1AKHViYgBGbmxi8qiJkNvoHNeDu9m3MfPE (6484) ·
1. Introduction
Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments.
Replies
1AKHViYgBGbmxi8qiJkNvoHNeDu9m3MfPE (6484) ·
...and there is a broader cost in the loss of ability to make non-reversible payments for non-reversible services.
1AKHViYgBGbmxi8qiJkNvoHNeDu9m3MfPE (6484) ·
While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model.
1AKHViYgBGbmxi8qiJkNvoHNeDu9m3MfPE (6484) ·
Completely non-reversible transactions are not really possible, since financial institutions cannot avoid mediating disputes.
1AKHViYgBGbmxi8qiJkNvoHNeDu9m3MfPE (6484) ·
With the possibility of reversal, the need for trust spreads. Merchants must be wary of their customers, hassling them for more information than they would otherwise need.
1AKHViYgBGbmxi8qiJkNvoHNeDu9m3MfPE (6484) ·
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.
1AKHViYgBGbmxi8qiJkNvoHNeDu9m3MfPE (6484) ·
A certain percentage of fraud is accepted as unavoidable. These costs and payment uncertainties can be avoided in person by using physical currency, but no mechanism exists to make payments over a communications channel without a trusted party.
1AKHViYgBGbmxi8qiJkNvoHNeDu9m3MfPE (6484) ·
The system is secure as long as honest nodes collectively control more CPU power than any cooperating group of attacker nodes.
1AKHViYgBGbmxi8qiJkNvoHNeDu9m3MfPE (6484) ·
The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions...
1AKHViYgBGbmxi8qiJkNvoHNeDu9m3MfPE (6484) ·
Transactions that are computationally impractical to reverse would protect sellers from fraud, and routine escrow mechanisms could easily be implemented to protect buyers.
1AKHViYgBGbmxi8qiJkNvoHNeDu9m3MfPE (6484) ·
What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.