>when I don't have to keep a local copy of every transaction ever made by anyone on the whole system.

How about this part? That sounds like a pretty big flaw in the system.

You would need to correlate that information with other type of information to be able to identify the user. As long as you take certain precaution, you should be fine.

Well sure, but it sounds like it would require a lot of storage.

There are proposal that make it possible for nodes to not have to download all that files.

However, it's ain't much of a problem as long as HD keep in pace with Moore's Law.

Moore's Law doesn't apply to a single given machine...my hard drive isn't magically doubling in size every X months. You see the problem?