
You Probably Don't Need a Blockchain - village-idiot
http://ashtonkemerling.com/blog/2018/02/21/no-you-probably-dont-need-a-blockchain/
======
dack
Okay, I don't want to come down too hard on this article, but I think it's
nearsighted. Sure, it's true that _today's_ blockchains have many downsides
the article brings up, but it's written as if those won't change or improve.

It feels to me a bit like claiming in the 90's that the internet isn't the
future because you can't download that much stuff at 56k speeds.

They mention "immutability" being a problem - so much so that it somehow
disallows typos or undos. That's just not true - you just represent the
updates as changes in their own right (which better reflects reality than
literally altering history). There's nothing about "the blockchain" that can't
record human error or corrections.

They go on to talk about how proof of stake doesn't solve all problems by
mentioning, "The Bitcoin blockchain is currently 157GB in size, and that’s at
a very low transaction speed. The idea of everyone mining on their phone is
just laughable."

Once again, they are talking about current implementations - I don't see how
this is inherently a restriction in the technology, and there are (reputable)
companies working on this exact thing.

The amount of money I have in cryptocurrencies can basically be rounded to
zero, so I don't have much skin in this game - I just think blog posts like
these aren't really making compelling points other than "the current
technology today has many flaws", which I think is uninteresting to most.

~~~
chris_wot
Well, he has a point. Unless you use a cryptocurrency, I can't think of
anything that needs the blockchain. I have seen plenty of people trying to
shoehorn the blockchain into areas that don't need it - goods distribution,
electricity supply, you name it and someone is trying to do it. Almost all of
those things would actually work better with a centralised database.

The Blockchain is an awesome technology for an incredibly niche market. So his
article is right - in most cases, you probably don't need a blockchain.

~~~
solotronics
Anything where chain of custody is important is a great application in my
humble opinion. Currently a huge problem in engineering is guaranteeing the
legitimacy of parts. Everything from electronics to commercial jet parts have
knockoffs being made and passed off as legitimate. If you have unique QR codes
for each part from the manufacturer you can use a blockchain to track chain of
custody of the part.

Beyond that you can make something unique digitally and hash it and someone
can "own" that digital thing, instead of money it can be items in a game or
art or anything really. A musician can make a song for a single person and
sign it into a blockchain and you can prove who it was for. Lots of neat
applications that haven't been created yet just like the internet when it was
new.

~~~
eridius
How is this any better than the manufacturer just maintaining a database of
legitimate parts (identified by QR codes) and then contacting the manufacturer
when you want to know if a part is legitimate? About the only thing a
blockchain would do is insulate you from the manufacturer's API going down.
But even that can be solved by having the manufacturer simply send you a copy
of the database periodically (and then contacting the manufacturer if your
database copy doesn't have the part, in case it's newer than your database,
although even that can be solved by having the manufacturer generate the codes
in advance, so the database they give you can already contain the codes that
will be used for parts manufactured over the next month).

Heck, you don't really even need a database for this at all, come to think of
it. Just have the QR code contain a signed copy of the part identifier. You
can validate that the signature matches the manufacturer's public key and that
will be just as good as asking the manufacturer if it's valid.

Also, now that I think about this, this whole scheme (including using a
blockchain) has the fatal flaw wherein a knockoff can just copy the QR code
from a valid part. There's nothing stopping anyone from reusing the QR codes,
and the knockoff will appear just as legitimate as the original.

~~~
solotronics
With a blockchain the end user could tag the part hash as being installed and
you could see exactly who each supplier had the part at what time. A database
could go offline and stop a part from begin installed into a jetliner but a
blockchain would be always available. The manufacturer could track which parts
the end user has in stock and installed and make production decisions easier.
A consortium of manufacturers could use the same blockchain for all their
parts. I am not claiming it's more efficient for all use cases just that there
are some distributed trust applications that seem to make sense.

~~~
eridius
The only interesting part here is the behavior when the manufacturer's API
goes down, and that's solveable just by having the clients maintain a queue of
their failed modifications and retry them later when the API goes back up
again. And of course the manufacturer can even provide the software that does
this to the client so the client doesn't have to do any work for it.

~~~
langitbiru
The blockchain solution can gives more benefits more than "when the
manufacturer's API goes down".

So there are 3 actors in supply chain: manufacturers, retailers, and
consumers. In your solution (centralized database and API), you rely on the
goodwill of the manufacturers which is fine (I guess) in most cases. But
retailers and consumers have good reason sometimes not to trust the
manufacturers. Vice versa.

Okay, let's consider this case: the manufacturer produces milk packaged in a
bottle. So they put QR code in the milk, and put some information in their
database. Let's say they put the production date into this database.

QR code: Abbbccc Information: produced on January 5th 2018

They send the milk to the warehouse A. Warehouse A keeps the milk for a night
before sending to the retailers. But alas, there is a storm preventing the
warehouse sending the milk to the retailers. So 1 week later, it delivers the
milk to the retailers. Warehouse A informs the manufacturer about the
incident. But let's say this milk only has 10 days before it hits expiry date
after the production. Manufacturer decides to lie to the retailers. They
updates the database.

QR code: Abbbccc Information: produced on January 11th 2018

In blockchain, this corruption can be prevented.

~~~
icebraining
The blockchain is not what prevented that; the manufacturer publicly
publishing that information is what prevented that. The fact that they did so
to a blockchain is irrelevant.

Say the manufacturer instead just has an RSS feed on their site, where they
publish that information (digitally signed, of course) as the milk is
produced. The retailers just have to keep a local copy of that feed, and so
they can detect any later tampering.

~~~
eridius
And if you really love the blockchain, you can always run your own blockchain
that simply records snapshots of the manufacturer's RSS feed!

</sarcasm>

That said, this does bring to mind one genuinely useful aspect to the
blockchain I forgot about, and that's the fact that Keybase uses the bitcoin
blockchain (IIRC) to periodically record the Merkle tree roots that they use
to verify their own information. The only reason to do this is as proof that
they're not tampering with the Keybase history that they publish, and so
fundamentally this is just the same thing as digital notarizing that I did
mention before (except in this case it doesn't matter whether the courts
recognize it as being valid). And you could still accomplish this without a
blockchain simply by having a neutral third party agree to keep a record of
the merkle tree roots, but this is one of the few cases where the 'trustless'
aspect of the blockchain actually is useful.

Though of course even with a 'trustless' blockchain you still have to trust
the chain itself. With Bitcoin, you can assume nobody's managed to execute a
51% attack against the chain (at least, for the time being; AIUI with the way
things are going it looks like the Chinese government might be able to do it
by exerting pressure on all the Chinese miners), but if you're running your
own chain, how do you make mining the chain popular enough to prevent attacks?

In fact, to my mind, the only real benefit of Bitcoin at this point is the
fact that it's so popular it's hard to attack (well, except by the Chinese
government).

~~~
icebraining
Yeah, as long as the cryptocurrency speculators are paying for it, getting a
public timestamping service for almost free is nice.

I'm not actually a Bitcoin/blockchain hater; I can't avoid having a soft spot
for any tech that makes me feel like I'm living in a cyberpunk world :) What I
dislike is the mania. Bitcoin is a cool experiment, not a production-ready
solution to anything.

------
mjfl
I got downvoted the last time I said this, but cryptocurrencies are actually
pretty nice for doing exactly what their purpose is: sending money over the
internet. Do you know how hard it is to get Stripe or Paypal to approve you
for international credit card processing? If you're a "hacker" working out of
your apartment, they automatically assume you're trying to launder money and
shut you down, even if you've worked hard to provide solid documentation that
you are who you say you are and you're doing what you say you're doing. Even
if they do approve you it can take months to integrate into their system. And
that's _with_ Stripe and/or Paypal, _without_ Stripe and/or Paypal it's
impossible. Until crypto. With crypto you can set up a transaction system _in
a day, by yourself_. I think that's great value.

~~~
Felz
Well, of course something that skirts around regulations will require less red
tape. Once the government catches up, you'll be required to do similar hoop
jumping for cryptos. Exchanges suffer this problem already, don't they?

~~~
solotronics
The cat is already out of the bag its just like bittorrents of copyrighted
content. Yeah It's illegal but that doesn't stop anyone. Also, with how easy
it is to change one crypto for another how would you even regulate it? I am
not asking that retorically and am genuinely interested in this if anyone has
an idea of how cryotocurrency regulations would work.

~~~
lalaland1125
You regulate the fiat onramps and offramps which are the exchanges. Nobody
uses bitcoin to actually pay for things, so once you take away the ability to
exchange it for fiat, the whole scheme collapses. The US government could end
most of this tomorrow by simply shutting down a handful of exchanges.

~~~
ghthor
This is very shortsighted. In the positive future, you aren't going to need to
exchange into fiat currency, youll just exchange in crypto.

------
c-cube
Very interesting, and mostly right imho. Still no killer app for any
blockchain so far, but lots of problems already well known. I'm almost
disappointed the author didn't mention the ecological disaster that goes with
the energy consumption, instead of just talking about the price.

~~~
village-idiot
Yeah, I totally forgot that.

~~~
scalablenotions
If you compare the energy consumption of traditional banking systems to
Bitcoin, you will realise how very efficient blockchain is.

~~~
chris_wot
I hardly think so. Try scaling up Bitcoin to the world's current volume of
transactions and you'll find it uses _vastly_ more electricity than
traditional banking systems use.

~~~
scalablenotions
We are working on it, so watch this space. The power consumption will not
increase linearly, because of tier 2 & 3 solutions. The key is that blockchain
is automated. With traditional centralised trust systems, you need buildings
full of people running everything.

~~~
floatboth
Buildings full of people are a joke compared to the massive amounts of power
wasted on mining.

------
thisisit
With the bitcoin price drop articles like these have been popping up on HN
quite frequently. previous discussion:

[https://news.ycombinator.com/item?id=16421383](https://news.ycombinator.com/item?id=16421383)

What I feel has never been discussed is not whether blockchain or
decentralization is a good idea rather how does decentralization will work?
The issue is not whether immutability is bad idea rather how will it work in
case of disputes?

The only answer I keep hearing is - well, game theory can take care of it.
This misses the point that if people are aware of the rules, they will find
ways to break it.

We saw a good example of how "we need 51% for manipulation" works in real life
during Status ICO. F2pool which held 25% of the mining power was able to
manipulate the ICO holding back ethereum transactions:

[https://steemit.com/ethereum/@dhumphrey/f2pool-
manipulates-u...](https://steemit.com/ethereum/@dhumphrey/f2pool-manipulates-
usd1-2-million-on-the-ethereum-blockchain-during-the-status-im-ico)

It wont be long before people come to realize the rules and start exploiting
it.

------
chrisco255
Opening this article, I was hoping to get a technical discussion as to why an
application might or might not need blockchain. Unfortunately, I was met with
a ranting article with a few straw man arguments about why blockchain is
flawed.

The first point the author makes is the disadvantage of immutability. Claims
that few systems benefit from immutable transaction records. First of all, I
don't think that's true. Many systems do, not just financial systems with
double entry bookkeeping. Event sourcing is a well defined architecture
pattern in back end systems, and it turns out that immutable event logs are
actually incredibly useful. It's also pretty well known that you don't erase
history in financial systems. That is one of the pillars of double entry
bookkeeping.

A more balanced article would point out the pros and cons of immutable
systems, but to flippantly argue that immutability is useless? That's just
lazy.

Tracking shipment of goods on a blockchain has many advantages. Namely, you
can create a shared protocol for the data of shipment tracking, and you can
open that blockchain up to certain parties to sign as the good moves along the
supply chain. It doesn't have to be "trustless". A particular app's blockchain
might only be open to a few trusted parties to write to. Not all transactions
have to be written to a single, global, immutable ledger. There are still
great benefits to sharing a common blockchain among specific, trusted,
cooperative entities.

On POW and the electricity argument, I think we waste electricity on lots of
frivolous things. I'm willing to bet Christmas lights also consume more than
the state of Delaware. However, it's not the processing of transactions that
the electricity is being spent on, it's the creation of new coins.

POS is a good alternative. I think many coins are starting to leverage POS.
Ethereum will be switching to that soon.

Still, POS vs POW has nothing to do with "why you probably don't need a
blockchain". These are implementation details that vary per blockchain/coin.

Scale also varies dramatically among coins. Ripple already processes 1000s of
transactions / second. Lightning network on BTC is growing rapidly. Ethereum
has scaling solutions in the works. Other chains have completely different
properties than the top two and have different answers for the scaling issues.
These issues will be solved with time.

As for rants on ICOs and scams, etc. I mean, do you know how many people have
been scammed from phishing e-mails? Does that mean we should not use e-mail?
No. As always, caveat emptor, do your own research, and don't take unnecessary
risks.

~~~
realusername
I would not bother if I were you, I've never seen a coverage so negative of
blockchains as the one we have on HN. Every week you have a new article
looking like this, full of straw man arguments, never any pro/cons. "You
Probably Don't Need a Blockchain", yeah you probably did not need a website in
1999 as well, and web technologies were crap. Cryptocurrencies are completely
new field which needs time to mature, basing the potential future of it on
current technologies isn't very wise.

I remember the Dropbox post on HN full of people asking why they would need it
when they can use USB keys and ftp, I feel cryptocurrencies are clearly
underestimated the same way here on HN.

~~~
dcow
I think HN is responding to the almost hyperbolic proliferation of
"blockchain" as some digital panacea and social zeitgeist. It's cool to talk
about "crypto" at dinner now. Every time I hear some suave new BTC owner at
the table next to mine undressing his two lady friends with technically
inaccurate explanations of how crypto currencies work I die a little.

But I think you're right. Time will tell. I would love to see more distributed
software that empowers participants to grow stake in the digital systems they
depend upon. And having well-curated frameworks and working knowledge for
operating blockchains will help us grow our digital gardens. The renaissance
has only just begun. Patience is a virtue.

------
jotto
A better title for the content might be: blockchain scaling issues

A better case against blockchains would be exploring the reasons why we
shouldn't care about trustless properties that blockchains give us.

------
wonton2
I think the focus in the article and in the comments is all wrong. The benefit
of blockchains is on the businesslevel. If you have several manufacturers, of
course you can integrate with all their databases, but that requires an
enourmous amount of managements and hours in meetings and implementation. The
next step, which i guess some banks have done is to cooporate on a common
solution which is operated and run by a commonly owned entity. This also
requires tons of management and a whole new organization which eventually
becomes its own business area. A third option is like uber for transporting
goods, a huge independent third party which is efficient, but eventually gets
too powerful, so people revert to one of the other solutions. Blockchains on
the other hand has a model for distributing trust and operations. It provides
a more general solution to a mexican standoff than months of meetings and long
contracts. Your contract is embedded in the blockchain. Of course the
blockchain needs to be updated and maintained, so i think the real issue with
blockchains would be that people cannot agree to using a single one for a
specific purpose. But then it is much easier to agree to using a blockchain
than to use solution x provided by company y because of all the organizational
overhead it could abstract away.

~~~
atomical
Most companies will adopt permissioned blockchains if they decide to use
blockchain technology. It's just not common to expose your data and logic to
people outside your organization even if encryption is involved. Right or
wrong it's a culture thing. Because of that it's just another technology
option like an API server backed by a relational database.

Blockchains and smart contracts are complicated. There have already been a
large number of security issues. There is also a lot of research into making
the technology performant. Picking a centralized authority is much less risky
because the organization is betting on proven technology.

------
laci27
Distributed systems are ideal for many applications. Distributed systems
verified by many 'miners' is even better, but at some point, we have to admit
that the technology is flawed in key points: \- power consumption, considering
global warming, is a huge waste; \- the speed all nodes communicate between
each other (not even counting the great firewall of China) can't be improved
after some point (BTC lightning network is NOT a real solution - read an
article about how exactly it works)

Proof of stake is a VERY BAD idea that creates more problems than it solves.
All I have to do to take over the chain is buy 1 coin more than anyone else on
the chain..

All other problems could be solved in the future (reversible transactions,
regulation/privacy etc), but with these 2 major drawbacks, blockchains are not
feasible, in my opinion.

------
scalablenotions
It would be nice if this was called, "Why would I need a Blockchain?" or
something. It's pretty clear the author hasn't gone deep enough to tell other
people how relevant Blockchain might be to their lives. A change in title/tone
would avoid the crimes of confidence.

~~~
village-idiot
Someone didn't read all the way to the disclaimer....

~~~
scalablenotions
I read the article. The disclaimer is both inadequate and a poor substitute
for a humbler article.

Disclaimer: Just saying.

~~~
village-idiot
So the disclaimer and the word "probably" wasn't hedging enough for you?

Maybe you just already had your own conclusions and don't like it when people
disagree.

------
paulsutter
If you’re not in an adversarial environment, you don’t need a blockchain.
Sometimes you are though.

------
alendit
The growth of the blockchains will slow drastically, as the flaw in
'Metcalfe's law' \- which states that the number of potential connections in a
network is proportional to the square of the number of participants-becomes
apparent: most people have nothing to sign for each other! By 2020 or so, it
will become clear that the blockchains' impact on the economy has been no
greater than the fax machine's.

------
emptybits
> On smart contracts: _" Of course, writing programs that produce permanent
> financial consequences gives me some pretty serious anxiety, and I would
> hope that most senior engineers would feel the same."_

I don't believe most senior engineers would feel the same. It's hard to
imagine our world today _without_ programs that produce permanent financial
consequences. They are everywhere.

~~~
village-idiot
Okay, go write a "smart" mortgage and put all your money into it. Let me know
how you feel about this.

Of course every bug has financial effects, software is designed to make money
in the vast majority of cases. But to write software that can literally drain
every single last dollar from your clients or yourself in an unrecoverable
fashion just because _any_ programming error is insanity to me.

------
stellarstep
And yes, the writer probably may buy bitcoins after other people who read an
article like this sold them.

~~~
village-idiot
Nope. I don't do speculative bubbles.

------
martind81
At some point in the article they mention that an alternative to the proof of
work could be to use the proof of stake: the oldest stake build the next
block. Did I understand correctly? How can that work? Doesn't it create
multiple problems to do that?

------
marban
My less romantic, medium-term outlook on this is that all of these thought-
police projects are trying to enforce a combination of nonstate binary answers
and an (informational) monoculture to a messy capitalist world with the single
technological argument of a distributed/anonymized/encrypted/irreversible
database that has little relevance for the actual underlying idea. Looking at
the past eight+ years, and other than opening up speculation and dubious
activites for a new group of people, we have not seen a single project that
would ever highlight the usual required 10x benefits, let alone the promise to
change the behavior of the regular user. It's merely porting a fraction of
existing stuff behind cumbersome UX — With all respect for infancy of
technology but what if porting my contacts, having one single login, a
distributed social network or to-do list aren't just that important as the
proponents are arguing for? Obvisouly all of these attempts have already
failed several times. This is not the equivalent of killing Gopher through
HTTP by a new experience, making information available for the first time,
introducing a new socially acceptable interaction or killing industries and
middlemen by means of __raw__ technology (In each case there was always more
to it). Even torrenting is already more or less dead in favor of OTT because
people are lazy bastards that don't care how the content gets streamed to
their TV. And what if customers actually like collecting flight miles, having
someone who picks up the phone when their CC was compromised, when the taxi
driver harassed them, their car title got lost or their 401k was hacked off
their account? IF breaking up the power consolidation in whatever industry
with blockchain tech being the primary method, the starting line is at what's
already out there and then offering real advantages and incentives (other than
coins) that can only be achieved through a public ledger — Obviously there are
potential and often cited areas like real estate, voting and medical records
but all of these seem to me as an admistrative job for a missionary movement
to enforce standards and not a private startup. And yes, I get the argument
for using it in adversarial areas but we're talking business here.

------
2_listerine_pls
> Blockchains typically use the “Proof of Work” system, where multiple
> participants try to solve a difficult problem in order to certify a block to
> be valid.

Apparently no one has told him that a blockchain is just a data structure and
has nothing to do with proof of work.

[https://youtu.be/fOMVZXLjKYo?t=21m40s](https://youtu.be/fOMVZXLjKYo?t=21m40s)

~~~
icebraining
No, that's just a hash chain, and it has existed for decades, long before the
blockchain ever appeared. For example, every POS software in my country was
legally required to implement that before the Bitcoin paper was published. The
blockchain is a particular implementation of an hash chain, designed to work
well for transactions using some sort of distributed consensus algorithm (of
which proof-of-work is a category).

------
anonytrary
If an author does not understand what he is talking about, then his conclusion
should be ignored. This article is laughable, I would suggest doing your own
research before listening to baseless prose. Below, we see why this might not
be a sound article:

> The first miner that solves the problem is rewarded with a few Bitcoins,
> hence the unkind comparisons to Ponzi or MLM schemes.

Author clearly does not understand what MLM and Ponzi schemes are, likely
throwing them out as buzzwords to associate mining with scams.

> Actually trying to make computers in general reflect the real world is a
> very hard task, and the blockchain does nothing to solve this issue.

Black and white statements are a red flag; it's likely this guy does not know
much and was hired to "write posts about bitcoin". Blockchains and other
emergent structures may trigger tons of research into automata theory.
Blockchains do get us one step closer to representing globally unique objects.
Seems like the author didn't ponder at all.

> One of the most common proposed usages of blockchain is to track the
> shipment of real world goods, including everything from food to diamonds. On
> the surface this sounds great, you could easily and trustlessly prove that
> the shiny rock in your beloved’s ring wasn’t mined by children in a war torn
> region, fantastic!

The author's sarcasm here is very telling of his lack of imagination. To
swiftly denounce technology that doesn't exist in its full form yet is
incredibly presumptuous.

> Ebay purchaser did not deliver? Tough. Someone held you hostage until you
> sent them bitcoin? Tough. Private key hacked, or hard drive destroyed?
> That’s unfortunate for you.

As if these problems are not applicable to fiat currency...

> The only way to recover bad bitcoin transactions is to convince everyone to
> do a hard fork

This is possible with smart insurance contracts with two user segments:
insurance providers, and insurance seekers.

> [Refunds due to faulty transactions] would rapidly clutter up the chain full
> of “oops” transactions, which would pretty quickly make you wonder why
> you’re bothering at all.

Did this guy just forget that faulty transactions make up almost no relative
volume? This is a moot point. Even if _every single_ transaction was faulty,
it'd only be a factor two more in size according to the Author. The author
thinks that a factor of two is a worthy point here. I am really starting to
question the validity of these points.

> It turns out, that there’s very few systems that truly benefit from an
> inability to amend or update transactions.

Okay, I can say that too. Where's the source?

> The idea of everyone mining on their phone is just laughable.

The idea of everyone carrying around a device that computes faster than the
supercomputers Feynman was playing on is just laughable.

> On top of that, as best I can tell a _large_ percentage of Ethereum
> contracts are literal Ponzi schemes and ICO tokens

So, you _can 't_ tell very well? AFAIK the logic here is also flawed; even
_if_ most of the ICOs were scams, it says more about the people doing ICOs
than it does about the concept of the ICO itself. Again folks, this article
contains a lot of misinformation. I highly suggest doing your own research
before making decisions.

~~~
village-idiot
Aaaand we finally have the first post accusing me of being paid to write this.
Bitcoin fanatics are wonderfully predictable.

~~~
anonytrary
Out of all the points I mentioned, you decided to comment on the least
interesting one. This is also very telling. This article seems to have been
written by someone who read a single Forbes article on blockchains. Many of
your points are obsolete, but readers will figure that out on their own.

I'm appalled at the number of articles in this space that are aimed at
confusing laymen more than informing them. It's a shame.

~~~
village-idiot
The moment you start accusing people of being paid shills, the rest of your
comment is literally pointless. It's hard to ignore the paid shill part.
Complaining about this is like calling someone IRL an asshole and then being
surprised that they totally skipped right by the rest of your treatise on the
state of politics today.

------
erikb
while I agree with most points I don't see what new value this blog article
provides. There is no indepth analysis, only opinion. And not even new ideas.
This is exactly what we criticise about most blockchain lovers.

~~~
village-idiot
The same could be said of your comment.

~~~
erikb
In case you are new here: The polite parts of the HN community consider it
best practice to explain why they flagged or downvoted something so that the
corresponding content provider has an opportunity to improve their results if
they choose to do so.

~~~
village-idiot
I disagree with your analysis and find it rude and pointless. Good day.

