Bitcoin is to be trustless by the thousands of nodes, but is this no more trustless than the Federal Reserve system? An account size in 8b on each device is a feasible alternative with absolute consensus by nodes for each device.
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What do you mean by "account size in 8b"? Do you mean just store a single number for an account's balance on the device that "owns" the account? – Andrew Chow Aug 18 '22 at 03:58
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On all devices, 8b lines of all potential personally identifiable accounts, to reconcile for database consensus for all intents and purposes. – Nick Carducci for Carface Bank Aug 18 '22 at 04:01
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Bitcoin is to be trustless by the thousands of nodes, but is this no more trustless than the Federal Reserve system?
No. Bitcoin achieves trustlessness by having nodes which are all enforcing consensus rules that are also trustless. The node operator determines the rules that their node enforces, typically by running a particular software. The nodes that share the same consensus rules will converge on the same state, and this state is what "Bitcoin" is.
While, in theory, you could have everyone also be validating whatever rules the Federal Reserve operates under, it would not necessarily be trustless. The rules themselves also have to be trustless.
In the Federal Reserve system, part of the rules are that the Fed can introduce and remove currency from the system. They control the inflation rate and the supply. Even if enforced by all participants in the system, the rule allowing them to have such control require having trust in the Fed.
However in Bitcoin, the rules do not allow for this. The rules in Bitcoin state a fixed inflation rate and monetary supply. These cannot by changed by a single entity, and so is trustless.
Another rule is how double spends are dealt with. In Bitcoin, it is handled through the blockchain and essentially random change. But the blockchain allows for everyone to converge on the same "real" transaction in the event of a double spend attempt.
In the Federal Reserve system, handling double spends essentially amounts to asking the banks for who is correct. By delegating the resolution of double spends to specific entities, the system requires trust.
Lastly there is the isssue of how rules can be changed. In Bitcoin, the rules are set by the node operators via the software that they run (and how it is configured). In order to change the consensus rules, node operators need to update/change their software to one that enforces the new rules. Furthermore, node software have been written specifically without auto-update mechanisms to prevent developers from forcing a consensus rule change onto node operators.
In the Federal Reserve system, the Fed can change the rules as they wish. Their rules allow for them to change the rules, and so even if everyone validated all Federal Reserve transactions, the Fed could issue a rule change, and by the definitions of the rules in that system, every node would have to update to the new rules. This is not trustless.
Andrew Chow
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