Anywhere this concept has value, a blockchain has value. That's all there is to it. The rest is fairy dust and noise.
I don't really follow a lot of the discussion in this article. As I see it, most of the buzz around blockchains is just wild speculation and fantasy. For example, why would be want a "fat" protocol? In any other context in technology, "fat" anything is considered bad. Technologies are supposed to be "thin", simple, efficient, and composable. So why would the opposite be praised in this case? Furthermore, the characterization of existing foundational internet protocols as "thin" and blockchain protocols as "fat" seems like an inversion of truths. By my understanding, it would take as long or much longer to become well versed in all the nitty-gritty details of TCP/IP, DNS, etc. than it would to gain a solid understanding of Ethereum.
Also, where is the need for software ecosystem micro-economies?
None of this makes any logical sense to me. It seems people have gotten it in their heads that the simple technological innovations of hash trees and distributed consensus protocols are going to somehow make them rich. And they're finding weird ways of justifying this.
That would be fine on its own, but they're almost all pretending this is not the reason for it, and that the token is necessary. This is an obvious lie in nearly every case when you dig into the details. Nearly every dapp that has its own token can be cloned to use Ether without any detriment to the product.
But I do agree we're in a bubble.
>Yes many tokens are being used as shares and trying to circumvent securities law.
All these companies behind this coins/tokens have no "paid" employee or assets and no legal registration ( for the coin itself) so there is no meaning to "shares" . There is nothing for ownership rights in the sense of share .
Note an important caveat -- a centralized third party can also provide such a service. So you have to further subdivide the space into use cases where the blockchain has to compete against such services, and use cases where a public ledger is desirable in and of itself.
Wealth is built through control, while a distributed ledger rejects control by design. Now distributed ledgers have utility, but that does not necessarily mean they will create business value for entrepreneurs and investors.
It's almost like how regulation has value in society, but regulation is decidedly not profitable and businesses usually reject it.
Assuming you convince 1) 100,000 miners your blockchain has value, such that 2) the distribution of control is spread out among those miners uniformly. Both of which is a pretty big assumptions.
Otherwise, it seems like you just tried to do a "grapeshot" with tech jargon & lacking a main point.
Centralised wealth is built through centralized control.
Distributed wealth is built through distributed control.
Produced how? by work?
Bitcoin distributed the vast majority of its wealth to aprox less than ~1000 individuals.
Best estimates are that there are about one million
holders of Bitcoin; 47 individuals hold about 30 percent,
another 900 hold a further 20 percent, the next 10,000
about 25% and another million about 20%, with 5% being
lost. So 1/10th of one percent represent about half the
holdings of Bitcoin and 1 percent close to 80 percent
of-the-bitcoins-2013-12). The concentration of Litecoin
ownership is similar
Most of the big wallets have been in place from early on,
so sitting back and watching your capital grow has been a
very successful strategy.
The distribution of Bitcoin holdings looks much like the
distribution of wealth in North Korea and makes the
China’s and even the US’ wealth distribution look like
that of a workers’ paradise
More to the point, assuming a currency medium has a finite supply - once produced and distributed, all future generations are at a catastrophic disadvantage simply for arriving at the wrong time.
It should also be noted the term deflationary is often used to represent Bitcoin or other cryptocurrencies when in fact the supply continually inflates every 10 minutes.
What many advocates conveniently omit from disclosing is the algorithm produced the supply very rapidly for very low effort to the early adopters. Not only does the production supply require more work for later adopters, but more users compete for the limited block rewards which decrease as time goes on.
It's not exactly Ponzi scheme, or a Pyramid scheme.
It's a Satoshi Scheme
... or a "Nakamoto Scheme"
A central bank can extract 2-10% of the money supply's worth of economic rent every year in perpetuity, and the beneficiaries of regulatory barriers to entry can extract similarly enormous amounts of economic rent on a recurring basis (e.g. the Big Three auditing firms have profit margins of up to 50%, thanks in large part to regulatory barriers to competing with them) and public choice theory tells us that this economic rent will be disproportionately distributed to the political and professional elite who control government budgets, manage banks, navigate the regulatory process, and most importantly of all, know the right people to pull the right strings.
Validators also charge rent for their services, which especially in the case of miners, is a staggeringly inefficient use of electricity.
Mining and staking algorithms have so far been measurably distributed disproportionately to a tiny minority of users. PoS is ironically manipulative in its own way, where an exchange or early adopter who controls a large sum will simply exponentially accumulate the newly minted coins.
For a algorithmic solution in software to persist beyond a fad like beanie babies or baseball cards, it necessitates a model which puts all users on equal footing for access, work, and production.
In any case I'm not saying they are perfect or that they permit zero rent seeking. What I'm arguing is that for reasons I've articulated, the current crop of cryptoeconomic platforms are much less rent-seeking than traditional financial platforms and systems.
Therefore, all other things being held equal, meaning that if we're only comparing on the grounds of how much rent-seeking they permit, I believe it is likely that it would improve public welfare if they supplanted the current monetary and financial system.
Fortunately there are many other blockchain projects out there. Bitcoin will have its position in history as the first and most influential, not as the most useful.
I have never understood why people dismiss the issue as unimportant. Any new coin that uses a scarcity model similar to Bitcoin's (which is almost all of them) should be immediately criticized and forced to prove its suitability as a currency sufficient to meet the demands of the market it's hypothetically supposed to serve someday.
Consider Monopoly. The entire game is based around the the dynamics of an economy that grows faster than the money supply. As the economy grows (via house and hotel upgrades), it becomes harder and harder for players to maintain a usable amount of money due to the higher rent charges on upgraded properties. When they're unable to pay a charge, they are declared bankrupt and must leave the game. As players leave the game, the economy slows and shrinks again, but the deflation is still sufficient to bankrupt all but one player.
You can run a simple experiment to test this dynamic. Play the game with "house rules" that give $500 to anyone who lands on "free parking." When I was a kid, we played this way. The resulting inflation causes the game to never end. Another, more interesting option would be to allow players to borrow money from the bank, and see how long that would extend the game. Maybe even tune the lending terms to see what works best.
Any "currency" with a fixed supply will encounter this problem. Divisibility does not help, as the problem is what payments wealth-creators will accept for their goods and services. If none of their target audience can afford to pay using crypto, but CAN afford to pay using local currency... they're going to use the local currency every single time.
It was only a valid hypothesis when there's only a single dominant chain. Not anymore. It's becoming more apparent that there will be multiple chains, which means these chains compete for usage, so naturally "all the value aggregate to fat protocols" is not valid anymore.
So you're right, the "fat protocol" should not be the norm. And it's really cool to see the landscape progress in this direction even though just last summer everyone took for granted that "fat protocol" will be the norm.
There are so many "startup people" who are too lazy to delve deep into how the tech actually works, who just read some medium blog posts and watch some youtube videos and think they know everything. These people end up producing shallow content that's basically a parroting of what they read online.
To people who actually have touched the code and building on these technologies, these things are so obviously outdated.
Amen. "Blockchain" is today's fad just like the "nanotech" mania of yesteryear. That doesn't mean there aren't advances and opportunities, but it feels like 90% of the people promoting it can't even give a high-level explanation of why it's a good fit for their use-case.
> For example, why would be want a "fat" protocol?
This may seem weird, but bear with me: I think this is like people talking about intellectual property (copyrights, patents, franchises, etc.) The underlying idea is that you can create some core framework which everyone wants to use (or can't avoid) and that therefore you can collect rent (or at least sew up an incredible starter bonus) making it more consequential than the individual pieces.
The current internet is (perhaps thankfully) a contrast, where nobody (AFAK) is making big bucks off of TCP-IP/HTML/Browser licensing fees.
So you’d use your corpcoin to rent cubes and get pens from the facilities folks, and trade coin to get servers, etc. the idea had traction until the accountants revolted.
I have to agree to this as I have written software to implement at least one networking protocol. On the contrary, I still haven't been able to wrap my head around Ethereum.
I'm sure most of us know that TCP/IP and all the other networking protocols are thin by design, for good reasons. Speed and reliability. It seems strange to write a connection-oriented protocol (TCP) that runs on a connection less protocol (IP) but this design is efficient and serves the purpose.
Calling the current bloating in blockchain protocols as a dramatic paradigm shift is an exaggeration. From what I see, the current blockchains protocols are bloated (as compared to TCP/IP) because they are encapsulating the application logic within themselves so as to achieve decentralization in a highly secure manner. (Based on my frugal understanding). It's a new way of doing things, perhaps not necessarily a paradigm shift.
Note to self - Understand blockchain in depth, may be it is a paradigm shift.
I'd rather use a fat client than a thin one:
Thin client: Primarily just a display. No local processing, or effectively none. Controlled from outside.
Fat client: A processor with a display attached. Nontrivial local processing. Controlled by me.
Maybe fat clients are inefficient. Maybe I'm not thinking right. I still want control.
Sure, and that's several trillion dollars per year worth of the global GDP.
Ok, thin protocols + fat apps --> fat protocols + thin apps. Neat theory. But this is putting the cart before the horse. Please can someone ELI5 to me:
* What problem does the fat-protocol, thin-app paradigm solve?
* Why would anyone be interested in developing a thin app for my fat protocol any more than anyone is interested today in developing a thin protocol that I can put my fat app on top of?
* Why is thin-protocol, fat-app considered to be in need of fixing in the first place? I consider the fact that apps capture more value than protocols to be a direct consequence of the free market. Apps capture business value because they solve actual user problems. Protocols define ways to build apps. But frankly I don't see a great demand for new protocols, and I consider that reason enough for the fact that protocols can't capture much value. To say that that would change with the blockchain is IMO equivalent to saying the market has it all wrong. What am I not seeing?
But generally speaking, this protocol issue is of little interest for end users.
What is of interest to them is the fact that their data can become decentralized with the blockchain, and the power balance can be shifted back to them. With all the tech majors becoming so powerful thats a really big deal.
I honestly feel like the terms decentralized and distributed are often used as synonyms when people talk about blockchain, even though they mean very different things. I get that a blockchain is distributed, but how is it decentralized? Aren’t you just replacing a big database in a data center with a big database replicated to many computers?
> What is of interest to them is the fact that their data can become decentralized with the blockchain
I'm not really interested in putting my emails in a blockchain, or did you mean some kind of... different data?
Credit agencies like Equifax also own our credit history data, and generously sell it back to us - 1 free report a year, rest you pay for. While also selling it to other companies without our permission. Which employers can get their hands on via background checks, again without our consent. Not to mention one of them recently got hacked and leaked everyone's SSNs. Their entire model is capturing our data and selling it to others. We should own this data, and choose if and when we would like to provide it to a bank to get a loan etc.
Ad tracking/browsing data is another. The current model is the people making the trackers own all your data. A model where WE own our web activity data and selectively choose what to expose to websites/advertisers would be much better for consumers.
In Europe they will have to provide the API thanks to PSD2: https://softjourn.com/blog/open-banking-api/
> Ad tracking/browsing data is another. The current model is the people making the trackers own all your data. A model where WE own our web activity data and selectively choose what to expose to websites/advertisers would be much better for consumers.
I don't know how this relates to blockchain at all. Blockchain
by design is public and replicated to anyone. How would you withdraw your data from there?
Imagine you’ve spent your whole life investing millions of dollars in entrepreneurs. Building models and testing hypotheses with no real agency: you can’t control what the CEO does or the product the engineering team builds or the way they market the product. Your job is to provide returns for your LPs. That’s it.
Now imagine, instead of spending thousands of hours interacting with and managing people, their problems, watching painfully as they try to figure out the market they specialize in, I tell you that you can invest in something else. That thing, we’ll call it a token. This token does work. It can be used to compute something. Or helps make something easier. I’m not clear on the specifics, but I can tell you one thing: if you buy it, and if you tell other people about it, merely the act of owning it increases its value.
I have just given you something you don’t get a lot of in your career, true, direct self agency. You are unequivocally sure that you are creating value because it’s you who is selling the value! You bought, the price rose, you know if other people get excited the price will rise again. It’s exciting, you don’t have to deal with people mucking about directly, and you’re doing your job: generating returns.
The house of cards here is the assumption that these tokens can be used for something, anything beyond a store of value. Because if that’s true, it’s not really speculation. You’re an early adopter of a paradigm-changing protocol.
The default assumption here is that engineers are like ants: we build for the sake of building. Give us a canvas and we will build dApps (or what-have-you) just for the sake of building them.
The truth is, engineers are not ants. We build things to make our lives easier or more fulfilling. I started programming, for example, to build video games. Many people build things to automate their homes. When you build for an employer, the end goal is always to do something for the customer.
The draw of Ethereum, seems to me, to be that eventually somebody will have to build something insanely valuable, right? Statistically, it’s gotta happen. I think that’s a ridiculous premise: if centralized tools are always faster with more mature ecosystems, engineers will always go there to solve their daily problems. The question to me really seems to be, “do we need truly immutable ledgers and transaction histories? Do we need 100.0% reliability in transaction history at the cost of orders of magnitude more energy expenditure, or is 99.9999999% okay?” As a cute anecdote, Life has been remarkably successful with a 10^-7 error rate in DNA polymerase. I have a feeling most industries will be fine without, and it’s actually probably cheaper to have a reasonable facsimile (or statistically insignificant approximation) of immutability (human intervention and accountants included) than a guarantee. Especially if, in order to be guaranteed, it needs to be public.
So, what you’re seeing is speculation that engineers could build something one day using an application development paradigm that’s not actually clearly or obviously more powerful. It’s worse speculation than betting on startups with teams of people who reliably execute, masked by the illusion of self agency as an owner and promoter of a token.
tl;dr: Somebody remind me of this post in a decade and we’ll see where it all ends up. The technology will grow and evolve. I’m not sold on any of this, and investors who aren’t building anything but themselves are holding tokens telling people to go experiment and build things isn’t an attractive signal. (It seems like VC flipped on its head and the incentives are poor for engineers - so, for now, let these investors play hot potato with each other for a while. I’ve seen a few of Vitalik’s tweets and it seems even he’s concerned about these incentives.)
But, separately, if you asked me if I wanted to use something to store/transmit value that was only reliable 99.9999999% of the time, I would immediately say no. At Visa scale, that means 15 transactions a day are incorrect - not delayed, just straight up incorrect. Maybe that already happens and we just don't hear about it because they can fix it without any one noticing or it's just small enough to not be noticed. But it is still unnerving.
Manual input at restaurants alone should hit that threshold. As you correctly pointed out, reversing the transaction is very low friction, which is something I've not yet seen presented in any blockchain based solution.
(150 * 10^6) * (1 - .999999999) =~ 0.15
 - https://usa.visa.com/run-your-business/small-business-tools/...
The scenario where accountants and human intervention are the thing you want to be rid of.
Financial transactions. Before someone just points out those are just more tokens and that we're all betting on their value, etc., etc., I'm deliberately skipping the meta-argument.
The point is that finance systems do exist, already, and adding a trusted distributed transaction ledger does add value.
To be clear, I don't have a dog in this fight. Tokens may be the Next Big Thing, I don't know. But it'd be really nice to have a full conversation on the topic that didn't either go off the rails or devolve into a political diatribe as soon as I ask a question about intrinsic value or zero sum games.
But as usual, as soon as a lot of money is to be made, non-techies get dollar signs in their eyes and --without understanding the tool-- jump in and start using it for everything.
It will be very amusing to watch, for sure.
For example, some of the coins that have been going up in price recently are complete garbage and it's a matter of time before their technical limitations become apparent to non-technical people.
I think I have a pretty good idea about how easy/difficult it will be to scale different cryptocurrencies based on the algorithms they use. Many of the ones in the top 100 list right now are essentially impossible to scale beyond a certain point, eventually they're bound to hit a wall.
Most investors right now are just randomly moving their money between coins. They wait until issues start showing up and then move on to another random coin. This is very inefficient.
This is a weak attempt at deflection by those who want to discredit criticism. Anyone who understands this sector and thinks it is a bad investment, will not invest. This doesn't mean their view is somehow incorrect.
As for finding an ICO that hasn't lived up to the hype, throw a dart at the dartboard. How about Tezos, for one.
How about Tron for another, whose white paper was found to have plagiarized from IPFS and/or Filecoin. See: http://www.trustnodes.com/2018/01/08/trons-whitepaper-copied...
I feel like this is more of a feature than a bug. If you're weaving applications into the blockchain, would it really be wise to have that chain communicate with abstract data off of the chain itself? Seems an unnecessary burden for the chain to bare!
Great article. I've recently gotten into Ethereum Dev and Solidity. It's really fun, fun stuff. This isn't directly addressed in the Ethereum portion of the article, but it's good to keep in mind that these things are all works in progress. Limitations today are non-such tomorrow; we don't quite know where the train is headed.
You, Developer, can help it get to wherever you feel it needs to go. Remember that before deciding not to contribute. :)
But now imagine if BoxRec had intentionally reported false results from their website in order to make a lot of money on the bet. People would lose their money, and there would be no recourse.
As mentioned elsewhere, a lot of work is also being done on decentralizing the oracles. Like PoW / PoS protection, this raises the cost of an oracle attack high enough to reduce the risk to acceptable levels for more sensitive applications.
To do anything more meaningful, code needs to interact with the real world. And this is generally the point at which blockchain apps lose all of their purported benefits, like decentralization, immutability, reliability and so on.
Asset issuance, voting, wills, identity/reputation systems, land registries.
Fundamentally, a blockchain is just public, transparent immutable data history. Of the above sample cases, all it takes is for the powers to be to recognize the data as a reflection of the real world; which is a barrier outside of the technology.
And sidenote, decentralized oracles will literally tie outside world to the blockchain.
All of which reach beyond the blockchain. No-one is going to care that a 'smart contract' says that Alice owns a plot of land when Bob holds the real-world deeds.
The real world and the blockchain can only be linked when, as you say, 'the powers that be' decide to recognise the data. But then you've lost all of the advantages that the blockchain was claimed to possess. For example, if we need an entity to recognise that the land registry smart contract is valid, there's no more decentralization, and we might as well let that entity store the land registry in their own simple database. The blockchain becomes pointless and wasteful.
That's a very wide brush stroke to paint. You just have to analyze each use case independently.
In the same example of land registry, just a transparent history is a huge value add when dealing with corrupt government officials. Here's a case study https://s3.amazonaws.com/ipri2016/casestudy_collindres.pdf . Voting transparency even with the government as the part of centralization is a huge value add imo.
Further, even allowing centralization in certain points, like a SpaceX IPO (which should def be centralized), allows whoever holds a share to make arbitrary, trustless mediums and rules of exchange.
With Ethereum, one way to do it is to make the voting weight non-transferable, meaning to give someone else your vote you'd need to give your private key.
It would be of course crazy to do that; like giving someone your bank card and PIN number to give them cash.
The terminology seems to have changed to mean any system that provides external data to ethereum contracts.
> Several data providers respond to this service agreement with a bid in the form of a data reply — when enough data providers have responded, the majority response is taken (or average depending on the request), outliers are removed, and data is fed into the contract.
What's to stop me from setting up 10,000 different data providers that initially provide good data to get a good reputation score, but then slowly corrupt them over time? It doesn't matter how many data providers you average if I can set up millions of them in seconds. I don't see any way to solve Sybil attacks here.
This is false. Where did you get that impression?
In 2014, the IPFS protocol took advantage of the Bitcoin blockchain protocol and network infrastructure in order to store unalterable data, remove duplicated files across the network, and obtain address information for accessing storage nodes to search for files in the network.
IPFS itself has never had any cryptocurrency integration, although there are external services that store your data on their IPFS nodes in exchange for Bitcoin.
(source: https://filecoin.io/blog/update-2017-q4/ and I'm on the IPFS team)
There will also likely be a small amount fo LINK required to start a node with enough reputation to gain assignments which would also increase the cost of a Sybil attack.
So, a prisoner's dilemma situation here? If one person objects, everyone loses their money? Who gets the payment? Are the coins permanently burned? If so, seems harsh in the face of accidents. If not, seems open to abuse if someone could be both the smart contract creator and a data provider. I create 100 data providers, and a smart contract, and when I detect someone new has joined my pool, cause them to lose their coins which are sent to me.
> There will also likely be a small amount of LINK required to start a node with enough reputation to gain assignments which would also increase the cost of a Sybil attack.
Ah, so an economic majority that successfully scams others and acquires a mass of tokens can use them to launch more data providers.
What do you mean by this?
For the sake of example, imagine this is a market that is being used to trade fishing rights for a region off Iceland.
Each of the five has a holding of Consortium Coin on this chain. This give them voting power in any decisions that have to be made of the chain. None of the second-grade members have any Consortium Coin.
The second-grade members trade in Fish Coin and Boat Coin.
Each of the five operates an oracle feeding to the consortium. It provides fisheries stocking data, and records of dock inspections of member boats. Each piece of incoming oracle data is signed to indicate that it is backed by the Consortium Coin holdings of the operator (proof-of-stake).
A simple election/raft algorithm decides that Oracle advice is true once it passes a threshold of so-much Consortium Coin.
There are contracts signed in western countries where the five firms are listed. These contracts say - essentially - that they will operate in good faith on the chain. (If they did not, they could be sued in the usual way).
There is a direct line out of this chain into the regulator, who runs analysis algorithms against the reported behaviour, and compares that to their independent mechanisms.
Bribery could still exist off-chain. But that is not new, and we do alright at protecting against that through current systems of governance. In this scenario, the thing your proof of stake is protecting against is a non-consortium blockchain member setting up a rogue oracle.
Why is this valuable? If ppl get the model right, you can run sophisticated markets like this without any civil servants being involved. It may turn out to be policy-wonk heaven. You can cut the size of the civil service, and yet have much more nuanced regulation, and better game-theory for operating markets.
Next: a social network going where people indicate trust of one another, and act as semi-guarantors for people they have vouched for.
Next: operate sections of the legal and judicial system over the chain.
Human actions captured on a cheap, secure, distributed ledger.
So what does the blockchain add? Why can't this be a database set up by the consortium?
If the blockchain community gets the contract/language issues sorted out, a small dev team could knock out a first-stage system like the fisheries system in three months and in two layers of technology (contracts, oracles). It would be trivial to operate and resilient to server failure (less-so the oracles). Ten years later, it would still be just the same two layers of code.
In this world, contracts make custom APIs obsolete. There is a new career path for a developer who lives and breathes async contract code.
The way of implementing such a system now is db-centric. Business problems tend to be event-driven, but databases are not. So we need many more layers of technology: ERD, stored procedures, 'backend', partner API, hosting complexity, business continuity complexity, further layers to assist support and deployment and API onboarding.
The database company takes on a life of its own, it is expensive to fund and delivers a bad customer experience.
So the thing that blockchain adds: you will able to reliably build significant systems with two-person teams in domains where we currently struggle to do adequate work with firms of twenty or forty people. We will be able to engage with more complex domains than we can at the moment, and there will be network effects from this.
My focus is multiple-host, centralised async systems. I think this is the future, and that databases will be marginalised. Comment here elsewhere gives more details.
I may turn out to be wrong. In that case, we will end up in the kind of blockchain world described in my earlier comments. I suspect it will hinge on whether it is possible to create a good-enough high-level language.
How do you know whether the numbers you are getting reflect something about the real world? How do you know that your data hasn't been tampered with intentionally or unintentionally?
Data provenance is extremely difficult, and that is only half the problem. The other half of the problem is determining whether you have actually measured what you think you have measured. (Note: there may be some additional halves lurking around as well.)
To give some concrete examples. You find a picture of a CEO groping someone, how do you know whether it is real? Does it matter if you want to short the stock of the company, given that you know that other people will not verify it? What if the photographer's camera automatically pushed a stream of hashes of sensor contents and GPS locations to a source with a verifiable timestamp?
How about the equivalent for a microscope sensor to ensure that the raw data from the sensor was verifiable, and that all transformations of that data needed to be published in a form that would allow anyone to verify that the raw data could be transformed to the final data?
How about a contract that specifies that if a freezer temperature rises above X degrees C for more than 3 minutes then the freezer owner must pay Y dollars to the owners of the contents of the freezer. What does it take to build sensors that the owner of the freezer would trust enough to enter into such a contract?
tl;dr Verifiability of data from oracles is extremely difficult, and much a bigger challenge than building a blockchain that could make use of it. GIGO will be a big stumbling block.
If the owner of the fridge in your example eventually discovers that the sensor has been tampered with, s/he can get the money back using the judicial system offchain, maybe reflected in some inchain contract.
Answering to my own initial question, the speed of the system could make a difference. An automated way to scam people with an oracle could make it easier to get the money and disappear.
Are there any other major differences?
It's ironic that they mention Augur by name in the article, but are apparently unaware its main innovation is the decentralized oracle that just so happens to have a prediction market built on top of it.
> I feel like this is more of a feature than a bug.
That is indeed 100% by design. All smart contract code in Ethereum has to be deterministic to guarantee computational consensus, and of course this can only be done by having a closed EVM.
And it's not going away because there's a demand for Bitcoin. Why? Not because blockchain is some sort of an innovation. It's because people want a currency not controlled by any state institution. It's because people want freedom. Deny that all you want, it's not going away.
That doesn't justify why anyone else should be shoehorning blockchains into their projects.
Earlier today I saw that Kodak is going to be launching KODAKCoin later this month as a mechanism to somehow assist photographers in selling and distributing their work. Presumably Kodak trusts Kodak. Any photographer who wants to use Kodak's tools to control the distribution of their work has to trust Kodak. Kodak has an IT department. They don't need trustless or decentralized. What they need is a boring ol' SQL database.
Maybe cryptocurrencies are a good idea, maybe they're not. That's more of a political and economic question than a technical one. Either way, they clearly do work more or less as advertised. What I'm still waiting to see is someone who is not a libertarian bent on the destruction of the global financial system using the blockchain to successfully solve any other previously intractable problem.
Trouble with that, is that then Kodak doesn't get to issue its own token, and therefore doesn't get to indulge in securities manipulation. It also means they can open themselves up to competition on ease-of-use, since now anybody can run a company doing the same thing.
There is also the VERY BIG question of whether or not such a distributed ledger would ever be accepted in a court as proof of ownership of rights to those photos. If it can't be, there's no point in any of it.
If you mean the ecosystem can thrive without Kodak, then it sounds like you don't expect Kodak to add any significant value and I may as well use any immutable public record, of which there are already countless legally tested options.
If you mean that if Kodak goes away then the rights contained in their ledger stick around as a historical document, then it explains why they need a public and immutable ledger (and a decent third-party archival service), but it still doesn't require trustless or decentralized.
A blockchain works, in the same sense that calling a ride sharing service to take me to the coffee shop half a block from my house works. But I can just walk half a block instead. As far as I can tell, the blockchain doesn't allow Kodak to do anything that they couldn't have done 20 years ago if they had wanted, and it's much more complicated (and therefore much more expensive and error prone) than many other data persistence layers.
You're right that they wouldn't be adding much value, and therefore couldn't extract much profit. That's why they're not doing that, and are instead issuing tokens.
That's what they're doing. They're creating an Ethereum-based ERC20 token and smart contract platform: https://www.bitsonline.com/introducing-kodakcoin-kodak/
It's not conceptually proven, though. As a mechanism of exchange it does work, but that is a very low bar. Many things can be used as a mechanism of exchange (such as Poker chips). But Bitcoin has not yet succeeded as a currency. There's a long way to go before you can safely say the mechanisms powering Bitcoin's blockchain are sustainable and can be stabilized.
Does bitcoin really do any of those things? Right now, btc core is not an alternative to cash- a problem that maybe will be fixed in time, but currently only seems to be getting worse. If bitcoin really did take off as a global currency, the IRS would audit unreported bitcoin transactions- and it'd have your financial records because the corporations and individuals you interact act with would cooperate, and it'd only need a few to start to deanonymize you. It seems like the blockchain would almost make the tax job easier, because all transactions are public unless people move from bitcoin to a zerocoin model. Even then, the IRS would pursue those who didn't report and have transaction information from vendors to work to identify fraud.
So, bitcoin doesn't seem like an alternative to taxes. Also have no idea what it has to do with most government regulation. And, is it really an alternative to the financial system? Yes, people can use bitcoin instead of a checkings or savings account- but still need to use traditional services to invest in the market, and the financial system will continue humming along making more money from money and making gobs of money profiting off everyone else's market inefficiency whether it's working in usd or btc.
So, what are we left with? It seems like core btc is only an alternative to a speculative investment in something that the federal reserve cannot print. And believe it or not, the vast majority of this country either doesn't care about quantitative easing, or believes in basic macroeconomics. Core right now seems to just be a LARP fantasy for libertarians convinced that "this time we can finally get rid of the evil Fed and their evil money printing". It'll never happen, and if it does offfer any kind of freedom, it's the freedom to go back to pre-fiat boom and bust cycles of economic hell detached from modern macroeconomic theory.
Before the central banking era, the US banking system was made more fragile than it would have been under a free market by 1. Civil War era banking regulations that required banks to hold US bonds as reserves and 2. laws against interstate branching.
The former resulted in an unstable centralized money supply that fluctuated with the volume of outstanding US bonds and the latter prevented more diversified banks from emerging that could better weather localised shocks. Canada had neither of these mandates and consequently had a far more stable banking system.
There were proposals before the Fed was created to make the US financial sector more like Canada's, but the banking cartelists won the argument, and the Federal Reserve mandates were passed to cartelize the banking sector under a centralized hierarchy.
Also keep in mind that macroeconomic theory is just theory. It cannot be scientifically proven correct due to the complexity of the factors involved. Also keep in mind that there is an enormous financial incentive to popularize the idea that centralized control over the money supply is economically beneficial, and Economics is not immune to undue influence. Consider that the Fed alone employs thousands of economists, and consider the institutional biases the Fed and its shareholders likely have.
Even with all these forces at play, there's no macroeconomic consensus around your belief that free market banking is less effective than central banking.
A couple of good talks by George Selgin on pre-Fed era and the 100 year performance record of the Fed:
But yes I agree with you that it is fundamentally anarcho-capitalist. You are certainly not wrong, and this is the source of my objection to bitcoin and most other cryptocurrencies. Although I don't view anarcho-capitalism as "freedom" like you do, but that's a debate for another time.
The reason I think that is very simple.
The blockchain allows us to create scarcity in an otherwise abundant medium.
This means that potentially (and yes it will take time) we will see be able to mimic the physical space and create items that are to some extent unique (even though the can be copied. The art market is based on exactly this principle)
It's extremely interesting when it comes to things like secondhand markets where we can buy and resell assets without having to deal with licensing issues from some central owner.
Things like ebooks that can increase in value because of the people who owned them, digital "Pokemon cards" to create unique digital assets, virtual goods without the need for the original creator of the game to be up and running.
In other words, it allow us to have a digital world where what we do creates a unique footprint and doesn't just get's obsolete and where the end user gets to tap into the value chain of technology even if they are not able to work in the technology space.
These are some of the things I believe is interesting. I am not anarco-capitalist or libertarian and I don't care if it was pushed primarily by them just like I don't care that my country was based on wars and slavery and killing other people.
The blockchain, the way I look at it at least, is a "protocol" like TCP-IP.
Besides which, when is turning abundance into scarcity a good thing?
To limit the illegal reproduction of information goods (movies, TV shows, ebooks) which have zero marginal costs. This is why DRM was invented -- to offer control to copyright holders by creating the illusion of scarcity of information goods which are costly to produce but can be reproduced by anyone at zero cost.
I was merely talking about the effects of the blockchain. The outcome of using a blockchain is identical to the outcome of using DRM: they both can be used to engender the illusion of scarcity of something that is not naturally scarce.
Without (the illusion of) scarcity, the enforcement of property (or access) rights on the Internet would be impossible; blockchains and DRM enable their enforcement by maintaining records of "who has permission to what and for how long" which is why they are useful.
The art-scene is based on this principle.
On top of all that, the 'decentralized' part is a pipedream anyway, there's no other implementation of the marketplace and everyone ends up having to trust thousands of lines of code. Under the hood, there's likely to be some centralized control, since the OpenBazaar investors most likely want to earn some money, which is through commission on sales. If it was actually decentralized, then everyone would be able to run their own version and avoid paying the commission in the first place.
It has not yet succeeded in this purpose as it is not yet a viable alternative currency except in extreme cases where the government-backed currency has failed completely.
9 years is nothing when we're talking about currency. It's not even a fraction of a single lifespan. Bitcoin's rate of money supply has slowed dramatically in the last few years (as it was programmed to do), limiting its ability to expand to accommodate new markets. Instead of becoming more widely accepted, organizations such as Steam are dropping support for it, due to volatility and increased transaction fees: which is exactly what would be predicted when a currency supply is limited but the economy around it is growing (or trying to grow-- scarcity of currency cause an economy to stagnate until an alternative is found).
Actually, it is some sort of huge innovation.
The only exception is things like Sia, and that's not cost or convenience competitive with Amazon S3 or Backblaze.
Where is the value here? When I visited this I was expecting to see at least something about building something useful for... something... Building what for the blockchain?
Oh kitties. Yeah.
I am absolutely aware of the fact that early stage tech often looks like a toy, but here's the thing. PCs were a toy but it didn't take long at all (VisiCalc, etc.) before they had actual uses. BBSes were a toy but they were immediately useful to their users for trading data and messaging.
We are now about eight years into block chain and beyond its one core use cases there is almost nothing. Whatever value has been delivered seems extremely minor compared to the vast sums of money being spent, making this perhaps the worst ROI I've ever seen.
Can someone provide a counter example? What are people doing in the real world with this stuff?
What's even worse, from my POV, is the humongous amount of electricity that is used to support the blockchain. And to what end?
Personally, I won't start believing in the blockchain until a non-wasteful alternative to the present PoW scheme gets developed and actually deployed. Right now, this looks to me like the most direct way of turning human vices into cooking us live on this planet that humanity has ever invented.
> The 'end' is the security of the bitcoin blockchain. Defence forces consume a massive amount of energy and human resources. They are still funded because countries don't all trust each other and they want security.
Yes. Wasteful as evil as the concept of a military is, countries need military forces to maintain peace, by keeping each other in check. It's an unfortunate direct consequence of the way humans organize themselves into societies.
But blockchain is not a direct consequence of a fundamental issue in human organization process (if anything, it's just a direct consequence of human greed meeting 2010s tech). It's the least efficient way of doing anything, because it completely eschews the need to trust other actors. Yes, I believe trustless systems are mostly a bad thing, because trust is literally the efficiency hack that allows us to coordinate at scale.
There are probably some theoretical problems where a trustless solution is perfect. But as it is today, the blockchain is trying to turn everything in the society into a Cold War-like military spending problem to avoid having to trust one another, even though trust-based systems work just fine.
I run 2 PoS wallets on one of my computers. It doesn't affect it much, though not all coins are equal (some consume more resources). It just have to stay on.
That's really cool because I can code the rest of the interface (front end etc.) with sloppy security and then ACTUALLY BOLT ON a secure layer with guarantees at the end.
Makes development much more streamlined. As the author of a huge codebase (https://qbix.com/platform) I worry that there are lots of security holes. With such a large attack surface, most new open source projects are swiss cheese, like early Wordpress (which is still full of holes from plugins).
Here, we just build our MODEL layer with a blockchain and KNOW the rules are going to be enforced.
Combine that with IPFS and a token and suddenly you don't have to pay for hosting to scale to billions of people. It's nice.
And anyway it's open source software! Why don't you go download the XRP consensus protocol from their github repo and try it. Ripple's servers won't even be part of the network.
What is there to trust? That they'll take your transaction? About the only thing they can do is refuse to include it in a block. Not much to trust really.
The fact that miners do not need to be known and trusted third parties means that there is great difficulty for any network adversary to identify enough miners to make an attack effective, and that even they were able to identify pools controlling >50% mining power, they would have great difficulty sustaining this attack as the network reacts by switching to new pools.
These facts in turn make it unlikely that a network adversary would
1. target miners in an attack as a means of controlling/obstructing the network
2. succeed in causing long lasting harm to the network in the event that they attempted such an attack.
Ripple's set of known and trusted validators can very easily be stopped and controlled by any reasonably powerful set of state level adversaries, and are themselves in a position to extract rent from the network due to the potential for such a group of known parties to collude, and the coordination problem that users of the network would have in hard forking away from such a colluding set of validators.
That's still a lot to trust. How do I know someone isn't just gonna go crazy? How do I know someone isn't shorting bitcoin? That's rational.
Someone could short Bitcoin Cash and then mine in secret using Bitcoin ASICs and make a fortune screwing the whole Bitcoin Cash chain with their superior power. Proof of work sucks!
It's not though because it takes a lot more than one individual to go crazy. It takes a huge number of people, who have a huge amount invested in the platform, to simultaneously go crazy and burn their hundreds of millions of dollars worth of their own assets down. People who own that much are generally mentally stable and focused individuals, and the idea that such a huge portion would spontaneously go crazy at the same time is extremely farfetched.
Relying on cryptoeconomic incentives is a much safer bet than trusting that a handful of trusted third parties won't be bent to the will of some political elite who pass a law, or won't collude to raise fees once they have attained a significant network effect and customer lock-in.
The mining has ALREADY been centralized in a small number of mining pools. They become a cartel that charges high fees, no collusion needed. You have only one miner every 10 mins, and it has to take every transaction made in the whole world. You call that a good scalable design. Not to mention they can just be DDOSed.
But anyway tell me again why it's not rational behavior for someone to mine Bitcoin Cash in secret and then unleash their far longer chain, after shorting Bitcoin Cash on the exchanges? Why is Bitcoin Cash even secure at all?
2. No one said that proof of work based cryptocurrencies can't be attacked. Obviously there's no such thing as an invincible protocl. The point is that it is much more costly/difficult to stop a proof of work based cryptocurrency than one that depends entirely on a small set of known and trusted third parties.
>>The mining has ALREADY been centralized in a small number of mining pools.
Already been addressed in my previous comment.
>>But anyway tell me again why it's not rational behavior for someone to mine Bitcoin Cash in secret and then unleash their far longer chain, after shorting Bitcoin Cash on the exchanges?
It would be much riskier than simply mining honestly. If they short it and their attack fails, they would lose a huge amount of money.
Having people host with several nodes running a consensus algorithm is worse than trusting all your data to one actor in "the cloud"?
If a thing moves across multiple organizations then you can make a case for a blockchain application, logistics is an obvious example, but there are others like asset (expensive paintings / vintage wine) provenance.
All problems related to inter-company collaboration are people and organizational problems not technical problems. Blockchain solves nothing in this space.
The problem is that some people adopted blockchain as some kind of weird gimmick to wrap extraordinary claims such as the ones in the original post and promote scams (altcoins, appcoins, whatever).
That's a problem of anonymity (or lack thereof).
Some other chains are working the problem in their own ways, I'm just less familiar with them.
edit: If UPS doesn't count then nothing is going to count.
Lots of things are interesting in theory. Bitcoin is about to end its first decade though. Asking where the actual value comes from seems on topic to me.
Hell, if these don't pass the ideological test, just ask someone from Venezuela why do they need bitcoin.
Basically, saying that bitcoin can (at the moment) function as a better currency than one that is completely failing is valid and interesting, but not exactly a ringing endorsement.
> Can someone provide a counter example? What are people doing in the real world with this stuff?
What? Where did they move the goalpost.
You might want to check this page out:
There are 938 projects listed that leverage Ethereum/Solidity.
One of my personal favourites is: https://colony.io. The whitepaper is a fun read.
Block chain centric use cases don't count since those just reinforce my worst case hypothesis-- that cryptocurrency is a financial MMORPG and a pure value-free bubble.
What's an actual case of an actual team, project, or organization using this stuff to do something... actual?
I'm both a developer and a founder and am very active in tech. I have yet to encounter a single case of someone using a block chain based application in the real world with the exception of the core currency/wire transfer use case of cryptocurrency. We have used it for that ourselves, but as others have noted the appreciation in value is actually harming this use case.
What I see here is heaps of money being raised and a lot of developer time being spent building things without any contact with reality whatsoever. As they say in the military: the first casualty of war is the plan. IMHO there is nearly zero chance that you are building the right thing until you have shipped and iterated a few times, especially with something complex and rather byzantine. The only exception to that might be "scratch your own itch" or "dogs making dog food" projects, but those really aren't exceptions since if you are the customer you can (to some extent and in the early days) short circuit the process by testing on yourself in your own head as you go.
Colony looks like groupware on the block chain. Groupware is a very well known tar pit of death.
Speculative investing + skyrocketing valuations does encourage highly motivated reasoning-- a unique kind of confirmation bias:
"This technology MUST be the answer to all the problems of the future because I'm getting wealthier TODAY!"
Irrational exuberance is rampant.
That said -- the recent New Yorker article on Estonia's digital society  covered that country's usage of a blockchain to manage patient healthcare records.
> the backbone of Estonia’s digital security is a blockchain technology called K.S.I.
K.S.I. from Guardtime  is an enterprise permissioned blockchain that is less decentralized than bitcoin and ethereum. Still, its exciting to see that Estonia is leveraging immutability and (some) decentralization to build a secure persistence layer that provides data provenance and a log of data access for management of their citizens' personal data, including healthcare records.
You didn't even read properly - we were talking Estonia.
At the scale of a local health care system the blockchain is perhaps really nothing more than a fancy database, if at that scale it will stay energy efficient for a long while.
Under the prototype, users interact with the charging station by agreeing to a smart contract that is programmed on top of the Ethereum network. Prior to charging, the user makes a deposit on the network, which is later released after the transaction is complete.
The main difference is that instead of users being billed for the amount of time that they are connected to charging station–i.e. the way most stations work today–users pay only for the amount of electricity consumed during the charging process. The hope is that both the cost of the micro-transactions, and the allocation and consumption of electricity, will be made more efficient and ultimately save money.
In addition, the blockchain plus smart contracts has the potential to streamline the process of purchasing power from a charging station. In theory, this can take place directly with the machine (charging station) and not require prior contact with the providing company or a human representative.
When VisiCalc was demo'ed there were people lined up literally pulling out their checkbooks and offering to pay almost limitless amounts of money for the prototype. Spreadsheets had insane value to accountants.
Other than the core use case of currency that I mentioned, where are the "killer apps" for block chain? A lot of it looks like minor and dubious improvements or solutions in search of a problem. Neither of those comes close to justifying the insane amount of money and resources being poured into this area.
It may be the case that the fundamental, key, killer features of the blockchain have lost their initial lustre to many people, and I understand that. But decentralization and verifiable, consistent truth are a really, really big deal.
There are applications with promise, large promise. Killer apps? Maybe. They will arrive, it's more "which of these" and not "whether these":
"At the Ambrosus project we aim to radically improve the global supply chains by creating a trusted ecosystem where we can reliably record the entire history of products and execute commercial transactions accordingly."
Prediction markets -- fascinating stuff with major potential.
Brazil experimenting with laws/petitions on the blockchain
... There are many amazing use-cases.
The reason this YC article was published is because there is a great demand for blockchain from investors.
Ignore it or doubt it at your own peril!
If the transaction is on an immutable public record, the authority couldn't say: "Well, no you didn't pay us. Pay us again, or we'll steal your dog."
If you live somewhere where Government/Corporation are out of control, this sort of safe guard has major benefit.
Is the charging process now trustless? Nope, because I still need to trust that once I make my deposit the real-world charging station will honour that payment. Is it decentralized? Of course not, I'm standing in front of a single charging station, not a zillion different ones. Is it immune to double-spends? As a user, I don't care.
Blockchain as a technology as originally described by satoshi's paper is an extremely good solution as a cryptocurrency. You have a bunch of transactions and they all reduce into a single number -- your wallet balance. Anything other than this you're just shoehorning data in a crappy linked list and you'll pay all the penalties for doing so.
Frankly, I think the MMORPG economic model is more sane. At least in-network consumption is part of the core use case and they've demonstrated 20 years of (incredible) profitability.
This is just the beginning
Big Pharma Seeks DLT Solution for Drug Costs
In the centralized world with a thin protocol layer that captures little value and a fat application layer that captures a lot, we see far, far more development in the application layer. When you invert where the most value is captured, you invest where the most work is done.
That said, all sorts of open source projects have shown that there are plenty of people willing to sacrifice their ability to capture value if it means they can produce even more value that is instead captured by users.
Don't get me wrong. I want to believe. I want a decentralized trust-free ubiquitous computing future. I want an alternative to conventional VC to fund startups. I want an alternative to adware/surveillanceware to fund products and services.
That's why I am saying "put up or shut up" and calling BS on this mania. It's sucking all the air out of the room and if this really is a totally vapid value-free bubble its collapse is going to be a disaster.
I'm not sure yet steemit will end up being a winner in this field, but I find this a very smart approach for challenging the network effect of big competitors.
As a user (writer/curator), you earn tokens for doing what you already do for free in reddit or facebook. The tokens you earn are like altcoins, you can trade them for whatever you like.
As you say, the key point of blockchains, like bitcoin, is that there is no central trusted entity. So, like steemit has done, if you add a trusted person or company, the main feature of the currency is wiped out and there's no point in having a blockchain in the system.
I'm not saying this model is foolproof, and perhaps you're right and steemit (or app specific coins) will never be a big hit because of that. My point was just to show an example of a different kind of business model / monetization strategy made possible because of the blockchain, and there will certainly be others.
I will add though-- the major reason cryptocurrency has so much value in that space is that the alternatives (bank wire, Western Union, etc.) are so terrible from a UX perspective. If those alternatives vastly streamlined their UX I think a lot of the value in cryptocurrency in the developed world might disappear. It might still have value in countries without good and reasonably stable banking systems.
Check SALT, millions in loans already distributed https://www.saltlending.com/
Nope. Still hype and noise.
I've had meetings with prospective clients that opened with, "We have $problem, can we use blockchain to solve it?" where anything that doesn't qualify as a blockchain is cast to the wayside because it doesn't scratch that buzzword itch.
(Amusingly, I've witnessed one pitch where the person called it "bitchain" and it sounded like "ba-ching!" and I was waiting for the follow-up to what I thought was onomatopoeia for a cash register sound. I've since learned to not abbreviate cryptography as "crypto" lest I attract sketchy prospects.)
A lot of the problems that you might want to solve with a blockchain probably doesn't need a blockchain. A distributed, append-only cryptographic ledger will suffice. To wit: https://paragonie.com/blog/2017/07/chronicle-will-make-you-q...
I asked a few questions and he dodged them like a professional politician:
* what do you do if you need to reverse a transaction (lets say, court order)
* what if someone loses his wallet/password
* some people claims blockchain is over-hyped
He said that I being skeptical proves my ignorance and I should study more about the subject instead of challenge him.
Remembered the short tale "The Emperor's new clothes", I'm unable to see the king's clothes because they are made of a magic fabric invisible to the stupid. I guess the magic fabric is made of blockchain.
So if there's a danger of forgery, or you have an interest in security, a blockchain with proof of work provides a really trustworthy way to know you're getting authentic data, because you can look at the chain, and know things like it would cost about 100,000,000 to forge this full history, and 1,000,000 to forge to last block.
Might be just my misinterpretation, but when I hear blockchain I usually just think of conventional totally trustless and identity-less protocols that necessarily require proof-of-work - which is a security level which is not needed for most applications.
Pardon my ignorance, but isn’t that what a blockchain is?
This is a handy reference to decide if you're building a cryptographic ledger or a blockchain: https://gist.github.com/joepie91/e49d2bdc9dfec4adc9da8a8434f...
In addition to this github gist, I like http://doyouneedablockchain.com/ .
The key innovation of the blockchain was the use of proof-of-work in order to associate an amount of computer-time with a given block, and then pick, from competing views of a blockchain, which view took the most energy to arrive at... all while being resistant to a small number of subversive actors.
In short, the blockchain solved the Byzantine Generals’ Problem, and happened to use a append-only cryptographic ledger as part of it.
Correct. In other words, proof of work is only a tool to make everybody slow
in producing data while keeping everybody fast in verifying it.
> In short, the blockchain solved the Byzantine Generals’ Problem,
No. It's a common misconception, but in fact it does not solve Byzantine
generals problem, with the simplest reason being that the problem requires the
solving protocol to terminate (blockchain does no such thing).
> and happened to use a append-only cryptographic ledger as part of it.
The correct terminology is not "ledger", but "document timestamping". You
don't need to record transactions in blockchain, they can be any statements.
Cryptographers already had such systems, except that each of those required
trusted third party to produce timestamps.
One implementation of it, google's, uses leveldb:
Another one out there uses postgres. It turns out that you can use traditional databases in many cases where you think you need a blockchain, and you'll be able to waste vastly less energy on proof-of-work and vastly less time dealing with the terrible mess that is "blockchain".
The reason not to use "blockchain" is that it has 200 definitions, all of them full of people trying to get rich, not getting things done.
Databases have long-since solved the problem of storing and distributing data.
Distributed stores like etcd, zookeeper, and so on have long since solved the problem of duplicating data.
Very few people need byzentine fault tolerance (due to having a large number of untrusted actors with write access), which is the only time the additional complexity blockchain includes is actually useful
Hence we shall issue signed receipts to all clients and providers then setup a system to pay out a large bounty if someone can produce a signed receipt not in our weekly-published-log. We'll automate the bounty, but perhaps a third party will also offer a validator. We will not even need Postgres for it, just nginx and a filesystem.
But that is not interesting enough by itself, and mentioning digital signatures just confuses people more. So we call it a Single-Issuer-Blockchain: Now people instantly get the idea.
In my case, this sentiment accompanies an implementation in the form of an easily-deployable open source microservice.
If it's too hard for people to build, they can use what I wrote.
> What is this hypothetical non-blockchain, where are you going to get it, and why not just use a blockchain if that's what you need?
That's the tx/s limit on Bitcoin today? I can do hundreds of writes per seconds to Chronicle on a modest VM without sweat. This is possible because it's centralized, albeit supports mirroring (i.e. replication) and cross-signing.
Are people still fighting about this or have they come to a consensus?
I'm probably the worst person to represent whether there's a consensus or not since I'm one of the designers of Ripple. But the important thing, at least in my opinion, is that there is no "secret sauce".
The software is open source. People are free to modify it however they please. We run the exact same software that we make available on our public servers and our validators. Others are free to run validators and they do so.
As it happens, much of the network infrastructure is run by us today. But we are more than happy to turn that over to others who are willing to do it.
Why do you care if something is decentralized? The main reason is usually that you don't want the users of the system to be forced to accept changes made by an owner/operator of the system whose interest may be averse to them. Ripple is decentralized in this sense.
For example, eBay is not decentralized. They don't warehouse their goods. But if eBay the company says no auctions of adult merchandise, then there will be no such auctions. It wouldn't matter if every user disagreed with the policy. Their only recourse would be to re-create what eBay had done, that is, to themselves implement eBay's secret sauce.
By contrast, Ripple has no secret sauce. Anyone can run their own servers. If we make changes people don't like, nothing requires them to run the code with those changes. If Ripple disappeared and users of the ledger wanted it to continue, nothing would stop them from continuing it.
It's way more like Certificate Transparency than Ripple. Chronicle has nothing to do with payments or currency. It's just a ledger.
Writing data to the blockchain solves this problem, but the cost is large and performance is dismal.
Writing hashes to the blockchain at specified intervals, delivers proof of existence, at an acceptable cost and performance, but does not really make sure the data itself will survive its original author.
Is there another way? Can chronicle help?
a) Do "dapps" really to use their own tokens instead of USD or even ETH to function?
b) How are closed ecosystems that utilize "utility tokens" benefitting customers? How are closed ecosystems better than open systems, open protocols?
- funding (ICO)
- an economic incentive for attracting early users (give tokens for using your app in the promise that they will be worth more in the future)
b) if a user earns tokens that value over time, that's a huge win: imagine if all the time you spend on apps today, generating valuable data to a few companies, would generate in turn some of these tokens back to you?
Besides, what do you mean by "closed" exactly? The data being on the public blockchain should actually encourage integration by default. For example, several new dapps are being built on top of IPFS for data, using uPort for identity, Aragon for governance, etc.
b) "closed" means literally useless outside. Can you use your Cobinhood tokens at any other exchange? No, it's because Cobinhood tokens are only good for consuming the features of Cobinhood.
b) it's not literally useless outside, you just have to exchange it for other coins to use it outside. Isn't that how cash in most countries work too? Besides, remember there's far less friction in exchanging app-specific tokens by another coin than there is in exchanging cash today.
Even if app-specific tokens do not become standard in the future, it's an interesting idea worth exploring. But the whole point is how different kinds of business models can be created due to the decentralized nature of blockchain, this is just one of them.
Yeah, you can trade your Cobinhood tokens for Binance coins, but this is an artifact of the fact that each built a closed ecosystem. If both platforms used the same currency (ETH, USD, whatever), then there'd be no need or the inconvenience to trade tokens around.
Also, note, not all dapp tokens have liquid secondary markets, so I'd argue that it's almost an exception that your dapp tokens can be monetized externally
However, OP nor Naval, really understand the protocol, or wouldn't be supporting non-blockchain things like ethereum (there is nothing that you can do with ethereum but not with git).
>One of these developers, Vitalik Buterin, was frustrated by Bitcoin’s immobilism
I am amazed at how HN is selling a promo story invented for media by ethereum as a company. Digging IRC logs would reveal how Vitalik convoluted each aspect of the tech(and was often wrong)to the point that the devs stopped caring and let him be. Even technically, I have answered this on HN and other places numerous times - tell me one thing you can build with ethereum but not with bitcoin? (On the opposite, ethereum can't do money - mutable chain).
Strange how the PR puff pieces around Ethereum never seem to mention this project. Amazing also how the quantum computer seems to disappear as the pre-mined coins were sold off.
So no, you can't "do" more, only be more noisy.
> Technically, decentralized system will be
> always slower than centralized one.
There are application where speed matters. For example, to sort things out while all the lawyers are in a room.
Not inspiring confidence in the statement that it is faster than other systems. Compared to Bitcoin it is off by a constant factor, and constant factors aren't really what we're interested in here.
Storing an economy in a fully replicated global ledger has its limitations, there's no getting around that.
>bitcoin is significantly slower than other systems of its class
that class being decentralised proof-of-work, it is no slower than it is more secure than those class-members. (And among class members of equal 'speed' it is most secure)
I'll immodestly list my own first: https://www.evanvanness.com/post/166666272011/theres-no-such...
See also CoinFund's Jake Brukhman: https://blog.coinfund.io/fat-protocols-are-not-an-investment...
And Zeppelin's Teemu Paivinen: https://blog.zeppelin.solutions/thin-protocols-cc872258379f
I hear that even Joel doesn't agree with how his piece has been interpreted.
The only use for ethereum is shittokens, and you could practically coingen these for free, and trade forever. No load on the shared commons, isolate activity to the specific coin. The only advantage is the ECR20 standard that aids exchange integration.
SV is all a blaze about Ethereum, but I tell you, this too shall pass.
Long on other smart contract platforms, but not ETH.
Doesn't look like this is fading away:
>>The only advantage is the ECR20 standard that aids exchange integration.
That's a massive advantage. Several decentralized exchange protocols are being developed, and a decentralized exchange, EtherDelta, is the most utilized DApp on Ethereum: https://ethgasstation.info/gasguzzlers.php
Ethereum's network effect in crypto-assets is growing stronger every day, with 91 of the top 100 tokens now ERC20 tokens:
As a long-time decentralization activist, this sentiment makes me want to tear my eyeballs out. Why are cryptographic tokens necessary to implement fat protocols? Why does "standardizing communication across applications" now also have to mean "implementing a global, secure financial market" in the process?!? This is maddening to me and nobody has explained to me why blockchains are a requirement to do this.
>>“Historically the only way to make money from a protocol was to create software that implemented it and then try to sell this software (or more recently to host it)… With [cryptographic] tokens, however, the creators of a protocol can ‘monetize’ it directly and will in fact benefit more as others build businesses on top of that protocol.”
>>Previously, the creators of open communication protocols for the Internet, largely DARPA researchers and non-profit contributors, could not align financial incentives with protocol development. In contrast, protocol creators today can issue “tokens”, like Bitcoin and Ethereum, that represent the value of their decentralized protocols.
The key is that it can "align financial incentives with protocol development".
If someone had said that one day there will be a company that does billions by allowing people to fundamentally share their cat pictures and send each other happy birthday messages people would have laughed their asses off.
The blockchain can be seen as a giant immutable feed. Make of that what you will.
I don't remember any of the early internet negativity that Bitcoin supporters do.
A novelty of the unfolding blockchain revolution is the realisation that there is a world of interesting non-turing-complete things to be built. We all assumed that anything non-turing-complete a waste of time. Surprise!
What you want to say here is that ethereum takes a large step towards creating a flexible development platform.
Ethereum has problems ahead of it. Just as C has an endless capacity to create memory leak bugs, Solidity offers opportunity for contracts that will drain people's accounts. Each time it happens, it will be reputational damage for the community.
If you wanted to learn Ethereum, it might make more sense to start with raw EVM than Solidity. Play at writing a macro assembler. Once you were tooled up, you might try your hand at becoming the Brendan Eich of the blockchain. Until you do, we are stuck with Brendan Eich.
If we do not find such an expression, general-purpose, public-access blockchain will gain permanent mistrust, and fail.
Message-driven concurrency is here to stay though. I am building a concurrency language centred around message-driven consensus-engines. (github.com/solent-eng/solent) It is designed to be host-distributed, but operated by a single party and not multi-party.
But do not discount value that the token creates as a network effect. Think of the currency as an investment vehicle to reward people who jump on to the network first. Consider Facebook, the first hundred customers are billions of times more valuable then the last hundred.
Once this fad dies, people should start joining the networks they plan to use, and early adopters will be rewarded for helping creating the network.
On top of that, it decentralizes the control of the network but temporarily provides capital for it's creators. It does not ensure that their system will belong to them in purpituity. Which is a good thing!
I'm mostly not interested in anything financial. Decentralization, immutability, and a built-in way to pay for usage are the main features of Ethereum (possibly combined with IPFS) that get me going.
I think that the first successful blockchain based company won't be doing an ICO but just launch it's token/coin because it has utility in itself.
Provable [X] without a central authority.
[X] can be the following:
Currency - Bitcoin
Computation - Ethereum
Anonymous currency - ZCash
Storage - Filecoin
Most of us would agree that central authority is too strong in many aspects of the economy and technology. The key question is for what values of [X] does the value proposition make sense? The core technology is less than 10 years old, anyone being too confidant in where this road goes should put it in a larger timeline. Besides not losing your money, as hackers we can only explore what may be possible.
Under a limited set of conditions, with some cost [Y] to keep the system running. The bitcoin network is extremely expensive, for example.
The key question is for what values of [X] does the value proposition make sense?
The key question is for what values of [X] - [Y] does the value proposition make sense. And, what contextual conditions must be maintained to preserve the decentralization advantages of [X]? In other words, the transactions could be decentralized and anonymous but if you have to sign up for a centralized exchange to participate, those benefits might be moot for you.
It uses sidechains in the near future to fix the problems ethereum has at the moment
Meanwhile I use it regularly to do business transactions from the command line and shell scripts, which appeals to me greatly as a hacker who does business.
Open source finance! It's the future, guys.
Sorry about the speculative bubble. It's not really my fault though. Traders and investors are a bit crazy.
It makes a lot of sense for us to store them on the blockchain rather than hosting it on a webpage.
For checksum hashes, unless double spending is a problem, IPFS will suffoce.
> “Historically the only way to make money from a protocol was to create software that implemented it and then try to sell this software (or more recently to host it)… With [cryptographic] tokens, however, the creators of a protocol can ‘monetize’ it directly and will in fact benefit more as others build businesses on top of that protocol.”
And what was wrong with developers finding a market, developing a software and then monetizing it? I have tons of ideas each day, some of them blockchain related too but it seems unethical to use other people's money to test my hypothesis.
Also, that makes any guides written for devs on the subject of negative utility. It wastes their time; since the premise, that the new paradigm derives its value from censorship resistance, is breached.
It takes some serious non-thinking to support Ethereum. The price is high, the value is low.