
The Blockchain Is Bigger Than Any Bubble - kylebarron
https://www.bloomberg.com/view/articles/2017-11-30/the-blockchain-is-bigger-than-any-bubble
======
olalonde
> Bitcoin is a poor currency and a crazy investment -- but the technology
> behind it is a real breakthrough.

I feel like that should be the other way around. When all the "blockchain
startups" and ICOs blow up, Bitcoin will be left standing. The true innovation
behind the "blockchain" was its decentralised consensus mechanism. That
mechanism is only secure as long as no single entity controls over 50% of the
hash rate. Some of the largest Bitcoin miners have so much hash rate today
that they could attack any (SHA-256 based) blockchain but the Bitcoin one.

"The Internet is a poor network and a crazy investment -- but TCP/IP is a real
breakthrough."... Sure!

~~~
rdslw
the problem many praising blockchain minus bitcoin people forget, is that
blockchain strength (distributed reconciliation) is possible only because of
incentive (sth you get in exchange for doing all the etahashes per second).

The moment you take incentive (bitcoin) out of the equation, whole blockchain
will lose its strenght.

You can not take out greed^H^H^Hincentive out of the picture.

p.s. this is black and white written in bitcoin whitepaper.

~~~
nettdata
Then how do you explain the Maersk blockchain-based insurance trial that they
found very successful?

Bitcoin is not the only incentive that can be had in implementing blockchain
technology.

There are a number of very promising use cases for blockchain, in education,
healthcare, energy... none of which involve bitcoin at all.

~~~
nordsieck
All "block chain" is is a Merkle tree. You can do all sorts of productive,
interesting stuff with Merkle trees.

If you want to do interesting things with a trust-less, decentralized system,
you need the mining and mining rewards.

~~~
Retric
There are a few file sharing applications that do interesting things with
trust-less, decentralized systems, without any sort of mining or mining
rewards.

Mining allows for high value transactions in a low trust environment, but
lower value transactions are very possible without that.

IMO Tit for Tat is a much more interesting form of consensus building as it
can be very low resource. But it's really all about the goals not the
protocol.

------
osrec
The block chain is good in so far as it is useful. I'm seeing a whole bunch of
people deploy it where anonymous trust is not a requirement. They're just
needlessly increasing the costs of the networks they create. It's a bit of
hype that will surely subside. Not saying it's not useful - just not for
everything under the sun!

~~~
drcode
You make it sound like having an open system for timestamped records with
support for highly complex permissions validation with a deep audit trail that
is resistant to fraud and posthoc record tampering has no utility beyond
buying drugs....

~~~
JackFr
You can buy drugs with git?

~~~
JorgeGT
Given the complexity of git commands, I cannot rule it out.

~~~
sli
Oh here it is, git-buy-drugs.

~~~
mercer
It would never be that straightforward.

------
geraldbauer
FYI: If you are interested in building your own blockchains from scratch over
at the Awesome Blockchains page (and repo) [1] I collect starter samples (e.g.
in 20 lines of javascript, python, ruby, ...) and articles. Happy
Blockchaining. [1] [https://github.com/openblockchains/awesome-
blockchains](https://github.com/openblockchains/awesome-blockchains)

------
marsrover
> Blockchain technology might also be used one day to produce new kinds of
> central-bank money.

I feel like they missed the whole point.

~~~
betterunix2
Not really. In fact, permissioned blockchains are already being researched by
big banks (I know someone working on this) to solve certain problems related
to the integrity of financial records. It is not hard to imagine revival of
ecash [1] coupled with a distributed ledger and a threshold blind signature
system for issuing the currency.

[1] [https://en.wikipedia.org/wiki/Ecash](https://en.wikipedia.org/wiki/Ecash)

~~~
okxyd
Yes he missed something: the context of bitcoin invention during the 2008
crisis. One of the big incentive to own something like bitcoin (or any
decentralized and distributed cryptocurrency) is that it allows to emancipate
yourself completely from financial institution either public (the central
banks) or private (retail banks) when it comes to managing your capital, hell
the "be your own bank".

This is something especially important considering we live in a world where
nation-states are increasingly weak, politicians are either seen as
incompetent at dealing with economic issue or just straight up overpowered by
transnational entities while people are more and more nomad (not hesitating to
just abandon their countries for another one when they are not satisfied
instead of trying to enhance it). The problem with this trend is that
currently moving your capital with you is hard (e-banking is a progress but
it's still not enough for most people, especially the poorest).

Finally there is this economic warfare aspect, not all countries are like the
USA where the currency is a tool for global hegemony and a fundamental pillar
of the state, in fact with the EU we have strong countries which for the first
time in history have willfully abandoned their monetary sovereignty (they
still keep control but it's not one-sided). Best examples of this dynamic is
Japan which has seen the yen bleed badly during the last decades and is the
first big country to have a pro-cryptocurrency attitude.

~~~
betterunix2
"it allows to emancipate yourself completely from financial institution"

No, it means trusting Bitcoin exchanges in addition to your bank, because at
the end of the day you still need to at least get enough money to pay your
taxes. So until you live under a government that recognizes Bitcoin as money,
you still need to cash out at least sometimes. Even if you somehow have no
taxes to pay, you still need to do business with people who do, and they are
either going to demand the government's money or they are going to take the
relative value of Bitcoin to that money into account when setting prices.

You seem to underestimate the power of governments, especially when it comes
to money. Governments tend to enforce laws dealing with taxes and debts, and
those are the laws that give fiat currency its value.

"Japan...is the first big country to have a pro-cryptocurrency attitude"

Ironically, Japan is also the source of the clearest example of the role of
debt laws in determining the value of money:

[https://qz.com/1003609/bitcoins-soaring-price-means-mt-
gox-c...](https://qz.com/1003609/bitcoins-soaring-price-means-mt-gox-could-
pay-its-debts-and-drw-wants-to-help/)

TLDR: MtGox is paying its creditors in Yen, despite having lost their BTC,
because of the debt laws in Japan.

~~~
okxyd
Right now you have to cash out but the endgame is to not have to, just like in
the early 00s it was a hassle to buy something online and doing your taxes or
accessing government services was science fiction while now you can almost
live alone without ever going out of your home required you have an internet
access because even the grocery store can be visited by internet.

But sure, the governments as today can easily cripple cryptocurrencies if they
decide to and I'm not underestimating their power but as I said there is a
competition between states, if my country adopts a hostile behavior toward
cryptocurrencies then I'm pretty sure another country with a more lenient
attitude will be happy to welcome my capital and workforce (not really a new
concept, it was already like that with huguenots 400 years ago and it weakened
badly the top dog that France while boosting immensely second or third ranked
powers like England and Prussia).

I think the leaders in first world countries already understood that, that's
why the general attitude is to say "it's none of our business" right now,
especially in places like Europe or Japan which kind of missed the first wave
of the "third industrial revolution" like internet is called by regulating too
much or having a top-down approach to develop the sector and in result got
crushed by the USA.

In short: ban cryptos at your own risk.

------
thisisit
> stabilized by central banks acting as _trusted monopoly producers_

Oh the number of cryptocurrencies which have tried to stabilize their
currency. There was BitsharesX which was abandoned quickly. Then there is
USDT. The answer is there can never be a "trusted monopoly producers" in a
decentralised world.

~~~
1053r
To be fair, while Bitshares was a pretty complete failure, BitUSD, which sits
on top of it as a "stablecoin" should be regarded as a complete success. Look
at the price chart relative to dollars. [1] It only has brief and small
excursions away from $1 despite being thinly traded and having very low market
cap, and being backed by having a nearly worthless coin, as cryptocurrencies
go.

Stablecoins are a very interesting concept. They are a game-theoretically
incentive compatible way to stabilize a currency WITHOUT a trusted monopoly
producer. [2]

1 -
[https://coinmarketcap.com/currencies/bitusd/](https://coinmarketcap.com/currencies/bitusd/)
2 - [https://blog.ethereum.org/2014/11/11/search-stable-
cryptocur...](https://blog.ethereum.org/2014/11/11/search-stable-
cryptocurrency/)

~~~
thisisit
The smallest measure in forex is called a pip. For USD it is $0.0001. Movement
of price from $1 to say $0.98 is a movement of ~200 pips. This is considered
huge volatility in forex. So it might look small excursions it is not a good
result when compared to real world use.

and I am saying this as someone who invested in Bitshares and it's precursor
Protoshares. I still hold ~100k of BTSX.

> They are a game-theoretically incentive compatible way to stabilize a
> currency WITHOUT a trusted monopoly producer.

This is the biggest fallacy in cryptocurrency scene. People think everything
can be mathematically modeled. Absolutely not. Everyone will act rationally in
a given situation. Absolutely not.

If that were the case we would solved all the problems in the world using some
kind of game theory function.

Edit: Oops looks like I deleted the SNB example. Here's what happened:

[https://www.reuters.com/article/us-swiss-snb/swiss-draw-
line...](https://www.reuters.com/article/us-swiss-snb/swiss-draw-line-in-the-
sand-to-cap-runaway-franc-idUSTRE7851LV20110906)

SNB drew and held a line at 1.20 for EUR/CHF pair. No cryptocurrency can
repeat that feat.

~~~
samsonradu
Think cryptocurrencies are just waiting for George Soros to make a GBP-like
move.

[https://en.m.wikipedia.org/wiki/Black_Wednesday](https://en.m.wikipedia.org/wiki/Black_Wednesday)

------
goldcountry
I stopped reading when the author claimed that bitcoin not having "alternative
uses, like gold" makes it less suitable as a currency

~~~
and0
What are Bitcoin's alternative uses?

~~~
TheCapn
I think OP's point is that "not having alternative uses" shouldn't be a
negative characteristic?

To play Devil's Advocate, is Gold's current value where it is today because it
is useful in jewelry and electronics? Why does Bitcoin necessarily _need_
something to provide its value besides the value we give it?

------
SimbaOnSteroids
I don't understand how bitcoin is different from a fiat currency. Both only
has value because we say it has value. Obviously a fiat currency generally has
the backing of a central government. However a government is only viable as
long as the constituents tolerate it, meaning whatever currency it issues,
backed by the credit of such government, again only has value because people
say it does.

~~~
milcron
Bitcoin has a hard cap of 21 million BTC. Fiat can be printed.

~~~
SimbaOnSteroids
Bitcoin's hard cap can be lifted should the right consortium of people decide
to.

~~~
jstanley
If by "consortium of people" you mean "overwhelming consensus among bitcoin
users", then sure.

------
zerostar07
at 144GB it's definitely very big

------
wickedlogic
Bitcoins value does have an upper limit, to the extent it is
cheaper/advantageous to move to a nearly identical clone, because the mainline
is over-valued enough that the idea entices critical mass (of new people) to
shift. This normalizes over time/culture, today we fork for technical reasons,
but in the future there will be other reasons.

------
ThomPete
People keep comparing Bitcoin to a currency like the Dollar which leads to a
lot of problematic comparisons.

Think about it as gold and it starts to make sense in the long term (short
term is anyone's guess)

~~~
soared
People keep comparing one currency to another currency? Preposterous! If you
have something that is similar to the dollar it will and should be compared to
the dollar. All those problems are real.

~~~
ThomPete
Not really. It's long since anyone saw bitcoin as a viable currency. It's a
store of value like gold that's about it.

------
zby
That might very well be true - as blockchain these days can mean just about
anything related to cryptography.

------
lukasb
WHICH blockchain, though?

------
greenwireless
How many times can a bubble burst? once ... So far the bitcoin bubble has
"burst" several times, maybe we can call it something other than a bubble?

~~~
sxtn
a zit?

