The recipient just needs to verify it back to a depth that is sufficiently far back in the block chain, which will often only require a depth of 2 transactions. All transactions before that can be discarded.
Writing a description for this thing for general audiences is bloody hard. There's nothing to relate it to.
It's not a problem if transactions have to wait one or a few extra cycles to get into a block.
Writing a description for this thing for general audiences is bloody hard. There's nothing to relate it to.
At equilibrium size, many nodes will be server farms with one or two network nodes that feed the rest of the farm over a LAN.
Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.
A lot of people automatically dismiss e-currency as a lost cause because of all the companies that failed since the 1990's. I hope it's obvious it was only the centrally controlled nature of those systems that doomed them. I think this is the first time we're trying a decentralized, non-trust-based system.
In this paper, we propose a solution to the double-spending problem using a peer-to-peer distributed timestamp server to generate computational proof of the chronological order of transactions. The system is secure as long as honest nodes collectively control more CPU power than any cooperating group of attacker nodes.
If SHA-256 became completely broken, I think we could come to some agreement about what the honest block chain was before the trouble started, lock that in and continue from there with a new hash function.
As you figured out, the root problem is we shouldn't be counting or spending transactions until they have at least 1 confirmation. 0/unconfirmed transactions are very much second class citizens. At most, they are advice that something has been received, but counting them as balance or spending them is premature.
