Virtual-Currency Craze Spawns Bitcoin Wannabes | Hacker News Reader

Virtual-Currency Craze Spawns Bitcoin Wannabes

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29 pointsBrandonMarc19 comments

"Some altcoins incorporate interesting new ideas, but there is an essential feature of Bitcoin which they all lack. It is not a matter of its technology, but rather of its history and community. Quite simply, a medium of exchange that is more widely accepted on the market is more useful than one which is not."

http://themisescircle.org/blog/2013/08/22/the-problem-with-a...

so uh, exactly the same problem bitcoin has vs. real currency?

Question: without regard to viability/ usefulness of the alternative coin in the long run (which the judgement for bitcoin hasn't even been reached yet), assuming that bitcoin is here to stay, will the alternative coin have any value as a tool for arbitrage? Considering that it's alot more difficult to move regular currency between exchanges, more so when they're of different currencies.

I'm not remotely an expert, or even exceptionally knowledgeable on the subject, but I don't know if I'm even sold on the idea that BitCoin is the crypto-currency to succeed.

The current implementation works pretty well, but other currencies have other advantages. Litecoin, for example, is designed to be mined on more commodity CPUs than GPUs, and has an algorithm specifically designed to deter faster GPU processing. Meanwhile, WorldCoin (WDC) is optimized for faster transfer times.

I don't know the ultimate long-term value on the former, but WorldCoin's advantage is pretty big, as currently BitCoin is too slow in transfer without slowing up the line to purchase a cup of coffee, for example.

It's possible that other currencies come out mitigating more of BitCoin's deficiencies, or maybe BitCoin can be altered in such a way that its shortcomings can be ameliorated, or maybe they aren't really so painful that they're actually a problem that needs a solution. I dunno.

Either way, I'd be surprised if the first-mover becomes the most entrenched permanently.

> I don't know the ultimate long-term value on the former, but WorldCoin's advantage is pretty big, as currently BitCoin is too slow in transfer without slowing up the line to purchase a cup of coffee, for example.

That's not exactly true. The transfer is immediate. The verification that ensures you aren't the victim of double-spend fraud takes an average of 5 minutes (during which they are waiting for their coffee). The transaction will show up as unverified on the blockchain even sooner than that, during which a future merchant could choose to not accept payment until the previous payment clears.

Even if they were successful once, the merchant could choose not to sell to them again. Considering the merchant charges on a credit card vs. the low transaction fees of Bitcoin, I would be surprised if Bitcoin didn't come way ahead in this scenario.

Fantastic. Thanks for the correction!

What if you want to buy something that doesn't require five minutes to prepare, like a newspaper from a newspaper stand on your way to work? Will you need to wait around for five minutes for the transaction to be verified or will the merchant take it on faith, temporarily, and require a way to track you down in case it's denied?

Yeah, I'm wondering the same thing. Imagine Visa/Mastercard suddenly decided, as a way to combat credit card fraud, that a human had to visually verify the transaction, and that would take anywhere between 2 and 5 minutes. It would end the use of cards in the majority of in-person transactions.

The payment gateway providers will create the infrastructure to settle payments early where needed (by relaying/insuring the risk, credit scoring, much like they do today for CCs).

In practice you may find that your starbucks coffee will take 10 minutes to buy with a newly created wallet, but comes in immediately when paid with a wallet that you've been using for a while (so it has a 'reputation').

In order to make a successful attack against a merchant accepting zero-confirmation transactions, the attacker has to:

1. Submit transaction A to miners

2. Submit another transaction B (spending the same coins as A) to the vulnerable merchant

3. This is the really hard part: make sure that the merchant doesn't know about transaction A until you got your purchase and ran away.

If the merchant has good network connectivity, it is very, very hard to perform this attack successfully, certainly not something that would be done to get a free newspaper or coffee.

Thanks for the response.

I just dug up an interesting and relevant bit of history. Here is, to my knowledge, the very first response, ever, to the original bitcoin proposal on the cryptography mailing list:

http://www.mail-archive.com/cryptography@metzdowd.com/msg099...

"For transferable proof of work tokens to have value, they must have monetary value. To have monetary value, they must be transferred within a very large network - for example a file trading network akin to bittorrent.

To detect and reject a double spending event in a timely manner, one must have most past transactions of the coins in the transaction, which, naively implemented, requires each peer to have most past transactions, or most past transactions that occurred recently. If hundreds of millions of people are doing transactions, that is a lot of bandwidth - each must know all, or a substantial part thereof."

So it appears the timeliness of verification on a large scale was possibly the very first concern ever voiced about bitcoin.

> The verification that ensures you aren't the victim of double-spend fraud takes an average of 5 minutes..

One confirmation takes an average of 10 minutes.

Average time between blocks is 10 minutes. Your transaction will be in the middle between two blocks which results in a 5 minute average wait.

No. Mining is a Poisson process. The expected time to the next block is always 10 minutes, irregardless how much time has passed since the last.

You are correct! I was confused about this

> The current implementation works pretty well, but ...

Exhibit A: HTML

Exhibit B: SMTP

Exhibit C: IPv4

If something kinda sucks, but kinda works pretty well, chances are that we'll still be arguing over it in ~10 years.

Litecoin, for example, is designed to be mined on more commodity CPUs than GPUs, and has an algorithm specifically designed to deter faster GPU processing.

Heh. That was their goal, but it didn't work. Then they redefined Litecoin as GPU-friendly and ASIC-hard. Do we believe they're right this time?

These coins are worthless. If they ever start to gain value, it would trigger the end of bitcoin. For alts that have a chance from being different from bitcoin, see namecoin, freicoin, and zerocoin.

*trigger the end of all coins, including themselves

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