One of his last comments -- the one about having an immutable, agreed upon history -- seems like a great tool for recording facts in our "alternate-facts" world.
Block chain has always seemed technically excellent but of limited practical value to me.
It clearly excels in a world where the participants are anonymous and can't trust each other. The trouble is that doesn't describe most business transactions worldwide. Humanity has a couple thousand years of business experience that generally always bent towards parties identifying one another, building trust, and using courts when those previous methods failed.
So there seems a big mismatch here...block chain seems really excellent at solving a problem that doesn't exist in most places.
Bitcoin is a good counter example. And crypto libertarians who would prefer anonymity will clearly always be attracted, but society would have a lot of cultural habits to undo before this would seem attractive in the mainstream.
> generally always bent towards parties identifying one another, building trust, and using courts when those previous methods failed
That costs a lot of money. It makes it hard to get started if you are untrusted, and it means you have to have a court system, you have to do legal stuff, you have to constantly be wary of the potentially changing trustworthiness of your counterparty.
Blockchains eliminate all of this overhead. It doesn't matter if you are dealing with a highly regulated bank or if you are dealing with Bob the hobo, the blockchain guarantees that you can't be stabbed in the back (... err, when used correctly. Used incorrectly it will not provide any security at all).
I think this is something a lot of people fail to grasp. The true power of the blockchain is its ability to bring trust to places where it's currently inaccessible. Banks that don't trust eachother can do buisness directly. Countries that don't trust eachother can do business directly. A person with no name, no reputation, and no tether to a court system can also be transacted with safely, because the courts, names, and reputations are made strictly unnecessary.
And the proposal is that doing things this way is much cheaper than doing things the traditional way, especially when you consider all of the innovation that could never happen simply because the innovator was unknown or untrusted. All of the energy and money that goes into mining Bitcoin, in my opinion, is more than made up for by the value-add here.
> The true power of the blockchain is its ability to bring trust to places where it's currently inaccessible.
Where is that? Because trust seems accessible to me everywhere there is a reasonably open democracy and rule of law.
And why does this trust cost so much? Take payment cards like VISA. Max, they cost 1-1.5%. There's not much to save there. Sure, it would be cheaper if I paid 0.01%, but the cost is already low enough that it's not really preventing any transactions. And of course bitcoin is not going in the direction of enabling micro payments because of transaction costs and volumes.
Ask any merchant who as ever received a chargeback for legitimate goods that they shipped for a credit card payment. Bitcoin has no chargebacks, which is great for merchants who are shipping to somebody they've never met on the other side of the world. VISA costs ~2.7% if you never have any customers who issue chargebacks. But if you're an online retailer, you've probably got an entire fraud department beyond just what VISA charges.
And some services (namely adult services and gambling services) can't get any access to digital payments at all. VISA, Paypal, etc. all block them, despite the fact that these services are entirely legal. Bitcoin makes it possible to use these types of services without some central party deciding that supporting an adult cam site is bad for business.
This is also great for the unbanked. If you are in Africa with no local bank, no government id, etc, something like Bitcoin can enable you where no bank would ever trust you.
And Bitcoin is in fact going in the direction of enabling micropayments. There is a huge upgrade to Bitcoin in the works called the lightning network, which means you basically have to make 1-6 starter transactions on-chain, but after that you can make an unlimited number of micropayments around the network for essentially free.
Not having charge backs doesn't make bitcoin less expensive, it just shifts costs. Good for retailers, bad for customers who can't dispute, or who had their money taken by fraud.
Bitcoin has been around for a number of years now, what do you think is the thing that's preventing it from catching on?
> And why does this trust cost so much? Take payment cards like VISA. Max, they cost 1-1.5%. There's not much to save there. Sure, it would be cheaper if I paid 0.01%, but the cost is already low enough that it's not really preventing any transactions.
This is an important point that very few in the bitcoin community have bothered to investigate.
Credit card fees are even lower than the 1-1.5% you speculate. As credit companies increased their efficiency with technology they didn't lower the fees, but spent the extra profit on marketing in the form of rewards cards and cashback, which shifts money from retailers to card holders. Since vendors compensate by raising prices, that actually means that they redistribute money from people who pay cash or debit to those who use reward cards. There have been class action lawsuits in Canada and the US over this recently.
In Australia they took an administrative approach and capped interchange fees at 0.5% in 2003 and the result was that rewards cards went away.[1] The credit card companies still made profits.
Meanwhile, real transaction costs in Bitcoin are enormous, but instead of being transparent are currently handled via seigniorage through the currently relatively high inflation of the bitcoin supply (rewards to miners). As that is reduced and finally dries up Bitcoin transactions will require large fees. Either that or miners will exit the business and the whole system will collapse since it isn't designed to handle reductions in difficulty. 50% attacks will be easy to carry out, or trust of central authority will be even more important than it is now with the already tiny number of professional miners controlling the network.
In Bitcoin, when the coinbase reward falls, miners will approximately spend as much on mining as the users spend in fees. So the users collectively decides how much hash power they want to pay for, while miners decide what transactions to prioritize.
