In fact this solution doesn't use either the number of files or their filenames to encode additional information - it uses the sizes of those files to encode the additional information.
We probably agree that any program should be allowed to uniquely identify the files making up the input data. And if Mike would have spotted the (other) more obvious loophole, which is to store input data in only the filenames, he could have given this (possibly the only) sensible answer: "Yes, multiple files whose summed up size + the size of the decompressor are smaller than the original file are ok. But the files must be uniquely named inputfile.0 ... inputfile.NNN." Which is exactly what Patrick delivered.
But that's not what happened. Patrick, not Mike, changed the rules, and he intentionally introduced a loophole. But in doing so, he failed to specify that file names were to be left unaltered. I think it's fair that if you make intentionally tricky rules, you not be surprised when your own loopholes are exploited.
Providing multiple files with the (deceptive) intention of storing data via filesystem metadata, but then failing to specify how filesystem metadata is to be treated is just asking for it.
This is exactly why such challenges are always entirely unsatisfactory and nothing but a pointless distraction. There might be some point in providing entertainment to both parties if the pedantry war weren't entered into, but the nature of the challenge all but guarantees that will happen.
Mike will always be able to find an excuse not to pay. If Parrick had imposed the 'no file renaming' condition, Mike could have found another way in which to break his submission with a counter loophole.
This type of challenge should never be made or accepted, if financial incentives are involved, without an impartial adjudicator.
It's only a pointless distraction when people see these challenges and treat them as a game to be tricked. Mike already made it clear the challenge is not about financial compensation (and offered to give Patrick the $100 back even though Patrick did not win, under the very generous assumption that Patrick innocently misunderstood the challenge instead of deliberately tried to subvert it).
The point of a challenge like this is the same as the point of the Randi challenge: to provide a means to demonstrate that impossible claims are impossible (in this case, that of being able to compress truly random data, and in the case of the Randi challenge, supernatural/magical abilities such as ESP). After all, if any such claim were valid, then the claimant would be able to defeat the challenge, assuming that the stated rules are fair (and they are).
Which is to say, the point of a challenge like this is not actually to have anyone enter. It's just to be.
> This type of challenge should never be made or accepted, if financial incentives are involved, without an impartial adjudicator.
Did you read the whole page? Mike did offer an impartial adjudicator:
> I would gladly submit any such submission to an impartial ombudsman to determine the question of
whether data compression has occurred.
I'm not sure I'd go that far, but it's definitely not a surprise to see it fizzle out. It's particularly uninteresting here because a real solution is either impossible, or only possible because Mike's random source isn't entirely random (which is kinda boring).
Then again, the purpose apparently was to make crackpots put their money where their mouth is rather than spam the usegroup, so perhaps fairness isn't the best success criterium.
I don't think that's relevant - in a sense the ordering information is only required because using individual files has otherwise destroyed some information (by allowing reordering within the output data).
The same process would work with a single stream input to the decompressor, as long as the length of each block where an additional '5' must be output is available - the list of file sizes - so that's where the additional information is stashed.
