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Systems built on trust, norms, and institutions function better than blockchain (medium.com)
303 points by petethomas on Apr 6, 2018 | hide | past | favorite | 220 comments

> Venmo is a free service to transfer dollars, and bitcoin transfers are not free

Venmo is not free. There's a cost, it's just hiding.

> Blockchain-based trustworthiness falls apart in practice...

The particular brand of trustworthiness the author is arguing against is indeed a myth, but that doesn't mean blockchain is "crappy technology" or "a bad vision for the future"

Blockchain adds a new thing to the world: digital property that cannot be reproduced for free.

Smart contracts add another new thing to the world: the ability to build immutable software that interacts directly with the financial system.

Both of these ideas are very powerful, and almost all of the interesting blockchain projects are still in the R&D phase.

The hype around blockchain is ridiculous and absurd, but that doesn't mean the technology isn't exciting or potentially transformative.

edit: I actually wrote an article about the "trustlessness" thing: http://cowpig.github.io/bitcoin/ethereum/poker/cryptocurrenc...

> digital property that cannot be reproduced for free.

Sure, all through the magic of using a medium sized country's worth of electricity....

> Smart contracts add another new thing to the world: the ability to build immutable software that interacts directly with the financial system.

"Immutable" as in "immutable up until the folks at the top decide to alter history to benefit themselves financially". See also - Ethereum & The DAO.

> and almost all of the interesting blockchain projects are still in the R&D phase.

Bitcoin is more than 10 years old. It is a mature tech that is still in search of a problem.

> Bitcoin is more than 10 years old. It is a mature tech that is still in search of a problem.

I don't understand how this can be said with a straight face. Aeronautics, ballistics, these are examples of mature tech. I can't think of a single example of technology that was considered mature after a mere ten years.

Bitcoin is a data structure. It isn't like the invention of flush toilets, the standardized shipping container, or sliced bread.

It's been on the market for 10 years and so far its only use seems to be a great way to run pump & dump penny stock scams....

It's a medium used for transferring a few billion $ daily.

It's not the exclusive way to transfer value between people, but neither was the mechanized agriculture the sole way of growing plants in the beginning.

And the first plane could fly a distance of 60 meters after 10+ years of developement..

And we went to the moon literally 56 years after that (the years of development).

>> digital property that cannot be reproduced for free.

> Sure, all through the magic of using a medium sized country's worth of electricity....

Exactly. Also, I'd question if having more kinds of "property that cannot be reproduced for free" is a good thing. We have plenty of that already. The world becomes better as more things can be reproduced cheaper.

It's like saying free/easy dollar reproduction would make the world better.

No. You can't eat replicated dollars. But you could eat replicated food, wear replicated clothes or drive a replicated car.

>"Immutable" as in "immutable up until the folks at the top decide to alter history to benefit themselves financially". See also - Ethereum & The DAO.

You seem to be implying that the Ethereum Foundation had the ability to unilaterally alter the blockchain for everybody. But that's not really true. While anyone can hard-fork the blockchain, that doesn't mean that anybody else is going to accept the new fork. In fact, a bunch of people revolted against the Ethereum Foundation's decision and kept the old blockchain alive as a Ethereum Classic. Ultimately, it was the market that decided to recognize the Ethereum Foundation's fork as the winner.

> Ultimately, it was the market that decided to recognize the Ethereum Foundation's fork as the winner.

So instead of a carefully designed system of law that has thousands of years of evolution to get where it is today, we'll just regress back to what is basically mob rule?

The point is: people who want to manipulate history or cheat need to jump through many more hoops than currently exist. Instead of a simple unilateral decision from a company's CEO, the decision rests on a giant (and growing) ecosystem of developers, economists, and traders.

Some call it mob rule. Others call it democracy..

Any currency is only worth what the market values it at. (Yes, this is true for fiat currencies too, as evidenced by countries that have suffered hyperinflation.)

You can still use Ethereum Classic if you really want to, but it has a significantly smaller userbase and market cap than the Ethereum Foundation's fork.

> You can still use Ethereum Classic if you really want to, but it has a significantly smaller userbase and market cap than the Ethereum Foundation's fork.

That is comforting if my mortgage or deed to my house was tied to a smart contract running on that platform.

Bitcoin solves a problem. Ever used a dark web market. Good luck with Paypal

If the problem it solves is "I need a way to buy illegal drugs, weapons, and fake IDs while evading the police," I think you can see obvious problems to mass-market adoption. I also wonder whether a system with a permanent, publicly accessible ledger is truly ideal for this application.

Spookyhesunset claimed that bitcoin still looks for a problem to solve. I showed that it did so. Whether its ethical or whatever doesnt matter. There is a huge market, period!

It's already massively adopted in this field, like it or not. Buying drugs with bitcoin is mainstream; no drug dealer takes cash now.

"no drug dealer takes cash now." seem hyperbole on its face.

Yes, but I don't think the Bitcoin pushers are telling us that it's going to revolutionize the world of buying heroin online.

Cash is still more anonymous than BTC, just not as mobile. Monero is more anonymous and more mobile. This is what real dealers use over distance.

> cannot be reproduced for free

Only if you opt into the particular set of constraints that define what that property is (as set forth in the base of protocol code most commonly used to define it).

If you don't, as innumerable forks of Bitcoin have demonstrated, you certainly can reproduce it for free. I suspect there is a hypothesis of "property" at work here that is being subject to some very privileged and Protean interpretations.

Sure. You can print your own money for free and call it FakeDollar. Nobody will confuse it with the real thing

You mean TetherCoin? Which some people are actually treating like US Dollars for some insane reason?

Seems to me that there's this bipolar relationship with blockchain, and now that the manic period is over, we're going into depression. Instead of being this magic solution to all these problems, now it's some hideous failure, and I think both viewpoints don't really see blockchain for what it is.

If you're a journalist, now is the time to be extremely critical of blockchain and cryptocurrencies if you want some easy popularity.

> Venmo is not free. There's a cost, it's just hiding.

What's that now?

* 3% fee for processing credit cards

* Platform play where the first stage is to amass users and then use that audience to sell to businesses (https://www.theatlantic.com/business/archive/2017/07/venmo-m...)

And I always assumed that the short delay for transferring money out of Venmo allowed them to eek a small margin against the time value of money somewhat similar to Robinhood (https://www.investopedia.com/articles/active-trading/020515/...)...but I don't know for sure.

It is a lot easier to avoid paying a fee on Venmo than it is to use a cryptocurrency to send money to someone: just don't use a credit card.

I think you are taking my response as in the context of Bitcoin. It's not. It was outlining the ways Venmo makes or seeks to make money. Some of which could be considered hidden costs to the user (e.g. transfer delays and the associated opportunity cost/time value of money).

I did not mean to make an implication about crytpocurrencies one way or the other.

And credit cards are not currency, they are instruments of debt. Debts carry a risk of default.

Thus comparing credit card fees to currency transfer fees is not apples-to-apples.

Comparing bitcoin to the cost of writing a check is apples-to-apples.

What about in 2023?

this is absolutely untrue.

Venmo requires a bank account, and presumably some proof of citizenship, to have been setup far ahead of the point at which "money" goes into or comes out of Venmo.

Gajillions of people send money to each other on Venmo, to the point where my parents know what it is. You can't say that about Bitcoin. QED.

Blockchain is actually a technological shadow cast by a sociological proposition, which is then you can trust people to voluntarily deprive themselves of leverage for the sake of the greater good.

Blockchain is essentially a tool for measuring how much leverage different nodes have in a network system. All of the functional premises of blockchain depend on the assumption that the only leverage that exists in a blockchain network is that which can be represented by the various metrics exposed by the protocol. Obviously this is not the case, networks are often stacked with multiple layers, not all of which are visible to instrumentation, and many are deliberately hidden or informally created as the opportunity arises. Cliques form, whether by design or merely as a consequence of some underlying structure or geometric boundary domain, influence builds around them, and sooner or later someone finds the ideal geometric position from which they can become the center of decentralisation.

This is essentially another instance of goodhart's law, which states that the moment any given metric becomes a useful target for optimization, it ceases to be a useful measurement. Or another variation of this same observation, the McNamara fallacy, which can be summed up as the belief that the only factors in a system that count, are those that can be counted.

The problem that proof-of-work blockchain solves is widely misunderstood. It uses proof-of-work to establish consensus over points in time which are universally unique. Prior to the publication of Satoshi's paper we did not have a solution to this problem and for that reason it is a significant advance in technology. I wouldn't call it crappy, it's actually quite brilliant.

For a detailed description see this: https://grisha.org/blog/2018/01/23/explaining-proof-of-work/

> I wouldn't call it crappy, it's actually quite brilliant.

I agree with you, I always thought that the Bitcoin algorithm was very clever and "mind opening" in a way. It's one of these things I'd never have thought about but almost seems obvious in hindsight. What's even more interesting is that basically all of it is pre-existing technology: HashCash, ECC, Merkle trees etc... Just combined together in a clever way to create something that's more than the sum of their parts.

Now where I become a naysayer is when we switch from the realm of intellectual curiosity and into the world of cryptocurrencies today. Being clever and innovative doesn't necessarily mean useful or valuable. We have plenty of clever ideas out there that don't have much of a practical use (or used to have one but are now obsolete). Duff's Device, sleep sort, the fast inverse square root, one instruction set computers, code golf and 4KB demos ...

I think I do understand the technological value of Bitcoin's PoW blockchain, I just think that its only practical use is for a tiny niche. It's the Prolog of consensus algorithms, I'm sure it'll be useful to some but I doubt it's going to be the new C++. You say that "It uses proof-of-work to establish consensus over points in time which are universally unique" and it's true but how useful or valuable is that? Is it such a huge problem in our modern society to agree on a sequence of events? Do you often program something and think "man, I wish that there was a way to establish a consensus over points in time which are universally unique" and 1/ there's no other simpler solution to achieve that and 2/ a blockchain could actually solve it? There's only a tiny gap between these two propositions.

But I think at this point talk is cheap and all that needs to be said about the blockchain has been said long ago and multiple times. How many billion of dollars has been poured into "blockchain" technology these past few years, in the form of pre-mined coins or ICOs? How many hundreds of engineers are working on those killer blockchain applications? How many high profile companies have boldly announced blockchain-related tech investments lately? So.... where are the results? How long do we wait for them until we decide that maybe it's not that revolutionary?

> HashCash, ECC, Merkle trees etc... Just combined together in a clever way to create something that's more than the sum of their parts.

No, not really. The way proof-of-work is used is nothing like in HashCash (more generally known as a time lock puzzle), the solution to a decentralized clock is the one piece that is new. In the paper it is referred to as "Timestamp Server". Everything else is previously known tech, but the clock piece is an invention, the invention that made it all possible.

What I meant is that this decentralized clock is an emergent property from the use of these various algorithms. The code is actually HashCash, just used in a way that creates a new side-effect. The Time Server is not an algorithm, it's a side effect. I agree that it's a bit subjective though.

Well - the way you describe it is it's like Satoshi used a bread knife to cut something other than bread, but it's more like he used it as an antenna. He is exploiting a feature of HashCash that Adam Back (who invented it) didn't even know existed. It has to do with multiple participants solving the same timelock puzzle in parallel and some very interesting stuff happens then - you should read the link I posted (I take it you have not read it), I think it does a fair job of explaining how incredibly clever it is.

But we're in complete agreement and that's my point, he took something (HashCash) and found out that it could be used for something it wasn't meant to. That's what's so clever about it. It's not like inventing elliptic curve cryptography designing the first internal combustion engine, it's taking something and realizing that it could be a lot more. It's not using a bread knife to cut something else, it's using a bread knife to create a more efficient battery. Or like using sleep as a sorting algorithm or figuring out that you could abuse the floating point representation to compute an inverse square root without actually having to compute a square root.

I'm not trying to diminish the discovery, it's quite the contrary, I think its simplicity and elegance is what makes it so impressive. It's a very elegant solution to a very complex problem and you could explain it in a few minute to somebody with the right technical background.

I think also important is that there are exploits that break the existing system (e.g. 50% attack) but it's not in the financial interest of any given actor to exploit it. Part of the algorithm is economic.

Not all interests are financial, so unfortunately, there IS a class of actor with an incentive to exploit it.


That class of actor can even potentially avoid the financial sunk costs that would ordinarily be required, although that in turn would require the use of several zero-day exploits and/or the use of similarly high-value resources usually available only to state-level actors.

Still, under certain circumstances I could see something along these lines being the opening move in World War IV (not to be overly dramatic or anything). Or perhaps a much smaller conflict, should any state be foolish enough to standardize on a national cryptocurrency of their own creation for internal use.

It’s very interesting as a matter of pure technology. I’m just not sure it’s that useful as a banking system.

It doesn't have to be either or, the banking system of the future can be a mix of different technologies. Personally I see bitcoin(and friends) as the higher layers of a hierarchy used by humans to securely trade value. The 3rd record of account doesn't have to contain 100% of all transactions taken by it's holders, but when the transaction is big enough, or the values held by 2 parties is questionable because the time since either of them updated the 3rd record has been too long, then write to the blockchain. Most other transactions can be taken care of between the 2 parties without involving the chain at all, as long as in the future someone squashes all their transactions and writes to the public ledger, to prove they haven't cheated or made a mistake.

IMHO, banking & finance are its least interesting potential use cases.


Medical Records

Mid aughts, I was trying to figure out how to use tamper evident logs (rolling hashes) for our electronic medical records infrastructure. To answer questions like "what did you know and when did you know it?" and "where did this bad data come from?"

Coupled with the notions for Translucent Databases (all data at rest is encrypted) to protect privacy.

We hadn't even gotten to the consensus and trust issues.



I'm now most interested in verification of sources.

Where did this cotton or wheat or cobalt come from? Are these pills authentic?

Is the data cited by this paper legit?

Verify copyrights, perhaps even a realization of Ted Nelson Xanadu's notions of transcopyrights. (Disney's DragonChain and others have floated those use cases.)

Is this news report real or agitprop? Is this quote actually legit?

Did someone(s) silently update some published information?

Etc, etc.


Tursted Rules & Constraints Satisfaction

Since seeing a presentation on using ethereum style smart contracts for medical claims processing, I've been reading up.

I can barely wrap my head around this stuff. Computability, Turing complete, N vs NP, etc. But the domain experts I heard told a great narrative, so now I'm interested too.

All of this is hype. Blockchain is only useful when you bolt a speculative asset on top because otherwise, who the heck will pay for the miners to make it work? If your answer is "the people using it will", that means there is already enough trust in the system to just use a Real Database....

And even if you manage to solve that problem, the blockchain still doesn't help with medical records, authenticity or anything else. You still have to trust the people entering those records. you still have to trust that the person who said "those pills are authentic" on the blockchain.

Smart contracts are also the biggest pile of hype. You can't have "code is law" because other wise you wind up with The DAO.... All code has bugs. All code has corner cases where assumptions fall apart. You can't code law.

Blockchain is pure, 100% hype. Almost every single use case falls apart under even a small amount of scrutiny. The only use the blockchain serves is as a platform for fraud. If you are a scammer, there is no better place to be than in crypto.


It's turtles all the way down, right?

None of my proposed use cases rely on PoW, bitcoin.

Perhaps I should have said it more clearly: I'm not interested in currency et al, because best as I can tell, bitcoin is just a better escrow, or worse a collectable (like baseball cards). And those things don't interest me.


Have you done accounting, bookkeeping, auditing? Another way to think about blockchains is an interoperable ledger. If your data doesn't leave your org, you can just using tamper evident logs (rolling hashes), no consensus stuff required.

I worked on election integrity issues for a decade. I'm the biggest technoskeptic. I pretty much oppose all things new until they're battle proven.

The biggest challenge for election administration is verifying and publishing the physical chain of custody of all the gear and materials. And no matter how hard you try, there's always some yahoos (flat earther types) that will demand ever greater proof.

Whaddya gonna do?

Well, based on my experience, applying some blockchain technologies to document and publish chain of custody would simplify A LOT of the public accountability and transparency issues.

At the end of the day, it's just double ledger accounting. Debits match credits. The parts of blockchain that interest me make it easier to "show your work".

What you're describing are hashchains and logs that predate Bitcoin. They're useful. They might even be part of the solution to the problems you were talking about. Here's some old ones just to illustrate that people have been on the topic for a while.




And here's you a blockchain-based solution to medical sharing since you said you were looking into such things.


Thank you.

Those papers are from about the same time frame, but I don't immediately recognize them. I do remember the implementation I modeled mine after was patent encumbered.

I may have adopted "tamper evident logging" because I was talking to a lot of non-geeks at the time and they were familiar with terms like "tamper evident seals".

That MeDShare paper is kinda weird. We were very fortunate to have domain experts (nurses, doctors, admins) on staff. So what we ended up with (after a few years) didn't look much like what MeDShare proposes. For example, access control is a non-starter, because in an emergency no one cares about permission. So the best we could do is log access. Also, demographic data at rest is plaintext, because in the USA there's no GUID, so you need access to all the fields to do record matching (linking) and mitigate poor data quality.

Repeating myself: my interest in tamper evident logging was for legal liability and improving our own QA/test.

I haven't thought much about all the other areas blockchains could be used in medicine, like prescriptions.

PS- My default position is that smart contracts are a malware vector.

But if there's some meat on those bones, I wanna know about it. I think of it as a constraints satisfaction problem. If the "vocabulary" can be kept simple enough, where our current theorem provers are sufficient, that could be cool.

Have to try it to find out. That's what we are doing right now.

> It uses proof-of-work to establish consensus over points in time which are universally unique.

Did we really?

BTC vs BCH, Ethereum vs Ethereum Classic. Sigwitx2.

These hardforks technically break established consensus and rely upon social means (hey everyone: switch algorithms right now!!) to stay in order. At the end of the day, it seems to me that the "blockchain" is only as strong as the community's resolve to work together.

As far as I can tell, Bitcoin is turning into a governance structure. The current power players are the devs, who most people trust (and I see no reason not to trust them). And the social structure is organized on Github and forums.

Laws change (get broken) when establishd consensus shifts (hey everyone: women should also have the right to vote!!). Crypto/Blockchain doesn't going to change how consensus works (nor is it supposed to). It's just the digitalisation of laws/currency etc. Edit: But Crypto/Blockchain allows you to opt out of laws/currency without physically leaving the country.

> But Crypto/Blockchain allows you to opt out of laws/currency without physically leaving the country.

As do clubs, corporations, and "Roberts Rules". People have been making secret societies and private laws since the mid 1850s. That's a long solved problem. Chuck-E-Cheese tokens, Disney Resort Meal Points, and hell, even credit card money is "made up money" to some extent.

For example of all the above: https://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op

The thing is, people need to understand the laws for them to be useful. You can't just "outsource" the rules to the blockchain.

My point is that the currently established social structure behind these cryptocommunities is horribly defined right now. Its pretty much structured around trusting a few developers. The key for success is a true governance body. Blockchain doesn't solve the hard problem at all. (Case in point: should Ethereum hardfork right now, or wait for Proof of Stake? GPU miners want a hardfork ASAP due to the ASIC miners incomming, but the rest of the community doesn't want unnecessary hardforks. Finally, the ASIC-investors definitely don't want a hard fork.)

Someone needs to make a decision, and a group of people will lose out. Probably the ASIC guys / Bitmain based on the current political environment.

But then it all begs the question: if everyone is centralizing trust in the developers, then what the hell is the point of the blockchain? Its no different than trusting the rules of the Capitol Hill Babysitting Co-op and their fake monopoly money (erm... babysitting "scrip")

> I wouldn't call it crappy, it's actually quite brilliant.

The New Oxford American Dictionary defines technology as "the application of scientific knowledge for practical purposes". If the application does not fulfill the purpose, the technology is crappy, regardless of how brilliant the science behind it is. The author is not saying that the science is crappy but that the technology -- i.e. the application for the practical purpose -- is.

I think the designer's own words are a better summary of the problem solved:


The magical thing is that you can actually know that the distributed system is consistent by how much work was performed.

> Prior to the publication of Satoshi's paper we did not have a solution to this problem

what was the problem that this solved, exactly?

there's literally a link in the comment. Show some effort please..

Imagine a few different personas, such as investment banker, retail store owner, and soccer mom. Then complete the following sentence: I need a decentralized time ordered log so that I can ...


> A winner of the Nobel Prize in Economics, Paul Krugman wrote in 1998, “The growth of the Internet will slow drastically, as the flaw in ‘Metcalfe’s law’—which states that the number of potential connections in a network is proportional to the square of the number of participants—becomes apparent: most people have nothing to say to each other! By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s.”

This is a complete non-sequitor. The usefulness of blockchain is not assured because people have been skeptical of useful technology in the past. You must actually propose and defend an application of this technology. Otherwise you are offering my skepticism as evidence itself that blockchain will be useful. If that had merit we can go into business together: you propose a technology and patent it, and then I express skepticism and then - profits!

People say that a lot about the internet – that nobody knew what it would be useful for at the time it was invented. It had MORE uses than originally foreseen (same as computers) but one of the internet pioneers chimed in on the comments thread to the first article saying that actually they did know exactly why they built the internet at the time they built it: they wanted a better way to send messages and share files, so they built one, and the day it was built it was the best way in the world to do that. Same with IBM - scope wasn't foreseen, but those machines were the best in the world for the purposes they were designed for.

But the myth that people create amazing technology that has no use (TCP/IP, the computer), and then a decade later people discover what it's useful for, is just that: a myth.

Imagine a few different personas, such as investment banker, retail store owner, and soccer mom. Then complete the following sentence: I need a decentralized method of sending bits to other academic computers across the country so that I can ...

I can easily imagine a persona who could complete that sentence: scientists who wanted to share data across the country. The internet was built because it satisfied an actual need at the time, and grew organically.

It is even in the name. The "Internet" was not some monolithic project. It was a way of connecting the many different networks that had already been built.

The internet as we use it today is far beyond what anyone originally envisioned. No one thought we would be using it for e-commerce or social networks or in fact anything other than for a few geeky scientists to occasionally collaborate

Imagine playing that game in the 1950s about computers. IBM thought there was a market for maybe 5.

I know this Gucci handbang is not counterfeit.

My prescriptions are the real deal.

As a better escrow for exchanging goods, services.

I can verify if the trog on Fox News is just making shit up. (Verified sources, citations are baked into all content.)

> I know this Gucci handbang is not counterfeit.

> My prescriptions are the real deal.

How does the blockchain solve any of this? You still need a human to say "this Gucci handbag is not counterfeit". A human still needs to type in "yup, this prescription is real".

How are anti-counterfeiting efforts done today?


For this use case, think of blockchains as a shared ledger.

If you already trust the accountant, he can set up a conventional database, and you can look stuff up there. Much simpler and cheaper.

A blockchain-based shared ledger is only useful in case the participants don't trust each other. In which case you cannot do anything with it to help detecting counterfeits.

Or when you have a supply chain composed of various participants.

And now you're trusting each participant to enter their portion of the ledger accurately.

The original articles goes into this very problem. What's to stop your mango provider from spraying pesticides all over their mangoes and then entering "organic" into the ledger?

Yup. Turtles all the way down.

I'm not saying blockchains are a cure all. I'm saying I'm keenly interested in using shared ledgers for this use case.

My experiences with election integrity, for better or worse, inform my views (optimism). There was a lot of interest in auditing elections. And it was studied extensively.

For my part, I read up on Medicare fraud and forensic accounting, because they seemed to be the most mature related domains (at the time). My conclusion was that reducing fraud is best accomplished thru simplifying the accounting.

You still need relationships and face-to-face and "trust but verify".

My ultimate hope is that something like blockchains (not talking cryptocurrency, bitcoin, PoW) will somehow make the chasm between the physical and digital worlds smaller. Thereby reducing transaction costs, waste, fraud, uncertainty and so forth.

I can think of at least 2 promising areas: 1.Micropayments- currently it's very hard to charge for anything on the internet so we get ads, which everyone hates or paywalls which people hate even more. Internet money doesn't need to be decentralized but then who will issue or build it -google, facebook? So far this is the most promising. 2. Data privacy - everyone's complaining about Facebook now. So far public decentralized blockchains have offered the most promising way to build truly decentralized apps (while still providing an incentive/payment to developers). I'm pretty sure even more uses we can't think of now will open up as the technology matures

To "establish consensus over points in time which are universally unique"

In many ways, blockchain tech is the stupidest thing that has ever existed. It is a colossal monument to the inefficiency of human behavior. You are literally throwing energy and immensely valuable computation time out of a window simply because people can't trust each other. It is a massive sink for the destructively self-interested behavior of mankind. The problems that blockchains are trying to solve are not inherent difficulties involved in the tasks that they're being applied towards, they're problems with us. We can design an astronomically more efficient system for accounting, but it would be have to be one that is not being run by stupid, short-sighted apes. The entire overhead of the blockchain is devoted to dealing with a problem that we shouldn't even have, the whole thing is basically made of market failure. If there's any value in it, it's that we can use it to establish objective metrics for just how much value is destroyed by human irrationality and information deficits. We don't need to fix centralized accounting, centralized accounting works fine. We need to fix human beings.

Meanwhile, imagine if every GPU used for mining right now was being used for training neural nets instead. The value in that is nearly unimaginable; we could be making massive leaps in almost every field and industry, because the applications of deep learning to making tasks marginally more efficient are essentially endless.

> We need to fix human beings.

I admire your optimism. Meanwhile, we have quite a few millennia of trying and failing in this, so I'd rather try fixing the system instead.

> Meanwhile, imagine if every GPU used for mining right now was being used for training neural nets instead

With what, MNIST? For the billionth time?

ML and the current incarnation of AI don't need more CPUs, they need more data and better algorithms.

> we have quite a few millennia of trying and failing in [fixing human beings]

Actually, research is showing that brutality is declining and empathy is on the rise [0]. We may be living in the most peaceable times in history. Maybe the optimism is warranted?

[0] https://www.wsj.com/articles/SB10001424053111904106704576583...

This is nearly entirely my opinion of blockchain.

If you were a logistics company would you rather-

>Total control of fees and servers

>Directly working with companies to solve their problems


>Writing something open ended so other companies can develop their own uses

>Get paid with supporting software

>Big cost increase because of miners

I completely understand Bitcoin and currencies. But I think most blockchain is going to be bad for the environment and not needed. Centralized servers are superior for most uses.

FYI: when you talk about GPU/mining/energy, you are talking about Proof of Work (pow) and not blockchain. You can look up about Proof of Stake among other ways for consensus

Even just the concept of the blockchain itself is based on a massively inefficient use of resources to have a public ledger that can't be tampered with. This wouldn't be an issue at all if people just didn't have incentives to tamper with it!

>This wouldn't be an issue at all if people just didn't have incentives to tamper with it!

:O, the only possibility for that which comes to my mind is a world in which everybody is infinetly rich?

Even that would only address financial incentives (and just the rational ones, at that). There are - unfortunately - others.

Compared to any point in the human past, this is already largely the case in many countries. The problem is that it has been uneven.

Lets see proof of work be used for 9+ years and millions of people.

I worry about russian hackers(spamming) stakes or pulling off attacks.

It took me long enough to believe that BTC wasnt going to break.

While you are at it, you can also read up about "triple ledger accounting"

I looked this up, what is your point(if you dont mind)?

It seems like a feature with ~0 benefits. Can you explain?

I think you should look it up again.

> We need to fix human beings.

As a non-utopian, I understand that human beings cannot be "fixed." Thus, we must create systems that cannot be corrupted by humans.

Creating a money outside of state control may be the smartest thing that humanity ever does. We'll need maybe a century to see how it plays out.

That said, most of the blockchain projects out there are scams. If your project can run on a centralized database, then you don't need a blockchain.

> creating money outside state control

Which if successful enough to constitute a counterweight with enough force to push back against "the state" will yield merely... another state, but conveniently one with "Our Guys" in control of all the economic leverage.

You call yourself non utopian, yet Bitcoin - a tool to deleverage the state by sapping its power of taxation - is a nakedly self serving utopian project. And yet tax rent (in the form of landowner's premiums like mining rewards and tx fees, and soon by lightning network channel brokering fees, not to mention off chain but indispensable infrastructural scaffolding like exchange fees and fiat ramps) doesn't just disappear, it merely flows to the pockets of a different cabal composed of early adopters and wealthy latecomers who were able to buy large tracts of influence and infrastructure in bitcoinland.

Yet nothing those in power do will ever change the monetary base or inflation rate of Bitcoin.

These are fig leaf constraints which do nothing to curb the ability for highly leveraged, anonymous individuals in the ecosystem to severely and without warning or accountability alter the purchasing power of the Bitcoins in circulation.

And yet, as we've come to better understand ourselves, human behavior actually has become better. The statistics actually bear this out.

We need to stop thinking of "human nature" as some inviolable fundamental quality and start thinking of it as the behavior of an animal in an environment.

I am perplexed. If I wanted to, say, record licenses for a piece of software and enable people to transfer the licenses to others, why wouldn't a blockchain ledger be the perfect solution? Sure I could require them to physically buy a disc and then have them physically give the disc to a person they want to transfer it to, and it's just overcoming our human limitation of being meat-based creatures that exist in physical space that is particularly difficult to move through... but what's wrong with that? Every technology exists to overcome human limitations.

Technology serves human beings, human beings do not serve technology. Human beings are messy and unreliable. Making them non-messy and reliable would make them not human.

Or, what if you didn't have to worry about making money off of your software and you could just do the massively more efficient and socially beneficial thing and give away your software for free to everyone as soon as it's created?

What is human? Is dying from diseases and starving to death human? Is waging war and inflicting massive suffering on each other for little real gain human? Maybe there's some aspects of being human we're willing to give up.

Gotta love how he begins saying he was bashing the tech in December(when the market was on the rise) just so that no one can tell him "everyone bashes bitcoin when it's going down".

Venmo is centralized. I cannot use it as I live in a third world county with no access to it.

Paypal sucks. It takes 5% from the seller and it has power over your money, they can(AND HAVE IN THE PAST) seize it whenever they want.

I had my salary confiscated once over a mistake in the bank. I telecomute, working for a company overseas, and the fees are stupidly high.

I find your lack of vision disturbing.

You know, paypal may well suck. I have never used it as a developer or a seller, but I really, really, like to have it as an option when I am purchasing something from some rinky dink website that doesn't look like it has been updated int 10 years.

One of my credit cards has a thing where you can create a throwaway card number with a limit of your choosing. Which is a great idea I wish more cards gave you.

Sucks for the buyer too. Ever tried to use PayPal (or credit cards for that matter) to buy something from the US with a Canadian shipping address while you're living in Vietnam with a Vietnamese IP address? I did; I got fraud blocked.

Haha, no, I am one of those annoyingly generic users. But honestly I kind of expect them to block that. That seems pretty suspicious at first glance.

Why suspicious? Simply because it is out of the ordinary?

Fraud detection systems basically have most of their feedback mechanisms geared toward reducing - even eliminating - false negatives, and very little attention comparatively given to false positives as long as no individual merchant notices a measurable drop in sales.

Meanwhile, a hapless individual might have many of their purchase attempts foiled as false positives, and be left with little to no recourse (well, I suppose their complaint on Twitter may go viral, that does seem to work occasionally with ebay).

Yeahp it sucks for the seller mostly.

His point was these technologies solve people's problems very well. People doing blockchains could just work on improved versions of proven tech that have fewer problems. For Venmo, you might make changes to facilitate more access. He mentioned credit unions to point out different types of institutions can be more fair. A non-profit version of Paypal with chartered protections against high rates or unfair seizures might solve that problem. Another precaution at individual level is spread your assets a bit so you're not overreliant on a bank. I do that with a reserve of cash, a checking account, and several credit cards I pay off quick.

I've never had a problem with a bank that couldn't be fixed with a better policy or implementation of the existing model. Same with a payment service. What remains are the tricks hackers and scammers come up with that we'll always be facing. Traditional methods already have a lot of risk reduction for those with well-understood problems and solutions. The cryptocurrencies will have to go through a lot of loss before they get to where traditional system is now. So, fixing problems of traditional system will also lead to fewer losses.

> For Venmo, you might make changes to facilitate more access.

yeah, and you might commit those changes to Venmo's own repos. and if Venmo's leadership sells out, society would be still be without an open alternative to Venmo's "open access" gardens.

why deal with the middle-persons?

You don't commit them to Venmo's repos. You make a Venmo-like system controlled by one or more cooperating non-profits acting in countries with strong legal systems for dealing with financial fraud. The protocol and code are open. The charter of the non-profits addresses common concerns about fees, disputes, and so on.

In other words, you use established forms of law and incentives to make organizations that protect their members' interests. You can further decentralize the scheme by having diverse sets of such organizations that have to agree on changes for participation to continue. Each problem is solved in the simplest, most-legally/technically-proven way possible. One can also make the individual customers voting members on things like charter changes that can add more protections later.

"why deal with the middle-persons?"

The author of the original article addressed that. Even the crypocurrencies have middle persons don't most of the stuff that middle-persons do in traditional systems. They're just getting worse results so far in the new model.

Yes I agree. All those problems to the existing system can theoretically be fixed by this and many other approaches.

For how long has the current system existed again? Exactly.

I don't really get the appeal of Venmo either. Anyone I'd consider using Venmo with I can simply hand cash.

"Instead of relying on trust or regulation, in the blockchain world, individuals are on-purpose responsible for their own security precautions. And if the software they use is malicious or buggy, they should have read the software more carefully."

This is also one of the aspects of "the blockchain" that I struggle with. I don't think normal people want this or should be expected to do this effectively. And once you outsource the security (which most everyone will because it's the rational choice, e.g. Coinbase is better at protecting your crypto than you are, John Q Public.) you're no longer in a "trustless" state. The "trustless" pipe-dream (in the consumer use case) all sort of unravels from there for me.

FWIW, my position in the world is protecting vulnerable seniors and people with special needs from fraud. So part of my view that this isn't a better recipe for trust is coming from that perspective - just imagine telling a person with alzheimer's that their life savings are gone and it's their own fault for downloading a virus…

I don't think that many users would store their tokens locally. I believe the trust aspect is that YOU have a choice where as currently you may not (if you think globally). You could think of it like hosting your own email server.

> And once you outsource the security you're no longer in a "trustless" state. The "trustless" pipe-dream (in the consumer use case) all sort of unravels from there for me.

I think the conclusion doesn't follow. An analogous solution is that traditional public-key cryptography (e.g. as implemented in TLS) is supposed to be trustless, but I haven't personally audited or even read any of the relevant code (e.g. TLS), so I'm "not in a trustless state". It doesn't follow that TLS is useless for me.

TLS relies on trusted certificate authorities though. I don't think it was ever intended to be trustless, in fact you specifically get warnings when a trusted certificate authority cannot be found for a given cert.

I was actually referring to the transport encryption which is designed to be "trustless" (but which, as you point out, is distinct from the digital certificates part)

Traditional public key cryptography is inherently trustful. Either you're trusting a key because they physically gave it to you, or the key is downloaded from a trusted key server, or the key was signed by a trusted certificate authority, or you got the signing key from a server using HTTPS with a signed webserver certificate, etc.

My comment wasn't suggesting that blockchain is "useless" (that obviously isn't true), just that the "trustless" argument doesn't hold up for me, and that is a primary argument for why blockchain is awesome at pretty much every event/talk I go to on the topic.

So what would you characterize the "trustless argument" as being? Would you say that an analogous argument could be made for TLS?

I think that putting some responsibility for security on the user is a good idea. All too often users are lax with security and don't realise the impact that has, say when their credentials are used to access a system illegally because they used the password "password", or poor security on their own PC sees it become part of a botnet. If you don't take security seriously when dealing with cryptocurrency then you can be taught a very personal and expensive lesson in no time at all.

In Trust we trust!

Trust, LLC, a subsidiary of Koch Industries and Union Carbide

Seems like it would be useful to have norms and regulations against overly centralized control of such an important enabling technology.

If you'll forgive me coining (see what I did there?) a couple of neologisms, we could call this class of regulations "anti-trust" and their enforcement "trust-busting".

The banks should step up and secure the average joe's private keys.

One thing is sure, if you're hanging on to the past you'll always lose in the end.

That's not to say blockchain is the be all and end all, but constantly hunting for arguments why something will never work , is not only terribly boring, but IMO the most counterproductive way to look at anything.

That's pithy, but there's no particular reason to believe it is true. You may find futurism amusing, but the future is not guaranteed to be better unless we make good decisions. The fact that something is futuristic does not make it inherently better, and believing that is does is just the mirror version of traditionalism.

There is ample evidence that stable, predictable institutions are the main driver of improved quality of life in the west. The libertarian instinct to tear down these institutions instead of putting in the hard work to make sure they are well run is counterproductive.

> The libertarian instinct to tear down these institutions...

... is predicated on the long-carried memory of institutions like these failing under the duress of locked-in, privileged, out-of-touch bad-decision makers in positions of power fucking it up for the rest of us.

> instead of putting in the hard work

in my view, "hard work" is the work of building fair, equal-access solutions in an open space, instead of building more walls to facilitate Government Guidance of systems that governments have historically mismanaged.

> That's not to say blockchain is the be all and end all, but constantly hunting for arguments why something will never work , is not only terribly boring, but IMO the most counterproductive way to look at anything.

I don't believe this is the same as discrediting solutions looking for problems. Blockchain proponents desire a technical fix to people problems. That is untenable, as people will always override software, whether that's through a courtroom, a government/regulatory body, or a fork based on majority consensus.

Ah, but that is only temporary. The ultimate technical fix to people problems will eventually prevail, making you all obsolete. Erm, I mean us all, us humans, all of us human people of which I totally am one.

> That is untenable, as people will always override software, whether that's through a courtroom, a government/regulatory body, or a fork based on majority consensus.

I would say every single non-naive person in this space realises this, so it's not true that blockchain proponents "desire a technical fix to social problems" in that sense. What smart contracts for eg could be good for is to leverage social consensus much more highly, rather than replace it (since like you said replacement is impossible)

This is a clear example of survivor bias; there have been plenty of things that people thought were the future that turned out to be false, and the people who ‘hung on to the past’ and didn’t adopt those things won out in the end.

Betamax, 3D TVs, laserdiscs, segways, new coke, etc.

Many of those items changed forms and exist today. If this was 10 years ago you can add 3d printing or solar panels. Some technologies take time to develop.

Cryptocoins appear to have drastically more adoption than any of those.

Don't kid yourself, the number of people who own cryptocurrency is vanishingly small, and the number of people who own cryptocurrency for any other reason than a get-rich-quick scheme is microscopic.

Depends on how you define "adoption" doesn't it?

Their adoption comes as a consequence of their temporarily uncensorable ability to facilitate open speculation and gambling, so the adoption curve is merely following the well worn grooves laid by ancient vices.

Pet rocks did too at one time...

> One thing is sure, if you're hanging on to the past you'll always lose in the end.

That does not seem to be a truism on the face of it. Some things change and some things stay the same. New or old is not clearly a winner, the world is more complex than that.

That does not seem to be a truism on the face of it.

Agreed. It's actually quite empty, on the face of it.

If you don’t at least have a grip on the past, you’re destined to repeat its mistakes.

What is your argument? All you are doing is starting an ad hominem attack against the author hy trying to position him as a defender of the pasr.

Yes. We saw the same thing with 3D tv's. People tried to cling to their old 2D sets and clearly the new technology won out. /sarcasm

We just bought a new TV and it was rather amusing that not a single model advertised it being "3D". Not on the box, not in the software. Nowhere. I'm not even sure the new 4K TV we bought supports 3D....

Last TV we bought years ago.... everything was 3D this, 3D that...

That's easy to say if you have nothing to lose. Most people investing (time and/or money) in crypto have a lot to lose.

What you're saying is also just plainly logically unsound. If we tried to explore every possibility, irrespective of its potential, humanity would be nowhere. "Hunting for arguments why something will never work" is one of the finest anti-insanity protocols we have at our disposal.

So what real-world problem does it solve? For example, can you address point 8 of this stream? https://twitter.com/timbray/status/963115533825527808

>One thing is sure, if you're hanging on to the past you'll always lose in the end.

Well, people chasing after the latest fad lose much faster...

Even if that statement is true, that does not imply that the inverse is true--just because you're not hanging onto the past doesn't mean you won't always lose in the end.

> if you're hanging on to the past you'll always lose in the end

"In the end" isn't necessarily interesting. In the end, we're all dead anyway :)

I'm not protecting the status quo. I just want breathable air. Cryptocurrencies are an environmental disaster. We should go out of our way to destroy them.

Thank you for saying this. I always try to find the words but you said it eloquently.

Money will continue on the path of virtualization and unversalization.

It was cows and jugs of honey at first. Then it was seashells. Then it was gold. Then it was printed paper. Then it was records in a database, but living isolated as local records.

It will become even more abstract and even more open, eventually. Whether that's the blockchain or something else, remains to be seen.

Putting money on a blockchain is not inherently more abstract than keeping it in a bank's database.

Wow--it's both amazing to me and yet deeply unsurprising that the comments here so far seem to ignore the thrust of the article. Well, whatever--I like how it makes explicit the political theses embedded in current discussion of an "apolitical" technology.

I think the author of this article is making an either/or argument about centralized vs. decentralized trust when this can just as easily be a both/and proposition.

Cryptocurrencies have not yet eliminated and may never eliminate the need for centralized reputation based systems of trust. Centralized trusted systems are more efficient for reasons that may be fundamental and rooted in physics and math, and they can do things that no current generation decentralized system can do. Complex secure computations that are cheap to perform on a server are massively expensive on a block chain or other distributed system.

Yet what cryptocurrencies do offer is a system that levels the playing field between trusted entities and allows a once-trusted but now corrupt entity to be replaced without completely ditching the entire system. That's not true of things like centrally banked fiat currencies. If the current US financial system becomes irredeemably corrupt, this can't really be fixed without risking the destruction of the dollar and all assets and contracts denominated in dollars. A new dark age is a very high price to pay for the replacement of a corrupt or incompetent system.

I think an argument can be made that replacement of institutions will always be necessary at some point. As institutions become large their size insulates them from reality, allowing something like "genetic drift" to occur that gradually erodes their competence. Combine this with the fact that psychopaths gravitate toward positions of power and you have a general tendency of large powerful systems toward decay and corruption over time.

We saw a very concrete example of this in 2008 when banking institutions that had failed badly due to a mixture of incompetence, hubris, and corruption received a blank-check bailout on the backs of taxpayers and the rest of the non-financial economy. It is no coincidence that cryptocurrency went mainstream right after this, since these events demonstrated the need to start thinking about ways to devolve power away from these systems or at least to reduce the cost of doing so.

Side note: I think we've officially entered the cryptocurrency / block chain trough of disillusionment. See: https://en.wikipedia.org/wiki/Hype_cycle

> I would assert that there is no single person in existence who had a problem they wanted to solve, discovered that an available blockchain solution was the best way to solve it

What about Wikileaks? They had all their payments shutdown and then they were able to start accepting payments.

The "use case" for Bitcoin was stated up front. It is to allow censorship resistant transactions. And for Wikileaks in 2010, when their financial transactions were being censored, it worked!

I think skeptics of cryptocurrency get too focused on applying cases where their traditional banking systems serve them well, rather than how such systems do not serve marginal actors very well (or at all, for whatever reasons).

Cryptocurrencies don't need to appeal to mass market users who are already happy with what they have.

Appeals to legality (without stating jurisdictions or enforcibility), cries of rampant speculation (without acknowledging how much speculation already occurs in many kinds of markets and financial instruments), doesn't really matter to those who are now enabled to do something in a way that they couldn't before.

People using cryptocurrencies today to engage in various forms of trade valuable to each other, don't care what people on the sidelines think.

Blockchain is perfect for its original use case, a distributed trustless database. The tradeoffs don't make any sense for a trusted system, i.e. replacing SWIFT or storing titles to property.

All the evidence to date suggests that banks are much more capable of providing useful financial services than blockchains. Can you give a counter example of a real world use?

Depend on what you mean by financial services. For example, no bank can beat crypto in price for remitting ~$1k to Southeast Asia within a couple of hours. I spent years as a digital nomad and there was no traditional fiat solution that came close.

I couldn't even find a traditional solution that beat crypto for converting ~$10k USD in the US to CAD in Canada (although I did have to write a script to do this via crypto and it sometimes took a few days for the markets to align favourably).

On the other hand, I highly doubt blockchain is going to beat banks at their main business of being a middleman between savers and borrowers.

I moved from the US to Canada. Banks wanted to hold my transferred money for a month even though they got the cash within 3 days.

with cryptocoins I wouldn't have had to move the money at all.

So why didn't you convert your USD to Bitcoins, move, then convert your Bitcoins back to CAD as you needed CAD?

I kept the money in kind. It was merely transferred from bank to bank.

FWIW I kept my BTC in kind as well.

This article highlight a really interesting point here:


And even if there are the “proof-of-work” people are going to distrust that “it’s a mathematical proof”. Just look at Trumps alt-facts and “fake news”. You don’t need to go even that far to find people putting money under the mattress because they distrust authorities. And even if math is “universal” people are going to mistrust it because they don’t understand it. I don’t think they will ever trust bitcoin. And I think they are in a majority.

And when the mattresses are being stuffed with fiat currency, the utter lack of cognitive dissonance becomes striking. To a lesser degree, the same goes for "keep the government out of my Medicare".

>In fact, I would assert that there is no single person in existence who had a problem they wanted to solve, discovered that an available blockchain solution was the best way to solve it, and therefore became a blockchain enthusiast.

I would say that every person running a darkweb drug market would disagree...

Blockchain isn't necessary for that. All you need are some shitty PHP pages behind a Tor hidden service and an escrow agent to facilitate transactions. The currency doesn't matter and it certainly doesn't have to be Bitcoin-- prepaid Visa cards work just as well, and are more anonymous than Bitcoin anyway.

I'm seeing more of these "anti-blockchain" criticisms circulating lately. This one makes valid points about problems with the present state of the ecosystem, but the author seems to ignore the fact that these problems are addressable.

His basic criticism of smart contracts is they can have bugs, and they can be costly since they will often involve moving money. Yes, this is a fact. Many potential solutions are out there, but how about these two ideas for starters:

- a crypto-currency where at least accounts for certain transactions can be de-anonymized, so a person can be identified and face consequences when they commit a crime like hacking.

- special transactions with settlement periods in which they can be canceled in the event of a hack, which might be identified by voter consensus.

I honestly thought the author was trolling us (until I read the comments). There are so many holes in his example of ebook transaction. Here's just the two points he made that were the most egregious to me:

>> and that the book — rather than some other file, or nothing at all — will actually arrive

Really? Ever heard of checksums - its used all over the place. And if we weren't able to trust it, I guarantee you that blockchain tech is not the only thing that will break.

>> It’s a complicated way to buy a book! It’s not trustless, you’re trusting in the software (and your ability to defend yourself in a software-driven world), instead of trusting other people

It's like arguing with my grandma about evolution. "But you are trusting the scientists!!". I don't know where to begin.

How are you supposed to checksum the book before you have it? You can't do that without trust, because you need to trust someone to give you the right checksum.

Not quite that dire: The checksum is typically public, where a large set of diverse stakeholders (most of which have incentives aligned with yours) can publically dispute it's veracity, increasing the costs of fraud. Moreover, some of those stakeholders may already be part of your existing circle of trust (either directly or transitively), which increases uncertainty for fradulent sellers.

Name me a single eBook you've purchased where the checksum for the eBook was public.

I read the bitcoin whitepaper about 7 years ago. I find it funny when people talk about blockchain like it's new technology, or like it's a vision for future. It's old tech that has been generally increasing in market value.

Exactly, Blockchain is now 10 year old technology, with a lot of implementations and technologies built over it.

TCP has its root in 1974 technology [1], and it was not until the early 90's that it started showing its potential.

The key to Blockchain technolgoy is the proposal of what it can solve (trusted transactions in a trustless environment). I like to see Blockchain as TCP/IP: It is going to be the foundation of bigger and more "user friendly" protocols and systems. (golem.network, storj, filecoin, eos). At some point we will get the "HTTP" of Blockchain, and over that, we will start having the "Google"s and "Amazon"s spawning as well. But if you think that, it took Amazon 20 years (1994) before TCP was "invented"... then the timing for Blockchain technology is going quite well.

[1] https://web.archive.org/web/20160304150203/http://ece.ut.ac....

Blockchain consensus algorithms are slow and use a lot of power. There may be competing technologies, like Hashgraph, that solve speed and power usage issues in the future. As of now all live implementations of blockchain are underwhelming.

Not all. I think you are specifically talking about Bitcoin (Proof of Work)

What live implementations are using POS (Poof of Stake)? It's all academic and likely to be only marginally faster without a lot of risky optimizations.

Nano/Raiblocks. Mainnet has been pushed to 300tx/s - theoretical max is 7000tx/s - Wallets available for all platforms.

Lisk, Nxt, Bitshares and dozens of others.

From what I'm reading Lisk only supports 25 transactions per second.

Ethereum will be switching soon.

> Poof of Stake

Is that what happens when you accidentally lock yourself out of your crypto wallet forever?

As someone born and lived in a 3rd world country for a better part of my life, I believe Blockchain solves a very real problem. That's equal participation in internet economy irrespective of someone's geographic location. It was thanks to the internet I realized I can also contribute to the world (by creating something people want & writing about something others want to learn). However, when it came to making a living out of that there weren't many options. One of the prime motives for me to move out of Sri Lanka was it will be way easier for me to accept payments online.

PayPal is still not available in Sri Lanka, even after repeated attempts to convince Central Banks and governments [1]. Also, recently Stripe blocked a payment from one of my customers due to high-risk profile. Reason? He used a US issued debit card from Nigeria. I reached out to the person, turns out he was a passionate young entrepreneur who was trying to build a really interesting business. But his geographic location becomes a resistance in a medium it shouldn't.

For me, Blockchain( and Cryptocurrencies) is a reframing of the trust model from heuristics such as geographic location to verifiable algorithms. The Internet protocols enabled us to exchange code, art & virtual goods without geographic boundaries. Then why not money?

[1] https://www.change.org/p/enable-receiving-money-to-sri-lanka...

Blockchains are accounting mechanisms. In their simplest form, blockchains are just a linked list of linked lists that that fulfill the requirements of an easily immutable, distributed and auditable system of accounts.

I'm not sure how the author is attributing so much doom and gloom to cryptographically secured accounting systems, some of which have survived for a decade without a major failure of their primary function (securing digital assets with enforceable contractual conditions and private keys).

> I would assert that there is no single person in existence who had a problem they wanted to solve, discovered that an available blockchain solution was the best way to solve it, and therefore became a blockchain enthusiast.

He hasn't been paying attention to the space long enough: Many traders in contraband meet that description, and used to talk about it at length in r/darknetmarkets, before it was banned. (BTW, does anyone know where they hang out, now?)

Contraband traders don't care about a blockchain. They just want untraceable un-reversable monetary transactions.

Of course, it turns out bitcoin isn't exactly untraceable.

Contraband markets, ransomware authors, and scammers. The world is wasting power on hashing to support that.

The consensus doesn't have to be based on PoW. Almost all interesting cryptocurrencies (well, interesting to me) use or plan to use proof-of-share mechanisms.

Check out Algorand, for instance: https://www.algorand.com/how-it-works/

Clearly the scions of a new age!

A few month ago I clicked through quite a few youtube [0] lectures on "system dynamics," the 1960ies hype technology, and the people who did system dynamics back then are entirely reasonable, well aware of its limitations and the applications are very interesting, but their work got completely drowned in bullshit. Very similar to "the Internet" in the late 90ies, "web 2.0" in the early 2000nds and block chain today.

So block chain is a really cool algorithm, that under ideal conditions can solve the Byzantine Generals problem, but there is at the moment just so incredible much bullshit surrounding blockchains, that it is sometimes hard to separate the wheat from the chaff.

[0] https://www.reddit.com/r/lectures/comments/7jtg5e/dennis_mea...

r/lectures thread, see the videos linked in the comments.

I agree that it'll be hard, if not impossible for bitcoin to work as well as normal systems built on normal trust. However I think we increasingly do need some system of verifiable trust in a world where anonymity is common, since all current forms of trust require it's participants to not be anonymous.

I think he is absolutely right about his dystopian view on smart contracts managing stuff but forgets about that one trusted party we're trying to avoid the most here, that costs us the most money and that we need the least in real life: Banks. That's what we neet the blockchain for.

I never understood that sentiment. What exactly is bad about banks? Banks are a trusted middle-man that controls, insures and manages my transactions, and in contrast to arcane technological blockchain solutions is actually a legally liable entity.

I also don't understand how banks cost me more money than bitcoin. A bank transaction costs me very little to no money, a crypto-currency transaction is extremely expensive.

For better or worse, banks are treated like the Ticketmaster of the financial industry.

The new-age solution to this seems to be sticking it to them by conducting all your business with scalpers.

The TL;DR is:

- blockchain systems still need trust;

- security is not solved;

- blockchains are overhyped and most followers don't want it for the problems serious actors try to use it to solve.

- it has many issues (need for infra, require tech knowhow, etc)

I agree, but I still don't see how it's crapy tech, nor how it's a bad vision of the future.

You have an system that make auditing easier, with one place only for the data to be read and written and yet robust enough because of the duplication.

You have transactions logs tided to identities you can fake organised in a timeline in an open format that is not only very well documented, but being actively tested right now on the field.

You have hundreds of start up engage in a Darwinism race to find out which use case we can make that's worth it on the long run.

And finally, the tech has enough impact to force state actors to create new laws, financial actors to adapt and a huge amount of money to be invested by a lot of people.

So on one hand one very interesting concept. On the other hand, pretty much hate for the sake of hate.

If you love this you should also follow @sarahjeong. Hilariously eviscerates cryptocurrencies for sport.[1] Smart (Cal + Harvard law), unafraid and one of the best up-and-coming tech journalists IMHO.

[1] https://twitter.com/sarahjeong/status/953419544516747264

The blockchain is not currently fit for most "real world problems", because the way it achieves consensus and performance, but there are initiatives like the one below to change that:


Relevant article. Replying to why decentralization matters


The feature of things like bitcoin that they operate largely outside government control may be useful for things like raising investment in ICOs. While many are rubbish there may be some useful stuff in there.

It’s going to be interesting reading these articles ten years from now.

It's already interesting reading articles about how Bitcoin would be dominating already by now written several years ago...

Are we going to wait much longer for the Rapture?

Yeah, that proves bitcoin's bright future /s

Wealthy investors trading in the market is an indicator out of several indicators to consider.

stopped reading after the intro. this is a guy who is a self-proclaimed luddite and who likes to hear the sound of his own prophetic voice. i love how he emphasized his own words in a “callout”, immediately after the inline text. magazine style. sensible in magazine format. but in a blog? puh-leez.

his opinion is not worth debating, even if there is a kernel of truth there.

Shockingly, technology has multiple uses, some better fits than others.

I think you’re crazy if you buy crypto unless you’re buying drugs, but this man’s lack of imagination wrt a no-trust public record is absolutely boring. Sure, if you’re blind, the world is dark. But we can always close our eyes to pretend—it’s never been difficult to be cynical about technology.

Why is it that whenever this guy says something's wrong with "blockchain", every example he gives is about something other than a blockchain? Like exchanges and smart contracts. Those are not the same thing as Bitcoin and Monero.

HN seems to have a bipolar relationship with decentralization. It's all love until blockchain is mentioned. Then everyone thinks centralization is superior.

Another y-combinator contrarian post of the form "the thing everyone likes is actually crap."

Fortunately for the author I happen to agree with this particular thesis.


I actually like the way this author deconstructs what a blockchain technically is and how it’s sold. And I agree on many points.

However, this is where they go awry:

Instead of relying on trust or regulation, in the blockchain world, individuals are on-purpose responsible for their own security precautions.

THIS is the revolution. And the revolution will not be centralized :)

Blockchains are just one example of it. Kademlia trees and close consensus is another, used by SAFE network. Go look it up.

The whole POINT is, it is very hard not just for someone to tamper with a file, but to cut off access to it. Crypto-currencies also have the added requirement of preventing “double-spending”, which is very hard to do.

EXAMPLE: Why trust the landlord to have keys to open your apartment instead of an electronic lock that lets you set permissions YOURSELF? Use your phone to authenticate yourself instead of facebook controlling it. “Oh what if I lose the phone?” “Then have a backup.” “What if I lose everything?” “Then have M of N friends plus a key derived from a passphrase you know to restore it.” “Ok what about if I get amnesia and lose my phone?” “This is 0.00001% of the population and even Jason Bourne implanted a chip in his own ass.”

This guy doesn’t live in a country where the institutions people rely on have routinely screwed people. The solution is usually “throw more Democracy at it”, which is what can lead to totalitarianism.

Ever read “fuck the cloud”? It’s a good read. Why SHOULD I pay someone I don’t know to store all my files, and delete my local copies?


Have you all seen just recently what Facebook does? Why would I entrust my data, identity and brand to them?

Have we seen websites censored or DDOSed? Or just broken links to useful stuff?

SAFE network and Freenet etc. are the decentralized future. I agree that Blockchain is only a small part of the future.

Blockchains with one writer are, for example Scuttlebutt. Super resilient.

I also agree that there is no viable medium of exchange that’s fast and cheap for everyday transactions because the way blockchains currently work, they need a global consensus about every friggin transaction. That doesn’t scale. That’s why we launched intercoin.org

If you want to see more about this topic, I just wrote about it: https://qbix.com/blog

>This guy doesn’t live in a country where the institutions people rely on have routinely screwed people.

True, but his argument is that the actual fix (that would work) is to fix such dysfunctional countries so they are functional, rather than downgrading everywhere to a Somalia level of trust with blockchain as the techno solution.

And I am saying that is NOT the optimal solution.

In the past we didn’t have many technologies, and we used centralized providers who did things manually. Was that better? You can throw more democracy at a problem. But technology to decentralize it is often better for everybody.

I see technology as enabling UPGRADING, not downgrading. The proof is in the pudding: will people choose it over the existing systems.

No coiners. Its fine, we will listen to them protest for years and years, telling us it cant work, it isn't a real solution, etc, while we invent the future.

This internet thing will never take off, you need a box that screeches, connected to your phone all day long! I can't even get faxes while im 'online'. Pointless.

Your attempt to equivocate the internet (and its impact) and blockchain is laughable.

I wouldn't say it's equivalent, after all, blockchain is a layer on the internet. But it is common for people to underestimate the impact of technology in the long term. Just as the dot com bubble left people disillusioned with the internet as a platform for commerce, so too is the current state of blockchain. It will continue to evolve, it will continue to grow, and something will rise up and change commerce in a dramatic way. I'd argue that the industry has already come a long, long way and it still has a long, long way to go.

Don't spoil their fun. They've been riding that false analogy to the bank for over a year now.

The early internet was shitty. No one is disputing that. Blockchain is also shitty, but the community doesn't know how to fix the problem.

The internet was consistently useful year after year, and more so over time. Bitcoin has been around for almost a decade and has pivoted from being a decentralized currency to being a quasi-decentralized store of value amidst a classic speculative investment bubble. It has actually gotten increasingly less useful over time.

Yet, in general, more valuable, thus increasing in usefulness over time. 1 bitcoin in 2018 is objectively more useful than a 2010 bitcoin, as it has more buying power.

So I would argue that any deflationary cryptocurrency will more likely be more useful over time as it has increased buying power. (But not necessarily value!)

That is such a silly and intellectually dishonest argument. The value of tulips in Feb. 1637 in Amsterdam was also quite high, but that didn't last, neither will bitcoin's valuations.

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