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Nobel Prizes are given for making important — preferably fundamental — breakthroughs in the realm of ideas and that just what Satoshi Nakamoto has done according to Bhagwan Chowdhry, a professor of finance at UCLA, who has nominated Satoshi Nakamoto, the creator of Bitcoin, for a Nobel prize in economics. Chowdhry writes that Prize Committee for the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, popularly known as the Nobel Prize in Economic Sciences, has invited Chowdhry to nominate someone for the 2016 Prize and he started thinking about whose ideas are likely to have a disruptive influence in the twenty first century.
"The invention of bitcoin -- a digital currency -- is nothing short of revolutionary," says Chowdhry. "It offers many advantages over both physical and paper currencies. It is secure, relying on almost unbreakable cryptographic code, can be divided into millions of smaller sub-units, and can be transferred securely and nearly instantaneously from one person to any other person in the world with access to internet bypassing governments, central banks and financial intermediaries." Satoshi Nakamoto's Bitcoin Protocol has also spawned exciting innovations in the FinTech space by showing how many financial contracts -- not just currencies -- can be digitized, securely verified and stored, and transferred instantaneously from one party to another.
There's only one problem. Who is Satoshi Nakamoto? Suppose that the Nobel Committee is convinced that Satoshi Nakamoto deserves the Prize. Now the problem it will face is how to contact him to announce that he has won the Prize. According to Chowdhry, Nakamoto can be informed by contacting him online just the same way people have communicated with him in the past and he has anonymously communicated with the computer science and cryptography community. If he accepts the award, he can verifiably communicate his acceptance. Finally, there is the issue of the Prize money. Nakamoto is already in possession of several hundred million U.S. dollars worth of bitcoins so the additional prize money may not mean much to him. "Only if he wants, the committee could also transfer the prize money to my bitcoin address, 165sAHBpLHujHbHx2zSjC898oXEz25Awtj," concludes Chowdhry. "Mr Nakamoto and I will settle later."
(Score: 2) by JoeMerchant on Tuesday November 10 2015, @03:43AM
While I am talking about a web of trust, I am not talking about government enforced insurance payments - I am talking about trusted "insurance providers," who, in essence, are putting their own trust reputation on the line when they back a transaction. If you are new to the system, you can either get a friend to vouch for your ability to pay (for free), or pay a provider to do it for you, through deposit, fee, or both. Government is not required, a transparent system that accurately reports transaction success and failure is. If you want to participate in the system, you prove yourself to be a trustworthy actor. This is an idea I have mostly hatched in the back of my head with no real development, as opposed to Bitcoin which has been raked over the coals by the world for nearly a decade now - so, let's not get too critical of the lack of detail here. The main departure point from Bitcoin, in my opinion, is the lack of dependence upon a particular computing problem being a particular kind of "hard" (and, yes, I know about the increasing complexity...) and the setting of a rather large amount of energy expenditure required to successfully validate a transaction, coupled with a large pool of competitors looking for that solution. Take the hash table scheme and try to validate every cash transaction in a modern city in a day, and you've completely trashed the system. If every time you spend money on lunch, gas, groceries, etc. etc. etc. were to run through a Bitcoin style validation, it would be impractically complex and energy demanding.
The web of trust's main weakness, as I see it, is guaranteeing the identity of the actor - this would be done with traditional cryptographic techniques, and, assuming the web validates, say, 100 identities in an average transaction, significantly less complex than searching for a single hash collision.
I'm not saying that a blockchain is useless or obvious, I am saying that it is not a practical replacement for cash or credit as we practice them today. It is a clever system with a large hidden cost that would be inevitably exposed if it were scaled up to try to replace cash and credit.
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