Ametrano 2 Understanding Lags Well Behind The Hype Understanding of the technology however lags well behind the hype, amongst practitioners, policy makers and industry commentators alike.
Consensus in a distributed network with faulty or malicious nodes is a very primo bitcoin capital corp problem known as Byzantine General Problem Nakamoto reaches consensus using game theory economic incentive for the mining nodes to be honest Miners bitcoin ppt download compensated for their proof-of-work using seigniorage revenues, i.
No bitcoin No asset available to reward miners Appointed validator officials required Why should validators use a blockchain, i.
It is scarce in digital realm, as nothing else before It can be transferred but not duplicated i. Why onlyMonday-Friday, two days settlement? Who and when will gift humanity with a global instantaneous free p2p payment network?
Blockchain transactions are immediately validated and cleared, then settled shortly thereafter, automatically without a central authority In the financial world, cash transactions only are cleared and settled automatically without a central authority 12 Consensus by reconciliation Financial transactions that take milliseconds to execute, clear and settle in days Not a technological problem Consensus by reconciliation of multiple independent ledgers: a checks and balances system that allows for prescriptions, corrections, and restrictions 13 The Mirage of Low Operational Costs If one takes into account the seigniorage revenues invested, each transaction on the bitcoin blockchain has a cost of about USD Cheaper forms of consensus have not been proven yet Even in the case of basic bilateral consensus through digital signatures something hardly innovative or disruptive Which consensus model?
Central governance: back to DB admin What if the single authoritative data source is hacked? Which reference can be used to fix it?
What consensus is required? Such a fingerprint can be associated to a bitcoin transaction irrelevant amount and hence registered on the blockchain Blockchain immutability provides non-repudiable time-stamp, proving existence of that data file in that specific status at that moment in time.
This process is undergoing standardization: third party auditability makes it suitable for regulatory prescriptions See 18 Anchoring: A New Bitcoin ppt download Paradigm Bitcoin blockchain network security is preserved by a computation power unparalleled in human history Other transactional networks can tap into this security via anchoring i.