Author: John Dillon 2013-05-09 00:57:42
Published on: 2013-05-09T00:57:42+00:00
The conversation starts with a discussion of whether mobile carriers can engage in financial scamming. The author repeats that the double-spend protection provided by the blockchain has a sweet spot where it is valuable, and then there are many kinds of transactions on either side of that sweet spot that don't really benefit from it. Examples include Facebook buying Instagram for a gajillion coins or when an employer pays an employee's salary. In the latter case, people get paid after they work their two weeks, so the double-spend is already irrelevant. However, when an employer pays an employee on the blockchain until the transaction confirms for someone else to accept funds from that payment, they not only have to trust the employee but also the employer. A scheme where one vouches for their payments with their identity could benefit from being able to follow that chain all the way back to the last confirmed transaction, but actually implementing this may be too complex to be worthwhile.The topic continues with the idea that small payments don't need the blockchain. Satoshi's bag of crisps example is given as an illustration. If the cost/complexity of double spending is higher than what the payment is worth, again, one doesn't really need the block chain. However, the issue is how to optimize it - by adding yet more restrictions and limitations on those who choose to run a node or mining operation, or by actually fixing the trust issue? Large sums of money that move around but not large enough to justify expensive cross-jurisdictional legal action or where the cost of identity verification and all the associated paperwork is just too high are places where the chain is really wanted. Most online transactions fall into this bucket today. Especially for the most popular use of Bitcoin as a payment system: buying things PayPal won't let you. In that circumstance, the only leverage one has is the protections of the blockchain and the damage one can do to the other (often anonymous) party's reputation.
Updated on: 2023-06-06T16:11:51.052113+00:00