
Real talk with a Blockchain Engineer - stackzero
I often hear these things touted by blockchain advocates: data ownership, supply chain, and &quot;cutting out the middleman&quot;<p>I want to debunk these statements once and for all.<p>Myth #1 Blockchain changes data ownership, giving power back to the consumer<p>Anyone who becomes privy to some data has some ownership of it. Blockchain doesn&#x27;t change that. If you want to share something with only a few select people you need inherent trust or an NDA.<p>Myth #2 Blockchain can revolutionize supply chain<p>Its a datastore with some cryptographic identity checks and tamper proof guarantees. It can&#x27;t prove that a package made it from A to B or that it stayed at some ambient temperature IRL. It only records that someone attested to that, not whether its true.
An ordinary database will do for an audit trail.<p>Myth #3 It cuts out the Middleman<p>You dont need blockchain to cut the middleman out of indusrty X. Any service trying to do this wants to be the new middleman with lower service fees cos&#x27; blockchain!<p>Here are some axioms which I think will drive future blockchain use cases<p>1. The transfer of value must occur on the chain<p>This is why digital currency is the #1 use case. We&#x27;re already accustomed to digital value transfers when we use modern banking, the transfer of value is a few digits on our screens.<p>2. If you can&#x27;t do 1) then it must be enforcable off-chain<p>Take for example buying a house. I sign some papers at the bank and some more with an agent and then we all agree I own a house and owe the bank some money.
We sign the papers because then its enforcable by law. Keyword &quot;enforcable&quot;. If the legal system agrees a cryptographic signature on a digital record achieves this purpose then its as good as the paperwork.<p>We&#x27;re a few years away from proper legal recognition of smart contracts. Ricardian contracts seem to be a step in the right direction.<p>Thanks for reading and hope it clears things up.
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will_brown
As to #3 cutting out the middle man...how about in the case of corporate stock
ledgers and how the market currently works with brokers, stock trusts and
stock custodians?

For example in the Dole case which showed even a publicly traded company when
scruntized has issued nearly 30% more shares than there was outstanding. If
instead of the current system with brokers, stock trusts, stock custodians a
corporation used Blockchain for issuance of stock, such an error could never
happen right?

Just in case you aren’t familiar with the Dole case it’s pretty famous, even
the Delaware Court of Chancery Judge said Blockchain would have prevented this
issue, which is likely wide spread in all publicly traded
companies.[https://www.google.com/amp/s/www.nytimes.com/2017/03/21/busi...](https://www.google.com/amp/s/www.nytimes.com/2017/03/21/business/dealbook/dole-
case-illustrates-problems-in-shareholder-system.amp.html)

~~~
mechagodzilla
It sounds like any centralized database to track ownership of shares would
solve this though, and then you wouldn’t require third party proof of work or
run the risk of losing your shares when your usb flash drive breaks

~~~
will_brown
Most all public traded shares exist in the form of digital shares in a
database/databases.

I agree that Blockchain is more often in search of a problem. But in the case
of publicly traded shares, where the current system is broken (like the Dole
case and others have shown double spend is real in Billion dollar publicly
traded companies) and there are multiple expensive middlemen, p2p/immutable
shares sound like a winner.

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ndury
Digital currency can only be the #1 use case if we find a generic, uniform way
to pull in real-time real-world data of which we can verify its
confidentiality, integrity and availability.

There are several known solutions which attempt to solve this problem;
oraclize, bluzelle, chainlink, ...

How do you see this? Do you think the #1 use case can be achieved without
having a secure, high available oracle?

Another topic I find interesting is the recent discussion on XRP: "Banks won't
want to shift around hundreds of millions of dollars on a public available
ledger."

How do you see this? Do you think fintech/banks can work use public ledgers?

Kind regards,

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stackzero
> Digital currency can only be the #1 use case if we find a generic, uniform
> way to pull in real-time real-world data of which we can verify its
> confidentiality, integrity and availability.

I'm not sure I understand your point here

> Do you think fintech/banks can work use public ledgers?

The only reason they'd want a public ledger is for transparency with end
users. This isn't high on their priority list but more importantly there's too
much at stake to leave the protocol up to anonymous public participants.

Consortium chains make a lot of sense in these private B2B transfers. Which is
the goal of something like Stellar as the only incentive to run a node is to
keep the ledger/service lively. It is also a better engineering tradeoff to
have a dedicated chain to process Txs only you care about and not have it
degrade from cryptokitties. Lots of blockchain projects are moving to this
parachain model. E.g. substrate, tendermint, plasma protocol

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cdepman
Thanks for your thoughts! It appears some states are already legally
recognizing smart contracts. Contract legality is determined at a state level
because there is no federal contract law:
[https://www.technologyreview.com/s/610718/states-that-are-
pa...](https://www.technologyreview.com/s/610718/states-that-are-passing-laws-
to-govern-smart-contracts-have-no-idea-what-theyre-doing/)

Good further reading to understand smart contracts from a US legal
perspective: [https://corpgov.law.harvard.edu/2018/05/26/an-
introduction-t...](https://corpgov.law.harvard.edu/2018/05/26/an-introduction-
to-smart-contracts-and-their-potential-and-inherent-limitations/)

Also Ricardian contracts if anyone is interested:
[https://en.m.wikipedia.org/wiki/Ricardian_contract](https://en.m.wikipedia.org/wiki/Ricardian_contract)

~~~
stackzero
> It appears some states are already legally recognizing smart contracts

That's good to see.

FWIW I don't like the idea of a future where we need special solidity lawyers
to verify some code matches its legal obligations. Which is why the Ricardian
format is so appealing. It should be accesible to all

Btw thanks, that harvard link is a good read!

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apo
_You dont need blockchain to cut the middleman out of indusrty X._

Counterexample: electronic peer-to-peer money transfer. You simply couldn't do
it without a middleman before Bitcoin. Now you can. What value you place on
the ability depends a lot on the privileges you currently enjoy.

However, this only works given another property that you didn't mention:
censorship-resistance. This requirement disqualifies most other "blockchain"
project. This is what most "cryptocurrency investors" still don't get.

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ssharp
> You simply couldn't do it without a middleman before Bitcoin.

How many people transfer Bitcoin without middlemen like Coinbase.

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phaser
The fact that it's almost never done doesn't discredit that it will always be
possible.

Coinbase is also able to operate their business without asking for permission
thus censorship-resistant in contrast to the experience of trying to start a
bank from scratch

~~~
will_brown
>Coinbase is also able to operate their business without asking for permission

That’s not true in the slightest. Coinbase has all sorts of licenses
(permissions to operate) without which they would be shut down for multiple
violations of law from money transmitter business violations to Broker/dealer
issues. Look at all the Coinbase customer dissatisfaction (accounts missing,
funds never deposited, transaction didn’t go through) there would be plenty
room for competitors except for the barrier to entry (permissions/licenses
required). Not to mention Coinbase complies with KYC laws and as a result
turns over said customer data to the IRS as part of its ongoing compliance to
keep its permission (licenses in goodstanding) to operate.

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axelrosen
Blockchains are really unimpressive technologically. I think this is why so
many in tech are pretty negative towards them. It's a crappy database, it's an
inefficient payment system and so on...

However the few interesting properties that they do have make for a big
difference at scale if you look at it in a broader context.

> Its a datastore with some cryptographic identity checks and tamper proof
> guarantees. It can't prove that a package made it from A to B or that it
> stayed at some ambient temperature IRL. It only records that someone
> attested to that, not whether its true. An ordinary database will do for an
> audit trail.

Sure, there are no inherent features which directly enable that. However with
a regular database can you give access to absolutely everybody (even if you
have complex access control rules)? Can you incentivize people to interact
with this database in a given way? Will people trust the data? Can you make
people believe that your system is going to be around for long enough? Can
your system be safe from regulatory risk?

The answer to all these question is a very qualified yes. However when you
think about them it's pretty obvious it's going to be hard. Say incentivizing
people. You can surely assign rewards to people, have a little virtual
currency/credit system. But you can see how the more sophisticated it gets the
more you're creating something blockchain like. Which is also why private,
hybrid blockchains or non-blockchain decentralized shared database systems are
interesting btw.

The point is - none of these features or problems are inherently technical.
They're more social than they are technical. The questions I posed are just
food for thought, there are so many more aspects one could consider.

~~~
whttheuuu
Uhm, from reading your post I don't think you fully understand how any of it
works..

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wyldfire
> We sign the papers because then its enforcable by law. Keyword "enforcable".
> If the legal system agrees a cryptographic signature on a digital record
> achieves this purpose then its as good as the paperwork.

I'm a big Bitcoin fan. I think some other cryptocurrencies are great too. But
real estate is the most misguided use case for tokens/blockchain. Courts must
be able to override a ledger when necessary because the real world is a messy
place. Courts cannot just shrug and say "oh gee I guess it is too bad that the
defendant has decided not to comply with the court order and execute a
blockchain transaction. We will just be angry and impose penalties but the
blockchain will remain the true authority that supercedes ours."

The legal system cannot/must not "agrees a cryptographic signature on a
digital record achieves this purpose then its as good as the paperwork" \--
or, rather, if it does, then it must still remain centralized and operated by
a trusted authority. If it's trusted, then you don't want or need a
blockchain.

~~~
stackzero
The point I'm making is we can agree some paper is truth or that a distributed
ledger is truth. Failing to send a transaction should void the sale in the
first place e.g. Hashed time locked contracts. With some proof of authority
logic we can facillitate updates to the ledger by courts or governing bodies
i.e the same as adding some new paperwork currently

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hanniabu
> Myth #1 Blockchain changes data ownership, giving power back to the
> consumer. Anyone who becomes privy to some data has some ownership of it.
> Blockchain doesn't change that. If you want to share something with only a
> few select people you need inherent trust or an NDA.

I disagree with this. It's clear in cases such as Facebook that data privacy
is abused. Not only that, but users don't have much of an idea of exactly how
their data is being used. In a P2P system powered by blockchain, I can set
permissions for certain data my on-chain information to be accessible between
different parties, whether that's a doctor or a friend on a social media
platform. They can receive a hash an decode it locally to view whatever
information I am granting them permission to view.

> Myth #2 Blockchain can revolutionize supply chain. Its a datastore with some
> cryptographic identity checks and tamper proof guarantees. It can't prove
> that a package made it from A to B or that it stayed at some ambient
> temperature IRL. It only records that someone attested to that, not whether
> its true. An ordinary database will do for an audit trail.

Again, I disagree. Custom devices are being designed to record information in
a tamper-proof way and submit to chain.

> Myth #3 It cuts out the Middleman. You dont need blockchain to cut the
> middleman out of indusrty X. Any service trying to do this wants to be the
> new middleman with lower service fees cos' blockchain!

I disagree with this as well, in certain context. Yes, many of the newer
projects are trying to run blockchains they're developing as businesses. In
that sense I would agree. Where I disagree is where blockchains aren't
services, but protocols. A marketplace protocol can cut out Ebay, a stack of
supply chain protocols can cut out SAP, loaning protocols can cut out current
loan services, etc.

For somebody calling themselves a 'blockchain engineer', it sounds like you
don't have a great grasp on what the technology enables. Is this all doable
today? No, but some of it is. We're still in the early stages where
infrastructure and tools are being built out.

~~~
hashtagjohnt
> I disagree with this. It's clear in cases such as Facebook that data privacy
> is abused. Not only that, but users don't have much of an idea of exactly
> how their data is being used. In a P2P system powered by blockchain, I can
> set permissions for certain data my on-chain information to be accessible
> between different parties, whether that's a doctor or a friend on a social
> media platform. They can receive a hash an decode it locally to view
> whatever information I am granting them permission to view.

I think the OP is saying that if anyone has access to the raw data at any
point, then they have some sort of ownership. And this is actually true in
your example. A person owns their own data (age, email, etc.), and then gives
it to Facebook. Someone might expect privacy from Facebook, but since Facebook
now has _access_ to that data, they have some sort of ownership of it. And
what do they do with their ownership? They sell it :). If you give your hashed
data to Facebook, and allow them to decode it and read it, then they can still
sell the decoded data because they now have access to and some ownership of
the data.

~~~
pariahHN
I think that would tie in to the enforceable off chain point - if by law
Facebook has to respect the permissions you give them, then yes they may have
the ability to sell the data you allowed them to read but if you did not give
them permission to sell it, then you would be able to pursue legal action.

Which of course would require proving that they did in fact sell it, but it
shouldn't be prohibitively difficult to setup a mechanism for taking a data
point and verifying whether or not the seller has been given permission to
sell it - could have it so that who has access to a given data point and what
their permissions are is part of the public record.

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omegabloom
From a supply chain perspective I feel it will be revolutionary from the
decentralized nature and all parties sharing a unified data set for let's say
a shipment. Right now a shipment transfers from party to party to party all in
their proprietary databases. Working off a shipment from one central point
will drastically alter the way things work. As well with the coming wave of
IoT, robotics and automation in/on everything automatically fulfilling and
queuing the next party/parties in the chain will be a radical improvement. It
is mind boggling how much manual, paper based work goes into putting that
t-shirt on your back today. :)

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mkirklions
Until blockchain can scale, or people can find a problem worth paying txn
fees, Bitcoin will be the only coin with value.

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decentralised
What type of work do you do?

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stackzero
Currently, designing and building blockchains.

~~~
decentralised
Awesome. Any repo you'd like to share?

