Qualitative Security Model

In Social Network Principle it is showing that Bitcoin is a network of human relationships. This can be modeled as a directed graph where each vertex represents a merchant and each edge represents a validated trade for bitcoin. Edges indicate the direction of movement of coin and are quantified in the number of units traded. All owners of bitcoin are presumed to have been merchants at the time they received the coin, including as miners (selling confirmations) and as recipients of charity (selling goodwill).

If a person is not personally accepting coin, or does not personally validate coin accepted, the person cannot reject invalid coin. The person is entrusting this task to a central authority. Similarly, when a person simply delegates coin to another party, the person no longer owns the coin. In both case the person controls only a promise to trade back the coin and therefore does not contribute to security. All people utilizing the same delegate are reduced to just one vertex that represents the delegate.

The graph represents activity occurring in any window of time. While customers could decide to leave the delegate at some point in time, and validate their own transactions, they cannot act in defense until they actually do so. The distinction is analogous to being armed vs. having the ability to become armed. As shown in Cockroach Fallacy, the latter matters not when you are getting robbed.

For any period of time, the security of Bitcoin is a function of the number of people and the similarity of amounts traded. The strongest system would be all people in the world trading for the same amount of bitcoin in the period, an ideal which can be called "distributed". The most anemic system would be one delegate accepting all bitcoin traded in the period, which would be a "centralized" system.