I am convinced that many problems with Bitcoin would be solved if we could come up with a way to tie mining difficulty to the currency's demand instead of only to the mining computing power. Instead of ensuring a predictable generation rate, this could ensure a predictable <i>value</i>. When demand wanes, the currency is harder to mine and becomes more scarce, and when demand surges, the currency becomes easier to mine and more available. This would stop some of the volatility in BTC prices. You could plan the rough change in value over time, and build it into the algorithm, perhaps making gains unlimited at first, then making it very deflationary for several years, and gradually easing gains to something like 0-2% deflation per year. A currency with a known long term future value is obviously very useful, and a stable value is also more useful.<p>I can't think of a decentralized way to measure demand, though, so maybe this is not possible.
I think we almost all agree that cryptocurrency is a revolutionary thing. It's difficult to see <i>how</i> revolutionary, because we are only beginning to understand what can be made possible by it.<p>I often see it compared to the advent of the early Internet in the 1980s, when nobody really knew how big it would get, just that it was "revolutionary" and would become huge.<p>This may be an overestimation caused in part by bitcoin stakeholders trying to promote the idea. But a very similar thing happened in the 90s when everyone was buying tech stocks.
> This realization raises interesting questions about the political motivations of Satoshi Nakamoto in presenting their creation as a digital currency when they must have known that they had solved this far more important general problem.<p>He was well aware: he posted a short essay to bitcoin.org explaining how Bitcoin is a general solution to the Byzantine Generals problem, and if you read his early cryptography/p2presearch ML threads, he specifically says that digital money is but the earliest and most obvious application, and that far more could be built on top of it, and he hoped there would be, and included the dangerously-complex scripting language specifically to support more complex functionality than simply a global ledger.<p>It's not his fault if everyone else was more interested in applying Bitcoin to financial transactions than exploring approaches like Namecoin.
I think this article is on to something really important. It is way too easy currently to get caught up in the frenzy over the specuation surrounding Bitcoin.<p>This idea of the Bitcoin protocol as a decentralized, secure, and transparent storage system has all kinds of applications, whether Namecoin, smart property or something else.<p>I played around with using Namecoin as a more consumer-friendly form of drm.<p><a href="https://github.com/aaron-lebo/dissent" rel="nofollow">https://github.com/aaron-lebo/dissent</a>
I don't think the author realizes how uninteresting a decentralized transaction store is without the currency element.<p>The trick was to line up economic incentives so that securing the network and accepting transaction fees are the same thing.<p>The fact that bitcoin serves as a centralized document store is one of the biggest defects in bitcoin as it stands now, and when bitcoin does fall, it will fall to a system that treats the transfer of currency units as a first-class citizen rather than a side effect of a script.
A bit reason I think Bitcoin is a fundamental innovation is that nobody quite seems to know what it is. It's clear to me that it is not a currency in the classical sense in that it does things that no classical currency does, but it's also not just a payment mechanism or a wire service or anything else simple and easy to define.
Let me use this opportunity to point out <a href="http://virtual-notary.org" rel="nofollow">http://virtual-notary.org</a>, an online witness to facts that can be checked online, where these facts are recorded in the Bitcoin blockchain. These go beyond the types of document proof of existence cited in the article, and can cover facts such as exchange rates, DNS address ownership, WHOIS info, weather conditions, housing prices, employment status, etc.<p>This article describes the usage scenarios in detail:
<a href="http://hackingdistributed.com/2013/06/20/virtual-notary-intro/" rel="nofollow">http://hackingdistributed.com/2013/06/20/virtual-notary-intr...</a>
Anyone interested should study the script system and Namecoin.<p>"Restricting transactions to such a simple form would restrict Bitcoin to exactly the possibilities traditional currencies had (though decentralized). However, Satoshi saw the potential to allow it to do more, and introduced a script system. He wasn't around anymore to bring it to practice, but Mike Hearn wrote down some of the things Satoshi had in mind on the Contracts page of the Bitcoin wiki."
>This realization raises interesting questions about the political motivations of Satoshi Nakamoto in presenting their creation as a digital currency when they must have known that they had solved this far more important general problem.<p>Why oh why must every mention of Nakamoto imbue him/them with certain politics? We're led to believe Nakamoto is a subversive anarcho-capitalist libertarian who wants to overthrow governments.<p>There are certainly hackers driven by ideals and politics (e.g. rms), but there are plenty more who solve a problem <i>just because they can</i>. The Morris worm wasn't published in order to promote anarchy. Quicksort wasn't invented as a metaphor for classism. <a href="http://dl.acm.org/citation.cfm?id=358561" rel="nofollow">http://dl.acm.org/citation.cfm?id=358561</a><p>It seems far more likely that Nakamoto saw an existing problem, solved it in a clever fashion, and published the result.
So, BTC might fail as a currency, but succeed as -- say -- a basis for the kind of persistent URN scheme that the W3C & others have been mumbling about for a couple of decades. An interesting thought.
One of the biggest problems with bitcoin as a currency that i see, is that everyone still deals in usd amounts and comparison when offering products, when webhosting is a flat btc price regardless of market fluctuations and when people buy and sell items based on their btc price without first translating it into a fiat currency equivalent, that is when bitcoin will truly be mainstream.
Sorry to be a bit off-topic, but is anyone else's browser having difficulty rendering the text on this page? <a href="http://i.snag.gy/SK7NX.jpg" rel="nofollow">http://i.snag.gy/SK7NX.jpg</a><p>I've noticed this on a few sites, and I'm wondering if the problem is on my end, or if it's a problem with the website.
Naive question from total outsider to both contexts, popped up while reading this: has there been any speculation that Aaron Swartz = Satoshi Nakamoto, or are there good reasons to exclude it?