
Some ideas for native Bitcoin apps - livestyle
http://cdixon.org/2014/10/04/some-ideas-for-native-bitcoin-apps/
======
Animats
Bitcoin can't handle micropayments. The block chain is limited to about 7
transactions per second, and every node has a full copy of the block chain, so
traffic goes up roughly as the square of usage. There's a minimum fee for each
transaction (if you want it confirmed in any reasonable length of time) and
it's currently about $0.30. That's more than many merchants pay to process a
credit card transaction.

Nor can Bitcoin handle fast payments. It takes about an hour to get solid
confirmation of a transaction, by which time the price of Bitcoins may have
changed substantially. If you're selling anything that actually costs you
money, you have to wait for some confirmations. One gambling site tried
accepting unconfirmed transactions. People would bet, then, if they lost,
double-spend to kill the payment.

A distributed digital currency without these problems is technically possible.
That may be the currency that actually becomes useful for micropayments.
Meanwhile, Bitcoin for vending machines, music tracks, and parking meters
isn't going to happen.

~~~
Hermel
Allow me to correct a few of your misconceptions:

> Bitcoin can't handle micropayments. The block chain is limited to about 7
> transactions per second,

Note that this is not a technical limit, it is an arbitrarily set parameter.
Gavin argues it could be increased at least 1000-fold with more professional
infrastructure over time. Even with a tenfold increase, an average PC with
mediocre broadband could still process every transaction ever. I'm confident
that as soon as the need arises, this limit will be increased.

> and every node has a full copy of the block chain, so traffic goes up
> roughly as the square of usage.

That's not true, traffic goes up linearly with the number of transactions. If
there are twice as many transactions, twice as much data needs to be sent
around in the network. It is also linear in the number of full nodes running -
but most users do not run a full node.

> There's a minimum fee for each transaction (if you want it confirmed in any
> reasonable length of time) and it's currently about $0.30. That's more than
> many merchants pay to process a credit card transaction.

Wrong again. At the moment, the recommended minimum fee is 0.03 USD, or 0 for
high-priority transactions (those who move large amounts or old coins). It
used to be 0.001 BTC, but that was reduced to 0.0001 BTC. Also, most merchants
have to pay much more than 0.30 USD to process credit card payments.

> Nor can Bitcoin handle fast payments.

Firstly, when looking at throughput (how many times can the same Bitcoin be
spent per day), Bitcoin beats all existing payment systems by a wide margin.
Even with SEPA, which is praised to be very fast, you can resend the same euro
to a new account at most once per business-day or about 20 times per month. A
Bitcoin, however, can be moved thousands of times per day (assuming movements
between trusted parties) or dozens of times per day between untrusted parties.
So regarding throughput, Bitcoin is the clear winner.

Secondly, there is the time it takes until the money arrives with certainty.
For credit card transactions, that time is 60 days. For bank transfers,
settlement is T+2 days. That means if you send 100 USD from a Lehman brothers
account to a BofA account on Monday, and Lehman goes bankrupt on Wednesday,
you won't receive anything. With Bitcoin, it takes about an hour to reach that
level of certainty.

The problem you are referring to is that by colluding with a miner, someone
could issue a competing second transaction that invalidates the first.
Fortunately, such attacks require effort and are perfectly detectable. So if
not much is at stake, one can accept a transaction as soon as it has spread to
the relevant miners. For example, when you order a coffee in a restaurant, it
is much easier to simply walk out without paying than to try to launch such an
attack.

> Meanwhile, Bitcoin for vending machines, music tracks, and parking meters
> isn't going to happen.

Exactly for those applications, it is safe enough. None of them is 100% safe
anyway: vending machines can be fed with fake coins, music tracks can be
pirated, and parking meters can be ignored (betting that the police won't
check them). In all those cases the effort to cheat with traditional means is
smaller than that of colluding with a majority of miners (and you need a
majority for a reasonable rate of success).

~~~
the_mitsuhiko
> That's not true, traffic goes up linearly with the number of transactions.
> If there are twice as many transactions, twice as much data needs to be sent
> around in the network. It is also linear in the number of full nodes running
> - but most users do not run a full node.

How does that make sense in a peer to peer environment?

~~~
Animats
Traffic is number of transactions times number of full nodes. That's why
there's a scaling problem.

------
derefr
> 2\. Allocating bandwidth, storage, compute.

Before Bitcoin was a thing, I was thinking about the Erlang VM's "reduction-
counting" processing paradigm, and noticed that it was a lot like having a
dom0-scheduler "treasury" with domU-process "citizens", where each citizen
gets paid a basic income every scheduling interval, and then can spend it to
"purchase" time-spent-aware on a virtual core.

In Erlang's model, processes lose whatever they don't spend in a given
interval—this is necessary to prevent a process from "saving up" and then
blocking the VM for seconds at a time. However, if rather than putting a cap
on wealth, you just cap _spending per interval_ , then processes could do lots
of other clever things with their income: trade it, invest it, spawn subagents
that consume it, etc. This would be a very interesting platform for running
goal-directed AI agents on: somewhere between Core Wars and Heroku.

Now, if the only "ledger" of reductions was in the local dom0, you'd have
nothing more than a toy server: a sort of fishtank for agents to interact
within. But throw a blockchain at the problem, and now agents could pay to
spawn sub-agents (or copy themselves) anywhere that'll take their dom0's
currency.

Interestingly, since cryptocoins are all pretty fungible, this would imply
that the "intelligence" of an AI—or of a hypothetical Hansonian brain-
emulation, for that matter—could be measured in units of dollars-spent-per-
second.

~~~
lpgauth
Cool idea, the only problem I can see is how you define a reduction. In the
Erlang VM a reduction is kind of a magical unit... and not a reductions are
created equal.

~~~
derefr
I think the definition of a reduction (in terms of what it buys) is allowed to
be pretty much arbitrary while still having an effective distributed economy
emerge on top of it. Think of it as a communist state that both issues
currency, and sets arbitrary prices for all state-produced goods in terms of
that currency. In one state, a loaf of bread (or a multiplication) might be
worth $1, and a hamburger (or a network message send) $5; in another state,
the costs might be reversed. This would shake out as

1\. exchange rate nash-equilibria between dom0s, determined by their "monetary
policies";

and 2. spawning of subagents on dom0s with better cost-structures for the
particular tasks they're assigned to accomplish. (If you're doing a lot of
network IO, you'd want to delegate that part of your job to a place where
network IO—after currency-conversion—is cheap.)

~~~
lpgauth
Right, if reductions are market based then yes, it would work.

------
bitsweet
I think this is a great post. I do wish it covered some of the other Bitcoin
2.0 concepts since it can do more then just efficiently moving small amounts
of value around. Many think that concepts like smart contracts and fractual
ownership (e.g. Reddit's recent announcement) require new altcoins, metacoins,
or ethereum but don't realize Bitcoin can natively supports them too. There
are already open source colored coin [1] APIs that allow anyone to model
ownership of anything on the Bitcoin Blockchain, without any intermediary
currency.

[1][http://coins.assembly.com/](http://coins.assembly.com/)

(disclosure, helped create this ^)

~~~
artia
Awesome points. See my other post above, there's a link to you in that post

------
eterm
Micro-gambling Peer-2-peer gambling Webcams

The real wonder is why haven't any of the major players in these areas adopted
it in any way. Curiously it is the payment provider industry who has paid it
some attention, rather than any of these.

Perhaps the traceable nature of bitcoin makes it unappealing for these use
cases. In the early days of bitcoin where it was relatively easy to get
anonymous bitcoins (by paying cash through unscrupulous dealers not paying
attention to KYC rules), these would have made great use cases for bitcoin.

Now however, I feel like bitcoin doesn't provide relative anonymity over more
traditional methods of payment.

I think there could still be a case for a new mail-like protocol that combines
email and cryptocurrency for an email system which is both encrypted by
default but also everyone sets a payment level for mail to reach them.

So I say "My Address is <bitcoin address? mail address?>, pay at least 0.001
bitcoins to get mail through".

This system:

    
    
       *Puts a direct cost on spam (therefore massively reducing it)
      *ensures everyone owns private keys (so mail can be encrypted simply by knowing their address)
    

Two fantastic features.

Sadly it won't happen, mail is too entrenched.

~~~
yuvipanda
I'm always wary of email/spam solutions that require 'payment' of some form.
See
[https://craphound.com/spamsolutions.txt](https://craphound.com/spamsolutions.txt)
for a lot of reasons (in particular, Unpopularity of weird new taxes, Public
reluctance to accept weird new forms of money, Ideas similar to yours are easy
to come up with, yet none have ever been shown practical, Countermeasures must
work if phased in gradually, Sending email should be free)

~~~
eli
It also makes it suddenly expensive to run a decent sized email list. For
security announcements, say.

~~~
eric_bullington
No, the idea is that users would be able to set an incoming fee per email
address, including a default fee for unknowns. Users would simply whitelist
email subscriptions at 0 fee. In fact, this could likely be done completely
automatically beyond the initial setup (and then only if you want to diverse
from the defaults).

~~~
x0x0
And recipients could set it at 0 for mailing lists, or any email with which he
or she has conversed.

------
apo
Also see OpenBazaar, a peer-to-peer marketplace:

[https://openbazaar.org](https://openbazaar.org)

This is a rapidly developing example of an application that couldn't exist
without Bitcoin.

~~~
kristofferR
Yeah, and the upcoming UI looks fantastic too:
[http://www.youtube.com/watch?v=2UISZbGXP74](http://www.youtube.com/watch?v=2UISZbGXP74)

------
jzwinck
How about a browser plugin that lets you pay a few cents here and there to
hide ads? You could whitelist the sites you care about (no need to pay off
every random blog), and give them a sort of "budget" (unknown to the site).
Then each time you view a page on cnn.com or whatever, your browser could toss
a few Satoshis over to them in exchange for receiving a page with ads
completely removed.

Sort of like the NY Times paywall we all know and love/hate, but easier to
deploy for less gigantic sites with less staff, and more voluntary (users who
don't pay would just see ads as they do now).

------
netcan
Out of these 4 categories, _marketplaces_ is the one that I think has the most
potential for a breakaway change.

Micro-payments, micro-incentives and any kind of a scaling down of
transactions is something I'm not exactly sure about. Maybe there's some cool
stuff here, but I would be surprised.

Marketplaces though are a different story. Marketplaces have been developing
into giants since the internet began and the financial infrastructure for
running them is terrible.

Ecommerce, native or not, will also be impacted. Anti-fraud & payment
verification colour the world of ecommerce enough. Solving friendly fraud
(mostly chargebacks) could enable a lot of otherwise transactions and serve
underserved markets (EG shipping goods to high risk countries like most of
Africa).

ATM though BTC is still in a shaky place. Even bitcoin owners don't use it
much. Most people don't have bitcoin wallets so unless a service is important
enough to make people use it, BTC cannot be the only option.

Marketplaces are the kind of thing where users can be forced to use the
payment method available. EG, if Uber paid driver in BTC, drivers would accept
BTC.

~~~
datadiver
what you said and decentralized marketplace could emerge with bitcoin, where
marketplace works like a blockchain explorer. Craigslist + bitcoin = Alibaba

------
paulsutter
Item 2, allocating resources for a true mesh network is a cool idea. It's
clean, a b2b transaction for a specific standardized service: forwarding or
storing data. It does not sound like a legal minefield. Am I too optimistic?
Hats off to cdixon.

The other four I don't understand, can someone help me out?

There is no technical reason that existing money transfers get delayed or
expensive because of international borders. The issues are regulatory [1]. How
does bitcoin solve that? Same with payments and micropayments. There's nothing
technically difficult about moving small or large amounts of money between
people. Compliance with regulation is where all the trouble comes in [1], and
Bitcoin is not miraculously exempt from those regulations either.

Am I missing something? I'm really curious. Like most technology folks, I
/want/ to be more excited about bitcoin.

[1] [https://www.wepay.com/api/payments-101/payment-regulation-
ch...](https://www.wepay.com/api/payments-101/payment-regulation-challenge)

------
panther2k
I'm working on a crowdlending network that enables the first idea:
[https://s3.amazonaws.com/loancoin/whitepaper.pdf](https://s3.amazonaws.com/loancoin/whitepaper.pdf)

To the extent people are interested, we'd really appreciate any feedback.

------
comex
> Incentivized social software. Up until now, social sites have had to rely on
> non-monetary currencies such as likes, followers, karma, upvotes, etc. With
> Bitcoin we can add actual monetary incentives to the mix. This is happening
> organically on Reddit where users are tipping each other using Bitcoin and
> Dogecoin.

Incidentally, this is a pretty bad idea, because of how the way people think
about things changes when money gets involved. Someone said it well in a
recent thread, so I'll defer to them -

[https://news.ycombinator.com/item?id=8392883](https://news.ycombinator.com/item?id=8392883)

(AFAIK, most Reddit tips are only for a few cents, so the only real value is
the acknowledgement that someone appreciated your post enough to tip you. This
sidesteps the issue, but means that it isn't a good reflection of what would
happen if you tried to make a real incentivized social network.)

~~~
gregpilling
Club Med used to solve the problem with beads. Vacationers would use beads to
buy beer or whatever while there. At the end of the stay they add up the beads
that you used and give you a bill. It is pretty effective at making you not
think it is money.

My bill was over $600 for 2 weeks :(

~~~
JoeAltmaier
You know that going in. As a way to quit obsessing about the money and just
enjoy yourself, it worked quite well.

------
artia
Also worth reading:
[https://news.ycombinator.com/item?id=8410986](https://news.ycombinator.com/item?id=8410986)

Two compelling blog posts by two Bitcoin thought leaders at the same time.
Multiple discovery at its best

~~~
uptown
Also interesting that these posts are coming at a time when Bitcoin's value
has dipped to its lowest level in recent months.

~~~
barnaby
Bitcoin has lost some value recently, yes, but what it's bought with that loss
is increased merchant adoption. Currently merchants instantly sell bitcoin
which causes the downwards pressure on the price you've been seeing. However,
as the utility continues to grow this trend will very likely reverse.

------
cwiz
I think there is huge opportunity in decentralising existing business models
that are well suitable for p2p.

Think of Uber / AirBNB / etc with no fees and no government power over them.

Another huge opportunity in distributing revenue of these services to peers
running the network. This may cause rapid growth & unparalleled fault
tolerance.

Third thing that might be disrupting is ability of such services to issue
their own coins/stocks, which price is linked to service's revenue. Revenue is
then distributed among stock owners, and service can issue such stocks at will
without government's approval.

------
gracehopper
This list is pretty good but I suspect infrastructure work is far from done.
Also Marketplaces aren't quite native by this definition-- cdixon is more so
pointing out that their reaches can be expanded to the unbanked. I think the
_real_ magic of Bitcoin lies in the Blockchain itself and its application to
the real world via smart contracts. The fact that bitcoin is a currency might
turn out to have been a big distraction or just a side effect of the real
applications. If this is true it further points to the need for ubiquitous
infrastructure.

------
tomasien
There's some crazy, crazy infrastructure growth going on with BTC, Ripple, and
Stellar. It's thrilling to see what is just becoming possible.

------
coinbased
Interesting to see VCs like Chris Dixon desperately pumping Bitcoin in a last
ditch effort to wipe the egg off their faces.

~~~
tomasien
If you're referring to the recent price drop - you should learn about what
causes price fluctuation in Bitcoin. It's actually largely due to the fact
that Bitcoin is actually rapidly becoming USED rather than HELD which causes
downward pressure on it. This causes miners to become un-profitable btw which
will eventually cause upward pressure on the price (but that problem is
worrying as it's getting really expensive to produce BTC - just a side note).

But while the price dropping is somewhat concerning, it is extraordinarily
clear to anyone paying attention that BTC and crypto generally is growing in
utility rapidly.

For context: I'm a fairly neutral observer who does not own Bitcoin. I do have
USD on the Ripple ledger.

~~~
reddytowns
Why would unprofitable mining cause a upward pressure on price? There is a
fixed amount of bitcoin distributed per day cumulatively to all miners
regardless of their number.

I doubt the recent price drop is due to people buying and selling in bitcoin
since it's way too steep a decline.

I'm guessing that most miners themselves also happen to be investors as well.
After all, if you believe in bitcoin enough to purchase equipment to mine it,
you must also believe that the price will at least stay constant or rise. So
it seems natural to keep some of your profits in bitcoin.

So people mining and investing together are heavily dependent on price, more
than those doing one or the other. With the constant slow decline, it left a
lot of miners languishing, and they not only need to convert all their current
profits to their local currency to pay the bills, but their bitcoin
investments as well. This creates a feedback loop and an ever increasing rate
of price decline until enough miners run out of bitcoin to sell and/or close
up shop.

------
logicalman
For point 2, there is a white paper on using cryptocurrency to incentivize the
development of Tor networks - [http://www.nrl.navy.mil/itd/chacs/ghosh-
torpath-torcoin-proo...](http://www.nrl.navy.mil/itd/chacs/ghosh-torpath-
torcoin-proof-bandwidth-altcoins-compensating-relays)

~~~
kristofferR
OnionTip.com is a simpler way of incentivizing people to run Tor nodes by
using Bitcoin.

It may be too simple though, since the amount donated in laughably low
compared to the work done by the nodes.

Torcoin and similar solutions may be a better solution due to that issue.

------
untilHellbanned
To continue the discussion...

[https://hackpad.com/Native-Bitcoin-Applications-
dNXoRdhwIb5](https://hackpad.com/Native-Bitcoin-Applications-dNXoRdhwIb5)

------
wslh
Speaking about cryptocurrencies in general, where are these on the list?

\- Open source and Kickstarter like projects funding

\- App/Startup Coins

\- Virtual Goods

\- Silk Roads

------
jgalt212
Does any know or care to hazard a guess on how much BTC Andressen Horowitz
owns?

