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Comment by dcc1 | Hacker News Reader

tl:dr NSA invented Bitcoin?

No; Bitcoin sacrifices some of the nice features of the known possible digital cash systems in 1996 in exchange for an ad hoc sort of decentralization. Arguably, that's why it's succeeding - decentralization turned out to be more important than either high-powered security proofs or efficiency (my essay on the topic: http://www.gwern.net/Bitcoin%20is%20Worse%20is%20Better ).

Tatsuaki Okamoto has quite the crypto and coding chops:

https://www.google.com/#sclient=psy-ab&q="Tatsuaki+Okamoto"+...

http://academic.research.microsoft.com/Author/1002804/tatsua...

http://www.informatik.uni-trier.de/%7Eley/pers/hd/o/Okamoto:...

Their proposal requires a central bank. They discuss how to do "offline" transactions without contacting this central authority, but double-spending would only be detected when money is "deposited" back into the central bank.

It is worth pointing out that the double spending is not merely detected in these systems; the bank is able to compute a proof, that anyone can verify, of a particular party's guilt. This allows the bank to create a blacklist, or to use a legal system, etc.

It doesn't necessarily require a central bank, which everyone must be compelled to use, it just requires a banking system. If someone wishes to pay you, and happens to use a different bank to yourself, then your bank (whom you, admittedly, have to trust) can work on your behalf, directly with the sourcing bank, to claim the funds. There's quite good reason to trust in this system because our bank knows that the sourcing bank can identify double-spenders.

The plus side of such a system is honest bank customers still get complete anonymity, even if the banks conspire against you. The downside is you can never know if your bank is conspiring against their customers as a whole i.e. by not operating in line with their inflation/reserve policy... which of course is one of Bitcoins best features.

It doesn't solve the decentralization problem.

> Without a trusted certification authority and a secure infrastructure, the above four security features cannot be achieved, and electronic commerce becomes impossible over an untrusted transmission medium.

You right, no proof of work either

1. They are describing the invention of David Chaum

2. What they are describing has a security definition and can be proved secure. Bitcoin has no security definition, no proof of security, and is vulnerable to polynomial time attacks.

> Bitcoin has no security definition, no proof of security, and is vulnerable to polynomial time attacks.

Cite?

It is pretty hard to cite the lack of a security definition and the lack of a security proof. As for the polynomial time attack, it is describe in the original Bitcoin paper, at the end of Section 4:

http://bitcoin.org/bitcoin.pdf

It is also described here:

https://en.bitcoin.it/wiki/Weaknesses#Attacker_has_a_lot_of_...

And in this criticism by Ben Laurie:

http://www.links.org/files/decentralised-currencies.pdf

Ok, that's not an attack against the cryptography of the system, which you're original post implied. E.g, you can't use a polynomial-time algorithm to spend coins which belong to me.

"that's not an attack against the cryptography of the system"

I am not sure what you mean. What do you think this is an attack against?

"you can't use a polynomial-time algorithm to spend coins which belong to me."

In some situations I can. If, for example, you received your money from me, I can take the money from you and transfer it to someone else. The attacker can also stop you from completing transactions and stop you from receiving rewards for mining.

Again, I'm not sure I'd call a reiteration of the design criteria an attack or weakness of the system. Bitcoin was designed to operate by 51% proof-of-work consensus. It's a feature, not a flaw. It's kinda like saying democracy is broken because you could be unseated by a 51% vote.

The difference between Bitcoin's vulnerability and democratic systems is pretty clear: in a democratic system, 51% of the participants control the outcome; in Bitcoin, a single participant doing 51% of the work can control the system. It is equivalent to allowing every single voter to fill out as many ballots as they can on election night, using whatever equipment they happen bring with them.

With their records, if they didn't make it, they should at least know who did (who posted the paper, who was mining during the early days, etc...).

Not necessarily, but they were out in front of the idea in the 90's.

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