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Comment by eximius | Hacker News Reader

Really interesting and great work, but it by no means solves the 'coffee customer' problem.

A basic presupposition of this protocol assumes that there exists an address in your control with the exact amount of funds you wish to send. If there isn't, that money has to still come from somewhere, which is the On-block transaction we wanted to avoid.

So, we can transfer pre-existing funds Off-chain very quickly, but quickly setting up new addresses with funds is still fundamentally not possible. This protocol has uses but it doesn't solve the big problem it claims it does.

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Ideally, one would combine the protocol with some sort of address exchange criteria. You hold an address with $100 worth of bitcoins. The coffee costs $2. The coffee shop holds an address with $98 worth of bitcoins. You initiate the transaction, effectively swapping the addresses and paying for the coffee. Of course, this presupposes a preset group of prepaid addresses. But what is to stop ys from generating hundreds of prepaid addresses (other than the required finances of course), each ranging from say $50 to $120, and promoting their their general circulation, for the purposes of easier exchange?

mainly the finances. also you'd be copying the structure of current monetary denominations. which may or may not be a bad thing, but I don't see it catching on.

a more likely scenario is said server acting as an payment processor by making a promise to the vendor that 'this address WILL have $x.yz monies in it'. the customer would then either have to prepay the 3rd party or give them information for traditional debt collection purposes.

So, this could be good for paymemt processing. maybe. i havent thought about it for long.

you could also "make change" by exchanging ownership of the $100 address for 5 $20 addresses, and change those down into 10 $2 addresses each. there's very little cost of executing this algorithm several times over for a "single" purchase.

There are problems possessing 10 $2 bitcoins, due to the minimal transaction fee (approximately $.20). Reclaiming the value (putting back On-Blockchain) of $20 worth of $2 dollar addresses will cost you 10%. Then again, %10 is how much Coinstar charges to turn loose change back into dollars. Still, a better alternative is this; replace Bitcoin with a lower-denomination Altcoin (Dogecoin?) to cover preset currency addresses below a certain amount. Dogecoin's transaction fee is negligible, so the reclaiming cost is no longer an issue. Though Dogecoin's fluctuations demand some level of, the lower-denomination restriction makes these fluctuations negligible (By which I mean this; A quarter is more likely to fall out of your pocket than a $10 dollar bill out of your wallet. However, the quarter's ease of use is more important than its potential loss of value, which is relatively negligible when compared to the $10 bill)

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