Ideal Properties of Digital Commodities
Inspired by the thread: http://bitcointalk.org/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||B.||2,100,000,000,000,000 individual units (2.1 Quadrillion); if necessary this could be increased with the agreement of miners and clients.|
|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. Mostly irreversible even before then, especially with the right precautions.|
|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)||C||Bitcoin can be used in off-line transactions using physical representations, like Casascius physical bitcoins and Bitbills, that give parties an assurance, through producing tamper evidence upon redemption, that the bitcoins they represent have not been spent. With computers but no internet access, transactions can be constructed for publication when either party gets online.|
|Speed||ideally transactions would be instantaneous||B||For large values, bitcoin is fast enough only for shipments; anything faster than an hour on average requires compromising security. For small transactions, bitcoin can be practically considered instantaneous since the security risks from an unconfirmed transaction are low|
|Scalability||usable for every transaction everywhere in the world||A||The existence of lightwieight and offline transactions (e.g. Casascius Coins and Bitbills) can replace the need for conventional cash|
|Stability||value in the future is predictable, within reasonable bounds||D||Bitcoin value is highly volatile, with no mechanisms to encourage stability or avoid bubbles. Supply is pre-determined, which eliminates some uncertainty from future value.|
\**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.