Bitcoin and Digital Currencies:
edited 13th May '11 5:50:36 AM by Carciofus
edited 13th May '11 7:22:54 AM by DeMarquis
If you have 100 coins, you must have earned them somewhere, and all nodes in the network keep track of that. Which means that it is impossible to forge bitcoin, unless you can somehow manage to infect all nodes and trick them into saying that "the dude had 100 coins from somewhere" :P
edited 13th May '11 8:23:59 AM by storyyeller
edited 13th May '11 9:22:26 AM by Carciofus
edited 13th May '11 10:17:05 AM by Tzetze
edited 13th May '11 11:02:08 AM by Tzetze
edited 13th May '11 1:27:28 PM by DeMarquis
edited 13th May '11 1:30:24 PM by Tzetze
In a normal coin there will be forgotten coins, so there is a need to replace those. There is also the silly idea of infinite growth.
Since nothing can be lost by definition(read: make a alogrythm that allows coin lost for long enough to be regenerated), then you have beat the first problem.
The second problem is beaten by the purpose of bitcoin: A online currency to act as something to replace paypal and lots of other instances. Something like wiipoints, or other stuff, except it is meant to be a currency.
However lets say your computer crashes, and you do not figure out a way to recover your wallet.
Then those coins will be "lost", and must at some point be "renerated".
The "banks" trick is to create large enough nodes, and enough backup nodes to make sure that some ludricrus must happen for a bank to obtain damage.
edited 13th May '11 2:44:04 PM by Carciofus
edited 13th May '11 2:57:45 PM by DeMarquis
edited 13th May '11 3:15:11 PM by Carciofus
Basically the transactions would go trough bitcoin, and then exchanged into normal money, and then stashed on your bank account.
Now, the advantages is that you do no longer have paypal doing questionable things, but instead you have a mechanism that works only the way it is written to. That means the initial room for abuse by the 3rd party is removed.
Any fraud is not removed, but the frauds reliance on a corrupted questionable entity is.
Another advantage is that nothing can actually block it, which means that you can not have a 3rd party deny donations to something, or deny transactions.