For example supply line tracking blockchains. "Look this piece of beef was at place X on time Y with temperature Z, I have a hash and everything". Yes but how do I know that you didn't swap the barcodes or you didn't fiddle with the GPS or the thermometer was working or a million other things ?
Blockchain only makes sense if the asset is internal (i.e it gets created in it) because that makes it publicly auditable and you don't have to trust anyone. Cryptocurrency is the perfect use case and the reason they were invented.
Let's use your beef example. The beef might come from a farm. It's certified organic. It gets shipped off to a distributor. The distributor sells it to a store. You go to a store and buy it.
In the current system, if the store is a bad actor (e.g. selling beef it claims is organic, when it's actually not) then you don't really have a way of knowing.
However, if the beef was tracked on the blockchain and transferred to you on the blockchain at the point of purchase, then you are no longer relying on just the store telling you it's organic. The claim is verified by chain of custody on the blockchain. So now multiple parties (the farm, distributor, and store) would have to cooperate to dupe you. You can still get defrauded by the store if they completely swap the beef. But, they would STILL have to purchase legitimate beef and transfer it on the blockchain to you. It would be harder to get away with it vs. just changing the label.
That's just one example of where it can minimize trust. But once more assets are tracked on the blockchain, you can start to do REALLY COOL things with them.
For example, imagine using real estate to get decentralized collateral backed loans on MakerDAO.
I can go on and on about this stuff...but it's really cool and we're just getting our feet wet with the technology.
Tracking external assets requires trust, period. And that being the case, what advantage does blockchain bring to the solution?
Having movements logged in a federated database has all the same properties.
Blockchain is crazy expensive to run. Why would anyone pay for that when there's dirt cheap alternatives that are every bit as effective at solving the problem?
That said, even then - when would it be cheaper just to bribe the voters?
- The Citizen (on blockchain): EvilCorp is dumping toxic waste on my property! They are making millions of dollars from my ruin! I stake all of my available money -- $20,000 -- on this statement.
- EvilCorp (on blockchain): No we are not. We stake 1% of our discretionary PR budget -- $200,000 -- on this statement.
- PR firm (on blockchain): We stake $200,000 to support EvilCorp. They are our biggest customer, and we can handle the (unlikely) money loss if this means good relationship.
- Other citizens of the town: yeah, that sludge looks really nasty.. but EvilCorp has a ton of money. That guy has almost nothing, I do not think he is going to win. If we support him, we will likely lose our stake. So it makes financial sense to side with EvilCorp.
- Blockchain decides EvilCorp is correct. The Citizen now has backyard full of toxic sludge and broke.
- EvilCorp and PR firm both get even more money.
However, in my example, this is not the case at all. A PR firm or EvilCorp does not care about success of cryptocurrency, they just want to make sure that "The Citizen" will fail. For example, your link talks about "penalizing both sides hard" like it is unavoidable -- but this is exactly what EvilCorp would want.
I don't think I have seen analysis of the prediction markets which assumes actors who are willing to lose money to get the desired results.
if you need to know the final consensus (or lack thereof) about that verification, regardless of how consensus is determined, it's not a deal-breaker. multi-party signatures, basically, which is what ethereum is designed to do.
(for context tho: broadly I agree, blockchains make zero sense in very nearly all potential scenarios)
Consider, for example, the problem of restaurant reviews. We know that one person's review of a restaurant isn't going to be 100% accurate, because it's subjective. Socially, we've figured out ways of getting around that, like soliciting reviews from many different people, looking for reviews from people with tastes like ours, looking at the specific details they post, etc. They're also not generally incentivized to lie, because they've already eaten there and their review isn't likely to influence their service in the future.
All this falls apart if, say, the platform responsible for collecting these reviews has a business model where they are incentivized to bury negative reviews and manipulate scores upwards, but only for restaurants that have given them money. It'd be a much more trustworthy system if the reviewers could receive currency directly for the information they provide, provided by the potential customers who benefit directly from that information. Alas, basically nothing on the web works that way.
If only current blockchain implementations had acceptable performance to handle terabytes of data on mobile phones...
"reviewers could receive currency directly for the information they provide, provided by the potential customers who benefit directly"
The greatest benefit goes to restaurants with positive reviews, which are thereby incentivized to game the system.
Blockchain might have solved the problem of trustless consensus with proof-of-work, but you are now introducing a new situation in which any number of fake, anonymous contributors can distort the review system. If the review reader pays the review writer directly, upvoting their own phony reviews doesn't cost the corrupt restaurant anything.
I'm not so naive as to think that all problems are magically fixed by blockchain, but given the number of posts on HN and elsewhere who complain about the power of big tech companies and assume they're tampering with or misrepresenting data for their own profit, it seems like people consider this problem to be important.
The trustless consensus idea is inherently abstract and paranoid, for better or worse. But life in human society requires constant acts of concrete trust and mutual consideration.
The cypherpunks who invented the blockchain don't seem to have explored the idea taken to its "logical" conclusion of ripping out all trusted entities and (somehow) replacing them with exchange of anonymous cryptographic tokens. The blatant truth is that doing away with trust altogether would paralyse every aspect of civilization.
What, specifically, does a review system gain with The BlockChain?
And who pays for it? Blockchain’s aren’t cheap!
Game theory. Without DLT you make more money by doing these things. With DLT it just becomes the cream skimming problem, where you're just paying money to shuffle assets around but you're actually losing money because the total value of all the assets is still the same.
E.g. if you replace Wagyu beef with flank steak, A) you can only do that once rather than infinite times, like you can currently, because each asset still needs to have been originated somewhere B) you now have to either sell Wagyu beef as flank steak or else sell it into an unregulated market as a potential lemon, where you'll take a huge price hit anyway.
So it certainly doesn't eliminate all fraud, but it eliminates the vast majority of fraud by A) ensuring you can only commit fraud at most once per genuine item produced B) vastly reducing the profitability of any fraud you do commit.
Keep in mind that once DLT is common place, what's a status symbol isn't going to be the watch itself or whatever, but rather it's going to be having your purchase of the watch recorded in the DLT. This means that even if you do defeat all the tamper proof mechanisms or whatever, the original item is going to be basically worthless.
Whether it's going to eliminate 99% of fraud or only 97.5% of fraud or whatever in each industry is difficult to say, but regardless of the exact number it's going to be high enough that everything not on the DLT is going to be both considered a potential lemon and also carry substantial legal risk, and as such will priced accordingly.
I mean that alone is a several trillion dollar a year improvement that will continue on indefinitely, and that's only one of the many applications for blockchain.
Consider that roughly 75% of American adults of working age are either unemployed or underemployed, and in most countries it's vastly worse than that. The reason most of them are unemployed or underemployed isn't (for the most part) that they're unable or unwilling to work or that they don't have valuable skills, but rather that double entry accounting doesn't enable a broad enough spectrum of economic relationships to capture the long tail of human talent.
When I say this is going to be a multi-quadrillion dollar technology I'm not kidding around. 99% of the stuff you own today wouldn't have been possible without the invention of double entry accounting, which vastly expanded the types of economic relationships that were possible and thereby vastly expanded the types of goods and services that could be produced. DLT isn't a replacement for your MySQL instance, it's a replacement for double entry accounting, and a 10x improvement at that. When people look back 500 years from now they're going to see that the vast majority of the (then) modern world wouldn't have been possible without it.
It's going to largely replace the middle class in the same way that automation has largely replaced the working class, because if you go down the Bureau of Labor Statistics list of jobs it's pretty clear that most middle class American jobs are basically just fulfilling glorified accounting functions.
Even just considering supply chain, as the profitability of creating counterfeit items decreases that doesn't just reduce the percentage of things you buy that are counterfeit, but it also makes it possible to make entirely new classes of (genuine) products that wouldn't have been economically viable previously.
Dynamic link tracking?
Database Local Transformation?
And let’s be honest here, I’m gonna assume it is a clever buzzword designed to sell the failed blockchain technology to a new set of rubes, right?
And from the naked eye it definitely doesn't look like "most" middle class jobs are accounting - I see teachers, engineers, architects, healthcare, legal workers, protective services ..
So my skepticism about your assessment of our labor situation and needs bleeds over to your enthusiasm about DLT.
It may cut fraud costs, but there are other ways to do that. Blockchain replicates computing costs relative to centralized data stores, so implementations have non-zero scaling costs.
Which is about as relevant as the cost of tea in china.
Or, to steal another analogy, counting on database efficiency as the competitive advantage for your business is like picking up nickels in front of a steamroller. Especially since DLT efficiency will eventually be figured out. Even if it takes another five or ten years or even twenty years, that's nothing in the grand scheme of things.
Lol. The BlockChain is inefficient by design! It is that exact inefficiency that makes it trustless.
Git is basically a distributed ledger without the proof of work inefficiency.
There is no way to reliably (key word here: reliably) take non-cryptographically provable information and achieve consensus on it in a decentralized manner.
It will of course be less scalable than the blockchain itself as a generalization.
and there are trackers for supply chain already run on centralized databases that can be tampered.
It looks pretty similar to blockchain, but it has lots of advantages for supply chain tracking: much better scaleability, no energy waste, no need for full chain, ability to only care about specific subset of entries, and so on.
There are a number of current CT servers, and they are generally free -- they are so cheap that a large company can run one as a public service. For supply chain, have a few competing companies and govt's of US, Russia and EU run it, and you would have very tamper-proof system.
A distributed database ("ledger") might make sense in the context of supply chains.
The competing technology is to have a central clearinghouse for the relevant data. Or to just not track the data at all.
One way would be to have each "verified" transaction to be associated with an individual or entity who is providing the "verification", with legally enforceable dire penalties for "submitting" a transaction that is later found to be fraudulent.
So, if a transaction is found to be fraudulent, it can be traced back down to the first transaction in which a fraudulent transaction was submitted as "verified".
The thing I never understood with private blockchain tech is that the "traditional" blockchain (i.e. Bitcoin) relies on proof of work, and the only way this is viable is to have tons of resources working on these proofs so that you don't get a 51% attack (there have even been a bunch of articles about how smaller coins actually are very susceptible to a 51% attack by a decently funded attacker).
For a private blockchain, though, it never made sense to me as to who would serve the role of the miners with sufficient incentive to prevent a nefarious attacker. If on the other hand you are in a system where the participants agree as to how they will trust each other, well then you'd be back to a situation where the byzantine model isn't really necessary and you can just go back to a cryptographically signed ledger a la the Quantum Ledger DB that AWS just announced.
Would really appreciate someone explaining this one to me!
And I think you're right -- adding Nakamoto consensus to private blockchains makes no sense, because by definition they don't have arbitrary validators. And without Nakamoto consensus, "blockchain" is just rebranding of old and boring tech.
A distributed merkle-chain database is still pretty innovative. A good example is git. I think what many private groups want is a "binary git for transaction data". Everybody can review their own copy of the shared chain with signing of new links in the chain.
Now that isn't really a full blockchain, but is a different kind of thing from a central RDMS.
The point being that all the hype about "blockchain everywhere" came about because of bitcoin. If people are now starting to refer to just the "hash of blocks with previous blocks" (i.e. the "Timestamp Server" section of the original bitcoin whitepaper) as blockchain withOUT the proof of work/stake part, well then you really are just rebranding old tech as blockchain, because it was the proof of work part that was really the new thing in bitcoin.
Proof of work is required for distributed consensus; without that you need a centralized repository like GitHub or Linus to bless the current state of the database?
With Git for code you don't really need consensus - I can have my fork and you can have yours.
Another issue against the DLT hype is that the blockchain does not provide security where 90% of the whole architecture is outside the blockchain, less if there are many few nodes.
Until we don't see a community working on adversarial attacks, we will not know if it is secure of not. There is concrete research about BFT since 1982.
I think it's very unlikely that any of the theoretical ideas behind Shasper are incorrect. Casper itself is simple and comes with a simple proof, and it's similar to an old algorithm by DLS , which also comes with a proof. Sharding does introduce some other machinery, like VDFs for randomness (specifically ), but that has been vetted by plenty of cryptographers such as Dan Boneh's group.
So even though there aren't any large-scale deployments of BFT algorithms yet, the approach is widely thought to be sound. I'm working on a blockchain based on sharded BFT, as is Ethereum, RapidChain, NEAR Protocol, and others.
It's always possible that our economic assumptions will fail, but they're not radically different from Bitcoin's. You can attack Bitcoin by buying 51% of all hash power, or you can attack a BFT system by buying 34% of all stake. Either way it comes down to making an assumption about the attacker's funding.
When I read the updates about Casper there are plenty of issues presented, so don't sure why you are saying Casper itself is simple.
Fine you are working in the "Sigma Network", we are working with one of the projects mentioned there.
It is not 'trustless', but it is decentralized. You're basically relying on a majority of participants to behave ethically and not collude. In a situation where collusion is impractical or has little reward, this can function fine.
An example of this is Blockstream's 'Liquid' crypto which is validated by crypto exchanges. The security model of this coin isn't great compared to Bitcoin, but it arguably has advantages over the simple custodian model.
If you're operating a legal business, a centralized database hosted by an industry mutual or regulator beats a blockchain.
If you're at the scale where broad co-ordination is a problem, you're at the scale where the big boys can arrange a meeting. Alternatively, if you're at a scale where someone can get everyone on a blockchain, you're at the scale to create an industry organization.
Get the actors together to standardize a format for the messages everyone's emitting, and then make some software (one shared implementation, many different ones, doesn't matter) to parse the log stream into a point-in-time representation you can load into an analytics tool.
Seems to me that that sort of technology would fit this use-case a lot more closely than an Actual Blockchain™ would.
That's the idea. Just add a proof of causality for the transactions that span more than one peer, and you've got a blockchain.
A blockchain is a chain of blocks. A block is a persistent record of all the information required for the consensus process, which is held onto by a node after the consensus process has completed for that node. A new blockchain node bootstrap-syncs to the network by just receiving blocks at random from peers and then evaluating the consensus rules against those blocks in order to decide what its deduced copy of the "chain" shall look like. And you can never throw those blocks away (just keeping the transaction log), either, because a new peer might want to bootstrap itself from you.
This is not how multi-master sync in e.g. etcd or Postgres works. In those, consensus is a process that happens between all the nodes registered to a given cluster at any point in time. Each consensus-step happens between a known, fixed set of peers (fixed for the duration of that step, that is), consuming a fixed set of data that must be the same on all peers (the database before the update), and producing a new artifact (the updated database) that should be identical on all peers. After the consensus step completes, the inputs required to re-evaluate that particular consensus step are discarded by all peers. You can't go back and "watch history" happen again. You can only know what you've got right now.
But, luckily, since what you've got right now is an append-only file, you can just read it and see everything that's happened historically. It's just a logical history, though, not the history of the consensus process itself.
New nodes in such a system don't re-evaluate history to "reach consensus." They just pick a bootstrap peer to trust and slave themselves to it, synchronizing until they're an exact mirror of it. But—because all the nodes in the cluster keep their state in lockstep under consensus anyway—every node that is "in consensus" is as good as any other node that is "in consensus" for bootstrapping from. (And if you happen to bootstrap from a node that is lying about being "in consensus", then you'll quickly find that you can't obey the consensus protocol with the rest of the cluster using the data you bootstrapped.)
A blockchain is a very specific kind of distributed database architecture. Just having a distributed append-only database does not automatically make something a blockchain. You can have distributed append-only databases that aren't blockchains.
(Heck, there's an even more trivial case: a distributed append-only database owned by one party. How do you build that? Just deploy a master and some read-replicas, and tell the master to be append-only by policy! It should be pretty obvious, I hope, that that is not a blockchain.)
Ok, it's not. It also does not have verifiable causality, because it's formed by a set of registries with no explicit relation between them.
Picture instead, something more like a document synced in realtime using Operational Transformations (via SubEthaEdit, Etherpad, Google Docs, etc.), purely peer-to-peer (so specifically like SubEthaEdit) and without any peer expected to retain any history of the OT sync process itself (so you can't "wind back" the document like you can on Google Docs.) Except, now, also picture that if you try to broadcast any OT events other than an insert OT, the other nodes will just ignore those OT events, causing your document to fall out of sync with everyone else's. So the document itself can only ever grow, and nothing can be redacted or changed once it has been inserted.
So now you've got this single document that everyone can "write" to (but never change anything that's already been "written.") Now just make everyone always put their new writes at the end, so they're not breaking up anyone else's message. Now you've got a durable, distributed message bus.
(If you've ever used a wiki Talk page—or the old original C2 wiki where every page was a Talk page—the rule there for posting a new "chat message" to a page, is that you should append them onto the end of the existing "chat messages" of everyone else. If you put it anywhere else, another editor will revert your edit. This rule by itself is enough to allow for a functional chat system/forum with a complete logical "conversation" history! Same idea here—just that it's the database-node software that's automatically "reverting" bad edits. In all other senses, it's just a regular distributed file.)
From my perspective, blockchains are suitable for two things: People who want to misbehave(therefore they don't have legal recourse, independent of the morality of the extralegal actions) and people at war with each other that still need to have a relationship with each other.
It's kind of the perfect technology for a collapsed civilization or the revolutionaries and criminals in the current world order.
So Wall Street banks?
Then you have a people & process problem, not a technical one. The Blockchain, A Real Database™ or even a CSV file won't solve your problems here.
Do you have an actual example?
But never-the-less I'd echo the interest in reading details of a successfully implemented use-case for public blockchain technology, beyond cryptocurrencies. Based on some of the comments here hinting that there might be some, and assuming they do indeed exist, I suspect that they are not solutions that could be achieved only with blockchain technology (like cryptocurrencies), or even solutions that are significantly better (in terms of cost, effort, time to market or some other metric) with blockchain technology, but simply solutions where blockchain has been made to work (i.e. other approaches could have been too and some of those may have been as good if not better).
Is NIST correct?
Hasidim don't seem like they have that problem.
Technology can't solve this problem.
If multiple entities need to coordinate inside a mutually used product don't trust each other, then the problem is structural and needs to be solved with interpersonal, regulatory or political action.
If you're in a situation where cryptocurrency is the best solution for currency, then you're probably in a lawless wasteland with abjectly destructive governance systems.
Seems like in that circumstance moving is the right answer.
It also enables otherwise untrusted actors to make trustable claims, bypassing the gatekeepers that would otherwise have mediated those claims. One tangible example is ICOs bypassing not just regulators, but banks and the financial industry that would normally have had to underwrite them. Obviously this particular example has some serious kinks to work out, but the ability to bypass the corporate gatekeepers (not so much the regulators) has value, I think.
So I personally think DLT is going to be one of those multi-quadrillion dollar technologies that come around every few hundred years. The real benefit of DLT is that it enables new types of human relationships. So thinking about it in terms of what percentage of your existing databases should be replaced by it isn't going to give an especially impressive result, because by definition your existing databases are going to model your existing relationships.
Think about what percentage of the stuff in your house you would own without the invention of double entry accounting. Unless you happen to have some veggies from the farmer's market or a sweater one of your relatives knit you, the answer is probably 0.00%. It simply isn't possible to manufacture things like the iPhone without double entry accounting, because without double entry it would be impossible to form the sorts of human relationships needed to produce such a complex product. And if we asked someone to take a look at all the stuff in their house a couple hundred years from now, I'm guessing that a similar 0.00 percentage of the stuff they own will have not have been created as the result of DLT.
The fact is that once DLT becomes ubiquitous it will no longer be cost competitive to manufacture and distribute products using only the sorts of relationships and techniques enabled by double entry accounting. And if anyone even tries it's going to be like bringing a knife to a gunfight.
Can you share some examples of use cases where DLT is going to be transformative?
So to apply that, wouldn't we have to somehow register each individual head of lettuce with a tamperproof fingerprint? Just registering the bags the lettuce came in isn't good enough; the "farm" selling you their romaine might actually be selling you romaine from somewhere else that they've repackaged. (If that wasn't the case, we wouldn't be having this lettuce problem to start with.) And this is setting aside the possibility that lettuce might be leaved/shredded before packing and shipping, because now we have to put that tamperproof fingerprint on each and every leaf.
Oh, also there's the thing about all the leaves actually being in contact with one another as they're shipped, so by the time the consumer actually eats the leaf and gets sick, the best you could possibly do is say "we think it's from one of these packagers."
Maybe you're envisioning some other way entirely for Distributed Lettuce Technology* to solve this problem, I dunno. But I have trouble seeing it.
*I'm sorry, but cut me some slack, the joke is RIGHT THERE
Think about it from a game theory perspective. Under the status quo, each party in the supply chain maximizes their profit by lying about where their supplies came from. Whereas with DLT, each party maximizes their profit by being honest about where their supplies came from.
As an example, let's say you hijack you a truck and swap out expensive lettuce for cheap lettuce in a way that circumvents whatever tamper proofing technology has been applied. Stuff like this happens all the time currently, and is wildly profitable. (That's why if you go to a sushi restaurant and get a bunch of assorted sushi pieces or rolls, there is roughly a 0% chance that your meal will actually consist of what you ordered.)
With DLT though this is no longer profitable, because if you sell the cheap lettuce as expensive lettuce then you now have to sell the expensive lettuce as cheap lettuce, because each head or crate or whatever still needs to be traceable back to the source. This means that your total profit from the transaction is just whatever you would have made without cheating, plus your costs of hijacking the truck. So all in all, a substantial net loss.
You don't really need a distributed ledger for that,a centralised database run by an industry clearinghouse could serve the purpose just fine.
But maybe there are cases where a distributed ledger is easier or cheaper to establish than such a clearinghouse.
It allows you to know the source, which enables you to make a data-informed decision about whether or not you trust the source.
As opposed to the current status quo, where you can never even know the source so trust doesn't even come into the picture.
I've seen lots of vague "blockchain for supply chains is a great idea" pronouncements but I don't get how it would actually work.
Then as each head of lettuce is picked, it goes into a crate that's securely sealed and then signed with the farmer's private key in a way that originates that crate of produce on the ledger. When the farmer sells their produce to the middleman that transaction is also recorded, and so on, all the way to the end consumer who buys the produce in a grocery store or in a restaurant. (And consumers would just use their phones or credit cards for this, rather than using any sort of external fob.)
Then when the first person gets sick they report their illness as per usual. Nothing happens at this stage, because there's no way to narrow down what made the person sick. By by the time the second person gets sick (with E. coli of the same genetic signature), now you can find the furthest place back in the supply chain where both people's purchases intercept. So you can now see if e.g. the contamination came from a single farm, and if so only recall lettuce from that farm rather than all romaine lettuce produced worldwide.
Because the database is open anyone can download a copy, and there is no risk of a single entity imposing a 30% Apple tax on each head of lettuce or whatever. And each person benefits from participating, because it's a pareto improvement in terms of their profitability. (Now their products only get recalled when they are at fault, rather than their products getting recalled when anyone is at fault.)
Trust scales with something like Metcalfe's Law. E.g. a consortium of ten independent banks is probably 99% less likely to steal my money than just Wells Fargo. The idea that we need millions of independent entities to get substantially better security than the status quo is just propaganda that gets spread by Bitcoin maximalists.
There is a cost of duplication, but at the level of duplication you actually need the cost isn't that much compared to the benefit.
The tampering comes after the fact when a legal issue arises. The immutable nature of the ledger makes it an improvement over the past by preventing later tampering.
Then after bitcoin had gone up the marketing guys saw visions of billions in free money and started saying blockchain, blockchain!
If you look at Bitcoin and the Proof of Work mining algorithm that was created to solve its BFT problem, what you have is a globally dispersed group of participants driving the cost of SHA2 hashing to as close to zero as possible. Electricity combined with computers can be converted to Bitcoin, which has value because a group of people believe it has value. You are optimizing everyone to solve that problem, and people are responding naturally to economic incentives.
I believe other problems can be reduced to a Proof of Work distributed problem to drive the cost to zero. LivePeer ( https://livepeer.org/ ) is a recently launched protocol built on Ethereum to drive down the cost of transcoding live video. This is a computationally intensive process full of proprietary technology and patents that forces video streamers to become beholden to centralized third-parties such as YouTube, Twitch, etc. LivePeer solves this problem by incentivizing global participants to commit transcoding resources to an open network, ultimately driving the cost of this to zero. This will reduce censorship and costs.
Beyond computationally intensive work and protocols, I believe that smart contracts will open up a range on novel use cases. For starters, pure digital assets will become a way to fund development of videogames. Free to play games like League of Legends and Fortnite sell in-game assets, but these are not unique - they sell as many copies as people buy. While this works for big players as a business model, I believe new, novel games will come from making game assets provably unique.
These are just a few examples, but many very smart, non-crazy non-scammy people are working in this industry and creating new technologies. It's sad that the fraud has poisoned the conversation so much, especially on tech places like HN.
On the ICO front, the SEC is now cracking down effectively. First they went after the outright frauds, such as the coin backed by nonexistent land and diamonds. They won in court. Then they went after the ones that promised big returns and didn't deliver. The SEC won again. That settled the issue of whether an ICO is a security. It is if it passes the Howey Test.
With the legal ambiguity resolved, the SEC started sending inquiry letters to new ICO proponents with some pointed questions. Many new issuers backed off. Now the SEC has an assembly-line enforcement process running for ICOs; issuers can either buy the tokens back and shut down, register as a real security, or get hammered in court.
List of 934 dead coins.
The problem in that area is not the previous lack of available technology, it is institutional inertia. You don't need a blockchain to speed up settlements, because the technology to do it did exist before. What you need is buy-in from a bunch of old and conservatively run institutions that do not particularly like change.
The primary fallacy of all these blockchain proponents is only seeing problems as technical in nature when they really lie somewhere else. The same applies especially to smart contracts.
This is a great point, especially with smart contracts, the problem of the wet code is massively more complex than that of the dry code.
They are currently paying someone to shuttle certificates/titles/deeds/bonds as a part of settlements. This involves expense and risk and probably gates outstanding trade activity and maybe even the exchange's duty cycle to some extent. There's opportunity to those institutions to save some expense here (taking on [not insignificant] new kinds of risk).
As far as I know, they never won in court. Everything was settled out of court.
A case recently went to court and they lost a key argument:
Former securities lawyer Louis Cammarosano claimed back in July 2017 that 1. token sales are a threat to Silicon Valley and Wall Street, 2. that the SEC doesn't want to bring an enforcement action if their case is not ironclad because they fear that a court will disagree with their interpretation:
This is just a rejection of a preliminary injunction. The ICO sale hadn't started yet. The court indicated that the line set by the Howey test had not yet been crossed. The ICO issuer agreed to cancel the ICO and not try again without notifying the SEC first. So the judge ruled that there wasn't an imminent threat justifying an injunction. This is not "ICOs are legal, go go go!", despite hype on crypto sites.
The big ICO case so far is . This was a criminal prosecution. It didn't go to trial, the scammer pled guilty after the preliminary ruling that an ICO was a security. Zaslavskiy gets sentenced soon.
We're way past that claim from July 2017.
The big ICO case  involved blatant fraud, and looked nothing like the tokens being issued in most token sales, so doesn't set a precedent that affects most of the token sales.
Everything else has been settled out of court, with none of the SEC's claims accepted by a court. So your claim that "That settled the issue of whether an ICO is a security" is wrong. An out of court settlement does not settle the law.
>>The ruling came in a criminal case against a man charged with promoting digital currencies backed by investments in real estate and diamonds that prosecutors said didn’t exist.
That's a traditional security, with the tokens representing physical assets. It is not like most token sales, which are pre-functional utility tokens, which do not purport to confer a legal claim to any asset.
Moreover, the individual selling these tokens was blatantly lying about the existence of the real estate and diamonds.
So your initial comment is wildly off the mark with respect to what has been "settled" with respect to token sales.
I am downright shocked at just how much of a failure this technology has turned out to be. How can this many brilliant people work on an area for this long and produce almost nothing of value?
I suppose it happens in areas of "pathological science" like infinite energy machines, but those are areas where the tech doesn't work and probably violates laws of physics. In this case the tech does work in the general sense but seems to have little to no utility in most cases. When you consider scams and fraud it may even have negative utility.
I'd like to be proven wrong. I keep waiting for that killer cryptocurrency app but it never arrives. Meanwhile the core use case of digital money seems almost abandoned.
It's not even that good anymore for black and grey market commerce. It was in the beginning because the authorities didn't understand it. It was security through obscurity. Now they're developing both expertise and legal frameworks for dealing with it. It's no longer a free-for-all.
I have trouble thinking of another technology that actually works that has attracted this much hype, brains, and investment and then failed this badly to deliver.
It's not like fusion, which has a very clear use case but faces so far insurmountable technical challenges. It's not like nuclear fission power which works, has a clear use, but has downsides.
I think the nearest comparison I can come up with are failed government mega-projects like the US Reagan-era "Star Wars" laser missile defense system, airplane-like space shuttles, or giant planned utopian cities that get built and then sit vacant.
I'm also shocked and a little horrified at just how much fraud there is in this space. I'd expect some, but the sheer volume of fraud is breathtaking. Almost all ICOs seem to be scams. Many exchanges are likely scams. Tether looks like a scam. It makes me disappointed in humanity that there are this many bad actors out there just waiting for a new way to fleece people.
Just... wow. What a waste.
I'd draw analogies to pyramid-schemes and "multi-level marketing", which are both "successful" but not in a good way.
I feel the collective "blockchain" mind-scape is absolutely dominated by nontechnical aspects, like the idea you can "get rich quick", and the assumption that you can find a "greater fool" to ensure your profit from a dodgy-product or speculative buying. This crowds out "actual engineering" and tends to corrupt whatever is left.
But I do think in terms of vision and coordination, blockchain has extended the horizons of what can be achieved.
There were 2 parts to SDI:
1) space-based rocket-based ABM, which worked well. You can watch the SDI video:
2) laser missile interception, which did not work at the time.
However, with recent improvements in fiber optic transmission efficiency, this works on ships today.
The Russians have an ABM ring around Moscow based on ABM rockets.
Both Reagan and the Russian leadership did not accept the MAD doctrine, hence the above defense programs.
To be fair, it made some folks who got lucky and bought in early nice and wealthy. Which then attracted a gaggle of shysters, hucksters and fraudsters.
When you drill down the key thing that gets people sucked in to Satoshi's Blockchain, it is naked greed. Everything layered on top about the technology, or "DLT" or whatever buzzwords these people spout is just window dressing. All of them want to Get Rich Quick and drive off into the sunset in a lambo from their bitcoin gainz.
You see pretty fast the dissolution of values in the face of potential fortune. Its an ancient aspect of humanity - the first European explorers in the Americas would slaughter whole countries on the whisper of treasure to be had.
People really do get weird around lots of money, especially if there's an opportunity to get rich quick. I think some really atavistic predator instincts can kick in.
Even your semiconductor example was immediately adopted and used. A decade into Blockchain and it's still all claim and no adoption, as this study found.
The reason tech adoption looks like it’s speeding up is that in that chart is just that they’re looking at more and more trivial examples. E.g. the cell phone might create huge changes in human behavior, but they’re not really a foundational technology. They’re more of an incrementally better version of a phone and a computer.
That chart has for recent things gaining widespread adoption: internet, cellphone, computer, (left off web adoption), microwave. Do you think the blockchain is actually bigger than any of those?
Or is it more likely what it has shown so far - nearly zero benefit compared to the claims? It's not like it hasn't had ample time to blossom and get integrated into everywhere. It simply solves a problem almost no one needs solved.
I do still hold out some hope that the tech will evolve and eventually catch on, or that it will lead to something else, but the first big incarnation cycle of cryptocurrency seems like a total failure to a shocking degree.
I'd posit it's not possible for DLT to fail any more than it was possible for email to fail. Yeah adoption could have been slower if the first email clients were shittier or whatever, but at the end of the day one-to-one or one-to-many instant written communication solves a real problem and I just don't see any possible universe where the idea wouldn't have eventually worked.
The conceptual breakthrough of DLT is basically using an algorithm to mathematically guarantee that two numbers sum to zero rather than taking the word of a supposedly neutral (and very expensive) third-party. Once you make that discovery there just isn't any universe where that doesn't outcompete the status quo, any more than we have globally competitive societies who haven't adopted things like fire or the wheel.
The reason it's taking so long to get real products (let alone adoption) is that it requires basically reorganizing our entire society, which doesn't exactly move on a dime.
Bitcoin was made of old, already-existing pieces. All the parts existed by 2001, but it wasn't until 2008 that someone put them together to make a system that could exchange unique tokens without a central authority.
Trouble is, the term "blockchain technology" is a way of fudging the fact that none of the good bits are new. And whether the new bits are good, well, there's a 10-year track record of not a lot so far apart from asset bubbles.
The 1988 Microsoft CD-ROM Conference held in Seattle in March, attracted about 2,000 industry insiders. The tone and ambience of the conference reflect a definite change in the industry. Most companies were represented not only by top management, but by their marketing personnel. Few blue-jeaned engineers or techies were found in the crowds. CD-ROM appears to have arrived.
FINDING A PATHWAY TO THE FUTURE
In his keynote address, Bill Gates, Microsoft's founder and chairman, reiterated his goat of making computers affordable and attractive enough to be "on every desk, in every home." Gates reported that less than 50,000 CD-ROM drives are currently in the marketplace. These are either in very narrow vertical markets, such as libraries, or are being used by the industry itself. The problem of low drive sales is compounded by the high cost of developing a multimedia product. Gates estimated that it costs $1 million for each disk product, an investment that many companies have been unwilling or unable to make.
The lack of a "rich standard for audio-visual" components of CD-ROM development, and the limited tools available to developers today, are two other important reasons Gates cited for the slow growth of the CD-ROM industry.
They filled the gap very nicely until broadband spread widely enough to allow the web to destroy any need for them.
And this assessment is cause for optimism. Look at many of the upcoming cohort of blockchain-based projects: LivePeer, Fluence, Augur, dare I say NuCypher (I'm on this team) - all of them have far more interesting things to offer than their use of blockchain tech. They render unto the blockchain what is the blockchain's, but all do way more interesting things.
The reality of block chains is that they'll always be complicated enough that there will always be a man in the middle. Mt. Gox demonstrated that block chains will always be exploitable because the man in the middle is easily compromised. And anything that's worth going to the trouble of protecting with block chain is worth compromising.
I'm really tired of the overused "blockchains are really slow databases" phrase. They're not, and if you're using one as that, you're doing it wrong almost 90% of the time.
Here's a great question to ask yourself if you need a blockchain:
Do I need game theoretical enforced security?
There are many networks and protocols that can be improved with such security mechanisms. There are more that can't be improved. Just in another thread, someone asked the question if Tor could be improved with it. There's plenty to experiment with here and figure out what makes a blockchain application great.
The entire idea is that you can incentivize good behavior and disincentivize or punish bad behavior. Consensus comes into play here when deciding, "Was this operation done correctly? If so, do this. If not, do that." This has the ability of enforcing correct operation in decentralized networks. My associates and I have taken to calling these "Decentralized Incentive Networks". Yes, there are many problems that have yet to be solved, but people are working on them. I'm really interested in seeing solutions to the oracle-problem, but I'm unsure if it will ever be solvable.
Even then, a lot of these applications won't be fit for enterprise (or even small business) use. Many of these applications will benefit (and survive) from community adoption and rely on being open source.
Hopefully, when the hype is gone, we will have made some really great technological advancements to peer-to-peer and distributed applications. This is where I think blockchain apps will find their niche.
Those are literally opposites. Blockchain + Tor would be the sort of complete nonsense the article is talking about.
Blockchain has nothing to do with security. It's not a security technology. It's a permanence technology. It ensures that something is never modified in the absence of a trusted authority which it does with security technology and distributed proof of work.
I'm not going to speak for these projects directly because I know very little about them, but I can speak as to how you would incentivize non-malicious behavior.
You didn't really provide anything to actually talk about. You took two literally opposite techs and slapped them together and then acted like it was obvious what that meant.
Blockchain has no application to Onion routing nodes, either. That, again, would be the sort of thing you don't want a permanent record to track. Tor is specifically designed for the routing to not be stable and not be known. It is fundamentallly the polar opposite of blockchain.
Blockchain is a public list of immutable data, identical for everyone.
TOR nodes form a private list of ephemeral data, fleeting and ever changing. Unique to everyone.
> If caught acting malicious, then your node can be penalized.
Blockchain literally has nothing to do with this. It has no such capabilities of any kind. Hell, it was literally built so that you can't have penalties as that's governance.
> I can speak as to how you would incentivize non-malicious behavior.
Blockchain doesn't do this, at all. If anything malicious actors love blockchain because there's largely no capability to recover from a successful attack.
And even oracle solutions get broken down into decentralized/centralized platforms.
1 - https://en.wikipedia.org/wiki/Hash_chain
If anyone is interested,  and  are the project. No one is using it, but it's a peer to peer chat and file sharing system.
i.e.: Depending on whether the person saying "blockchain" is lying to make a quick buck from the hype-train.
You should look at Merkle trees. They are a component of Bitcoin and many other cryptocurrencies.
I remember when I was studying computer science in 1999, even though the internet had been out a while and there had been lots of talk about e-commerce no one had really solved the problem particularly well in terms of providing a platform to the average Joe, but by 2005 things were very different and then by 2015 there was no looking back. I think it's going to be the same for Blockchain.
Why should anyone care more than say... the adoption rate of SkipLists or Bloom Filters?
Blockchain IS a usable datastructure with some interesting properties. But so are Cuckoo Hashes. But no one is going around talking about how Cuckoo Hashes will take over the world.
Its like XML or SOAP, or any other buzzword technology. There's certainly a benefit to the technology, but ultimately the engineering of stuff that uses it is relatively boring.
I'm not sure why you focused on e-commerce as a use case, as well as the average Joe as the user. The article in question talks about them trying to find ANY industry use case. The Internet was useful pretty much from day 1. In the early 70s it already enabled digital file transfers and email communication. The use cases were easy to find...
Initially, few people thought file transfer over the internet was a substantive use case because the transmission speed was too slow. Then throughput capacity picked up, but people then shifted the argument to something like, "It's good for medium size file transfer, and I guess I can sometimes send this clunky email thing instead of picking up the phone or sending a fax." This process repeats itself, with goalposts ever shifting, until someone talks about the possibility of selling everything over the internet, starting with books, and most think it's nutty, but believe hearing "you've got mail" every morning might get mass adoption.
I'm not sure whether 'blockchain' is a database or a universal computer or a new software primitive. Or whether we can even tell. What I know is that it is at the very least some sort of network infrastructure (in the most abstract sense of the term). Just like with the internet (another network infrastructure), the space of substantial use cases increases as more people and technologies are connected to it.
Could it end up being a dud apart from some random use cases? Emphatically yes. Could it end up being pretty important? Possibly (we don't know).
Ironically, the best evidence I have for being agnostic about the potential of 'blockchain' is the number of educated and non-educated people making wild claims about the benefits of decentralization, etc.
When the telegraph arrived, a substantial mass of people said it would usher in world peace. When the internet arrived, a substantial mass of people made wild claims about breaking us free from corporate power, educating the masses, etc.
Cite some numbers.
Even claiming the Internet is a reasonable comparison is a leap you haven't justified.
Why is it comparable to, ooh, let's just pick a completely random example, this HUGELY SUCCESSFUL THING?
Why not some other technology? e.g.
* blockchain: the Apple e-World of distributed databases
* blockchain: the Ford Pinto gas tank of distributed databases
* blockchain: the cold fusion of distributed databases
What does this even mean? Its a really beautiful solution its just lacking a good problem.
This is 100% equivalent to the maintainer merging a pull request. The other half of the solution is "we need to pay open source maintainers," which doesn't need a blockchain either.
Blockchain doesn't help this scenario at all.
Has almost nothing to do with Blockchain. This is just called "micropayments"- and blockchains suck for them. At best, you end up doing little payments outside the blockchain, and then settling them occasionally on the blockchain.
You may notice this same approach works quite well for "do little payments outside the existing financial system, and settle them periodically."
> Code and modules need to be multi-signed and certificates should be inexpensive to get and easy to validate.
Code signing is unrelated to blockchain.
Certificates are already easy to get. GPG is free. Certificates signed by a CA sometimes cost money- code signing certs, at least in theory (in practice? hah, not really), cost because they need to be able to verify your actual identity.
Certificates being easy to validate... this is a PKI problem. Blockchain provides nothing of value here.
You might be able to do something like what Keybase does- having some centralized "identity" and making changes to same auditable- with a degenerate Merkle tree. You know what else does this? A HSM from like 2006, which, in each audit log entry, includes the hash of the previous one, to establish exactly this property- changes and edits can be detected.
> One of our dependencies could become a malicious package in the same way we saw it with event-stream. But instead of giving full maintenance or full publishing rights to new collaborators, the original developer would give new maintainers or a CI system only signing rights. So they would sign their releases and after a careful review the original author would countersign stating that he checked and approves these changes.
Not only has this got nothing to do with Blockchain, the proposal here is just "a new maintainer needs to ask the old maintainer for permission to publish for a while", which is quite silly- if the old maintainer is tired of bothering with the maintenance bit, the LAST thing they want to do is careful code audits.
> Later, if our fictional project received an in-app payment there could be some logic within the runtime environment that based on the impact or contribution of this open source module to our project would automatically distribute a couple of cents of each payment to the author who can be determined based on the certificate.
Well, no, the author can't be determined based on the certificate on your binary. The person (or persons) who signed it can be. Asking every contributor to sign every release in perpetuity is silly, of course. Incentivize them to do it with a cut of the profits? Great, now they just rubber stamp everything.
Now, if you mean the maintainer of the module, sure. You know what else works quite nicely for this? Just having a payment address in your Git repo in some file with a well-known name. There's no point in the certificate, here!
"Aha- a payment address! PayPal won't work, not much else that exists will, either. For those smaller payments, only a Blockchain-based approach would work." Well, that's true- for now. Similarly, "free, rapid person-to-person transfers" was largely just Venmo for a while. Then the sleeping giants that are the financial industry woke up, threw some pocket change at the problem, and created Zelle / Early Warning, which does the exact same thing.
There isn't a good way to do microtransactions today because there isn't that much demand for microtransactions. If there is, it'll pop up quite quickly.
This entire article is just... clown shoes. The parts that might work aren't novel and don't require anything besides a degenerate Merkle tree, and the parts that are novel or require a Real Blockchain(TM) are useless.
Why is this? Because the article itself was written backwards! The author started out with "I like and know Blockchain. (more cynically, 'I benefit when $ETH goes up'.) Here is a problem. How can we apply Blockchain to it, and make the world more secure (and more cynically, 'make me richer and my skills more in demand')?"
In so far as this article attempts to solve any problem, the problem is "Blockchain isn't used as much as I'd like it to be."
The open source private blockchain project championed by IBM, Intel, Cisco, etc...
It's powering CLSNet right now. 
Because presumably that means that if someone guesses or steals my password, they now own my house.
But of course this isn't really a blockchain, it's just a CMS with a PKI interface.
You'll register your private keys with a PKI. In practice the worst case scenario would be needing to go to the DMV to register your new phone or something.
It also share the cost of running a distributed database among those who care about privacy while letting those who care less enjoy a simpler stack. A win, win.
Blockchain has truly transformed the fields of child pornography, ransomware, drug markets, and ponzi schemes. Regardless of your opinions of those fields, you simply have to accept that those areas wouldn't be possible to the extent they are now without Blockchain based cryptocurrencies.
No doubt, there is a lot of hype. No doubt, a lot of people, including techies, have lost sight of what is important. No doubt, many in the space are impatient, and do not understand that blockchain development, the real blockchain development is more like development of aircraft frames. Slow is smooth, and smooth is fast. No doubt, people are trying to apply it where it is not necessary.
There are, however, a plethora of other use cases. The key though, in my opinion, is placing all of it under the hood, invisible to the user except where it is absolutely needed (ie, hi user! here is your wallet).
The truth is that many businesses already run replicated, distributed databases on replicated, distributed servers, and it is plenty fast since they don't have to worry about solving advanced cryptographic math equations for incentive purposes. However, one problem facing generalized platform blockchains, such as ethereum, is that the current entire concept of business and how its modeled is far behind what a blockchain can deliver to a business and its interested parties. The problem, as I see it, is primarily one of control, and secondly, one of trust.. I mentioned the replicated distributed stuff earlier, and I think it safe to say no current business will ever open nodes to outside participants (such as customers, or resellers), or even inside participants (shareholders, employees). Unless shareholders demand it (for instance, to ensure a fair number of shares can ever be created), a completely internalized blockchain is pointless and no more trustworthy to society than what we already have.
Another large problem is obviously power consumption. Every bitcoin maximalist needs to come to the realization that one of the strongest ways the established players will fight a new paradigm is by controlling power costs. For many in the developed world, bitcoin is out of reach, as mining equipment is expensive, and power makes it impossible to turn a profit. The best solution to this is green, _affordable_ energy sources and affordable mining equipment. Proof of Stake is not completely the answer.
Finally, I point to this part of the "study":
> We documented 43 blockchain use-cases through internet searches,
No wonder they got terrible results. Doctors tell patients all of the time to not google your symptoms, it always ends with cancer. Does this mean doctors are a failure?
The established financial systems took a thousand years to formulate into what we know today. Patience is power.
To qualify this, when Tim used the word 'most' I don't know if he meant "most data stored" or "most DB instances". He also didn't give any percentages, so it very well could be 99% Dynamo and 1% ledger DB. Lastly, Bray didn't include Aurora or Redshift in that list of "most used database at Amazon", but Dr Vogel's keynote alluded to a ton of internal Aurora usage.
So, at least some people are claiming successful usage of blockchain in production. It's just not clear how much. Amazon seems to think there is a future in it, since they just released 2 new blockchain related services this week.
Just being rational and before reading the article, you can deduct there is some kind of bias.
"Any claim made for blockchain could be made for databases"
We can deduct here that author has no deep understanding of the technology.
"that's something we can confidently tell you for nothing: no, it isn't"
Author is dismissive and angry (didn't adopt early?)
I've been watching the space since 2010 and can honestly say most projects are solutions in search of a problem.