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Satoshi Nakamoto

Latency and locality

With a global p2p network, it is necessary to have all nodes receive the transaction, do some calculations and send results back.

The following content was written by mkrogh on August 06, 2010, 07:05:56 AM in the thread latency and locality. All content is owned by the author of the bitcointalk.org post. (original)


Hi bitcoin users

I found bitcoin yesterday, and I am really impressed by the idea of avoiding issuers/banks in a digital cash system.

However, I have one objection that I would like your view on.

That is the latency, or delay in a local transaction. Let us say that a payer and payee are located in the same city for example. I will claim, that they want a payment to go through
with a delay not much slower than the latency of network connections. With an issuer and using local coins (a prefix, say, can be used to localize a server of the issuer), the transaction should be done and verified in 100 microseconds or less. With a global p2p network, it is necessary to have all nodes receive the transaction, do some calculations and send results back.
It is not feasible,  with the speed of light as an upper limit, to do this faster than a second. As I understand it you actually use something like 10 minutes for one block, or even more for several block verifications. This means that verification of the absence of double spending is 10,000 or even tens of millions times too slow. This would get even worse in interplanetary trade of course.

The ideal payment system should be decentralized but also local, i.e., the verification of a local transaction must not have to wait for a light signal to travel to the other end of the “universe” and come back again.

Locality, in the sense describe here, is crucial, I will claim.

Sincerely,

Morten Krogh.

The following content was written by FreeMoney on August 06, 2010, 07:35:55 AM in the thread latency and locality. All content is owned by the author of the bitcointalk.org post. (original)


Why is it crucial?

One system doesn’t have to be used for all needs. If interstellar money is needed people will choose whatever is best for that, same if people need their money in less than a second.

The following content was written by knightmb on August 06, 2010, 08:04:38 AM in the thread latency and locality. All content is owned by the author of the bitcointalk.org post. (original)


It is not feasible,  with the speed of light as an upper limit, to do this faster than a second. As I understand it you actually use something like 10 minutes for one block, or even more for several block verifications. This means that verification of the absence of double spending is 10,000 or even tens of millions times too slow. This would get even worse in interplanetary trade of course.

It depends on your network layout. If you are using the entire public network, then yes you are depending on that time for the data to be processed by everyone else that is running a node. But, you don’t have to do it that way. You can build a trusted node (like a server) and have your clients direct connect to it and let it do the fast verification for you.

It won’t net you 20 confirmations in a few milliseconds, but it will help stop double-spending as long as you remain in control of that node because it knows what is being spent. The whole double-spending issue arises from trust. When you are comparing anonymous seller to anonymous buyer, the only “middle man” for trust is the entire swarm (hence confirmations that neither is cheating)

If you know you can trust your own node(s), then it reduces the likely-hood that double-spending will occur within your own trusted network. So if your example applied to an ATM like card for example, the bank (or whoever) would have all of those ATM machines networked to their own private node (or server) which would then further connect to the outside (Internet) for the rest of the transactions. So if you went to an ATM, withdrew 100 BTC (say the entire account only had that much), then moments later went to another ATM elsewhere and tried to withdraw that amount again, somewhere along that trusted chain would spot a double-spend attempt and basically report back no BTC left for that address.

The whole verification process is how you put the swarm to work, all those clients are examining if your transaction was valid or not, but you don’t have to wait for them to transfer the coin around. You can spend the coin around in circles all day without a single transaction verification. It’s only when double-spending occurs does the network correct for itself and fix the balances.

Banks already have this exact same problem. They all have their own networks that connect to other bank networks and it’s just as easy to double-spend on their ATM as has been demonstrated at black-hat hacker conventions for probably 10+ years now. I remember reading about the issue back in 1997 because a lot of networks will still on dial-up then for banks and the latency issue was part of the attack because everyone had their own *database* that all had to inter-connect.

With bitcoin, everyone is the database and banker and guard at the same time, so while it’s not perfect, it’s actually a lot better than what banks are using. Have you ever noticed at an ATM they have about 20 “network” stickers for all the different banks and setups that the ATM has to be compatible with?

The following content was written by mkrogh on August 06, 2010, 11:48:30 AM in the thread latency and locality. All content is owned by the author of the bitcointalk.org post. (original)


FreeMoney, I think it is crucial to have fast local transactions. It is needed for many businesses and person to person payments.
10 minutes or even 10 seconds is too slow. An extraterrestrial system was just an extreme example.

The most pressing problem, as I see it, is to get a digital cash system that makes it possible for people and small businesses to pay each other fast and without
registration and supervision from a big company/government.

I read the thread about vending machines. There were no real solutions except companies that would monitor for double checking in a few seconds. I agree that would be possible,
but we would lose the whole point of not having an issuer. This company needs to be trusted, it will break anonymity, and people need an account with that company.

What is wrong with the follwing “standard” system. A central bank/government issues a currency like today. It sets up servers around the world to validate transactions.
People pay each other by means of a single verification with one of the centeal bank’s servers. The speed issue is solved by coins having the location of the relevant server embedded in them. In worst case, the server would need to make long round trips to other severs, but in most cases the first server would know the answer already. The cental bank could have an algorithm for distributing coins around the network to optimise latency and server load. The wallet would have an algorithm for choosing the most local coins when making a payment.
The wallet could also prepare by exchanging coins with the server. On your way to Europe, the wallet replaces “American coins” with European coins, such that payments will be fast in Europe. For the user, this is incredibly easy. It is anonymous, and it requires no agreements with any processing companies.
Also, there could be many issuers of the same currency if so desired.

Bitcoin gets rid of the issuers, but instead introduces unacceptable slowness or a lot of middlemen like credit card companies/debit accounts etc. Satoshi’s solution, on the vending machine thread, with a double spending checking company is still too slow, even though faster than a block, and this company needs an omnipresence on the network almost like
an issuer.

But discarding speed, bitcoin seems extremely elegant. And of course there are uses for this kind of system. One could imagine many local bitcoin systems with an exchange between
different currencies. That would work except that an attacker can take over a small currency.

The following content was written by Insti on August 06, 2010, 12:50:12 PM in the thread latency and locality. All content is owned by the author of the bitcointalk.org post. (original)


The most pressing problem, as I see it, is to get a digital cash system that makes it possible for people and small businesses to pay each other fast and without
registration and supervision from a big company/government.



What is wrong with the follwing “standard” system. A central bank/government issues a currency like today. It sets up servers around the world to validate transactions.

So the solution to avoiding a big company/government regulation is a big company/government?

It is currently possible with Bitcoin to do transactions which are practically instant particularly if you do not fear some vast conspiracy to defraud you.
If you really do have need of transactions faster than Bitcoin can offer, use a different system, but you will probably have to forgo some of the benefits that Bitcoin currently offers.




The following content was written by mkrogh on August 06, 2010, 02:00:10 PM in the thread latency and locality. All content is owned by the author of the bitcointalk.org post. (original)


No, my goal is not to avoid government involvement in the payment system, but to not have the government monitor every transaction. There is a difference.

The current bill/coin system works like that. The government/central bank issues the currency but they don’t monitor individual cash payments.
I think that is okay.

You claim that is possible to make almost instantaneous payments with bitcoin. How? That is what I thought everybody agreed upon was not possible. You need to wait for
one or more blocks to be solved before you can trust a coin. That takes minutes. Even in the best case it is limited by propagation, with the speed of light, around the network which is slow. The only solution is to create another banking system on top of this. Bitcoin then becomes the backbone of an intebank transfer system, not what the population at large is using.
   
It is not just me that needs fast transactions. There is giant demand for fast transfers of digital cash from cell phone to cell phone, web shopping, stock trading etc. 

But, we might just have different expectations from a digital cash system.

Has anyone ever stated clearly what problem bitcoin is solving? It seems to solve the problem of payments that don’t need to be fast. But who are the potential users of that beyond people who thinks it is theoretically interesting like people on this board.

Do people agree with me on this point: We still need another digital cash system, and that probably needs to be issuer based.
Ali Sherief

By Ali Sherief

Editor-in-chief and serial coder & blogger.