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The blockchain must record the "spent" bitcoins or they can be spent again. Hence the requirement for an ever lengthening blockchain and time delays.

One solution proposed is that there be no verification at all for small purchases, like coffee or sandwiches type of sales.

That might work in a totally honest society, but unfortunately that isn't the reality.

The word would soon get out and many people would be "double spending" bitcoins. Businesses wouldn't be inclined to adopt the trust principle.

Preventing "double spending" is the whole purpose of the blockchain as described in the words of Satoshi Nakamoto and his fellow developers.

We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU proof-of-worker. As long as a majority of CPU proof-of-worker is controlled by nodes that are not cooperating to attack the network, they'll generate the longest chain and outpace attackers. The network itself requires minimal structure.

Satoshi and the other developers failed to recognize the problem of an ever expanding blockchain. If the blockchain is too long and requires too much time to verify transactions today with a relatively small amount of transactions, imagine the length of the blockchain and time delays that would be required if bitcoins were processing the volume of transactions by a company like VISA which handles 4,000 transactions per second.

Also of note......every transaction of bitcoins requires verification by human "miners". How would one scale that up to VISA transaction levels ?

There is no viable solution that doesn't make it more complicated than it already is......and that is too complicated for most people to bother with.

 

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As to the "trust" system of not verifying small transactions......companies quickly learned the folly of "trusting" customers when they offered "one hour delivery or free" as a guaranteed service.

When I was delivering, companies who offered that guarantee were inundated with calls for large orders of food at the busiest times in the worst weather......when it was a virtual guarantee that delivery would not be possible in one hour or less. People ordered and if the food arrived on time......they didn't answer the door. If it was late......they claimed the guarantee. It was a no-lose situation for the grifters.

Any company that currently guarantees the delivery in one hour has a long list of restrictions, which basically boil down to........not if they don't want to.

People who underestimate the level of fraud and theft in their business.........won't be in business long.

Guarantee Policy for Pizza Pizza. See......restrictions.

Guarantee Policy

 

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Who would conduct dispute resolution on the Ethereum protocol ? Who would reverse transactions ? How long would transactions take to verify ? Who absorbs losses due to fraud ? How does a customer pay recurring charges ?

These are all actions that VISA currently conducts. People "trust" VISA because they have a long successful history of these services.

They are actions that bitcoin doesn't conduct at all. Once the bitcoin is spent........goodbye.

Will Ethereum be any different than bitcoin in that regard ?

If so, maybe there will be some progress in crypto currencies, but it is going to take awhile to convince consumers.

 

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VISA has been applying for US patents on digital currencies since 2015. The latest patent filing reveals their interest is in creating their own digital currency.

In mid-2020, the U.S. Patent and Trademark Office made public a patent filling done by Visa in November 2019. The patent relates to a “digital fiat currency.” It covers a process on blockchain by a central entity computer to create a digital currency. The central entity computer generates the digital currency for the denomination and links to the serial number.

In addition, Visa has been engaging with policy makers and organizations to help shape the dialog and understanding of digital currencies. Visa along with other participants is working with the “World Economic Forum on a set of policy recommendations for central banks exploring the concept of Central Bank Digital Currency (CBDC).”

 

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The US Treasury had a hacking attempt and every US intelligence agency jumped in to investigate immediately.

A bitcoin exchange gets hacked and nobody cares, except for those losing their money.

It shows what the US government considers important and not important.

 

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But........bitcoin is valued at $20,000 each so that is where all the interest appears to be.

Bitcoins have no value without the blockchain. Blockchain has value but isn't valued separately. Nobody owns the blockchain or pieces of it.

Visit the bitcoin discussion websites and all they talk about is HODL (hold on for dear life) to gain the vast riches when people are "forced" to buy their bitcoins to use. This is the whole concept upon which the scarcity value is based. Only 21,000,000 bitcoins and the owners will become rich from consumer demand for their bitcoins.

I doubt that companies will put themselves into that position and will simply create their own tokens, as companies are already doing.

VISA and other companies have filed all kinds of US patents on their own specific use plans. They want to usurp the blockchain technology for their exclusive use, so they can profit from it.

I would say if you want to invest in digital technology.......buy VISA shares. These mammoth companies are going to flatten coin speculators.

 

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Consider the effects of a single announcement from the World Economic Forum about an agreement among nation's central banks that a globally accepted digital coin will be created and used by all countries. According to VISA those plans are already in progress.

That would make Bitcoin and all the other digital coins worthless. It reminds me of the story of the scorpion and the frog and VISA is the scorpion.

 

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Huh ? Governments have no interest in creating or allowing an "untraceable" currency. The last thing they want is a method of hiding taxes or criminal activity.

All it would take to crush digital coins is for the government to make them illegal to use.

The only people who would risk a felony criminal charge are the criminals.

 

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A globally accepted central bank issued digital coin is the most probable scenario that I can envision happening.

Technology advances quickly though.......so who knows.

 

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Regulated, stable value, government backed, globally accepted, ability to reverse transactions, less security required for fewer intermediaries.......

And......governments desire to collect transaction taxes, so the transactions have to be transparent to them.

 

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Paper money is legal tender. Businesses are required by law to accept it as payment for goods and services.

I also fail to see how a non-reversible transaction is good for consumers or why they would want it.

That is like an "all sales final......no refunds or exchanges" policy in a store.

Retailers have tried that in the past and found out their customers went elsewhere. Companies today advertise their open refund policies.

Bitcoin has been around for 10 years. A few retailers did set up to receive bitcoins as payments. They have largely dropped the method of payment since.

It doesn't matter to me if people continue to "buy" Bitcoins or whatever coin is in fashion, except perhaps when it is used for dangerous illegal activity.

That seems the main purpose of digital thus far..........see Silk Road story.

Ross Ulbricht is the main story, but his dark web site had tens of thousands of criminal participants.

With a double life prison sentence plus 40 years and no probation........the government showed who carries the big stick.

When they want to shut down crypto and their networks.........they will.

Ross Ulbricht - Wikipedia

en.wikipedia.org

 

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Central Bank Digital Currency (CBDC)

Central Bank Digital Currency (CBDC) is the digital form of a country's fiat currency, which is regulated by its central bank.

www.investopedia.com

 

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I hope poor people cash out and get rich from venture capitalists money buying their bitcoins before it all comes crashing down.

It would be wealth redistribution at it's finest. That Satoshi fella........a true socialist hero.

 

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The Trump administration (Treasury) has proposed new legislation that requires the exchanges to provide identification for all transactions over $3,000.

Both the sender and receiver information of the transactions will be required, names, addresses, dates, amounts, and purpose of the transactions.

The US government is saying it is to reduce money laundering, terrorist activities, and avoidance of US sanctions.

Surprisingly, Bitcoin prices barely budged on the news. It will create a lot of extra work from the exchanges though.

It might be one step closer to making unregulated digital currencies illegal.

US Treasury Unveils Stifling Crypto Wallet Regulation — Experts Break Down the Rules – Regulation Bitcoin News

The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury Department, has unveiled its proposed rules on transactions involving cryptocurrency wallets. Experts in the crypto community have weighed in on what the new proposed regulation means, what crypto owners should do...

news.bitcoin.com

 

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Biitcoin does appear to be trending down at the moment, but it is interesting to watch the buys and sells for awhile.

I watched for a bit and didn't see a single transaction involving 1 bitcoin. They are all trades involving tiny fractions of a bitcoin.......like 0.002 or 0.004.

How much does that translate to in US dollars for those trades ?

EDIT......so I looked it up and at current prices of $23,700 USD..... 0.002 represents about $50 US. The trades appear to be between $50 and $200 mostly.

This must be all the small fry getting in and out.

Bitcoin Ticker - Tick by tick - Real time updates

bitcointicker.co

 

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True story for those interested......

I was in the dealership a couple years ago buying a new vehicle. I was standing in the display area and they were prepping a brand new Corvette.

My salesman walked up and I said......nice car, some old guy with money I suspect ?

He said no.......he actually had sold the Corvette and a luxury SUV to a young guy in his 30s.

He said the guy was an IT software expert and when bitcoin exchanges started up they needed the trading software for their websites.

They offered him a contract to build it, but he declined and said he would build it for a tiny fraction of the fees from every transaction.

The exchange agreed and he gets a tiny fraction of the fees on all their transactions 24 hours a day.....every day.

Bitcoin has been very, very good to him.......

 

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But with Bitcoin, the mining that started out decentralized has become increasingly centralized with the introduction of massive mining farms.

These mining farms will control the mining and verification process and assign the fees they want to charge.

I don't think "decentralization" is a valid debating point anymore.

 

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Another problem is with the highly volatile value of bitcoins, but if bitcoins had a stable price nobody would buy them and supply would exceed demand..

People buy bitcoins expecting them to be more valuable in the future. They won't be interested in buying them if they are worth the same or less in the future.

Without a stable price bitcoins are useless for financial contracts. How would a person borrow 100 bitcoins today valued at $24,000 each and pay back 100 bitcoins over time in the future....without knowing what the bitcoins would be worth along the loan period ?

So bitcoins need both a volatile and stable price at the same time. It is a conundrum that hasn't been solved.

The people benefiting from bitcoins are the whales who own millions of them and are fabulously wealthy now. How many bitcoins are owned by the top 100 wallets and how many people own those 100 wallets ? Nobody knows the answer to those questions.

I also heard a comparison of transactions in dollars between Bitcoin and Paypal, claiming Bitcoin transaction dollars dwarfs Paypal transaction dollars.

The problem with that comparison is that Paypal transactions are between a consumer and a vendor......real business transactions.

Bitcoin transactions are between people buying and selling to each other, and can easily be manipulated by people transferring them between many wallets to give the appearance of many transactions.

 

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Nobody would agree to open ended contracts such as that. Neither party would know how much 100 bitcoins were worth in the future.

PS......the above statement isn't entirely correct. Some wealthy people may arbitrage that trade and "short" bitcoins for a profit.

Interesting that Peter Schiff accepts bitcoins as payment to buy gold from his company, but he only accepts the cash after the bitcoins have been cashed in to US dollars by a third party. He says virtually all companies that accept bitcoins as payment do the same.

So, they are basically happy to attract more customers but still want the US dollars as payment.

Therein lies a huge problem for bitcoin they have been unable to solve. All retall transactions are essentially in fiat dollars.........not bitcoins.

Most bitcoin transactions are transferring ownership of the bitcoins or moving them around to different wallets.

 

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I think the fiat system is going to fail at some point, but the solution isn't going to be a digital currency based on those failed fiat dollars.

More likely it will be a complete economic structure change to Modern Monetary Theory or a return to the gold standard.

Personally, I think a return to the gold standard would be the better option, because the currency would actually be backed with "money" that has real value.