Bitcoin can't handle micropayments. The block chain is limited to about 7 transactions per second, and every node has a full copy of the block chain, so traffic goes up roughly as the square of usage. There's a minimum fee for each transaction (if you want it confirmed in any reasonable length of time) and it's currently about $0.30. That's more than many merchants pay to process a credit card transaction.<p>Nor can Bitcoin handle fast payments. It takes about an hour to get solid confirmation of a transaction, by which time the price of Bitcoins may have changed substantially. If you're selling anything that actually costs you money, you have to wait for some confirmations. One gambling site tried accepting unconfirmed transactions. People would bet, then, if they lost, double-spend to kill the payment.<p>A distributed digital currency without these problems is technically possible. That may be the currency that actually becomes useful for micropayments. Meanwhile, Bitcoin for vending machines, music tracks, and parking meters isn't going to happen.
> 2. Allocating bandwidth, storage, compute.<p>Before Bitcoin was a thing, I was thinking about the Erlang VM's "reduction-counting" processing paradigm, and noticed that it was a lot like having a dom0-scheduler "treasury" with domU-process "citizens", where each citizen gets paid a basic income every scheduling interval, and then can spend it to "purchase" time-spent-aware on a virtual core.<p>In Erlang's model, processes lose whatever they don't spend in a given interval—this is necessary to prevent a process from "saving up" and then blocking the VM for seconds at a time. However, if rather than putting a cap on wealth, you just cap <i>spending per interval</i>, then processes could do lots of other clever things with their income: trade it, invest it, spawn subagents that consume it, etc. This would be a very interesting platform for running goal-directed AI agents on: somewhere between Core Wars and Heroku.<p>Now, if the only "ledger" of reductions was in the local dom0, you'd have nothing more than a toy server: a sort of fishtank for agents to interact within. But throw a blockchain at the problem, and now agents could pay to spawn sub-agents (or copy themselves) anywhere that'll take their dom0's currency.<p>Interestingly, since cryptocoins are all pretty fungible, this would imply that the "intelligence" of an AI—or of a hypothetical Hansonian brain-emulation, for that matter—could be measured in units of dollars-spent-per-second.
I think this is a great post. I do wish it covered some of the other Bitcoin 2.0 concepts since it can do more then just efficiently moving small amounts of value around. Many think that concepts like smart contracts and fractual ownership (e.g. Reddit's recent announcement) require new altcoins, metacoins, or ethereum but don't realize Bitcoin can natively supports them too. There are already open source colored coin [1] APIs that allow anyone to model ownership of anything on the Bitcoin Blockchain, without any intermediary currency.<p>[1]<a href="http://coins.assembly.com/" rel="nofollow">http://coins.assembly.com/</a><p>(disclosure, helped create this ^)
Micro-gambling
Peer-2-peer gambling
Webcams<p>The real wonder is why haven't any of the major players in these areas adopted it in any way. Curiously it is the payment provider industry who has paid it some attention, rather than any of these.<p>Perhaps the traceable nature of bitcoin makes it unappealing for these use cases. In the early days of bitcoin where it was relatively easy to get anonymous bitcoins (by paying cash through unscrupulous dealers not paying attention to KYC rules), these would have made great use cases for bitcoin.<p>Now however, I feel like bitcoin doesn't provide relative anonymity over more traditional methods of payment.<p>I think there could still be a case for a new mail-like protocol that combines email and cryptocurrency for an email system which is both encrypted by default but also everyone sets a payment level for mail to reach them.<p>So I say "My Address is <bitcoin address? mail address?>, pay at least 0.001 bitcoins to get mail through".<p>This system:<p><pre><code> *Puts a direct cost on spam (therefore massively reducing it)
*ensures everyone owns private keys (so mail can be encrypted simply by knowing their address)
</code></pre>
Two fantastic features.<p>Sadly it won't happen, mail is too entrenched.
Also see OpenBazaar, a peer-to-peer marketplace:<p><a href="https://openbazaar.org" rel="nofollow">https://openbazaar.org</a><p>This is a rapidly developing example of an application that couldn't exist without Bitcoin.
How about a browser plugin that lets you pay a few cents here and there to hide ads? You could whitelist the sites you care about (no need to pay off every random blog), and give them a sort of "budget" (unknown to the site). Then each time you view a page on cnn.com or whatever, your browser could toss a few Satoshis over to them in exchange for receiving a page with ads completely removed.<p>Sort of like the NY Times paywall we all know and love/hate, but easier to deploy for less gigantic sites with less staff, and more voluntary (users who don't pay would just see ads as they do now).
Out of these 4 categories, <i>marketplaces</i> is the one that I think has the most potential for a breakaway change.<p>Micro-payments, micro-incentives and any kind of a scaling down of transactions is something I'm not exactly sure about. Maybe there's some cool stuff here, but I would be surprised.<p>Marketplaces though are a different story. Marketplaces have been developing into giants since the internet began and the financial infrastructure for running them is terrible.<p>Ecommerce, native or not, will also be impacted. Anti-fraud & payment verification colour the world of ecommerce enough. Solving friendly fraud (mostly chargebacks) could enable a lot of otherwise transactions and serve underserved markets (EG shipping goods to high risk countries like most of Africa).<p>ATM though BTC is still in a shaky place. Even bitcoin owners don't use it much. Most people don't have bitcoin wallets so unless a service is important enough to make people use it, BTC cannot be the only option.<p>Marketplaces are the kind of thing where users can be forced to use the payment method available. EG, if Uber paid driver in BTC, drivers would accept BTC.
Item 2, allocating resources for a true mesh network is a cool idea. It's clean, a b2b transaction for a specific standardized service: forwarding or storing data. It does not sound like a legal minefield. Am I too optimistic? Hats off to cdixon.<p>The other four I don't understand, can someone help me out?<p>There is no technical reason that existing money transfers get delayed or expensive because of international borders. The issues are regulatory [1]. How does bitcoin solve that? Same with payments and micropayments. There's nothing technically difficult about moving small or large amounts of money between people. Compliance with regulation is where all the trouble comes in [1], and Bitcoin is not miraculously exempt from those regulations either.<p>Am I missing something? I'm really curious. Like most technology folks, I /want/ to be more excited about bitcoin.<p>[1] <a href="https://www.wepay.com/api/payments-101/payment-regulation-challenge" rel="nofollow">https://www.wepay.com/api/payments-101/payment-regulation-ch...</a>
I'm working on a crowdlending network that enables the first idea: <a href="https://s3.amazonaws.com/loancoin/whitepaper.pdf" rel="nofollow">https://s3.amazonaws.com/loancoin/whitepaper.pdf</a><p>To the extent people are interested, we'd really appreciate any feedback.
> Incentivized social software. Up until now, social sites have had to rely on non-monetary currencies such as likes, followers, karma, upvotes, etc. With Bitcoin we can add actual monetary incentives to the mix. This is happening organically on Reddit where users are tipping each other using Bitcoin and Dogecoin.<p>Incidentally, this is a pretty bad idea, because of how the way people think about things changes when money gets involved. Someone said it well in a recent thread, so I'll defer to them -<p><a href="https://news.ycombinator.com/item?id=8392883" rel="nofollow">https://news.ycombinator.com/item?id=8392883</a><p>(AFAIK, most Reddit tips are only for a few cents, so the only real value is the acknowledgement that someone appreciated your post enough to tip you. This sidesteps the issue, but means that it isn't a good reflection of what would happen if you tried to make a real incentivized social network.)
Also worth reading: <a href="https://news.ycombinator.com/item?id=8410986" rel="nofollow">https://news.ycombinator.com/item?id=8410986</a><p>Two compelling blog posts by two Bitcoin thought leaders at the same time. Multiple discovery at its best
I think there is huge opportunity in decentralising existing business models that are well suitable for p2p.<p>Think of Uber / AirBNB / etc with no fees and no government power over them.<p>Another huge opportunity in distributing revenue of these services to peers running the network. This may cause rapid growth & unparalleled fault tolerance.<p>Third thing that might be disrupting is ability of such services to issue their own coins/stocks, which price is linked to service's revenue. Revenue is then distributed among stock owners, and service can issue such stocks at will without government's approval.
This list is pretty good but I suspect infrastructure work is far from done. Also Marketplaces aren't quite native by this definition-- cdixon is more so pointing out that their reaches can be expanded to the unbanked. I think the <i>real</i> magic of Bitcoin lies in the Blockchain itself and its application to the real world via smart contracts. The fact that bitcoin is a currency might turn out to have been a big distraction or just a side effect of the real applications. If this is true it further points to the need for ubiquitous infrastructure.
There's some crazy, crazy infrastructure growth going on with BTC, Ripple, and Stellar. It's thrilling to see what is just becoming possible.
For point 2, there is a white paper on using cryptocurrency to incentivize the development of Tor networks - <a href="http://www.nrl.navy.mil/itd/chacs/ghosh-torpath-torcoin-proof-bandwidth-altcoins-compensating-relays" rel="nofollow">http://www.nrl.navy.mil/itd/chacs/ghosh-torpath-torcoin-proo...</a>
To continue the discussion...<p><a href="https://hackpad.com/Native-Bitcoin-Applications-dNXoRdhwIb5" rel="nofollow">https://hackpad.com/Native-Bitcoin-Applications-dNXoRdhwIb5</a>
Speaking about cryptocurrencies in general, where are these on the list?<p>- Open source and Kickstarter like projects funding<p>- App/Startup Coins<p>- Virtual Goods<p>- Silk Roads