
Bitcoin, Ethereum, Blockchain, Tokens, ICOs: Why Should Anyone Care? - prk90
https://medium.com/@preethikasireddy/bitcoin-ethereum-blockchain-tokens-icos-why-should-anyone-care-890b868cec06
======
hudon
Awesome deep dive into the space. The two positions I object to are:

> In some ways, Bitcoin could be considered the first decentralized
> application since it runs on blockchain technology, is fully open-source,
> and runs without a central authority.

Decentralization is not a new thing that only came into existence with
Bitcoin... Torrents are decentralized, the email protocol is decentralized,
Tor is decentralized, etc. Decentralized protocols and applications have
existed before the blockchain and what the blockchain adds as a decentralized
application is decentralized transaction validation. Basically decentralizing
the validation of what can and cannot get written to a database. If you make
your "writes" application state, then you can generalize the validators to be
not only validating database-writes, but program execution steps as well
(Ethereum).

> By no means do I believe that decentralized applications have no benefits.
> In fact, I foresee a future where applications are 10x more secure, 10x
> cheaper, 10x more efficient, or 10x more on some dimension than the current
> ones.

Decentralization is always costlier. Netflix is faster and more reliable than
torrents, Facebook is more reliable, faster and easier to use than Diaspora.
Fiat and credit cards are faster and easier to use than Bitcoin. AWS is
faster, cheaper and more reliable than StorJ, and on and on. When you
decentralize something, you must add coordination and communication costs such
that your overall costs will always be at least as high as the centralized
alternative. So the claim that the decentralized applications will magically
be faster and cheaper definitely needs research and a [citation needed].

If we realize that the decentralized application will always be costlier than
its centralized alternative, we must ask ourselves: why do we need
decentralization? Then, we will really know what blockchains are for!

~~~
clamprecht
Vitalik (of ethereum) has a pretty good blog post talking about the different
types of decentralization: architectural, political, and logical.[0] For
blockchains, he says:

"Blockchains are politically decentralized (no one controls them) and
architecturally decentralized (no infrastructural central point of failure)
but they are logically centralized (there is one commonly agreed state and the
system behaves like a single computer)"

[0] [https://medium.com/@VitalikButerin/the-meaning-of-
decentrali...](https://medium.com/@VitalikButerin/the-meaning-of-
decentralization-a0c92b76a274)

~~~
kbody
So ironic to read "decentralized (no one controls them)" coming from the
leader of ETH that made the decision to fork ETH and revert transactions
related to the DAO hack.

~~~
Lerc
But with decentralized control it's not a decision, it's a proposal.

A lot of people feel like Bitcoin etc. are Stick-it-to-the-man endeavors. In
the long term I think they will be disappointed.

I think the real benefit of this sort of decentralization would be if multiple
governments took an active part in its operation. America could propose
something but it wouldn't take effect if they can't convince the mining
majority of China,Russia,France,Australia,Nigeria and India. No one entity can
unilaterally make a decision for their own benefit.

~~~
52-6F-62
Well put. I've seen the 'DAO-hard-fork' line swung around pretty wildly over
the recent popularity surge the past few months -- but you nailed it.

That difference is the whole point. It could be argued that Vitalik has enough
political clout in the community now to do nearly whatever he wants, but that
only goes so far as whatever he's proposing is agreeable upon a consensus.

If the miners disagree, then it's a no go because they make it work. If the
larger userbase disagrees, then the miners will be bent to disagree because
there won't be any money in it if everyone sells off. It's shortsighted to
think that because there are influential parties the whole system is broken.
(hint: functioning democracies work this way. As far as most people can tell
so far, it's a good thing)

I also agree with the rest of your positions here. To wit: while governments
are hesitant and slow to get directly involved, they _are_ doing active
research[0][1] into how/why/when it will be valuable to use existing
blockchains or for what reason they could employ new ones. So are many banks.
The distributed ledger seems to hold inherent value for everybody.

[0] Being from Canada, I know more about the goings here than elsewhere. The
article has a rather negative tone, but the point being they are experimenting
and recognize the need to keep up technologically, and the need to improve
upon current systems. They are speaking more directly to virtual currencies
here. -- [https://www.theglobeandmail.com/report-on-business/bank-
of-c...](https://www.theglobeandmail.com/report-on-business/bank-of-canada-
says-wont-use-blockchain-for-interbank-payment-system/article35112169/)

[1] Fintech and Financial Services: Initial Considerations - IMF --
[http://www.imf.org/~/media/Files/Publications/SDN/2017/sdn17...](http://www.imf.org/~/media/Files/Publications/SDN/2017/sdn1705.ashx)

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mod50ack
The idea of the ICO is ridiculous to me. It's nothing but a scam: here's why.

I think that there are three ways in which something can have some sort of
"value."

(1) The object is scarce and has uses --- e.g., gold.

No matter what, people are going to want gold. It's scarce (assume you can't
just produce it) and is essential to modern electronic equipment (besides its
appeal as THE famous precious metal).

(2) The government backs it --- e.g., the U.S. dollar

Techno-libertarians are going to lambast me for this one, but governmental
backing actually means a lot to a currency. There is a reasonable expectation
that the U.S. government, for example, be around tomorrow; if they aren't,
we've got bigger problems than what we're going to do with our portraits of
dead presidents.

(3) Agreement within a community --- e.g., Chuck E. Cheese's tokens, bitcoins

Now we've reached the most basic level of commerce. I'm not going to explain
the social structures behind bartering and tokens, but essentially, everybody
in the Chuck E. Cheese's agrees that a token is worth a game (or everybody
involved in bitcoin transactions agrees a token has a certain worth).

Being a computer geek, the idea of a digital transaction becomes obviously
quite appealing. However, bitcoin (and ether et al.) seem to be a waste to me:
just a token that a useless computation has been done on an abused piece of
hardware. Perhaps it would be better to get token credit for contribution to
medical research or the like.

The altcoins and these bullshit "ICO"s are the next level of dumb. Now, not
only do we not have any computing value (as they're 99% perfect clones of
bitcoin or ether), we don't even have the ONE thing that bitcoin did right:
recognition, which led to some insane valuations in those early, early days.

Today's news story: Invest in our ICO: we're totally not a scam based around
fake currency. People totally value what we sell. Yeah, right. People barely
accept current coins.

~~~
programmarchy
> a token that a useless computation has been done

You don't understand the fundamentals of Bitcoin. The computation isn't
useless. Go find out why, and perhaps things will make a little more sense.

~~~
acdha
That's not a helpful answer — rather than just saying RTFM, do you understand
the problem well enough to explain what inherent value the computation
provides?

~~~
oh_sigh
If you assume that there were rational designers of Bitcoin, why would they
put in a useless, expensive computation?

------
SilasX
>I’ve been personally invested in this space for a while now — most recently
as an engineer for Coinbase

Sorry if this is too bitter and tangential, but ... I'm not so sure I'd name-
drop my employer so gratuitously, when they had ~3-4 site outages in two
weeks[1], all of them coinciding with a major price drop (to say nothing of
the miffed customers that are seeing their money and cryptocurrencies
disappear [2]).

[1]
[https://status.coinbase.com/?again#month](https://status.coinbase.com/?again#month)

[2]
[https://news.ycombinator.com/item?id=14523126](https://news.ycombinator.com/item?id=14523126)

[https://news.ycombinator.com/item?id=14587941](https://news.ycombinator.com/item?id=14587941)

~~~
dublinben
It would also be great to read about these technologies from a source without
the bias of being personally invested in them. It seems impossible to find a
writer with any kind of expertise in this field who isn't also personally
betting on it's success.

~~~
Rmilb
As a crypto fan, I try to pay close attention to the critics. Its tough to
find someone who understands the tech and doesn't think it has some chance of
success.

Having said that, Tim Swanson has some good critiques of bitcoin/blockchain.
[http://www.ofnumbers.com/](http://www.ofnumbers.com/) He does work for R3,
the banking consortium which isn't creating blockchain technology, but
distributed ledger technology.

------
wcoenen
One troubling aspect of the bitcoin proof-of-work is its tendency to eat the
world.

Miners will tend to expand their operations until the electricity cost
approaches the block reward. So if we plug in some numbers[1] we can estimate
that bitcoin may soon consume a significant fraction of all electricity
production. And it gets even worse as the price rises.

[1]
[http://www.wolframalpha.com/input/?i=(2500$%2Fbitcoin+*+12.5...](http://www.wolframalpha.com/input/?i=\(2500$%2Fbitcoin+*+12.5+bitcoin+%2F+600+seconds\)+%2F+0.05+$%2Fkwh+as+a+percentage+of+global+power+consumption)

------
danbruc
_Why Should Anyone Care?_

Well, you probably shouldn't care. It is not too long until we will be a
decade into this adventure and for all practical purposes there is still zero
adoption. We may or may not get a useful mainstream product one day but right
now we don't seem to be substantially closer to it than when the Bitcoin
genesis block was mined. Sure, tomorrow someone might have this one idea that
makes all the pieces snap together but it might as well take another decade or
not happen at all. So unless you belong to a small group of speculators, early
adopters, or want to invent the killer application yourself, you probably
should just care as little as 99 % of all people do.

------
Fej
Easy. Don't. One day the bubble is going to pop and cryptocurrencies will be
largely forgotten. The entire bubble is built on speculation. This is clearly
unsustainable.

Bitcoin will probably still be used as a medium of exchange for illicit goods
but that's about it.

~~~
danmaz74
> Bitcoin will probably still be used as a medium of exchange for illicit
> goods but that's about it.

As if this was a small use case...

------
rdiddly
This isn't so much of a "Why Should Anyone Care" but rather more of a "How
Does It Work?" for anyone who _already_ cares.

Those wondering why they should care, will not care enough to read this much
information.

------
cft
I looked into making a simple dapp with Solidity. They deployment of a dapp on
the mainnet is not easy... There are only a few tutorials, and they are not
very clear. When you deploy to the mainnet you start playing(wasting) with
real wallets, i.e. real money, and the lack of clarity does not help here. For
now I gave up in the middle of configuring geth node. This whole scene does
not seem to be developer/user-friendly. Perhaps someone can recommend _simple_
dapp/solidity tutorials, and most importantly, clear deployment howtos?

~~~
SkyMarshal
Did you try Truffle? I understand it's the goto for that.

[http://truffleframework.com/](http://truffleframework.com/)

~~~
bousaid
Truffle is also just as useless for understanding how developing on Ethereum
works.

Edit: Not saying Truffle isn't useful as a framework. You just won't learn a
lot more about Ethereum by just learning Truffle.

------
rb808
Thorough report but fails to answer the important part of the title: Why
should anyone care?

I dont see how any of this stuff benefits anyone I know. Most people don't
need to care, and I can't see any application being discussed that sounds
useful.

The only reason people are interested right now is that you can make money out
of a ponzi scheme - just remember to get out early before the house of cards
collapses.

------
ciocan42
I laugh when I read the petition asking Amazon to support bitcoins payments.
Not because of the volatility but because of being the slowest database to
date. How can Amazon or other big retailer support a tech with 7 t/s for
bitcoin or 20 for eth when they have in ten of millions of customers?

There is more innovation to come to outpace the current proven technologies.
In the last 18 months or so there is an explosion of new blockchain
whitepapers, especially this one: [https://www.cryptocoinsnews.com/red-belly-
blockchain-to-proc...](https://www.cryptocoinsnews.com/red-belly-blockchain-
to-process-over-400000-transactions-per-second/)

------
EGreg
Another great perspective

[https://www.scuttlebutt.nz/stories/design-challenge-avoid-
ce...](https://www.scuttlebutt.nz/stories/design-challenge-avoid-
centralization-and-singletons.html)

The original Ripple was decentralized in this way. No global consensus was
required. What changed that now it has an entire whitepaper on global
consensus?

------
taysic
Who are the people investing in ICOs? Does anyone know? Which countries do
they tend to live in and why are they so speculative?

As a developer, I think giving so much money, no strings attached, to a team
before a product even exists sounds crazy and kills incentive. I must be
missing something.

------
jayd16
I can't help but feel cryptocurrency is a fad. The technology seems sound but
the economic policy isn't. There's a reason we don't use the gold standard.

Fiscal policy is an important tool and I just don't see a future where the
world's nations give that up.

------
atomi
Can anyone predict approximately when eth miners will be unable to use gaming
gpus?

~~~
polotics
Well it all depends on when POS (proof of stake) kicks in... Good question
though, any takers?

------
lucidguppy
I thought the white paper was all about making irreversible payments...

