Why do you say that?  Pretty much every P2P system works by replicating the information across all the participating nodes, even 100G movie packs for BitTorrent - we're talking about less than a kilobyte of information for a transaction.

 

This seems like a great idea but I also don't understand how it will scale? I'm assuming the goal of bitcoin is to be at least as big as paypal right?

I see 3 scaling issues:
1) Having every node need to know about all transactions that happened ever.
2) Keeping the network connected
3) Amount of coins scaling with increased economic activity.


1) This seems like the biggest issue. Is the hope is that bandwidth and storage will keep pace with the number of transactions? Like the OP said paypal has millions of transactions a day. This will totally clog a lot of users bandwidth if they all have to be notified of each transaction.
Is the plan to eventually have the chain drop off old blocks? or is there a way to split the chain into parts so only part of the network has to keep track of certain span of coins.

2) What happens when there are a few million concurrent users? everyone connects to IRC still? (Granted this is fixable as the network grows since it seems outside of the whole block chain system)

3) You have this clever method of slowly introducing coins by time but time isn't really the important thing. Shouldn't the amount of coins in circulation be proportional to the amount of users?  If you want to avoid inflation & deflation the number of coins shouldn't the number of coins be proportional to the number of users or number of transactions or some other metric that is closer to the size of the economy?
(Also I was able to figure out how/why the 21 million number was chosen?)

1 & 2 could be solved by using a distributed hash table:
You should really look at http://en.wikipedia.org/wiki/Kademlia
I haven't looked lately to see if someone has come up with a better distributed storage system but it was by far the best solution a few years ago. (and I've implemented it before if you have questions)

1) Actually, from what I read in the PDF, I don't think it's necessary. It only needs to know that a transfer of *this* coin from Owner A to Owner B was valid. It doesn't matter if 1 year ago, Owner C gave Owner A that coin.

2) It's P2P, someone out there will be connected. I run a 24/7 Dedicated Server just for Bit Coin now on a Fiber connection. Not because I work with them, but because I see the need to donate the resources for the cause.

3) Don't let the 21 million limit fool you. It's more like 21000000.00000000 limit because the coin is so divisible, but for sanity reasons, it would make sense not to be trading coin in the Quadrillion Bundles 

I think we need to be clear to separate inflation/deflation from supply/demand.


What is the value of bitcoin? It has value only in that people perceive that it has value (the same as any fiat currency). Perceptions change all the time. If you want to see how this plays out look at the currency exchange market today. The value of bitcoin will float over time as supply and demand for it ebbs and flows. The important point is that the supply is fixed (once most of the coins are in circulation) and this serves to protect the value of bitcoin. Inflation erodes the value of currency and punishes savers; its a type of tax.

Perhaps this thread would be more appropriate in the economics forum.

I don't know that it's valid to say there is a fixed supply of bitcoins, because as has been discussed elsewhere in the forums, lost coins (lost/stolen wallets, hoarded coins on never-to-connect-again machines, etc) will not be recoverable in any way. So there's a cap on the number of coins that can be created over the lifetime of the currency, but the amount of bitcoins in circulation will not be fixed, as there will inevitably be lost coins as time goes on.

Now the divisibility of the coins is, as I understand it, what helps to insulate the currency against crazy deflation... but the economic discussions usually elude me, so I'm not 100% positive on that.

That is a good point, one I didn't think about.  So, let me think out loud here. There are a possible 21 million coins. Every time a block is generated by someone, they earn 50 coins. Right now, I see 66,618 blocks have been generated since the beginning. So that's 66618 x 50 = 3,330,900 coins so far. To reach 21 million, we need to reach 21,000,000 50 = 420,000 blocks. 66,618 blocks take up about 56 megabytes of hard disk space. So, perhaps 420,000 blocks (if every single coin is created) would take up about 420000 x 56 66618 = 353 megabytes of hard disk space.

The rest would be transaction history to make sure the owners are valid and older transactions are pruned after a while, so perhaps at full scale, this application could eat up as much as 1GB of hard disk space. So, someone correct me if I'm wrong, but even at full scale, the clients would need about 1GB of hard disk space to contain a fully generated coin network?

From what I read in the release notes, the IRC is just a bootstrap, the new version can work around IRC failure as it has an alternative (but slower) ways to sync up the first time users to the network.

Well, imagine if you will, the US and our national gross. It's somewhere in the multi-trillions last I heard. So, if everything had to be converted to dollars, that would be a trillion dollars in circulation (ignore how a complex system like a countries currency, this is way over simplifying).  No imagine all of that was to be transfered into Bit Coins? Well, there are only 21 million Bit Coins, so a 1 to 1 conversion is out of the question. Basically it would have to be scaled back to the decimal points (probably 4 places) to fit all of that in. That still leaves 4 more decimal places in which any economy working in the Quadrillion range is probably out of scope of any country in the world (or all countries combined really)

So, if you don't think of a 1 to 1 conversion for Bit Coins, because even I want to think of Bit Coins as dollars for example. But it isn't. It is it's own currency within itself whose value is only dependent on the people that use it and what value they give it. It's like that for any currency really, the only difference is, instead of the bank or government in XYZ country being the one who controls how it's created and distributed, WE *all* control how it's created and distributed.

We are *minting* the coin (through CPU cycles to generate the encryption hashes) and at the same time using it for trade and value. The only difference is, this isn't a USA currency or a Swedish currency, it's all completely electronic. The bank, the teller, the minting; is all of us at the same time. Basically, all of our clients have agreed upon certain rules to follow and as long as each client follows those rules, it can participate. Any client that doesn't (through hacking, cheating, etc.) is basically ignored by the rest. It's like playing a game of soccer where you have two teams competing and one guy just up and grabs the ball, runs down to the other side and throws the ball in. Dances up and down that he scored a point. Well, everyone else will just ignore him and his point, he wasn't playing by the set rules.  

I will second this. I am investigating whether this is a project I want to invest time and energy into (I am a professional C++ developer) as I see the potential for a revolutionary technology. However if the solution doesn't scale to millions and millions of transactions per-day (and a very large number of blocks) I fear this solution is destined to become more of an interesting research project rather than something that will have longevity and practical usefulness.

From the pdf:
"A block header with no transactions would be about 80 bytes."
and
"Once the latest transaction in a coin is buried under enough blocks, the spent transactions before
it can be discarded to save disk space."

so 80 x number of blocks + average transaction size * number of transactions.

Practically, from my disk:
77428 transactions in 66663 blocks is about 46,752,464 bytes.
which works out to about 600 bytes per transaction (including block headers + database overheads)

Is this possible? What would this look like? From a technical perspective what does a "lightweight client" look like for you? My understanding is that the Bitcoin client needs the entire block chain in order to establish trust.

I am just thinking out loud here...

Although the peer-to-peer model is certainly novel perhaps it seems to me to be somewhat utopian. Bear with me for a minute here (I am not trying to troll). Consider banks. Banks have a system whereby they can work together efficiently. I take take money out of a ATM from bank X even though I bank with bank Y. Banks loan money to each other. They are generally cooperative. Instead of every Tom, Dick & Harry having a Bitcoin client on his/her PC (or smartphone) participating in an open P2P network, perhaps there is a collection of Bitcoin "banks" who provide the service of hosting and "peering" the Bitcoin block chain. These are large enough organizations that they can afford the bandwidth and hardware needed to maintain an infinitely long block chain with a million (or more) transactions a day. These banks would still be peer-2-peer, and hopefully also completely open. Ideally anybody could participate in the peer-2-peer network, its just that the average person won't because of the barrier to entry. These banks still operate using the same fundamental technology we have to day. All of the beautiful facets of Bitcoin are preserved, except that the number of active participants is somewhat reduced. Anybody that _wanted_ to participate still could.

The problem remaining would be the typical "last mile" problem. How does Tom (or Dick or Harry) perform transactions? Well the issue becomes much more straight forward at this point. Now the trust only has to be between two parties (the "bank" and Tom). This really becomes more of a proxy issue. Now Tom has to send a transaction request through his "bank". It might even be possible to bake into Bitcoin a protocol for proxy transactions.

Anyway...This is just my 2 cents. I would really like a tangible answer to this problem because it seems foundational to the success of this endeavor to me.