> Whitepaper abstract says you use "A blockchain-based stochastic payment mechanism with transaction costs on the order of a packet". But how is such a blockchain transaction scalable to the entire internet when considering that it does a transaction for every packet? (pretend you're talking to someone who won't read the article).
I'd like to add to Mr. Simonsson's excellent answer that stochastic payments allow you to remove "dust-type" transactions from the blockchain.
Imagine I wanted to send you $0.01 100 million times, for a total of $1 million dollars. Let's also imagine that the transaction fees associated with 100 million blockchain payments are high enough that we'd like to control them. If instead of actually sending you $0.01 each time I send payment, I send you a provably fair lottery ticket with an expected value of $0.01 (for example, a lottery ticket with a 1/10,000 chance of being worth $100), this doesn't change the number of payments I need to send you, or your expected profit, but will decrease the number of transactions which need to be committed to the blockchain by the inverse win-rate (in our example, we'd reduce the number of transactions by a factor of 10,000). This allows the effective transaction costs to be arbitrarily low, down to the order of a packet (as at that point, physically sending you the lottery ticket starts to dominate the transaction costs.)
> Whitepaper abstract says you use "A blockchain-based stochastic payment mechanism with transaction costs on the order of a packet". But how is such a blockchain transaction scalable to the entire internet when considering that it does a transaction for every packet? (pretend you're talking to someone who won't read the article).
I'd like to add to Mr. Simonsson's excellent answer that stochastic payments allow you to remove "dust-type" transactions from the blockchain.
Imagine I wanted to send you $0.01 100 million times, for a total of $1 million dollars. Let's also imagine that the transaction fees associated with 100 million blockchain payments are high enough that we'd like to control them. If instead of actually sending you $0.01 each time I send payment, I send you a provably fair lottery ticket with an expected value of $0.01 (for example, a lottery ticket with a 1/10,000 chance of being worth $100), this doesn't change the number of payments I need to send you, or your expected profit, but will decrease the number of transactions which need to be committed to the blockchain by the inverse win-rate (in our example, we'd reduce the number of transactions by a factor of 10,000). This allows the effective transaction costs to be arbitrarily low, down to the order of a packet (as at that point, physically sending you the lottery ticket starts to dominate the transaction costs.)