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Building for the Blockchain (blog.ycombinator.com)
470 points by vincentschen on Jan 9, 2018 | hide | past | favorite | 330 comments

A blockchain ensures that some sequence of agreements was made in a way that everyone can trust. If everyone keeps their secret keys secure and solely in their possession, then no activity can be forged on the network by any significant likelihood.

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.

It seems like in most cases, the tokens are being used as a way for the developers to get funding to implement their project without the bureaucracy and costs of doing a real IPO.

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.

Absolutely right, the tokens are just a stepping stone to getting the [distributed] app off the ground. It's a great model! If you believe in the utility of something you can fund it very early on and reap great rewards, or at least root great endeavors on.

I somewhat fail to see how they could ever serve as a real payment utility. If they have some actual application utility, then you'd have to dynamically adjust costs based on the speculative cost of acquisition so your application costs aren't wild, and then it's still nothing but a speculation-driven currency. Isn't that just nuts? It's a built-in catch-22

Na you're looking at it as if you're moving currency from some valued mint to a non-valued mint and that's not the case, we're transforming capital from one ecosystem to another, just like Britain Pounds Sterling to the USD, when you move into the new token ecosystem you now are presented with new ways to use your token. MOST of these systems will not create _value innovation_ but some select systems will and those tokens will actually gain in value faster than the backbone currency [meaning the ivy of your token could grow faster than the tree of ETH/BTC because your innovation has value in addition to being a useful transaction vehicle].

How so? Can't you just do the same thing staking Ether instead of yet another ERC20 token?

Yes agreed, in several cases this summer I thought I was doing well with ICOs until I did the math and realized I would have done at least as well by just holding the ETH.

And this here is why we’re in a bubble.

I don't really follow your logic, considering I was referring to over 6 months ago.

But I do agree we're in a bubble.

If the owners do that, they don't get to flip the 70% of coins they withheld after the price inflates.

Yes many tokens are being used as shares and trying to circumvent securities law.

not just "Many" , All of these 1400 coins listed on this site except couple of them are "being used as shares to circumvent securities law"


>Yes many tokens are being used as shares and trying to circumvent securities law.

Tokens are actually mostly not shares. You dont own the company that issues the tokens. Everybody likes to think that it is, though.

The term "shares" is used here in loose sense, all these are coins/tokens .

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 .

There are a few, like Modum, that are really nothing but unregulated shares. Most of them are unregulated less-than-shares.

> A blockchain ensures that some sequence of agreements was made in a way that everyone can trust. If everyone keeps their secret keys secure and solely in their possession, then no activity can be forged on the network by any significant likelihood. Anywhere this concept has value, a blockchain has value. That's all there is to it.

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.

Well said.

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.

> distributed ledger rejects control by design

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.

More and more newer projects don't need those miners. It's still in question if they really offer the same security, but between masternode chains (security by having the "mining" done by people having to hold a large share of the coins so tanking its value would hit them hardest), dPoS (delegated Proof of Stake, every coin is a vote and you vote for a pool of "miners"), DAG where everyone has to do PoW for other txs to confirm their own, and other ideas, there are some interesting things. (I say "miner" but for those newer ones, the proof of work is often minimal to non-existent.)

If you can boil that down into an understandable statement appropriate for airing to on the radio or a finance television show, i'd be interested.

Otherwise, it seems like you just tried to do a "grapeshot" with tech jargon & lacking a main point.

There are alternatives to requiring a massive amount of miners. Some alternative cryptocurrencies implement those alternatives.

Happy? ;)

I imagine that exactly wouldn't be very convincing to those audiences now, would it?

I can either give you entry points for what to search for or I can give you the gist of it. If you want neither maybe you should ignore my comment instead.

My point is that your point in it's current from is essentially un-communicable, to non-advanced technical users.

> "Wealth is built through control"

Centralised wealth is built through centralized control.

Distributed wealth is built through distributed control.

Distributed how?

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" https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/

The initial windfall can only be spent once. The important difference between distributed finance and traditional finance is that the former has no gatekeepers that provide their controllers with recurring economic rent. Both mining and staking are competitive industries that require productive activity by their participants.

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.

> Both mining and staking are competitive industries that require productive activity by their participants.

Validators also charge rent for their services, which especially in the case of miners, is a staggeringly inefficient use of electricity.

Of course they charge for their service, but 'economic rent' is a term used in economics to denote value generated by other economic participants and extracted by a non-producing party. Miners are producing most of the value they are capturing. The portion of their earnings that is 'economic rent' is not nearly as large as that of the beneficiaries of the traditional monetary and financial system.

Every system deserves critique and improvements.

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.

A small minority doing the mining does not imply rent seeking. Specialization through division of labour would produce the same result.

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.

People also seem to forget that the Bitcoin whitepaper is pretty clear that Bitcoin itself is an experimental idea. I have never understood the "fixed supply" fetishism.

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 the "fixed supply" fetishism.

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[0]. 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.

[0] https://boardgamegeek.com/thread/426022/inflation-game-monop...

The "fat protocol" meme you're talking about has already come and gone.

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.

> A blockchain ensures that some sequence of agreements was made in a way that everyone can trust. [...] The rest is fairy dust and noise.

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.

A friend of mine told a great story about how some Koop aid drinkers were pitching blockchain internally for internal chargeback for services.

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.

Didn’t Ronald Coase win the Nobel prize in economics for basically pointing out why this was a bad idea? [1]

[1] https://en.m.wikipedia.org/wiki/Coase_theorem

Oof. It's hard to know where to even start poking holes in that. Like whether everybody's OK storing the data all across the world, versus running a tiny internal network that can be taken over by a disgruntled employee.

They actually can and fairly well IMO. What seems to be a bigger problem is that people don't want to accept that that has value.

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.

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.

Upgrade cost of network complexity: The Internet has smart edges ... and a simple core. Adding an new Internet service is just a matter of distributing an application ... Compare this to voice, where one has to upgrade the entire core. - RFC3439 (2002)

From http://github.com/globalcitizen/taoup

> In any other context in technology, "fat" anything is considered bad. Technologies are supposed to be "thin", simple, efficient, and composable.

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.

"Technologies are supposed to be "thin", simple, efficient, and composable." -- good aphorism for evaluating protocol schemas and suchlike.

> Anywhere this concept has value, a blockchain has value.

Sure, and that's several trillion dollars per year worth of the global GDP.

Monegro believes that this paradigm shift affects the way that developers should think about their applications: “The combination of shared open data with an incentive system that prevents “winner-take-all” markets changes the game at the application layer and creates an entire new category of companies with fundamentally different business models at the protocol layer.”

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?

Early blockchains like bitcoins might have this thin/fat protocol aspect, but this is much less true of newer blockchains like ethereum. Granted, with programming languages like Solidity we are still quite limited but there are some interesting developments ongoing, like possibly integrating the webassembly tech with some blockchains, to allow more flexibility on the application layer (see ewasm for ethereum).

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.

> What is of interest to them is the fact that their data can become decentralized with the blockchain…

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?

> 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

I'm not really interested in putting my emails in a blockchain, or did you mean some kind of... different data?

Bank data is one example. We don't even own our own transaction history/data - no bank provides free APIs to access this for consumers, the only option is to download manually/scrape through their websites. And as banks own this data, they could stop or handicap exports even further anytime they choose. I know if my bank gave me simple API access to my own data I would not have any use for apps like Quicken/Mint.

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.

> no bank provides free APIs to access this for consumers, the only option is to download manually/scrape through their websites.

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?

It's not public, it's just massively replicated. Your data on the blockchain is encrypted. Only you with your private keys can decrypt it and decide with whom to share it with.

Could you clarify which blockchain you are talking about? In Bitcoin nothing is encrypted and keys are used only to sign transactions.

You’re seeing everything just fine.

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.)

I don't disagree with anything you said.

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.

I believe the major players (Visa being one of them, and I know a Visa engineer) use formal verification for the actual money-handling code. Obviously, yeah, there could be mistakes with the verifier, etc, but the problems they experience are relegated to the "couldn't do this transaction" variety, rather than the "we did this transaction wrong" variety.

What sushisource said. 99.9999(...)% reliability with a fallback around inconsistencies of, “we’ll block this transaction,” as opposed to, “your money? What money?” (Apply to logistics, shipping, etc.)

15 transactions a day? I'm guessing that number is in the thousands, easily.

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.

Visa claims to handle 150 million transactions a day [0].

(150 * 10^6) * (1 - .999999999) =~ 0.15

[0] - https://usa.visa.com/run-your-business/small-business-tools/...

I can think of one scenario where being public and 100.0% reliable has meaning.

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.

Thanks. This is probably the most coherent pitch I've seen for tokens (and also helps me understand a little better why certain people are so attracted to them). I was of the opinion they were a pure ponzi scheme, but this gives me a somewhat better balanced understanding of what actual expectations underpin the speculation.

A really interesting project to check out if you haven't heard of it is the Brave project. It's got a really interesting concept and they actually have a functioning product that can be downloaded and used right now, not to mention the founder of the company is Brenden Eich who not only created javascript but co-founded Mozilla. It's definitely worth checking out, they do a really great job of explaining what a crypto-currency can be: https://basicattentiontoken.org/

Definitely not a pitch “for” tokens at all. Just my armchair assessment of nascent risk and the psychology of the space.

The most coherent pitch for tokens?

...is a sarcastic, tongue-in-cheek dismissal of the fundamental idea. That's about par for the course for intellectual debate around cryptocurrencies of late.

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.

It's sarcastic? Tongue-in-cheek?

(Don't worry, I'm confused too.)

It solves some problems, especially when it comes to networks of shared information where no one actor trust any other single actor.

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.

What I like about Blockchain tech is that non technical people will never be as good or as quick at identifying opportunities as a technical people who can understand the whitepapers and look at the code themselves.

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.

If this is true then name and shame a few of them (preferably some that we are likely to have heard about). Sick and tired of accusations being thrown out with no skin in the game.

> Sick and tired of accusations being thrown out with no skin in the game.

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...

How about XRP, or Litecoin? Or Bitcoin Cash?

Tezos is trading over 10x the ICO price on the futures/IOU market

Can you elaborate on the technical/scalability limitations you have seen in some of these coins and how to look out for these?

Not true. Domain knowledge trumps tech know-how. This is especially true for blockchain backed applications

It raises the low level of your app from request handling to dealing with users and their interaction.

> For one, Ethereum is unable to access real time data from outside the blockchain. Developers need to rely on trusted third party data providers, called oracles, to provide smart contracts with outside information like weather, random numbers, or currency values.

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. :)

What I don't understand is how Ethereum can describe their dapps as "trustless" when all the trust is still centralized in an oracle. This can even happen accidentally, such as with the Mayweather/McGregor smart contract breakage. [0]

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.

[0] https://www.reddit.com/r/ethtrader/comments/6w5wcn/important...

Plus, it's not like bribing oracles is unheard of. Herodotus, who lived 2500 years ago, already reports instances of bribery affecting the predictions of the Oracle at Delphi: https://archive.org/stream/jstor-3287085/3287085_djvu.txt

A lot of dapps don't need oracles to run. Anything that does is still more trustless than a centralized solution would be, reducing the counterparty risk to the oracle alone.

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.

If your code doesn't reach out beyond the blockchain, then there's very little it can actually do. You are limited to twiddling balances of coins. This turns out to be great for making casinos and ponzi schemes, but little else.

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.

> If your code doesn't reach out beyond the blockchain, then there's very little it can actually do.

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.

Asset issuance, voting, wills, identity/reputation systems, land registries.

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.

> But then you've lost all of the advantages that the blockchain was claimed to possess.

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.

How does the blockchain ensure that I can both verify that my vote was counted but can't sell my vote? https://youtu.be/BYRTvoZ3Rho describes one electronic voting system that's supposed to have those important properties, even though I don't fully all the details yet.

Depends on the specific implementation. Just because you do it on a blockchain doesn't mean you can't require people to show up to a polling center and sign transactions in person.

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.

In many jurisdictions "the real-world deeds" are already just a database record (albeit one in a central database managed by a Government agency).

You can solve this by using multiple oracles and a stake-based consensus algorithm to de-incentivize malicious reporting.

This is how Vitalik initially described oracles, as far as I know: https://blog.ethereum.org/2014/07/22/ethereum-and-oracles/

The terminology seems to have changed to mean any system that provides external data to ethereum contracts.

Now you have lots of extra complexity and multiple points of failure instead of just one.

No, it's for redundancy.

I am unable to find anything about using multiple oracles in Ethereum. Do you have any information about this?

Chainlink is a project to enable a network of decentralised oracles.

Here's some good background on ChainLink:


Reading up on ChainLink:

> 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.

Bingo. Most cryptocurrencies/contracts/anything in the field/realm -- they don't attack the problem of "person" vs address/wallet/account. ChainLink might think they are clever but like you said..when accounts in your network are free, then don't expect any kind of consensus to work. Accounts or rather, more abstractly, entry into your network -- needs to cost something that can't be easily done to gain majority. Another way to attack the issue is to do antes..so accounts dont cost anything unless the account holder is caught doing something bad -- ie. every entry requires a refundable collateral.

Accounts are free, but interaction is not. There's a stake to be lost in these transactions.

One thing that these networks don't seem to protect well against are fake peers that request data but dont provide it. These currencies and coins have been lucky in that regard and have prevented some of it by seeding their own trusted peers as the initial peer neighborhood. But is this true decentralization? Seems a bit obtuse. To add to the baffle, IPFS started using bitcoin and ethereum for storing the initial peer data for new clients to connect to. Its a web... maybe thats ok. Are things allowed to be this tangled? ;-)

> To add to the baffle, IPFS started using bitcoin and ethereum for storing the initial peer data for new clients to connect to.

This is false. Where did you get that impression?

You are absolutely wrong.


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.



Ah, thanks - you're half right :) The plan for Filecoin was initially (in 2014) to be based on Bitcoin, but since then this changed to its own Proof-of-Replication and Proof-of-Spacetime, reusing parts of Ethereum.

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's a penalty payment that each node puts up into escrow for each assignment of data, and if the data is not accurate in relation to all the other providers of that same data, the node will lose the payment.

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.

> There's a penalty payment that each node puts up into escrow for each assignment of data, and if the data is not accurate in relation to all the other providers of that same data, the node will lose the payment.

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.

Mmm, what would stop me from just grabbing the data the other oracles made available, and pretending I did the actual calculation/check/api-call/whatever?

Check the paragraph about Freeloading in their whitepaper

Augur (mentioned on the article) is fundamentally a decentralized oracle

> stake-based consensus algorithm

What do you mean by this?

Proof-of-stake as opposed to Proof-of-work

So the oracle is incentivized to tell the truth because lying will hurt the value of their tokens? What happens when someone offers them more than their tokens are worth if they lie?

Imagine a blockchain operated by a consortium of five companies. There are also second-grade members in the pool.

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.

> 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).

So what does the blockchain add? Why can't this be a database set up by the consortium?

(I'm explaining the dream here. If I knew what I was talking about, I would have done it.)

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.

So it sounds like what you really want is a better centralized database that has those properties, rather than a slow, energy-inefficient ledger providing features you don't need like reward tokens, mining, and decentralization.

You don't have mining in proof-of-stake. (Mining is for proof-of-work.)

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.

Verifiable oracles are extremely hard to create. In fact I think that the creation of verifiable oracles is the single biggest challenge facing science and engineering. Full disclosure, I am quite biased about this since part of my PhD work is to create a language to specify measurement processes.

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.

Maybe I'm just dumb, but is this a bigger problem than it is offchain? Data is forged all the time, we have fake news, people lie, people are jailed with false accusations.

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?

The major difference is that offchain we use contracts verified (and written to be verified) by humans. For a fridge that might mean that you need to send photo evidence and have a mechanic look at the fridge. In case of disagreement a human court will decide the outcome. It's not always going to get it right, but it's a lot harder to scam systematically. For smart contracts to bring the value of machine verified contracts without human intervention we need the data provided to the system to be verified. Without verification that all parties agree on we will always need human intervention in case of a dispute.

If you anyway assume a legal system to resolve issues, then just go for traditional contracts and money transactions. Why then bother with blockchain-based contracts in the first place?

How do you recover the money if it flew into the blockchain and changed hands in the anon cryptos.

I took this as a point of explaining what Oracles are/do. Too often Ethereum proponents skip talking about Oracles when it comes to discussing attack vectors on Eth smart contracts.

> Developers need to rely on trusted third party data providers, called oracles

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.

Yes, the lack of outside access isn't necessarily a bug, but it can be a development hurdle!

It's all the same thing every year on HN. People trying to find all sorts of excuses for Bitcoin existence - blockchains, smart contracts, ICOs - as long as they don't have to accept that Bitcoin's main purpose is and always was to have an alternative to the financial system, crippling regulations, government control and taxes. In other words, everything people hate about libertarians, they try to ignore in Bitcoin. Because they can't just ignore Bitcoin - it's not going away for some reason.

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.

I agree. "Bitcoin as anarcho-capitalist proof of concept" does seem to be the correct framework for understanding why it exists, why it works the way it does, and what one might find valuable about it. On that front it's been at least a partial success. I can't buy a cup of coffee with Bitcoin, and I doubt I ever will, but the fact that it works at all is a lot more than I suspected we would see at this point. It's definitely caused me to rethink quite a few of my assumptions about macroeconomics.

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.

Tracking ownership of some intangible set of rights is actually basically the one thing that BTC/ETH-esque tech is really useful for, so the Kodak thing is far from the craziest coin announced. A sane thing to do would be to piggyback on one the existing blockhains and their pre-existing hashing power. In this scenario, Kodak would create some kind colored-coin or side chain representing ownership of certain photographs and take a cut as basically a notary, providing easy tools to store a [ image_hash, owner_id ] tuple on the blockchain for posterity. This has the advantage of /continuing to exist if Kodak goes away/, which is what you want as a rights holder.

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.

> This has the advantage of /continuing to exist if Kodak goes away/, which is what you want as a rights holder.

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.

I'm suggesting your first scenario is the sane one for consumers. Kodak's value-add would be the tools to help you get the hash onto the immutable public record (and giving you control of the private keys that let you reassign ownership of this digital asset), presumably by integrating it into its cameras and photo-processing services, or providing a friendly Kodak-branded web frontend. If they go belly-up, you still have the keys and therefore can still transfer/prove those rights using somebody else's tools. You still want things to be trustless and decentralized because the whole point of such a system is to avoid costly records-digging to prove your rights in court. Unless you can continue to re-assign rights after Kodak gets bored of running its non-distributed, non-trustless sytem, you're back in the dark ages trying to prove things with photocopies of written contracts and so on.

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.

>>A sane thing to do would be to piggyback on one the existing blockhains and their pre-existing hashing power.

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/

Exactly. There have been a bunch of proof on concept websites that have been offering this service for 3-4 years now with very little pick up or interest from creators or consumers. In the end, there’s no reason it couldn’t be a simple open source drag and drop utility, or command line tool. They are offering a complicated solution to a problem that no one seems to think they have.

Bitcoin as anarcho-capitalist proof of concept

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.

>Bitcoin's main purpose is and always was to have an alternative to the financial system, crippling regulations, government control and taxes.

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.

>>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:



That's what libertarians want so desperately though. Because in their mind, they'll be the gilded elite in the boom-bust cycle. If it wasn't for the nasty government, all the hard-working brilliant libertarians would be billionaires.

I actually started another HN thread today trying to answer questions about taxing crypto and ether tokens:


Please stop participating in the attempt of some desperate people to relabel bitcoin "bitcoin core"

Eh, to most people right now bitcoin is an investment they could maybe get rich off of. I don't think most recent investors are thinking about any sort of social ramifications beyond "what if I get rich?"

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.

Personally I see a lot of different areas where the blockchain will be extremely useful.

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.

But all your examples are possible (and have been successfully implemented) without a blockchain. So what does the chain add?

Besides which, when is turning abundance into scarcity a good thing?

> 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.

How does a blockchain limit illegal reproduction? Having an record of ownership ain’t gonna shut down the torrents whether it’s in a database in Apple’s data center, or on a blockchain. How does this square with blockchain-related projects like IPFS which basically make it impossible to stop piracy?

Sorry if my reply implied that the blockchain is somehow comparable to DRM -- they are not.

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 illusion of scarcity isn't the point. The point is saving the unique history of an asset. Like leaving your footprint in the digital world like it was in the physical.

The art-scene is based on this principle.

A secondhand market no relying on a centralized player is the goal, someone who cant control what can be sold and resold. That cannot be done without de-centealized network.

The only project that comes somewhat close to that is OpenBazaar, and that is buggy and unwieldy, despite four years of development and millions in funding. The implementation requires a complex mess of software installs (even for potential buyers!), trusted moderators (how exactly do you trust a random unknown username on a pseudo-anonymous market anyway?) and an appalling user experience. The installation page tells me that I shouldn't risk large amounts of money, so even the developers aren't confident in their system.

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.

You are proving my point. It should not be in control at any one company specifically.

Blockchain is not a protocol. It's a concept because there are many different blockchains. Bitcoin on the other hand is a protocol.

Yup, you are of course 100% technically correct. But conceptually it helps me think about it like that (as the purpose overall regardless of how the blockchain is expressed is the immutable ledger)

it's a very noble approach, but the facts are not in your favour. The 'people' that keep bitcoin valuation high are: early adopters (including ones who lost access to their wallets), HODLers and speculators and perhaps a few casual drug buyers. As a mainstream currency, BTC is pretty useless at world scale.

You forgot a big one that’s not going away quickly: money launderers.

Serious launderers launder money through cash only businesses.

It's all the same thing every year on HN. People trying to find all sorts of excuses for Bitcoin existence - blockchains, smart contracts, ICOs - as long as they don't have to accept that Bitcoin's main purpose is and always was to have an alternative to the financial system, crippling regulations, government control and taxes.

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).

There is definitely a portion of people that this applies to. However, I’d wager that the majority of the Cryptocurrency market capitalisation is from people that really want to become millionaires really fast.

"Not because blockchain is some sort of an innovation."

Actually, it is some sort of huge innovation.

You're just speculating and I personally think you're wrong.

Yet so far I still see almost nothing on the block chain (beyond its core currency use case) that is useful outside the domain of block chain stuff.

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?

> 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.

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. An alternative to Proof of Work such as Proof of Stake would be like a country having a nuclear arsenal, allowing it to cut back on military spending. The problem seems to be that the incentives are on the miners to switch to another proof system, and the existing miners wouldn't want to do that because it's their edge in the market (low electricity costs).

You're talking about the means of blockchain to self-preservation; I'm saying that we don't need blockchain, that it eats way too much for the fun it provides, so we should just kill it off and call it a day.

> 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.

Proof of Stake (PoS) and Proof of Capacity (PoC) exist and are actually deployed for quite a while now. They don't consume lots of electricity and can be runned on cheap hardware.

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.

My favorite part about the blockchain is that it is a standard building block for decentralized byzantine consensus. Throw Ripple's XRP Consensus algorithm at 50-100 nodes and you know that 30% or more would have to be compromised to break the guarantees.

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.

Ripple is not trustless, so the blockchain part of it is moot. Since you have to trust Ripple (because they have full control), you might as well let them store the blockchain data on their own centrally controlled database.

What are you talking about? What exactly can Ripple do on its own network that you have to trust t not to do?

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.

If you want to be part of the Ripple network you have to trust Ripple's set of trusted validators. MySQL is open source, but that doesn't make a given MySQL server decentralized. Ripple in this case is that MySQL server.

If you want to be part of the Bitcoin network, you have to trust Bitcoin's miner du jour (actually du 10 minute).

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.

You don't have to trust anyone. You have to only trust that over 50% of mining power is motivated by cryptoeconomic incentives, which is a much more reliable assumption than assuming someone is altruistic or a good actor.

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.

You have to only trust that over 50% of mining power is motivated by cryptoeconomic incentives, which is a much more reliable assumption than assuming someone is altruistic or a good actor.

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!

>>That's still a lot to trust. How do I know someone isn't just gonna go crazy?

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.

That same logic can and does apply to Bitcoin. The governments can seize or buy many ASICs and mine in secret to destroy trust in Bitcoin's longest chain.

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?

1. Not all cryptocurrencies have ASIC mining. Ethereum has GPU mining. If a government attempted to attack Ethereum with GPUs that it bought, the public would likely react by turning their own GPUs toward Ethereum to protect it against the attack.

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.

It's nice in an utopian kind of way, but it's actually less efficient - i.e. more costly overall. So you're talking Facebook paying for their hosting by showing ads vs you trying to charge customers real money or slow down their computers. I have a guess which one is going to prevail.

Hmm how do you figure?

Having people host with several nodes running a consensus algorithm is worse than trusting all your data to one actor in "the cloud"?

Why use a blockchain instead of a database? Because multiple organizations are involved and each wants to control the database.

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.


This is a solved problem. All interested parties form an independent business entity and assign ownership to that.

All problems related to inter-company collaboration are people and organizational problems not technical problems. Blockchain solves nothing in this space.

The main benefit of blockchain is that it is trustless and censorship-resistant. You don't need to trust any business entities. You can transact with someone in a zero trust environment on the other side of the world

Just because you use a blockchain doesn't make your implementation trustless, nor censorship resistant.

Actually, according to the original definition - https://github.com/trottier/original-bitcoin/blob/92ee8d9a99... - it does, since blockchain is bitcoin (and vice-versa), and as far as anyone can tell, currently it is indeed trustless and censorship resistant.

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).

Not sure about censorship-resistance. Bitcoin transactions can be traced back to some identity, especially if the payer's Bitcoins were originally funded with fiat currency that came from the banking system.

That does not say anything about censorship resistance, because it does not mean the transactions can be reversed (on the contrary).

That's a problem of anonymity (or lack thereof).

Yes, but wouldn't the fact that it's not totally anonymous discourage people from saying whatever they want? Like, self-directed censorship.

it cost on average around $1 USD to perform an average blockchain transaction and millions of transaction are made a day, the demand is transparent and the data is available for everyone to see. If it was a solved problem I would expect the demand for decentralized ledgers to be a lot lower

You are confounding the demand for decentralized ledgers with the demand for currency that's recorded on the ledgers.

Sure. But this has been going on for awhile, what's the example of someone actually doing any of these things in a way that creates real efficiency?

That won't happen in a substantial way until scaling issues are fixed. On Ethereum, there are at least half a dozen projects that tackle different aspects of the problem. The first phase of sharding, for example, should be good for a 100X improvement; there's a published spec, a testnet is on the way, and it can be rolled out without a fork, so there's a good chance it'll happen this year.

Some other chains are working the problem in their own ways, I'm just less familiar with them.

I feel like you are moving the goalpost.

edit: If UPS doesn't count then nothing is going to count.

The guy said it seems interesting in theory but asked where the actual value was. You replied with some theoretical examples.

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.

I don't know about so called blockchain projects like ethereum, but bitcoin has value because it has inelastic demand. There are a lot of underserved people out there that need bitcoin, regardless of its value, in their daily lives because they can't use fiat currency for things like buying quality drugs online, getting rid of ransomware, laundering money, etc.

Hell, if these don't pass the ideological test, just ask someone from Venezuela why do they need bitcoin.

I'll bite. Why does someone from Venezuela need Bitcoin?

You have some good answers here: https://apnews.com/f7ccc4ea283746f28b261cabeaf8f0c5

It's not clear that the Venezuelan case is due to inherent property of Bitcoin, or merely that Bitcoin just has good timing and is the most conveniently available alternative to cash out of a tanking currency.

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.

> 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? Where did they move the goalpost.

Don't think so. You said $x is great for $y. He asked you to show an example of $x actually solving $y.

Exactly, scalability is a moving target. You can't expect to match VISA transactions the first day

Some progress in eight years would be good, though!

Hello, api.

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.

What I'm really looking for (and I've been asking this question in a lot of places recently) is some concrete examples of real world cases where this tech is being... you know... used as something other than just novelty or tinkering.

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.

Hi Api. Your questions are _spot_ on!

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 [1] 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 [2] 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.

[1] https://www.newyorker.com/magazine/2017/12/18/estonia-the-di... [2] https://guardtime.com/technology

Sure, but Lituania also didn't need to use the Blockchain for this use case.

> Lituania

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.

If you read correctly, I was not taking any exception to energy efficiency aspect of using Blockchain, either.

You might like this example, it puts decentralized smart-contracts in a digestible context: https://germanylandofinnovation.com/2016/10/19/german-compan...


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.

How is paying for electricity with Ethereum better for me than paying with a card? I don't see the advantage.

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.

The big feature of the car example comes within the third paragraph. It's decentralized. The node, the charging station, doesn't need to phone home or synchronize with a central authority in order to process the payment. It can write and fulfill the contract.

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":

* https://ambrosus.com:

"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."

* http://www.augur.net:

Prediction markets -- fascinating stuff with major potential.

* https://qz.com/1163660/brazil-may-write-new-laws-based-on-da...

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!

sorry but rather phoning home to verify entitlement, it will now have to sync the WHOLE blockchain (probably ASYNC but still). You're mixing two similar problem, and brute forcing things is not going to work for things like topping up a car.

Why is it worse to phone home and synchronize with a central authority than to phone home and synchronize with a blockchain?

When authority is centralized, it's akin to full control. Decentralization fragments control across many, many different parties, who in consensus have authority.

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.

There's no safeguard here. The smart contract is a red herring. Smart contracts cannot see or alter the real world, they have to trust that someone does that for them. In the example of the charging station, there's no safeguard that proves that the charging station will charge my car once I have deposited cash. You can analyse all the lines of the smart contract and the workings of the blockchain, but it is wasted effort: I have no way to know whether or not the charging station will ignore the blockchain's state.

I feel this is grasping at straws. If I'm running a series of charging stations, then I absolutely do want full control. And if I'm the customer, I can simply call Visa or MasterCard if the owner tries that shit.

Have you come across https://www.provenance.org? It's outside the currency/wire transfer space. Looked like an interesting application to me, but possibly too nascent to be a shining example

Once again, the blockchain part of this adds nothing to the process, apart from complexity.

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.

Also as a developer and founder making decisions and executing on every piece of the stack, I also don't see why this is blowing up. It seems to me that a bunch of people who have not had to experience making and executing real software architectural decisions are hyping it up to be more than it is. They've created an echo chamber for this buzzword, and rather than talking about solving a real problem, they're going straight for this solution. Good reliable software is already hard to create and maintain and where I live all these clueless businesses and government folk think that blockchain has come to save them from all their IT woes.

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.

> cryptocurrency is a financial MMORPG and a pure value-free bubble.

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.

Ten years in, nobody has come up with a use for blockchain


Fundraising: Ethereum ICOs Store of Value: Bitcoin Loans: SALT ....

This is just the beginning

I found a non-coin blockchain example:

Big Pharma Seeks DLT Solution for Drug Costs


Are there any companies in particular that specialize in the implementation of such blockchain use cases?

The post does kind of explain that.

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.

That's a nice hypothesis. We are now almost a decade into cryptocurrency. Where is the evidence that this hypothesis is true?

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.

Isn't end user adoption driver by the application layer though. If the application layer developers aren't incentivized and don't build things on the protocol layer, what's the point of the protocol layer?

For example, steemit.com: a social network where you get paid (in tokens) for producing/curating content. As the network grows, the token gets more valuable, so there's a strong incentive for early users to join it.

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.

There's nothing there that is impossible without a blockchain. The steemit website might as well issue its tokens using a simple database. Running it on a blockchain adds nothing except a 'shiny new technology' feel.

And why would I need the tokens in the first place? Hell, why would I need to pay at all, given that there are free alternatives like Medium?

You don't pay, you gain money. Unless, of course, you're a company that wants to buy advertising space.

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.

The tokens here are essentially altcoins, like ether or bitcoin. How would that be done with a simple, private database?

The steemit coins, as I understand it, have little to no other use (unless 'speculation/gambling' is a use case) so they don't need to be crypto coins at all. Instead they could be magic internet points that are all accounted for and transferable on steemit's website, with options there to buy more or to sell them for cash.

That’s like saying bitcoin could be a Money table on my personal database. It’s not the same at all. These coins are unique, wont be tampered, work on exchanges, and don’t depend on you trusting the startup that created it.

Indeed, that's the key difference. Steemit coins inherently require trust in steemit, since without the website's existence, the coins have no use at all. As everyone is implicitly having to trust steemit, there's no benefit in running a blockchain.

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.

You needing to trust the website will exist for the coins to hold any value, while true, is not the same as having to trust the currency will work as a currency - i.e. that what is yours is yours, and the steemit owners can't simply wipe out the database or change their numbers arbitrarily.

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.

its only a matter of time before bank settlement and cross border payments are all done on blockchain. I would think that asset tracking and real esate deeds are a great application. Asking why these things aren't on the blockchain yet is like asking why businesses aren't using the internet in the 1970s.

That's the core use case I mentioned: currency and wire transfer. I've used it for that and the value is there.

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.

Are you at least somewhat aware that the user experience of cryptocurrency is currently abysmal, and worsening?

Why? Putting blockchain in there just adds more FX transfers. USD<->GBP now becomes USD<->BTC<->GBP, so why would you expect that to reduce costs and improve efficiency?

Scalability and adoption are moving targets. People were saying the same thing of the internet in the early days.

Check SALT, millions in loans already distributed https://www.saltlending.com/

I opened this link thinking “finally, someone will explain why blockchains are great, with some solid practical examples: ycombinator themselves”

Nope. Still hype and noise.

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