[136764] in cryptography@c2.net mail archive
Re: Bitcoin P2P e-cash paper
daemon@ATHENA.MIT.EDU (Satoshi Nakamoto)
Sun Nov 2 20:56:16 2008
Date: Mon, 03 Nov 2008 09:37:43 +0800
From: "Satoshi Nakamoto" <satoshi@vistomail.com>
Reply-To: satoshi@vistomail.com
To: jamesd@echeque.com
Cc: cryptography@metzdowd.com
>Satoshi Nakamoto wrote:
>> I've been working on a new electronic cash system that's fully
>> peer-to-peer, with no trusted third party.
>>=20
>> The paper is available at:
>> http://www.bitcoin.org/bitcoin.pdf
>
>We very, very much need such a system, but the way I understand your=20
>proposal, it does not seem to scale to the required size.
>
>For transferable proof of work tokens to have value, they must have=20
>monetary value. To have monetary value, they must be transferred withi=
n=20
>a very large network - for example a file trading network akin to=20
>bittorrent.
>
>To detect and reject a double spending event in a timely manner, one=20
>must have most past transactions of the coins in the transaction, which=
,=20
> naively implemented, requires each peer to have most past=20
>transactions, or most past transactions that occurred recently. If=20
>hundreds of millions of people are doing transactions, that is a lot of=
=20
>bandwidth - each must know all, or a substantial part thereof.
>
Long before the network gets anywhere near as large as that, it would be=
safe for users to use Simplified Payment Verification (section 8) to ch=
eck for double spending, which only requires having the chain of block h=
eaders, or about 12KB per day. Only people trying to create new coins w=
ould need to run network nodes. At first, most users would run network =
nodes, but as the network grows beyond a certain point, it would be left=
more and more to specialists with server farms of specialized hardware.=
A server farm would only need to have one node on the network and the =
rest of the LAN connects with that one node.
The bandwidth might not be as prohibitive as you think. A typical trans=
action would be about 400 bytes (ECC is nicely compact). Each transacti=
on has to be broadcast twice, so lets say 1KB per transaction. Visa pro=
cessed 37 billion transactions in FY2008, or an average of 100 million t=
ransactions per day. That many transactions would take 100GB of bandwid=
th, or the size of 12 DVD or 2 HD quality movies, or about $18 worth of =
bandwidth at current prices.
If the network were to get that big, it would take several years, and by=
then, sending 2 HD movies over the Internet would probably not seem lik=
e a big deal.=20
Satoshi Nakamoto
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