Whether confirmations happen instantly (violating physical speed of light constraints imposed by reality) or take minutes or even months (ahem, Visa etc), does not seem to play any important role into whether something is fit for a consumer product. I'll give an example: even in the case of Visa's network, consumers are somewhat isolated from the long confirmation delays, and the costs imposed by confirmation delays are shoveled on to the merchants anyway. This is not because a centralized system like Visa requires that design, but rather because they made those choices when providing a product to merchants and consumers. Likewise, others have made similar products with bitcoin. That bitcoin confirmation delays are shorter has no bearing on whether a business can hold funds for 80000 days or whatever you want. This has little to do with suitability for productization. But perhaps this point is too nuanced for "a post that isn't technical".
My own opinion is that I don't really mind whether consumers are "directly" using bitcoin or not. I mean, I certainly don't care if they are manually bitbanging out their own bitcoin transactions or clicking buttons telling software to make transactions. That's a really trivial detail in the scheme of things....
As for being "completely incapable of handling transactions on the volume of the banking system itself", you mention settlement but I don't think you go far enough. Please, tell me the "correct" number of transactions for a civilization such as ours would create daily during normal activity. What is the "right" number and how should it be decided? Should the system exclude the transactions from someone making 100 trillion transactions per minute? What about 1 quadrillion per day? I suspect that this is an unanswerable, totally boring question. Instead, transactions should be based on batching and settlement, which is where the ideas for payment channels is coming from. There's also some recent talk on these lines called "lightning network". More broadly, see http://sourceforge.net/p/bitcoin/mailman/message/33405247/
Some argue that bitcoin is not "wasteful" because there is a real, meaningful use to byzantine agreement. I would recommend https://download.wpsoftware.net/bitcoin/asic-faq.pdf and https://download.wpsoftware.net/bitcoin/pos.pdf and https://download.wpsoftware.net/bitcoin/alts.pdf for some light reading on this subject.
Proof-of-Work (PoW) works because of the economic restriction provided by the second law of thermodynamics. Even though you can't know you're in the consensus set, you can put a raw economic cost on the probability of you being tricked. Bitcoin uses proof-of-work to tie Bitcoin consensus to a fundamentally scarce resource, namely negentropy. It is possible to use another physically scarce resource instead, but there is no alternative to the universal scarcity of negentropy. As maaku puts it, "I could be an AI trapped in a simulation with no knowledge of the outside world other than the foundational laws of physics, and from that be able to assert the validity of proof-of-work.".
As for Stellar and Ripple I would encourage you to read the recent discussion on HN where critical ledger vulnerabilities were enumerated quite thoroughly again: https://news.ycombinator.com/item?id=9341687
"Doing away with banks" has not really been advocated by any of the bitcoin developers. You should perhaps consider the possibility that your sources are lying to you? I don't know, there's no "anti-bank" feature built into bitcoin itself. Anyone can participate on the network, and you seem to agree especially re: why it bothers with Sybil resistance anyway. (As for governance, obv. the project more closely matches the bazaar-style development environment.)
"Does not scale"... well, to be fair, Visa also can't handle 100 quadrillion transactions per second. While the current network is not operating at 10k transactions per second observable by looking at mempools, it may never because of the existence of payment channels. Sorry, folks. (But nobody seems to be complaining about not being able to count the "true" number of users, so..... I suspect that deep-down this is a non-issue). Also check gavinandresen's posts, those were fun.
51% attacks don't do what you think they do. Having lots of hashrate does not mean that consensus rules get thrown out the window. If that was true then the bitcoin network wouldn't have survived its first 12 months.
Hopefully my response has encouraged you (or someone else) to think carefully and critically. I also would like to encourage programmers to look around for the source of knowledge or where it comes from; in bitcoin, the primary sources are going to be the bitcoin source code and whitepaper, and not journalists (because journalists have often not read the source code to find out what's going on).
Visa payment confirmations take a second. Until settlements are final it takes 6 months because of chargebacks. However that's because of the Chargebacks and not because the system is incapable of settling quickly on the side of Visa.
The Bitcoin design does not permit that, because you cannot forcefully charge a user later or reimburse them. The protocol has no support for that.
> Please, tell me the "correct" number of transactions for a civilization such as ours would create daily during normal activity. What is the "right" number and how should it be decided?
The correct number is infinite. Whatever the amount of transactions is, the system needs to scale to that level. Banks have found various ways to achieve that by layering different systems together, Bitcoin however has no solution for this issue.
> As for Stellar and Ripple I would encourage you to read the recent discussion on HN where critical ledger vulnerabilities were enumerated quite thoroughly again: https://news.ycombinator.com/item?id=9341687
Those are only vulnerabilities if you already find the current banking system vulnerable. Fundamentally banks that exchange payments need to trust each other today. Ripple or Stellar just accept this and accept that as part of their designs. Within that frame of thought, the system is secure.
> "Does not scale"... well, to be fair, Visa also can't handle 100 quadrillion transactions per second.
It does not have to, because the system for the most part is a black box. How it works internally is irrelevant for the operation. If the Visa network would hit a technological stumble stone, they can replace parts of it or rewrite individual transactions. You cannot do that with Bitcoin.
> 51% attacks don't do what you think they do. Having lots of hashrate does not mean that consensus rules get thrown out the window. If that was true then the bitcoin network wouldn't have survived its first 12 months.
Having lots of hashrate can do quite a few things to your network. The reason bitcoin survived the first 12 months was a combination of many factors. If you want to bootstrap a cryptocurrency today that is bitcoin compatible you will have a problem on your hand. Miners just need to point their rig elsewhere and you're done.
> Hopefully my response has encouraged you (or someone else) to think carefully and critically.
I hope this goes both ways.
Well, yes, it's true that there's no direct "chargeback" primitive. But really giving someone back some fungible BTC is really just a matter of signing another transaction, which is already a primitive in the protocol or whatever.
> The correct number is infinite.
There are real physical limitations to information processing objects: http://diyhpl.us/~bryan/papers2/The%20physics%20of%20informa...
> Whatever the amount of transactions is, the system needs to scale to that level.
.. even given the existence of physical limits? I suspect that a correct number is going to be "a system that allows any transaction to occur, but that prioritizes settlement" or something. This is the sort of problem that deserves stochastic simulation methinks.
> Banks have found various ways to achieve that
(Surely you don't mean infinite transaction volume. I'll assume for now that you don't.)
> Those are only vulnerabilities if you already find the current banking system vulnerable. Fundamentally banks that exchange payments need to trust each other today. Ripple or Stellar just accept this and accept that as part of their designs. Within that frame of thought, the system is secure.
Huh, actually I still disagree with you. So, I would argue that the current banking systems are using a different technical system for securing their accounts. They are not using decentralized consensus. They are not using "distributed systems". They are using something very different. They do not have to worry about replication failures or sybil nodes. Ripple, Stellar and Bitcoin all claim to, and I suspect only Bitcoin does based on my examination of their implementations and consensus mechanisms... [as elaborated in that link]
> they can replace parts of it or rewrite individual transactions. You cannot do that with Bitcoin.
Hmm that is an interesting claim. Do payment channels count as rewriting transactions? This is where transactions are replaced with successor transactions before they are confirmed in a block in the history. (my 2 second summary)
> Having lots of hashrate can do quite a few things to your network.
So 51% attacks (causing deep reorgs) can make their own coinbase transactions, change the order of transactions, fiddle with transaction malleability, exclude or censor transactions, include later transactions earlier in history. But they can't violate consensus rules (is not a trust issue), and I was replying to this aspect from your article text. Btw, reorgs happen quite frequently at the tip of the blockchain. Deep reorgs are exceedingly rare by comparison, but you can definitely catch a reorg of 1 to 3 blocks deep multiple times per day.
> [thinking carefully] I hope this goes both ways.
Always. It's been a pleasure. :-)
