Replies to post #76300 on Quantum Materials Corp. (fka QTMM)

[rodman]

Finally some detailed info! Security, security, security....
$5++

[Kurt_Banoffee]

You just have to love explanations that start off dead wrong.

Blockchain Explained
A blockchain carries no transaction cost.

Wrong!

Does it have to have a cost? No, and there are applications (such as what it looks like Capstan with internal traceability) that may not need a transaction cost but if you want to control what gets into the database (such as in the case of anti-counterfeiting), there will be a cost of some sort.

The article starts with the example of bitcoin. Bitcoin has a transaction cost - it's called bitcoin mining. Bitcoin currently pays the transaction cost in in "mined" bitcoins, but once all the bitcoins are mined, that gets replaced with a fee. There are about 2,200 transactions per block today and the 12.5 bitcoins mined to add the block to the chain are worth about $128,000. That's a cost of $58 per transaction!!! Not exactly free. It may seem free because it's currently paid by bitcoin, but in about 4 years when there are no more bitcoins to mine, you can bet you'll be paying a fee per transaction.

Why is a fee needed? Because it has to be hard to enter transactions into the record. Yes, the existing record is secure thanks to the nature of blockchain, but for the existing record to be meaningful, you have to control what gets into it in the first place. If it's easy to enter records, someone could simply enter billions of them and you'd never untangle the mess.

Bitcoin makes it hard by requiring whoever enters the transaction to first solve a very difficult math problem that can only be solved by trial and error and currently takes about 2.7 trillion attempts to solve. Adjusting the difficulty keep new blocks entered in the chain at about 1 every 10 minutes. This is known as "proof of work." The work requires lots of computers and electricity and it makes it near impossible financially to enter false records. Nobody is going to do the work if they don't get paid for it. No fee = no transactions get processed.

On the other hand, if you want to control what gets into a record of legitimate products to protect against counterfeiting, proof of work may not be a good option. It probably comes down to cyber and physical security on the front end, and that has a cost. The more secure, the higher the cost.