It is interesting that even in an article like this that they still say things like "for all its potential, blockchain is still in its early days." It is sticking with the unfounded assumption that it will be a success in the future, if only it is given more time. In technological terms, it is old. Innumerable efforts have been attempted, yielding almost no fruit.
At what point are the fundamental assumptions going to be questioned?
I think the fundamental assumption is that "Satoshi invented a useful solution to decentralized consensus".
What people don't realize is that Satoshi's solution only works if two assumptions hold true:
1. Mining is decentralized: If mining is centralized than relying on proof-of-work for consensus is waste since the centralized entity controls the blockchain anyway.
2. Consensus rules don't change: If you see the threat of #1 and so take power away from miners (like Bitcoin has done), then you cannot ever change the consensus ruleset because aside from proof-of-work, Satoshi did not give any solution to the problem of choosing between 2 chains that have slightly different consensus rules. If you change the consensus ruleset (ie. make any changes where 2 nodes disagree on if a block is valid or not), then you need an oracle to tell you which chain to choose. We've seen this when Core developers chose the 0.7 Bitcoin chain in 2013 and when Vitalik chose the forked Ethereum chain in 2016.
At the end of the day, the blockchain's decentralization is a myth because it relies on false assumptions. Satoshi invented a Rube Goldberg machine that is currently using as much electricity as a medium-sized country (and also enabling things like money laundering, drug trafficking, etc.).
Cryptocurrency mining is as close as one can get to a theoretical free market in the real world. Free markets have known modes of failure [1]. One of these is where first-mover advantage and economies of scale combine to produce a barrier to entry; the result is oligopoly or monopoly.
Except that so far it remains to be seen if that can work at scale. Bitcoin is moving towards the lightning network which changes things quite a bit, in particular potentially adding some centralization and giving some nodes advantages over others (well connected nodes with large open channels will have an advantage over a newcomer without connections for instance).
Bitcoin cash is trying an other route with bigger blocks but it remains to be seen if it scales well enough to real-world currency usage. And of course there's the big problem of cryptocurrencies being useless as currencies because they're not stable enough. Which itself can be largely blamed on their limited supply and inflationary nature which is necessary to bootstrap them (there's an incentive to get in early) but seems to turn against them in the long run since nobody wants to spend something that's by design supposed to become scarcer and scarcer.
It might be theoretically free but it doesn't work great so far. And of course we could discuss whether a completely free market is a good or a bad thing, but that's a whole different debate.
>Bitcoin is moving towards the lightning network which changes things quite a bit, in particular potentially adding some centralization and giving some nodes advantages over others (well connected nodes with large open channels will have an advantage over a newcomer without connections for instance).
The centralization narrative involving LN is somewhat mischaracterized IMHO. Given that source-routing puts control of payments into the the payer, you can choose to mitigate the custodial risk of a single hop holding up your funds in their payment channel a number of ways. For instance, there is no reason one payment from person A to person B needs to involve only one route.
Intelligent wallet software, on the order of tens of milliseconds, could break up one payment of $10 into 100 different routes across numerous payment channels. In addition to giving you custodial risk mitigation, its also beneficial for privacy as well.
I think the average human being values convenience and low fees much more than privacy (otherwise Facebook and credit cards wouldn't be quite as popular). That means that I expect that wallets and stores that offer the smallest fee will be the ones people use most. A well connected node will be cheaper to transact with by virtue of not having to open a new channel.
That gives well connected "bank" nodes a lot of power because they can decide who they connect with (you could imagine paying a "bank" node to connect with you to enable cheaper transactions for your customers) and as a user you have an incentive to host your coins in one of these bank nodes so that it remains easily and cheaply available for purchases. Meanwhile a small indie shop (or some guy selling socks on ebay) won't have any channel so transacting with them will end up more expensive than buying from a popular store.
Basically you've reinvented Visa without the insurance, regulations and customer protection. At least that's how it looks like to me.
I guess we'll know soon enough which one of us is right. Maybe the truth is somewhere in between.
> I think the average human being values convenience and low fees much more than privacy
I think it ends up being more nuanced than that, with plenty of gradations of all of those factors.
If it means, "Literally nobody can know whether I prefer pads or tampons, and where I get them, not even the person I buy pads or tampons from", then I'm going to lean toward paying cash at some random drug store. A brick and mortar because getting things shipped to me requires giving them identifying information, and cash because it has literally zero fees and leaves no paper trail.
If I have to buy something online, then I already have to give them my name and address so I can get it shipped to me. At that point I may not care if my bank and the credit card processing agency also have a record of the transaction, because the info's already out there. At that point it's just a question of whether there are privacy laws that prevent parties from selling too much information or not - either way, I'm guessing 1 and 3 parties will ultimately fall in roughly the same equivalence class, on the privacy front.
Personally, I don't see a middle path where blockchain is preferable to either of those options. If I want complete privacy, then I don't want that transaction appearing on the blockchain, either. If I don't, well, might as well get some consumer protection.
In reality, the average person is going to buy pads or tampons in a way that is most convenient to them.
Only the subset of privacy concerned consumers who don't want anyone to know whether they prefer pads or tampons will go out of their way to visit a random drug store.
That's not the argument. The idea is that if a given amount of bitcoins is set to increase in value as time passes (as is supposed to happen if the currency is successful) you don't have a lot of incentive to invest or spend your money.
If you have $100 on your bank account today then you've got incentives to spend or invest it soon because it's slowly losing value because of inflation, your $100 will probably buy you fewer goods and services in the future that it does now.
Now if you have BTC100 on your wallet and you believe that Bitcoin will succeed as a currency then you know for a fact that these bitcoins will be more valuable in the future than they are now (because the demand will grow but the supply is capped). Ergo you have strong incentives to hoard your bitcoins and not spend or invest them. Your savings gain value without actually being invested in anything. They don't contribute to the economy, they don't fund anything.
I don't understand why most cryptocurrency enthusiasts don't see a huge problem in this. How will you get a loan to start your company in the bitcoin world? Who would want to take such a risk when they'll keep getting richer by not doing anything at all? You'd have to promise them ridiculously high returns (higher than bitcoin's deflation at least). The rich gets richer by virtue of being rich, the poor needs to buy food and basic utilities so they can't save their coins to become rich. Basically what we have today, only worse.
I am a big supporter of crypto currencies, and I do see a problem in that. However, the current volatility will level off significantly once there is wider adoption. That will help reduce incentive to hold. I would never recommend somebody give/accept loans in crypto currencies right now. The time will come though (unless governments squash crypto through regulation or outright banning).
That said, there's no guarantee that BTC or any crypto will appreciate indefinitely; in fact quite the opposite. It can (and does) lose value.
This also overlooks the benefits of a non-fiat currency, such as protection against things like hyper-inflation (most of us don't think about this right now, but if you have any friends in Venezuela ask them how important this protection is).
I'd imagine very useful - just sell it for a few thousand and then "Including Venezuela's equivalent of food stamps, the total pay package now rises to 250,531 bolivars, or $32.19 a month" so it should cover that for a while. Or a flight out.
Except that Bitcoin was mostly minted by a small group of users who simply horde it, hoping to sell it to other users who due to the software will not be able to generate it for as low cost as the early users.
It's zero sum (minus the cost wasted in maintaining the network), and the game theory Satoshi designed will inevitably disincentive new users from adopting it as the barrier to entry increases and alternative options will likely obsolete BTC.
Bitcoin is still deflationary, which makes it unusable as money. Inflationary currencies like USD incentivize people to spend and invest. Deflationary currencies incentivize people to hoard.
Bitcoin is inflationary until the mining period ends, which it hasn’t. You could then still increase the virtual money supply through fractional reserve banking; also “investing” is a lot more like hoarding than it is spending…
So far I don't really know if you can call it inflationary or deflationary because while it's true that the supply keeps increasing the main source of variation for the currency's value is speculation. BTC barely qualifies as a currency today so I don't think we can think in these terms, it's more about what it could end up being if it manages to turn into a proper currency.
>You could then still increase the virtual money supply through fractional reserve banking
You can't do fractional reserve banking on-chain as far as I know so that would mean having your money managed by 3rd party banks who would take ownership of your coins, pool them with other people's coins and manage them for you. So... Back to the start?
Furthermore I don't think it solves the problem of deflation, even with a fractional reserve the bank has no incentive to invest the money if the expected return are less than what it would end up with by not doing anything at all (and therefore not taking any risks either). If you have inflation of, say, 2% then any investment expected to create value or even lose less than 2% is a good one. If you have deflation of 2% then an investment that managed to generate 1% of additional value over your investment actually made you lose money because you'd have been better off not doing anything.
Therefore deflation will make it a lot harder to loan money, fractional reserve or not. Interest rates will be a lot higher to make up for it. The poor will pay the price for being poor, the rich will reap the reward for being rich.
>“investing” is a lot more like hoarding than it is spending…
Depends what you invest into I suppose, if you "invest" in gold bullions then you're right, if you're investing in a startup or loaning money to people buying houses then you're powering the economy.
If you compare the thousands of years where deflationary currencies were working well to the modern Era I think most would prefer an inflationary currency.
It would appear the choice between deflationary and inflationary monetary systems was, at some point along the way, democratised.
And the majority chose inflationary monetary systems.
Each of us is free to offer to pay for goods and services with, say, for example, gold, and each of us is free to ask you trade your gold for legal tender and give us that instead - yeah, the one the tax agency accepts.
The only thing stopping deflationary currency from being used by most people is that most people are too busy surfing / skiing / rock climbing / recovering from a hang over / what have you to care much about how monetary value is exchanged. People, on the whole, only seem to really care about convenience. And more specifically, the more convenient it is to spend money, your own or credit, the better.
But is that the way it should be? Also, this isn't universally true. There are some vendors that started accepting Bitcoin as payment. Some of them stopped accepting it a few months ago when transaction fees were insane, but there are still some that do. You can even get debit cards that automatically convert to fiat on the backend, so the consumer can hold crypto and pay in fiat.
Actually, it's the exact opposite. The security of a blockchain is fundamentally dependent on mining being expensive. That is the only defense against a 51% attack. Cheap energy just drives up consumption to the point where mining is expensive enough to deter attacks.
This is ultimately what I think will sink blockchain as a medium of exchange (not necessarily as a store of value). By its very nature it cannot be cheap, so TTPs will always be able to beat it on price.
I'm not even sure that mining being expensive is a great defense against a 51% attack.
If things do end up being an oligopoly, then any one of the members of that oligopoly will only have a relatively small sprint between their current position and a 51% attack. And quite a few options for how to attempt such a sprint.
I meant that the variation in electricity costs harms the reputation of the blockchain. Work needs to be approximately the same difficulty for everyone.
Work needs to be approximately the same difficulty for everyone
Unfortunately the main design and math of of Satoshi's PoW means that users who ran the BTC software app 2009-2014 worked far far far less and spent much less CAPEX and OPEX to generate the majority of BTC that will ever exist.
No, the fundamental assumption is that distributed consensus in itself is useful. So far, there are some applications (databases), but for the stuff they are using the blockchain for, not so much.
Are there other means of distributed trustless consensus as secure as PoW? Secure being the operative word here. Lots of attempts, but none yet convincingly as or more secure.
People who are not crypto-anarchists don't realize that the only reason for proof of work is so you don't have to trust anyone. If there is trust, a centralized database is better in every way vs. Blockchain.
People who do not read modern research don't realize lots of the things they think are true about the state of research are totally false.
They also think that it's Proof of Work that provides a lack of trust. While that's involved, what's actually more meaningful is the demand to quickly select a "profitable" branch to mine and re-mine on. That can exist in PoS as well.
Hedera Hashgraph recently revealed that it supports more than a million transactions per second based on current usage by developers, that's enough to support decentralized servers and open source MMO environments. It uses gossip protocol and a form of voting protocol.
I'm invested a bit in Credits which claims it'll do a million transactions per sec but it's kind of bs - they can do nearly half a million in very limited conditions but in the real world the numbers will probably be far less and I'm a bit skeptical of such claims. I'm not sure that fast is necessary though - credit cards do a few thousand transactions a sec globally so if you can handle that you could potentially at last use crypto to pay for your coffee etc https://medium.com/@viruseslovers45/credits-the-best-blockch...
Yeah, Hashgraph appears to do high tps at relatively small number of nodes, aka will probably work in permissioned/consortium style environment with limited nodes, but whether it can scale in a public environment with unlimited nodes is an open question.
A non sharded public blockchain that doesn't do some kind of validator delegation will always be bottlenecked by a single validators computational capacity, which is on the order of 100-1000. Hedera is really pushing the line on making fraudulent claims here.
Hashgraph doesn't use blockchain - look into interviews with Dr Baird if you're interested. MachineZone, the big game company, is now building on Hashgraph:
Of course, but those aren't trustless per my question. They're designed for single administrative environments like corporate data centers where a trusted entity controls the environment.
The other two possible environments being multi-administrative (permissioned DLT deployed among a consortium of banks or entities sharing administrative privileges) or no-administrative (public permissionless blockchains like Bitcoin/Ethereum). The hard problem is developing consensus algos for the latter that scale while maintaining security of the shared ledger.
There is a large amount of r&d being put into BFT-style proof of stake for Ethereum, it’s always been part of the roadmap. Much work still needs to be done beyond the test net, but so far no fundamental showstoppers have been found. There is also constant collaboration between the researchers and developers of major projects to move the entire field forward.
It’s still early days, unfortunately the hype got far ahead of the tech but progress is being made everyday. I think the same of VR/AR.
If only someone could think to google "BFT Raft extension" or "BFT paxos extension" and find published research. And if only papers from that search had citations. And if only those cited had links to foundational research on generalized BFT strategies. Oh if only we lived in such a world.
If only. If Only. IF ONLY. iF oNLY. If OnLy. iF oNlY.
But one of the biggest selling points of Bitcoin itself was mathematically limited supply. A new cryptocurrency appearing every day fundamentally undermines the value proposition.
Blockchain may have value as a decentralized ledger in other areas, but “lots of blockchain based currencies” aren’t really one of them since it’s self-sabotaging.
And by prospered I mean, never made money, never became self-sustaining at all.
Facebook is still expanding in its 15th year.
MySpace never earned a profit pre Fox acquisition (the Google deal gave it a one time bump).
In historical terms, MySpace is barely a bump in the road, about the size of an Ask.fm type service (ie trivial in today's hyper scale). It's like looking back and thinking Excite was a juggernaut and therefore a supporting piece of evidence that Google is going to die soon.
Facebook will earn ~$20 billion in 2018 and will end the year with $50 billion in cash. That's 86 times what MySpace sold to Fox for.
MySpace peaked in size at a mere 75 million monthly active users. Facebook is nearly 30 times larger.
MySpace then is to Facebook now, what AltaVista at its peak is to Google today.
That doesn't mean that creating a new social network automatically besets the network effects of the most dominant platforms. I realize that platforms sometimes get replaced. It is early days for crypto, to be sure. It certainly hasn't reached maturity yet. However, there are examples of other monopolies (AT&T, Microsoft, GE, etc) that have lasted for many decades.
Network effects, yes like how BTC is owned by a tiny pool of oligarchs who need other users to transfer real capital in for their zero sum pyramid scheme.
One important point: if we actually include all 7 billion
people on the earth, most of whom have zero BTC or
Ethereum, the Gini coefficient is essentially 0.99+. And
if we just include all balances, we include many dust
balances which would again put the Gini coefficient at
0.99+. Thus, we need some kind of threshold here. The
imperfect threshold we picked was the Gini coefficient
among accounts with ≥185 BTC per address, and ≥2477 ETH
per address. So this is the distribution of ownership
among the Bitcoin and Ethereum rich with $500k as of July
2017.
In what kind of situation would a thresholded metric like
this be interesting? Perhaps in a scenario similar to the
ongoing IRS Coinbase issue, where the IRS is seeking
information on all holders with balances >$20,000.
Conceptualized in terms of an attack, a high Gini
coefficient would mean that a government would only need
to round up a few large holders in order to acquire a
large percentage of outstanding cryptocurrency — and with
it the ability to tank the price.
With that said, two points. First, while one would not
want a Gini coefficient of exactly 1.0 for BTC or ETH (as
then only one person would have all of the digital
currency, and no one would have an incentive to help boost
the network), in practice it appears that a very high
level of wealth centralization is still compatible with
the operation of a decentralized protocol. Second, as we
show below, we think the Nakamoto coefficient is a better
metric than the Gini coefficient for measuring holder
concentration in particular as it obviates the issue of
arbitrarily choosing a threshold.
...However, the maximum Gini coefficient has one obvious
issue: while a high value tracks with our intuitive notion
of a “more centralized” system, the fact that each Gini
coefficient is restricted to a 0–1 scale means that it
does not directly measure the number of individuals or
entities required to compromise a system.
Specifically, for a given blockchain suppose you have a
subsystem of exchanges with 1000 actors with a Gini
coefficient of 0.8, and another subsystem of 10 miners
with a Gini coefficient of 0.7. It may turn out that
compromising only 3 miners rather than 57 exchanges may be
sufficient to compromise this system, which would mean the
maximum Gini coefficient would have pointed to exchanges
rather than miners as the decentralization bottleneck.
Conversely, if one considers “number of distinct countries
with substantial mining capacity” an essential subsystem,
then the minimum Nakamoto coefficient for Bitcoin would
again be 1, as the compromise of China (in the sense of a
Chinese government crackdown on mining) would result in
>51% of mining being compromised.
For a decentralized currency, the limited supply is the only value proposition that made it viable. Otherwise the currency itself becomes flooded by mining rather than purchased with other forms of currency, which leads to more miners trying to cash out than people trying to buy in, which leaves the currency itself into a constant, downward price based on sheer supply and demand.
Any type of currency that doesn't have something limiting the supply (not fixed, but at least constrained) becomes valueless by default.
Even if Bitcoin is limited, if cryptocurrencies themselves are not then we're all just giving people a license to print money.
At least with the Federal Reserve there is a governing body limiting the supply of new dollars entering into the system.
> "Satoshi invented a useful solution to decentralized consensus".
I think that even if decentralized consensus is workable, it's irrelevant for Wall Street projects because these organizations already have experience creating strong trust relationships and useful governance for collaboration (e.g., traditional contracts).
PoW is just one of available consensus algorithms. Blockchain doesn’t imply decentralised consensus, you can run it on paxos, raft, authority round or something else, especially for internal, private or semi-private networks. What you get is trail log with proofs that’s immutable and strongly protected against temper.
If your definition of "blockchain" is any distributed database with signed rows and a public read-only API, it's miles away from what Satoshi was talking about... Why don't you just call it a "distributed database with signed entries" or something.
When meeting my company's Head of Blockchain (not sure if the pun is intended) a while ago, I asked him if git would qualify as blockchain technology. He replied that "blockchain is not a technology, It's a paradigm shift". Literally. That statement was so absurd I didn't even know what to say, so it worked out well for him.
This is exactly what's driving my skepticism. The people who I've met who are most vocal about "blockchain" are also the ones who know little to nothing about the algorithm itself (and algorithms in general).
That is exactly the kind of thing I would expect to hear from a "Head of Blockchain". Your company made a great hire, and they will clearly push the boundaries of marketing bullshit with regard to blockchain.
No, very much not. There is no such thing as consensus in blockchain. Can you
(you in particular) even define the term "consensus"? Can you explain how does
your definition relate to what is commonly used in computer science and how it
works with the impossibility proofs?
> (and also enabling things like money laundering, drug trafficking, etc.).
If you're trying to take a dig at blockchain technology for its decentralized nature and ability to circumvent government controls, you should be aware that this is considered a good thing. See https://news.ycombinator.com/item?id=16702684, for instance. The recent SESTA/FOSTA debacle is one example of why such decentralized networks are needed.
I disagree with 1, because the real controller in any cryptocurrency is the software users of the coin are running. You could have trillions in mining hardware but that doesn't matter a bit if a popular implementation changes the mining algorithm to no longer work on your hardware and the userbase starts using that hard fork.
Its the problem that the advocates for larger blocksizes in BTC ran into. So long as the ecosystem itself was predominantly going to stay on the bitcoin core implementation, the advocates for change couldn't force it. Eventually they just hard forked into BCH, while the more popular original chain keeps on going.
That also means that nothing is really decentralized unless you can cause sea change amongst all participants in a cryptocurrency - if you disagree with what the most common implementation is doing, you can't do squat about it, and commit access is never decentralized or democratized. Theres always someone with the master key to the repo. And we have seen plenty of evidence that once established unseating a popular implementation of any crypto is nigh-impossible, regardless of what the developers do.
Aside from the fact that proof-of-work on a world scale utterly defies the CAP theorem, there has never been an economic system that can scale to the level of, say, one order of magnitude close to ubiquity where there are no trusted intermediaries. Human civilizations just won't organize this way.
There is another, more social, assumption he is making: value that is stored on mathematical concepts (e.g., blockchain) is more appealing as value that is stored on more traditional concepts (e.g., reputation, trust).
The social question is the more interesting one. Tech history has suggested that people slowly but surely gravitate to more open systems, but asking folks to hold their life savings in digital currencies that rely on mathamatical promises completly foreign to the average user seems like quite a stretch. It does not exactly help that just about day there is a news article of some new data breach of an online system.
Mainly because known markets were shut down (maybe some new ones have cropped up which are not in that tracker?) and the dominant use of bitcoin transactions currently is wild speculation.
> If you change the consensus ruleset...then you need an oracle to tell you which chain to choose.
What are you talking about? The rule to choose the correct chain is well defined and simple. The longest chain, i.e. the one with the most work done, is the correct chain.
I'm not sure if you've spoken to any Bitcoin developers recently, but they'll tell you you're wrong and that it is the valid chain with the most work, not the chain with the most work. They'll then tell you what valid means.
Some developers would agree with you though, like Gavin Andresen [0].
Either way, you end up with either centralized miners deciding the fate of the chain, or centralized developers deciding the fate of the chain. Both outcomes are contrary to what Satoshi envisioned.
It has always been the longest valid chain though. If miners were to introduce double-spending transactions in a block, full nodes would--by default--reject the blocks, regardless of how much work the chain contains. This also highlights why miners don't control the network and never had.
My understanding is that the danger of miner control is not "double-spending" but making multiple spends and being able to pick the most favorable one after the fact.
As a non-controller if you try to double-spend, you can't know which one of your attempted transactions will be recorded in the ledger and which will be rejected. As a 51% controlling miner, you can choose the 'correct' transaction.
This allows the 51% controlling miner to engage in futures arbitrage.
Double-spending just means spending the same output in multiple transactions--there are many ways to perform a double-spend attack. Your interpretation of a 51% attack is correct.
If it wasn't clear, my comment was referring to a double-spend that would result in an invalid block i.e. both transactions are on the same chain. I simply used an example to argue that it's always been the case that invalid chains are rejected by honest nodes.
A sufficiently large miner could, right now, create a block which created a million bitcoins from nowhere and gave those to them and it would - for a while at least - be the longest chain. No other clients would accept it, of course, but by your definition the chain where someone just made themselves a billionaire would be Bitcoin.
The really funny thing is that we are going to see more and more coins moving towards regular changes to their algorithm to keep ASICs out, and effectively surrender their decentralization.
Taken to the logical conclusion, a supernode that is issuing algorithm changes is no different from a supernode that is signing blocks directly, just vastly more inefficient. Since you are already centralized, there is no reason to have miners at all. It becomes a ponzi scheme where the rewards are paid out randomly to participants.
> and also enabling things like money laundering, drug trafficking, etc.
At this point, I don't worry about those; criminals would operate with or without Bitcoin and we have government agencies dealing with those; I'm more concern about suicide rate that will spike due to BTC/altcoins losing 80% of value.
I have too many acquaintances on my Twitter that last summer were showing me "this cool blue app that helps make 15% a day" and now they remain silent. I tried to contact two of them via cell and it goes nowhere.
Looking at BTC/ETH/altcoins charts, I can only image brain-halt it caused so many people that we putting second/third mortage on their house just to "invest in a blue iphone app" and many cashing out their 401k just to be lest with 5% of their money not even year later.
TCP was created in the mid 70's. The internet as we know it didn't offer the average user much value until the mid 90's and even then it was a very small amount of the population capable of using it / benefiting from it.
Electric cars were around in the late 1800's. In the early 1900's they were on a par with gasoline / steam powered car sales. It has taken us well over 100 years to get to a stage where they're considered a viable option again for most people again...
Bottom line - technology morphs over time so long as there are people passionate about it and continuously working to improve it. There are literally thousands of developers working full time in the blockchain space and it's one of the hottest growth areas around in technology in terms of developer mindshare.
It's not going to die any time soon, regardless of what price Bitcoin is.
> The internet as we know it didn't offer the average user much value until the mid 90's
The Internet was useful to academic, financial, government and military users in the 1970s [1]. It was built and iterated to solve real problems. Real users' inputs, many of whom were experts in their fields, were incorporated into its design.
Not to mention corporate email was popular in the 1980s, long before the Web reached a large number of traditional consumers. Even the Queen of England sent an email across Arpanet back in 1976. Microsoft Mail came along in the late 1980s.
> TCP was created in the mid 70's. The internet as we know it didn't offer the average user much value until the mid 90's and even then it was a very small amount of the population capable of using it / benefiting from it.
Using it directly.
I don't personally own any equipment that speaks ATM, but I benefit from the existence of networks that use that protocol all time.
Heck, I doubt I'll ever touch a Bloomberg terminal, and I'm not entirely sure if their existence really benefits me at all, directly or indirectly, but that doesn't mean financial companies can't easily find uses for them.
It took centuries for the fundamental hermetic assumptions of alchemy to be questioned, and it had to come from 'insiders' (like Boyle and Newton) rather than total skeptics. Even then it was never refuted in any official sense, it just sort of faded out of fashion as its surrogate children, the sciences, took over more and more of its academic spotlight. Blockchain-ism, the alchemy of the internet age, will probably have to follow the same arc, though sped up by an order of magnitude thanks to the much improved knowledge-sharing network of the present day.
Good point. Having a strong 3rd party intermediary moderating/backing transactions is a feature not a bug. This is why people bank with JP Morgan and similar huge banks. Although they charge fees you do get something for the money. They are governed by laws, have physical locations, people to talk to, fraud prevention and raw financial, legal, and regulatory power. I have no love for them but I believe they will guard my money effectively.
You're probably referring to a strong 3rd party intermediary as the aggregate of our financial system when you refer to its regulatory power here, but that it reads like the bank itself has regulatory power is the critique of money provided by Bitcoin in a nutshell. Regulatory capture IS the problem of scalability with our monetary system. Bitcoin exists to prove this.
The problem in 2008 was the investment, not the deposit arm of banks.
Bitcoin has had problems with both the investment, and the deposit arms. Most ICOs are pure fraud, and i've lost count of the number of robbed exchanges.
2008 was not really a question of trusting banks in a way that our savings were harmed. It was more that our investments were harmed. Separating bank liability for either of those things is hard, but it is not a simple case to assign all the blame on them.
Bitcoin needs blockchain to verify that a bitcoin is authentic.
I have no idea why a company would use blockchain for logistics or file storage considering how its massively expensive to constantly pay miners for transactions.
My centralized server can do everything needed for logistics or file storage.
Benefits of blockchain are overblown. There are uses, but centralized servers are really good.
Now I agree that a lot of ideas for how blockchain will be used are just unnecessary and stupid, but there are some good ones as well.
You mentioned file storage but actually I think blockchain could be useful for this. Allow me to elaborate.
I don’t want to rely on Dropbox or Google or any other single company for the long-term storageof my data. And I don’t want to accidentally upload unencrypted data. And I don’t want a single company to decide what platforms they will support.
I want an open protocol and a nice open source client. Different people have different wishes. For me that would be far more attractive than the centralized storage you are suggesting, because it’s not just about the servers and the storage it’s also about the people and the software ecosystem around it.
And besides, if I gave like hundreds of GB of data to one company then they could easily start charging me more in the future and I might not be able to do much about it. With a distributed system I think there is a better chance that competition might drive prices down more.
And that’s just one kind of use-case. There are more as well.
I think blockchain in general is cool and also I like projects that aim to make worldwide payment be really fast and cheap and for the banks to hold less power over my money.
There are already open file storage protocols, and open source clients that supports many storage providers. I use git-annex, which supports about a dozen commercial services, plus any machine that supports SFTP, SMB, Webdav or rsync, among others. And of course, it encrypts everything locally before uploading.
Sure, you can sync to your own drives or to several commercial storage providers, but it's not as cheap as it should be. We're talking geographically distributed storage on an open marketplace, cryptographically enforced for extremely cheap prices.
Wasabi and B2 are pretty much the only commercial services which could even attempt to compete on price with something like Sia today (Filecoin and others in the future potentially), but they're only in single DCs and if they lose your data you have no one to go after. In the cryptocurrency-based systems, this is all automated.
For as many incredibly stupid and useless applications of blockchains as there are, this isn't one of them in my opinion. It may not be unique, but it's actually something that could have a competitive edge over a centralized service.
>Wasabi and B2 are pretty much the only commercial services which could even attempt to compete on price with something like Sia today (Filecoin and others in the future potentially)
It would be nice to see Sia/Filecoin provide some basic DB metrics like availability, durability, latency, bandwidth... things that any prospective client would absolutely need to know.
Not sure how git-annex works, but with blockchain your files are automatically distributed among geographically diverse nodes, and there's an embedded payment method to reward others for hosting your content--all while not having to communicate with a corporation or any other third party and providing pretty good built-in security.
Dropbox got a similar response, no? That it can be replaced by rsync.
New non-blockchain distributed ledgers like Hedera Hashgraph can support 300,000 transactions per second. That's enough to decentralize servers, or host an open-source MMORPG. No more single point of failure.
Sure but I don’t want to own the storage drives myself. Also I want it to be simple as Dropbox. I have other things to do than to dick around with storage and syncing and all that — believe me I did spend a lot of time on it already.
The point of the blockchain is to allow me to rent storage space on other people’s computers.
It's younger than most technology is when it becomes successful. Much younger when you realise you think about the age of the concepts, designs, algorithms, etc. that eventually become successful rather than a specific attempt at implementation.
Imagine if a bunch of investors walked into the Homebrew Computing Club [1] in 1976 and offered to buy anything and everything its members made for $1 million. With the benefit of hindsight, blockchain is the story of a neat database technology trashing its near-term prospects by marketing itself as a currency.
Blockchain is a shit database concept. It's use as a currency is one of its best uses. This idea that blockchains are a good database is an absurd myth. Blockchains are useful specifically for doing distributed consensus, and almost nothing else. Currencies are one of the best applications of distributed adversarial consensus. There are others, but currency is pretty near the top of the list.
I think this paper [1] made a decent case for permissioned blockchains (i.e. "where the participants are limited to a predefined set") in cases where one must store state, accommodate multiple writers who do not trust each other and does not have access to an always-online trusted third party. The number of cases where the final condition applies is small, but positive.
> cases where one must store state, accommodate multiple writers who do not trust each other and does not have access to an always-online trusted third party
Ya, that's distributed adversarial consensus. Decentralized currencies are an excellent instance of such conditions. They really are a useful and interesting application. That doesn't mean they deserve all this hype in the form of investment from the average person, but if they weren't so hyped, they'd have a serious use-case as a world reserve currency and they'd make a very nice international settlement layer. Because all of the countries in the world would know that the currency was politically neutral. I think that's a pretty sweet/useful property to have.
There are definitely a few other cases where adversarial consensus problems exist too. I think decentralized prediction markets are a pretty great application of smart contracts, for instance. But yes, a lot of these things are way way over-hyped and being pushed for things way beyond their useful scope.
Right now such currency is USD, with the Fed acting as a trusted third party. That's one of the reasons why other countries are investing in "blockchain technology", whatever that entails
The Blockchain is a clever combination of two preexisting concepts: distributed merkel trees, and a consensus algorithm. If you remove one of them, you no longer have a Blockchain, you just have one of its preexisting components.
"Permissioned blockchains" is like someone thought "what if we took the radios out of cellphones and connected them by cables" and proceeded to call that a brand new invention.
That's not actually true. Git is a blockchain, for instance. Permissioned blockchains are a real thing. Even centralized blockchains can be useful (e.g. a government publishing property record transactions, the blockchain aspect would be useful to ensure retroactive modifications weren't made, even if the gov. was still in full control of the chain itself).
No, they're just merkel trees! The attempt to co-opt them to make "blockchains" seem more useful than they really are - and to justify all the money dumped in these projects - is disgraceful.
But irrespective of its conceptual quality, why should anybody care, outside of compsci? Why doesn't the doubly linked list get to be a household name or a hotly tipped investment buzzword?
Because at a fundamental level, distributed adversarial consensus commoditizes trust. Institutional trust is an enormous bottleneck in our economy. It is a virtuous cycle that ossifies industries, e.g. banking, and consumer finance. Why does it still take longer to send money to someone in another country than it does to mail them a package? Why are credit cards a pull architecture, even though that is pretty obviously incorrect?
The reason is that the institutions that created these things are extremely well insulated from competition. They are well insulated from competition, in part, because they have acquired the public's trust, through a long track record of not stealing everyone's money.
Solutions to the distributed adversarial consensus problem provide a way to give new businesses access to the same, or even greater, levels of public trust. Now - obviously there are still scams in this space. When I say 'trust', what I mean is, in the sense that two counterparties can transact in a way that doesn't require intermediation to ensure the completion of the transaction.
This really is a fundamentally novel and socially significant innovation. It really does reshape the competitive landscape of a number of industries. At least, it has the potential to. But it is also true that there is an enormous amount of greed and hype floating around. And this isn't in any way intended to justify the ICO scams, or the sky high prices of the existing currencies. It's not clear that anyone has yet figured out the right interface and set of practices for actually realizing all these economic gains. Nobody has yet made the iPhone of blockchain.
But the basic technical problem - distributed adversarial consensus was indeed solved by Satoshi. And that really does have substantial, positive social implications for the future. And I fear that people here are losing sight of that because of the gyrations of these silly markets.
It absolutely does no such thing. Trust has nothing to do with technology and you'll never escape the need to trust real world, meatspace based institutions and humans. At the end of the day you are arguing "code is law", which is a pile of fresh horse manure, clear to anybody who saw what happened to The DAO.
Technology is created and governed by humans and you have to trust those humans. You need human meatspace based institutions in place to deal with when that trust is broken. No technology will replace this--at least in any kind of world I'd want to live in.
Satoshi's Glorious Blockchain will never succeed because it is a technological solution to a problem that can never be solved by technology.
> It absolutely does no such thing. Trust has nothing to do with technology and you'll never escape the need to trust real world, meatspace based institutions and humans. At the end of the day you are arguing "code is law", which is a pile of fresh horse manure, clear to anybody who saw what happened to The DAO.
Anecdotes are not arguments. You keep making statements, but providing no justification for them. You could say all of the things you just said about the internet in the mid 90s. And people did. And then in 2001, those people felt vindicated. But today, they look like the fools that they were.
Why is it not? It's slow, expensive and wasteful. You could host a regular MySQL on commodity hardware that could handle ten times the rate of transactions of the bitcoin blockchain. You could publish signed dumps publicly for people to replicate and monitor as they see fit.
The only interesting feature of bitcoin is the trustless consensus but it's not as useful or revolutionary as the hype would have you believe. In particular it's only working as intended as long as you remain withing the digital world, as soon as meatspace is involved you need trusted third parties and arbiters. "Blochain technology" whatever that is, is a solution in search of a problem.
I guess you've never heard of CQRS then. Blockchains are not on-demand databases, but rather sources of truth from which derived, queryable databases can be constructed.
>Command Query Responsibility Segregation is a software pattern that divides the system into two distinct parts, an append-optimised command side and a read-optimised query side.
My point was about the "append-optimised" part. Of course the blockchain can be arbitrarily fast to query but you can only make about 5 transactions (or "inserts") per second on the bitcoin blockchain on average. Not very impressive as far as DBs are concerned.
CQRS is great. But you can implement it very efficiently using standard logging techniques. Blockchains are just a slow, inefficient implementation of CQRS.
The idea of a neutral "third party"(!) operating a globally available transaction ledger, with standardised APIs and agreed meanings to contracts and data structures is appealing to everyone in every sector.
the sizzle of blockchain is enticing, it solves huge problems that are darn well intractable without "disruption".
for example in finance the global clearing system is an embarrassing hodge podge that only benefits the fraudulent and the incompetent - and replacing that completely over night has enormous attractions for pretty much every actor. but ... it is really a silver bullet - if it was so easy to replace global clearing, to get everyone agreeing on one representation of a trade or an instrument or a hundred other things i honestly never understood, if it was that easy it would have happened.
this sort of sector wide cohesion comes with either one dominant player or many years of government level negotiations
The web only blew past everyone in most areas because there were no global communications between parties at all in the areas the web now dominates (cf social media vs international shipping documentation)
I don't see how blockchain fixes any of the clearing/settlements issues in a way which is better than a trusted third party (or which doesn't involve trusted third parties).
Let's take settlements. Some instruments are (still, in this day and age) ultimately issued in bearer form (ie, if you have the piece of paper, you own the bond/shares/title to the land/whatever, just like cash). This has a number of problems (you'd be surprised how many people lose bearer instruments). There's a similar, but less serious, problem with requirements for paper certificates in registered form.
The only real way to fix those is to change the law so that instruments can be dealt with in purely electronic registered form and the bearer instruments don't exist to start with.
Some jurisdictions haven't changed the law to allow this so we are stuck with legal title being bearer or paper certificate based. Blockchain by itself as such can't fix the problem of "what happens if you lose the instrument" and can't fix the problem of "what happens if you refuse to hand over the instrument in performance of a valid contract".
A trusted third party (nominee/custodian/etc), by contrast, can fix some of this pretty well (trusted third party keeps the instrument in a vault and issues its own electronic registered form instruments which confer "good enough" title most of the time).
i did not make myself clear (i should stop
posting from my phone).
i was trying to say that the sizzle was more than the reality - a trusted (neutral) third party will solve all the claimed issues - it's just that the reason this has not happened in many sectors is because the issues the third party / blockchain can solve are not the issues preventing adoption - it's like car manufacturers would like to dump their dealers and sell direct - but no one is prepared to risk a huge downside. Tesla might be "disruptive" but no one seriously thinks Tesla will replace all other car sales - and so dealer networks will remain (for a while).
I saw a very good presentation regarding this HyperLedger project, and IMO this kind of projects are the ones that will form the future of blockchain technology.
There's zero need for a blockchain in that case; all you need is for each insurance company to public a hash-chained log of their policies. The closest example is the CT logs, but every single invoicing software in my country was doing that before the Bitcoin paper was published, as part of the mandatory implementation of SAF-T: https://en.wikipedia.org/wiki/SAF-T
This is an announcement of a future prototype. It is literally not useful. It is hype.
I'm all for people trying things out; prototypes are how we learn. So good for them for trying it and seeing what happens; maybe one day it will be useful. But it's maddening that people keep confusing marketing-driven press releases for actual delivered utility.
The reason I put that link was to provide some context. I know one person in IBM (here in Mexico) related to this project in Mexico and the project is already working in production.
I'm not "being dense". Every time I ask for examples of a blockchain project actually delivering value in a way that a simple database or checksummed transaction log wouldn't, I get pointed at proposed projects by people who have seen exciting presentations. Every time.
You were responding in a contradictory fashion to somebody saying, "Innumerable efforts have been attempted, yielding almost no fruit." The only thing that could usefully contradict that is proof of something yielding fruit. A press release isn't. Neither is the fact that they've managed to get the prototype running. There are a lot of blockchain prototypes running. Many of them are proposed and built by consulting companies that get paid by the hour, whether or not any actual business value is delivered. IBM has such an enormous conflict of interest here that they're just not a reliable source.
I'm sure you're friend's sincere, but there are plenty of sincere blockchain proponents. There were plenty of smart, sincere people who believed in 3D TV, Google Glass, and the Zune as well.
Really? This doesn't seem true at all. I feel like it takes decades for many good ideas in tech to get traction, usually going through many, many failed iterations.
As We May Think[1], anyone? Or self-driving cars, which go back to at least 1984 in CMU, and yet are still "[near] future tech" now. Neural Nets were a half-century old idea[2] before they became actually useful...
I mean, the question is not "Is Bitcoin as implemented by following the original whitepaper going to be the future of mankind?" It is whether or not there is something big in that whole area (blockchains, decentralized tokens of exchange, PoW/PoS/etc) and, if so, how big?
Of course, for a lot of people, the question is "By, say 2025, is my BTC going to make me rich or is it is not even going to be worth the bits it is encoded in?" Equally hard question to answer, but much less interesting.
The current cycle of blockchain furor could all end up badly (I hope it doesn't, but who knows), and yet that won't mean the tech has no future. Now, it could be like VR/AR/AGI, which are always the future, of course ;)
I cannot agree with you more. I'd actually love to chat more about this so feel free to reach out if you're interested. I work on building new technology for municipal governments, and the last 9 months have consisted of cities asking me about my blockchain strategy. I'm still struggling to explain a distributed ledger does not solve any of the problem they describe. Yet "cutting edge technologists" have told them it's the most important thing for distributed data. I ask what they think about SQLite and they ask me what SQL is.
No it's not. It took double entry accounting hundreds of years to spread around the world, why would you expect triple entry accounting to take over any faster? We already know it's going to succeed because it's objectively better by a very significant margin, but that doesn't mean it's not going to take decades to do so.
> It took double entry accounting hundreds of years to spread around the world, why would you expect triple entry accounting to take over any faster?
Here in modern times information moves orders of magnitude faster than when double entry accounting was invented.
By modern standards, blockchain is ancient and has yet to move beyond its current use as the world's greatest platform for financial fraud ever invented.
> Here in modern times information moves orders of magnitude faster than when double entry accounting was invented.
The speed of information is about as relevant as the cost of tea in China. What matters is how fast people actually change their minds, which isn't any faster. All of the older generation basically just has to die before the new best practices can get widely adopted. If anything change likely happens more slowly these days because people are living longer.
Blockchain shysters speak in such vague terms that they are effectively saying absolutely nothing while still reeling in the rubes to buy into their scams. Case in point. Your post.
by me, now, and in the past. and by lots of other people. but websites and tv probably get a lot more views for articles that talk about people getting rich quick. i bet alot of people who have followed bitcoin since the early days are pretty neutral on it, or even negative.
governmemts are thinking of putting assets and laws on Blockchain, stock exchanges are waiting for scalability to start putting everything on the blockchain. Immutable government records already exist. Where do you base your argument?
But if the government is corrupt they'll just say that the original transaction was invalid for X Y Z reasons and carry on... the truth being obvious has never been a problem for corrupt regimes
Git provides centralized version tracking that can be cloned easily -- no miners required. And authenticity, while not truly unique is likely unique enough.
> And how would a blockchain stop a government from putting a counterfeit record in to start?
Or any entity? Sure you can trust that once it is in the blockchain it won't get tampered with but you still have to trust the source of that record.
... which is where all these stupid "do your inventory management on the blockchain" things fall apart with even an ounce of thought. Who gives a crap if the blockchain trustlessly says the wine was made with grapes from peru if a corruptible human had to enter it...
At some point, all data comes from humans and you have to trust those humans to do the right thing. And when those humans breech that trust, you need meatspace based institutions to sort out the mess...
“governmemts are thinking of putting assets and laws on Blockchain”
Two things: this statement is so vague it borders on meaningless. What assets? Who will put it in there? The president? Why would a government do that? Is it free to do or is there budget? Etc.
Secondly, even if we could surmount the vagueness that plagues not just this idea but all blockchain ideas, the Herculean effort required to move governments which can barely move themselves seems like it would delay the whole thing by decades.
It all starts with how vague the ideas are. It really requires simply staring at the ceiling and figuring out precisely what you mean when you talk about blockchain ideas.
The vagueness of Blockchain reminds me of the same “Cloud” vagueness. CEOs and CIOs read these articles about how great “Cloud” is and how everything is moving to “Cloud” and they turn around and declare things like “I want Cloud” and “We need to work on Cloud!” and “Invest in Cloud”. Just parroting what they read in HBR or what some IBM consultant told them. Then a whole bunch of money is spent on “Cloud” with often not much to show for it at the end, besides a bunch of opportunistic Cloud providers getting rich.
Rinse and repeat for Big Data, ML, AI, Bockchain, and whatever the next fad will be.
The value proposition of the cloud was that it saves time and sometimes money because of usage pricing. The only advantage of blockchain is that it's supposedly more secure against tampering.
Yes, businesses try out different things and some things stick and some don't. This doesn't even have anything to do with technology. Businesses use computers because some idiot in a suit read an article.
Many companies are making a lot of money from implementing or integrating "Cloud", "Big Data" and "ML". They're not fad technologies. Blockchain hasn't done anything yet so should not be lumped in with them.
assets like everything from real estate records to money to corporate stocks to car ownership to birth certificates.
What you call vagueness I call short sightedness and failing to see the big picture. It has been done before with all major breakthroughs since the applications are not immediately obvious to everyone.
There are a large number of people who... believe there was a conspiracy to produce a falsified birth certificate for the previous president of the United States. If it were on a system where the original record could be viewed in a transparent forgery resistant way then that wouldn't have been an issue. Maybe.
what do you mean? you are too focused on SV "solve a problem mantra" you keep repeating it.you can think of tamperproof, speed, transparent, public keywords.
you want private land ownership records? private tax records? private stock ownership records? you hate it so much your reasoning becomes blurry man. think a bit
Several states in the US are accepting tax payments in bitcoin. Additionally ever out of counties in the US which are putting real estate transactions on a block chain
> Several states in the US are accepting tax payments in bitcoin.
Citation needed. The Arizona senate barely passed one such bill, but it would still need to pass the House and the governor. Arizona's government is known to do silly things in a vain attempt to be tech relevant.
BTC alone has a market cap of more then 100 billion USD, hence your statement and premisse is inaccurate. Wall Street firms just attempt to use it in places where it's not useful and where there are simple alternatives.
Yeah, I agree the way Wall Street approaches this seemed rather defensive. They are trying to appear on top of things, while in reality still are not sure how to tackle bitcoin long term.
> Combined they're sitting at ~$165 billion dollars in created value.
Huh? Bitcoin and Ehtereum are purely speculative assets, they have not enabled any new production or efficient distribution,
they have not increased economic activity. They aren't even marginally useful in electronics production like gold is.
This is like saying printing dollars creates value (though the dollar is at least useful as an instrument of trade).
> they have not enabled any new production or efficient distribution
You know of another way to transfer massive amounts of money around the globe without middle men? This claim that cryptocurrency offers no value is completely ignorant of the most basic and fundamental properties of the technology.
You do need middlemen. The middleman is whatever service you must use to convert btc or eth to local currency which will actually be accepted for payments.
The question is whether Bitcoin and Ethereum have provided value. "Have" means in the past up to and including the present.
You are implicitly agreeing with the statement that Bitcoin is only speculative, by admitting that it will only be useful without middlemen in a hypothetical future where it achieves wide adoption.
Nope. In reality, the tax office comes along, demands to see the seller’s records, and if they haven’t kept comprehensive records of all transactions and the fair market value of the coins at transaction time in local currency, then they get fined, or if they’ve been actively evading tax, jailed. Plus, even if they’ve kept records perfectly, they need to get local currency at tax time in order to pay their tax bill.
Bitcoin is useless for any legitimate business. The costs of using it vastly exceed any benefits.
A lot of dopes who think they’re smarter than the tax-man because they’ve been evading taxes by using bitcoin are going to have a ‘Martin Shkreli’ moment in the next few years.
If I buy a grain of sand off of a beach for $1, the market cap of that beach is trillions of dollars. That doesn't mean the beach produced trillions of dollars.
Crypto does not equal blockchain. Blockchain has a huge number of potential industry uses other than cryptocurrency. IBM has done a lot of work with companies making blockchain products that don't involve cryptocurrencies. When multiple companies are in a shared relationship they can benefit greatly from the tech. There are government regulation opportunities keeping track of sales and trades on regulated public markets. Crypto is just the craze that got the word out. Even calling crypto a failure feels like an over statement.
At what point are the fundamental assumptions going to be questioned?