled compression with a high level of security.

My logic is not at issue.  At issue is the logic applied by courts of law.  I don't agree with it, I merely try to anticipate its consequences. 

The U.S. government does not consider bitcoin to be a currency.  It considers bitcoin to be property, a commodity.

This is incorrect, you are forgetting there are no "coins" in Bitcoin, just inputs and outputs. The government can have a list of blacklisted inputs, but you can always move your coins through a mixer and get new inputs for your transactions, just the same as cashiers do in your example, and their blacklist would not hold for long just the same as banknote blacklist gets meaningless outside of the banknotes first move.

They can't actually do that, since either they are unsuccessful (much likely) or nobody would bother use this coin anymore, since its purpose would have been defeated (so they weren't able to control it, only to destroy it).

The fact that you need to do so is a clear demonstration of a weak fungibility. Mixers cost money. As soon as getting clean coins is more expensive than non-clean ones, the question is answered.

This is incorrect, you are forgetting there are no "coins" in Bitcoin, just inputs and outputs. The government can have a list of blacklisted inputs, but you can always move your coins through a mixer and get new inputs for your transactions, just the same as cashiers do in your example, and their blacklist would not hold for long just the same as banknote blacklist gets meaningless outside of the banknotes first move.

This is incorrect, you are forgetting there are no "coins" in Bitcoin, just inputs and outputs. The government can have a list of blacklisted inputs, but you can always move your coins through a mixer and get new inputs for your transactions, just the same as cashiers do in your example, and their blacklist would not hold for long just the same as banknote blacklist gets meaningless outside of the banknotes first move.

A very good point.  Even cash is not entirely fungible: if you accept money that you *know* comes from illegal activity, you can be considered accessory to that activity.

The government cannot require store cashiers to check some "tainted cash" database before accepting banknotes; that is why tainted cash does not keep its taint for long.  But the government could require such checks for bitcoin, since the cashier has to connect to the internet anyway in order to accept a bitcoin payment.  

Weak.  Just have the users supply a return address, give them a transaction id, and send winnings from deposits made with that transaction id to the address from which the transaction id was generated.  
Then it's a pretty simple and straightforward implementation -- maybe 4 hours with testing, all-in.

They can't actually do that, since either they are unsuccessful (much likely) or nobody would bother use this coin anymore, since its purpose would have been defeated (so they weren't able to control it, only to destroy it).

These are bets, with payouts returned to the sending address, that is why we cannot run it with the CN protocole.

But the government could require such checks for bitcoin, since the cashier has to connect to the internet anyway in order to accept a bitcoin payment.  

Fungibility is broken in bitcoin, because of the perfect transparency. There is no "if the currency is legal there is nothing wrong with any coin", at least not in the near future. [ ... ] We don't experience these issues with fiat simply because the basic user has no way to know what is the history of a note, and has no reason to fear other might know it and take him as responsible, so the analogy with USD is worthless.

Journalist always say that one thing that is much worse than censorship is self-censorship. I see the resembling restrictions you are putting on your customers. All US$ banknotes have serial numbers, and are much easier traced than cryptocurrencies, in fact they go through a record whenever they pass through the bank. Nevertheless, nobody is ever going to refuse the bill because there are traces of cocaine on them as long as they've received it for legal goods and services. Are your gambling business legitimate? If so, why on earth would anyone care where those inputs came from in any transaction if that transaction is completely legal?

I must be a "clueless fool randomly blabbering about things I don't even try to understand"

I agree with smooth. I run a gambling service and this is a very practical concern to me. Some people IRL might not accept coins that come from me, fearing in the next couple of months/years they would need to justify the coins are fully legit to some authorities. I'm not talking about newbs, but people who understand how bitcoin works, and what are the legal implications surrounding it now or in the near future. If you can get a 100% clean coin from an exchange for price X, or a coin tainted with whatever activity is not explictly fully legal everywhere on the globe, also for price X, which one do you choose?

Fungibility is broken in bitcoin, because of the perfect transparency. There is no "if the currency is legal there is nothing wrong with any coin", at least not in the near future. We are talking about a decentralized currency with very dissimilar and quickly changing legislations, so the opinion of the basic user is pretty much the only thing that matters. Note also that this argument of "legality brings fungibility", is fallacious in that legislation cannot fix technical weaknesses. We don't experience these issues with fiat simply because the basic user has no way to know what is the history of a note, and has no reason to fear other might know it and take him as responsible, so the analogy with USD is worthless.

Many people seem to just starting to find out how much bitcoin is transparent when they were actually assuming or expecting the opposite. Perceived fungibility (which the lack of is technically correct, and which again is the only thing that matters) is decreasing as this "discovery" keeps increasing.