The original white paper by Satoshi Nakamoto defines "an electronic coin" as "a chain of digital signatures" where each owner transfers ownership control of a coin to the next owner by DIGITALLY SIGNING A HASH of the previous transaction and the public key of the next owner and adding these to the end of the coin. A payee can verify the signatures to verify the chain of ownership". To put it in layman's terms, if you write a living will which transfers the deed to your house to your new found girlfriend, there must be 3rd party verification (notary) and witnesses. Every page of the will is signed! This becomes a legal document in the court of law and there is verification and witnesses to attest to the fact. This is critical as we all have seen estate after estate argued in the courts when there is no 3rd part verification!
So that brings us to segwit. The geniuses behind Segwit may be great code writers but they obviously have not done their legal research. SegWit assumes that the signature data is needed only WHEN the transactions are being validated and then can be discarded as unimportant. (This was described by Pieter Wuille) that signatures are only required at the TIME of validation. Moreover nodes are NOT required to keep the signature data. to help free up expensive data space they can be discarded. GREAT!. This opens up the likelihood that many nodes simply do NOT keep the signature data quite simply because it's cheaper to do so.
Now how does this adhere to the original Satoshi white paper which is "a chain of digital signatures". IT DOES NOT! Period! Argue all you want but this was a key component of the original white paper.
Now why is this important after all I'm just buying a sub sandwich at subway right? Well you are correct for most P2P transactions like paying the lawn boy, buying "party favors" from your buddy it does not matter. For the most part anything you would do as a cash transaction it does not matter. However where it matters is in a court of law. Ever see judge Judy have a defendant that claims to have paid cash for rent and yet there is no receipt with a SIGNATURE? Well it quickly becomes hearsay and unfortunately that is not miscible in court. But the digital age brought in a new need for signing legal documents and the Government enacted laws.
Hence the e-Sign Act which defines electronic contracts. "an electronic signature shall be attached with a contract or other record and executed by a person with the intent to sign a record. This requires 3rd party authentication. (I know how this works because I digitally use 3rd party validation). Without this validation my signature is not binding! Here within lies the issues with segwit. Large institutions where trillions of dollars are transferred daily will REQUIRE a validated signature in the event there is a dispute and it ends up in civil court. By law it requires a digital signature and 3rd party validation. So if you transfer $10,000 to your buddy in California that lost his butt shorting bitcoin so he can make his mortgage payment, he could dispute in a court of law that he does not owe you anything because you have no way of authenticating the transaction. This is why I like ETH & BCH!
So this morning I bought some BTC' to transfer to my trading account to buy more BCH'. It's been an hour and I'm still waiting and the price has risen $23. Nice and thank you BTC you guys have done a stellar job. Now this doesn't mean I'm selling all my BTC' and going into BCH. I think there is a place for BTC' as a store of wealth like gold . But the future of money transfers are in BCH and ETH! I think these two coins along with others like XRP will challenge BTC' for money transfers. Bottom line BTC' does not adhere to the white paper!
I saw your recent post on BTC saying that you are added even at the currently extended levels - giving your conviction in BCH I'm curious if you believe both can coexist. Personally, to me it feels like there can be only one bitcoin in the long run. Would BTC survive if Bitcoin Cash sees mass adoption in commerce? Would love to hear your perspectives.
Thank you sir and please keep supplying us with valuable content.
Your most recent post (the one above) though is going a bit further and people with a lot more experience and understanding than i have should comment on it. BCH is NOT the solution to BTC's current fee and latency issues. Do you really think that the run-away best group of developers (ie CORE) hasnt performed a very careful cost/benefit analysis on increasing block-size? It's clearly not the solution and in fact a very dangerous path for long term viability and adoption of crypto currencies. BTH is at best a sensible short-term trade and play on the (generally quite effective) marketing messages that are propagated from the BCH camp - that's basically their whole focus, they deploy all their resources to it, and they are quite good at it.
In summary, to all new-comers -- do your own research and ask yourself the question: what do the vast majority of contributors propose that have been in the game for several years, that have relevant software development experience, and have a good intellect along and integrity as far as you can tell? Those guys tend to favor BTC by a big margin. Then take a look at the BCH leadership team (yes, there is one) --
- Roger Ver, a talented self-marketer and astute business man who's spend time in jail and has renounced his US citizenship,
-Ayers, similiar type of character
- Mr. 'Fake Satoshi' Wright, his nickname says it all
- Jihan Wu, the Mining King from the People's Republic
All talented self-marketers, and savvy and cut-throat businessmen, but NOT a group of guys with any plan for long-term solutions to technical problems, with any integrity, or a track record of real contribution to what has made BTC such a phenomenal success.
Awesome write-up! Thanks for this valuable information. There is one thing which is not clear to me though.
If Bitcoin will lose its significance as a medium of transaction and will only remain as a means of store of value, then why is its alternative BCH but not vertcoin or litecoin (please don't get me wrong, I'm indifferent to any of these cryptocurrencies. I just don't get why specifically bitcoin cash stands as a bitcoin alternative)?