Ideal Properties of Digital Commodities
Inspired by the thread: http://www.bitcoin.org/smf/index.php?topic=2966.0
Ideal Properties of Decentralized Digital Commodity
If we had the ability to design and implement an ideal form of digital commodity money, what would it look like? How does Bitcoin currently compare?
it might seem like some of these things are mutually exclusive, but time and time again humans have made the "impossible" possible, so feel free to think hypothetically here.
| Property | Ideal Implementation | Bitcoin's Current Rating (A..F) | Notes |
|---|---|---|---|
| Decentralized | no single point of failure or issuing authority | A. | |
| Scarce | required to be a reasonable store of value | A. | |
| Divisible | should be as close to infinitely divisible as possible | C. | |
| Storage | actual commodity should be cheap and easy to physically store securely | A. | |
| Irreversible Transactions | transactions should be irreversible | B. | irreversible after an hour, often not acceptable wait time |
| Anonymous | untraceable transactions (if desired) | C. | currently requires some trusted third party to obsfucate transactions |
| Unspoofable | should be exceedingly difficult to counterfeit | A. | |
| Verifiable Funds** | publicly auditable balances, with account holder's permission, to verify funds before making a transaction or make sure that a third party has not moved your funds | C. | since permission is not required |
| Gratis Transactions | transactions should be gratis, or nearly so, forever | D | bitcoin future tx fees are certain, but could remain low |
| Unique Use-Value? | ideally a commodity should have a unique non-monetary use-value | D | BTC is the only currency that can be used to pay for storing data in the block chain, which is useful for secure timestamping. Competing block chains would probably not have the required incentives for generating that Bitcoin does. |
| Offline Transactions | ideally two participants should be able to safely transact without requiring internet access or trust of one another (like normal cash) | F | Not securely possible with Bitcoin: double-spending is always possible without Internet access |
| Speed | ideally transactions would be instantaneous | D | currently bitcoin is fast enough only for shipments; anything faster than an hour on average requires compromising security |
| Scalability | usable for every transaction everywhere in the world | C | currently there is a lack of lightwieight and offline bitcoin clients (if such a thing is even possible) to replace the need for conventional cash |
\**May not be a necessary property. Thinking it would be cool if a known address could be audited via a tool like blockexplorer.com but if the coins are moved from that address, they are untraceable.