On Tue, 2008-11-04 at 06:20 +1000, James A. Donald wrote:
> If I understand Simplified Payment Verification
> correctly:
>
> New coin issuers need to store all coins and all recent
> coin transfers.
>
> There are many new coin issuers, as many as want to be
> issuers, but far more coin users.
>
> Ordinary entities merely transfer coins. To see if a
> coin transfer is OK, they report it to one or more new
> coin issuers and see if the new coin issuer accepts it.
> New coin issuers check transfers of old coins so that
> their new coins have valid form, and they report the
> outcome of this check so that people will report their
> transfers to the new coin issuer.
I think the real issue with this system is the market
for bitcoins.
Computing proofs-of-work have no intrinsic value. We
can have a limited supply curve (although the "currency"
is inflationary at about 35% as that's how much faster
computers get annually) but there is no demand curve
that intersects it at a positive price point.
I know the same (lack of intrinsic value) can be said of
fiat currencies, but an artificial demand for fiat
currencies is created by (among other things) taxation
and legal-tender laws. Also, even a fiat currency can
be an inflation hedge against another fiat currency's
higher rate of inflation. But in the case of bitcoins
the inflation rate of 35% is almost guaranteed by the
technology, there are no supporting mechanisms for
taxation, and no legal-tender laws. People will not
hold assets in this highly-inflationary currency if
they can help it.
Bear
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