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There's No Good Reason to Trust Blockchain Technology (wired.com)
143 points by belltaco 10 days ago | hide | past | web | favorite | 160 comments

I hate blockchain so much and I can’t even exactly say why. Not because of the technology itself. I care about it as much as any other technology. I think it’s because of the sleazy non-tech people that suddenly turned into “experts” raising money for their BC startup, people organizing meetups, becoming “consultants” and of course the whole crypto craze... I really wish it will die soon.

I also hate blockchain but I can say exactly why. Someone came up with a hard problem and created an overly complex and inefficient solution to it. So I have two issues with it. 1) I don't buy that the original problem it sought to solve, which I believe is currency related, but let's say it's trust in a distributed system where trust does not exist. I don't believe that is an actual problem that should be solved with a general solution like blockchain. 2) the solution doesn't scale well and is overly complex. It is overkill. I think that much simpler solutions would be sufficient and should be purpose built. I also wish it would die soon.

> I don't believe that is an actual problem that should be solved with a general solution like blockchain

AFAIK this was a well-known problem for digital currencies. I think it was "eCash" that went the furthest ( https://en.wikipedia.org/wiki/Ecash ), with "blind signatures" to prevent transactions being linked to the same user, but couldn't solve the centralised trust problem.

BitCoin's "solution" is to share a ledger, pick the longest in case of forks, prevent spam using Hashcash and keep the hashcash barrier high by turning mining into a lottery.

This is a pretty cool hack, since it addresses not only technical security concerns, but also economic and social aspects. Yet I see it as a pathological, brute-force edge-case: technically a solution, but less "this problem is now solved" and more "ha, I hadn't thought of that; we'll need to specify the problem better".

If you strip away the application as a cryptocurrency, blockchain is just another hammer looking for a nail. Heck, even as a currency you're right in that it's an overly-complex hammer for a nail that already has a dozen hammers.

I agree though that further discussion would be necessary to find that nail for blockchain, but the elephant in the room (Bitcoin) has people who are personally and financially invested, leading to incessant noise being constantly generated around anything related to blockchain.

What "problem" do you feel like the Internet itself "solved" ?

The mentality that you need to have a problem to solve in order to justify your company has some real value to it. However, somehow this has expanded into the notion that every piece of tech that doesn't solve an explicit problem has no value. The existence of the gaming industry shows that this is not the case.

> I think that much simpler solutions would be sufficient and should be purpose built. I also wish it would die soon.

100% agree. If you look at all of the current blockchain "use-cases" you will find that many of them (e.g. Ripple and Corda) are simply centralized/semi-centralized solutions that have been around for years (in the distributed-systems literature) masquerading a blockchain solutions.

In a sense the blockchain craze is good as it's getting institutions such as banks to modernize their systems and make it so that a regional bank doesn't need to wait 5-7 days to transfer money, but examples like this are few and far between and for the most part people are using the idea to drain money from undereducated/uncritical people.

We do not like blockchains because it was something nasty / fraud-y marketers stole from us, and went ahead to make huge sums of money. From something that actually had tech potential, but wasn't ready yet.

It was a quick introduction to 'how the world works' for a lot of us.

Adding insult to injury, some of us joined the marketers for the scraps and gave them undue legitimacy. This was on HN a few weeks ago, explains the whole phenomenon based on three types: Geeks, Mops, Sociopaths. https://meaningness.com/geeks-mops-sociopaths (And we're mostly all 'geeks' here, by his definition.)

And this is not sour grapes — I first heard of Bitcoin in 2010, when it was 3 cents. I didn't make any money out of it, but I've not 'missed out' in any real sense.

I like the tech but can't stand the hype. It's become impossible to follow or engage in any discussions around the topic since the shills have taken over this space.

I also like quicksort and fibonacci numbers but would I try to start a business based on this? Probably not. I want to see legit tech being built that uses blockchains but as soon as it ends up being on a business plan or mentioned in marketing material my gagging reflex sets in.

Looks like somebody did start a business based on quicksort back in 1971. https://www.syncsort.com/en/About/Syncsort-Overview

I don't think it will die, newer blockchain protocols like MimbleWimble are highly interesting and pure math and cryptography. The ICO shillers are disappointing, I was younger in the dot-com era so I do not remember much, but I assume there was a similar vibe around that time with everyone getting rich with any website idea.

For example, the recent BitTorrent ICO disappointed me, although it pumped 10x from ICO price in the past week which will keep the speculators interested, thanks to Binance supporting it.

Thanks for sharing this, I haven't heard of MimbleWimble before but indeed it looks interesting. Here's the original whitepaper if anyone is interested: https://github.com/mimblewimble/docs/wiki/MimbleWimble-Origi...

I wasn't there during the dot-com era, but from what I read it was the same situation: lots of scammers and cool kids raising millions from investors driven by FOMO (fear of missing out), and lots of money ending up in the wrong hands.

> I was younger in the dot-com era so I do not remember much, but I assume there was a similar vibe around that time with everyone getting rich with any website idea

The big difference is that with dot-coms the scams and shady characters were in a minority, whereas with blockchain they are the vast majority (so much so that it is hard to separate the signal, if there is indeed any, from the noise). Don't think anyone would debate that point. Another (albeit more debatable) difference is that dot-coms were pretty focussed on users, while blockchain development seems to put very little genuine thought into how ordinary people would benefit from any of it - it is mostly about "building out the ecosystem" (which sounds suspiciously like "recruiting new members to our multi-level marketing scheme"). In my view these differences are because the dot-coms were driven primarily by the technology and the exciting new things you could do with it, while blockchain development is driven primarily by money (to make matters worse, psuedo anonymised money which was originally used almost exclusively for illicit purposes) hence bringing out the worst elements of human nature.

Nobody deserves anything. You get whatever life gives you and it's all about luck. I have as much respect for a lottery winner as a self-made business person.

As a human being, I would prefer the lottery winner though because they don't have as many false ideas about what kind of person they are and what kind of world we live in.

if you think like that investing in any technology early enough is gambling and luck. is it now..

I'd hope for HN to be a place where we can actually ignore the noise and discuss about the interesting research being done around blockchains.

Yeah there doesn't seem to be so much of that.

Try focusing on the technology, its merits and its potential (or lack thereof, depending which side you lean). I find that works for me, although sifting through the rancor and the mindless shilling all so prevalent in the crypto communities is rather saddening.

it's happened before that the people / community / culture of a thing had more to do with its success / failure than the technology itself.

VHS/betamax, for instance.

imo, blockchain as we know it today can't survive the wilding of these platforms, the stories around the cretins and thieves involved.

it'll have to evolve to something that doesn't resemble "blockchain" as we talk about it today (cloud versus devops versus sysadmins, etc).

a new keystone of this technology will have to carry it far away and make it kind of different for this to be the thing we're still talking about 10 years from now.

No need to be so passionate about it. It may not change the world but it's a very cool technology.

I hate blockchain because I care about trying to stave off the worst effects of climate change, and these morons are stomping on the gas pedal driving us off the cliff in the name of their get-rich-quick scam.

Did you ever go to such a meetup? What exactly annoyed you about the people?

Questions like this.

Don't sea lion.


This is spot on. It's the repeated conversations with evangelists to re-prove something mundane that really sucks all the air out of the room.

The "Just Asking Questions" faux civility is sometimes referred to as JAQing off.

I don't fully understand the concept of sea lioning. Basically asking any question at all is "sea lioning", if the person being asked doesn't want to answer? OP made one statement, I asked one question, and it is sea lioning?

Is that some kind of hyper progressive safe space thing?

Please explain. I'd like to be a good citizen.

"Sealioning is a type of trolling or harassment which consists of pursuing people with persistent requests for evidence or repeated questions, while maintaining a pretense of civility." (wikipedia)

Thanks - so asking a single question can hardly be called sealioning.

Seems that accusing people of sea lioning is also a good way to dodge addressing a serious question. Someone will have to make another animal based metaphor for that some time.

That comic just seems like a lazy way of dismissing people by assuming bad faith.

That seems rather silly. I am not going to hound you about your dislike of Bitcoin people. You are ENTITLED to dislike them.

I just note that you have no idea what you are talking about and therefore discount your opinion accordingly.

The people who are the most enthusiastic about cryptocurrency are typically the least informed.

"You know nothing, your opinion is invalid" is a classic "crypto" talking point.

"You don't understand Bitcoin," they shriek while failing to comprehend the precarious position their beloved asset is in. "Bitcoin can't have bubbles, it's mathematically impossible," yell their cheerleaders.

All the OP said is "I don't like Bitcoin people", without giving any reasons (even saying he can't give reasons). Why should people assume he made an informed decision, based on merely that? Also, many comments really show that people don't properly understand it - can you blame people for noticing and dismissing those comments?

And I question your claim about enthusiastic people being the least informed. I'd say the people who work on it and dedicate their lives to improving the infrastructure are both enthusiastic and informed. Of course there are also enthusiastic people who are misinformed.

that's just irrational and come from envy because you didn't gain money from the hype. quite common in psychology

You hate it because you missed out on the gold rush. It's called jealousy. Simple as that.

I hate it too for the same reason but at least I'm honest about it.

I don't hate it out of jealousy.

I hate it because so many good people have been scammed and because it is dreadful for the environment. Wasting power for seemingly no purpose.

Subconsciously you hate it out of jealousy.

I h#$@ it and I didn't miss out. A month's salary turned into 16 months of freedom and a bit of money to start a non-crypto company.

Reason being the ignorant hype, even greater inequality, and the support of criminals, terrorists, and bad actors built into the very nature of public blockchain.

Private blockchain is a different story, but I see that more like a choice between SQL and NoSQL. Just need to wait a decade or so for the tech to mature.

As you've identified, a "private blockchain" is just a database. People can't wake up to this soon enough.

Yes and no. Consider HyperLedger.

While it does have a shared, immutable ledger and chaincode, what is really interesting is the coordination and integration of business entities and processes. This is something a database does not facilitate like a blockchain.

Interesting. I'll have to read up on HyperLedger.

Why the emotional attachment to a "thing" that just is? Do you also hate gold? Maybe vegetables? Or Javascript?

I actually don't h#$@ it, just dislike.

I'm currently in a bet with a friend.

- If you use a curse word, $1 to the other

- If you can convince someone the h#$@ should be one of the banned four letter words, $10 recoup


h#$@ should be a banned for letter word! Do you agree?

Good spot here, h#$@ is a 4 letter word, starts with 'h' and you used it in a discussion in the context of the term 'hate'.

Not sure if this setup was to easy, or you taking your bet too serious scanning the interwebs for such opportunities :-)

I wasn't looking for it, but we did talk about how the internet would be a great place to spread the idea.

We don't go around preaching, rather bring it up when someone uses the "H-word." It's far more interesting IRL because it almost always sparks an inspiring conversation.

If you're a technical person, you don't need to trust Blockchain technology; you can verify that it works on your own. If you're not a technical person, you can find independent technical experts to verify it for you.

Much of the value of a cryptocurrency can be attributed to the fact that it's difficult to coordinate a large number of people to agree on changes. Also, because most blockchains are public ledgers; it's impossible to manipulate them behind the scenes without raising alarms.

On the other hand, fiat money is constantly being secretly manipulated. There is very little transparency and much of the new fiat money which flows into the system has to pass through big financial firms/gatekeepers who get their cut of the new money supply. Big finance firms have had many decades to figure out how to game the fiat system and there is no doubt that they've been successful at it.

Cryptocurrencies have the potential to greatly improve the financial system by making it simpler, fairer and more transparent. When anyone will be able to launch their own cryptocurrency, we will have a chance to free ourselves from the coercive influences of debt, venture capital and corporations.

> On the other hand, fiat money is constantly being secretly manipulated.

Let's assume for a moment that this is both true and relevant.

Why should reinventing the wheel be the correct response?

I feel like this is simply yet another example of the rather common bias of tech folks (not excluding myself here) where we too easily believe that a social problem can be fixed with technology. You see this kind of logic all the time when it comes to surveillance and censorship overreach as well. We know technology, and believe we can control it, and so think that all these social issues can somehow be fixed with clever anti-censorship or surveillance-proof technology. More often than not, these attempts fail entirely or become last-resort fallbacks at best.

This has played out fairly well with Bitcoin as well. Over time, people realized that almost all the complex stuff that the fiat money system does is actually useful, and is damned hard or impossible to reproduce in a crypto currency pretty much by design. Meanwhile, the existing fiat money system could also be made transparent etc., if a political movement was formed to push for that. So now we're back where we started, with a social problem.

>On the other hand, fiat money is constantly being secretly manipulated.

Crypto can be secretly manipulated in the exact same way fiat can. The only thing different about crypto is that there's no central bank that can literally print money. Instead we get defacto authority with no legal framework in place.

> The only thing different about crypto is that there's no central bank that can literally print money

Satoshi's pile of ~1 Million bitcoins disagrees with you.

The entire BTC economy innately trusts Satoshi to not ruin the fun for them. If Satoshi decides to liquidate his holdings of BTC, it would crash the market harder than the next 10-years worth of mining.

Satoshi's pile of 1-million bitcoins acts as a centralized bank, whether he likes it or not. Satoshi realizes this fact, and that's why Satoshi has ensured that his BTC has never moved.

Satoshi's pile of 1-million bitcoins acts as a centralized bank, whether he likes it or not. Satoshi realizes this fact, and that's why Satoshi has ensured that his BTC has never moved.

Speculation on cause is kind of stretching it. Satosh's identity is still unknown. Maybe that bitcoin is lost entirely, maybe "Satoshi" is going to liquidate as soon as he/she gets out of prison or maybe something else.

Also comes with the massive assumption that Satoshi still has control over the wallet, and hasn't, you know, lost the keys or anything:


We're saying the same thing. Satoshi is a defacto central bank. The main difference is the money is already printed but that fact is essentially irrelevant.

I don't see how that fact is irrelevant. In one case, an upper limit of how much currency can enter the marketplace is known. In the other, it can keep being printed indefinitely. That doesn't seem like a trivial difference. This is basic inflation/deflation we're talking about, and while deflation isn't popular among modern economists it certainly isn't seen as irrelevant. Satoshi has no magical powers, only a stash of coins that could have easily been mined by other early adopters.

I simply mean a large amount approaches infinity. In Satoshi's case he owns 5% of all bitcoin that will ever be and almost certainly much more in terms of what is in circulation. This amount of power is akin to that of a central bank for the purposes of this discussion.

USD inflated 2.44% last year. Satoshi can dump his alleged 5% of the total supply once, and then he can't do it again. The fed can keep inflating at whatever rate they want year after year. That's the difference, and it's huge. The fed's power approaches infinity, but Satoshi's does not. Gold doesn't become inflationary just because the pope owns a lot of it.

There were 5-Million BTC in 2011, and there are now over 15-million BTC today. BTC has inflated 300% in the past 7ish years.

There will be 657,000 BTC added to the system in the next year, or roughly 4.5%. Which means BTC is "inflating" more than USD right now (with your definition of 'inflation', which isn't very good IMO). The next halfening won't happen until 2020 or so.

That's not my definition you're using! I wouldn't count a hypothetical Satoshi dump as inflation, nor do I count new coins mined as inflation. Again, think of Bitcoin as analogous to gold (and ignore the fact that we can technically make prohibitively expense gold now, as economists of the past were not considering modern alchemy when defining inflation). We don't claim that gold has inflated when more is mined, because it is understood that the gold mined already existed. The fact that there was hard-to-get gold underground has already been accounted for in the market valuation of gold. The fixed total number of bitcoins is what makes Bitcoin deflationary, even though more bitcoins are becoming available in the short term; the market knows this, and has theoretically accounted for it. This is more true of Bitcoin than the classic example of gold, as our gold estimates are just that and our Bitcoin estimates are perfect (barring breakdown of the network). Yes, the market is irrational and hasn't _really_ accounted for it, but don't tell the economists that! This is covered in intro macroeconomics, a currency/commodity isn't considered inflationary just because more becomes _available_, it's about whether or not there is a known finite supply. I'm not pulling this out of nowhere. Ask any economist if Bitcoin is deflationary.

> We don't claim that gold has inflated when more is mined, because it is understood that the gold mined already existed.

Historically, I disagree. There was a big gold / silver crash that could only be described as inflation when the Conquistadors returned from the "New World" in the middle-ages.


We're talking about a change in Gold / Silver prices which lasted for two CENTURIES. Yes, Gold / Silver is effectively finite on Earth. But it is wrong from an economics perspective to ignore the "short term" impact that can last centuries.

I'd argue that most people are probably concerned about time-scales roughly relating to one's life.

For all intents and purposes it's the same central authority powers. You can split hairs over hypothetical scenarios where Satoshi doesn't have as large a share in some future, but the fact is that now they have the same control as a central bank does over putting currency into circulation.

Again, no. Satoshi can dump once, the fed inflates USD year after year at whatever rate they like. This is not the same power. Look at Venezuela; Satoshi can't do that. He can dump ~6% of current supply once (assuming high estimates of his holdings are correct), the IMF is estimating Venezuela's inflation at above 1,000,000% in 2018. That's totally different. This is the craziest modern example, of course, but USD could do the same at the whim of the fed (and they did increase supply by 2.44% last year, non-hypothetically). Satoshi holds no such power by any stretch of the imagination. There are legitimate criticisms of Bitcoin for you to make, but this isn't one of them. The supply is fixed. There is no "for all intents and purposes" disclaimer that can make your statement correct. This is basic economics, if you don't believe me find an economist to pick the brain of. They probably won't like Bitcoin, but they certainly won't argue that Satoshi is analogous to the fed.

Depends how you liquidate. If they were sold gradually during a bull market it wouldn't effect things much.

But a key difference is that nobody is forced to use a specific cryptocurrency and it's much easier to see if your cryptocurrency is being manipulated. If a currency isn't working for you; you should be able to choose a different one which does.

As an investor, it would make things more interesting because you will no longer be able to just sit around and wait for the capital to come to you through the same reliable fiat channels (e.g. interest, corporate dividends, index funds, ...); you will have to keep moving your investments across cryptocurrencies to follow the value and talent.

If any specific cryptocurrency becomes unfair, smart people will dump it for another one; the manipulated coin will lose its value.

There are crooks in every country and it's not fair that you should be forced to share a currency with them just because you live in a country which happens to have a lot of them.

> If a currency isn't working for you; you should be able to choose a different one which does.

Imagine an employer saying "This week I'm paying you by dollars, but I don't like being forced to deal with dollars, so if I decide dollars aren't working for us we'll switch to Euros next month. And then maybe Pound the month after that."

I'm not sure how this is going to benefit cryptocurrency users.

If conversion is easy and fast, then I wouldn't care what my employer pays me with. The onus is on me to figure out which currency is used by the smartest and most productive people on the planet because that's the one I want to hold onto in the long term.

It's not exactly the world's biggest secret that the smartest and most productive people on the planet do their business in USD or other local currencies...

And the average person is even more keen on being paid in something they can reliably exchange goods for or invest in productive businesses whose value rises when they make more profit rather than the money-printing scheme du jour whose future value rises are contingent on hype and exchange manipulation.

>it's much easier to see if your cryptocurrency is being manipulated.

Specific transactions can be verified but that does not translate in to full transparency. Transactions can be obfuscated and laundered. A Swiss bank could set up a wallet to perform all BTC transactions through.

And your not being forced to use fiat. If you were, investing in crypto wouldn't even be possible.

Actually, if you look at encrypted blockchains (Zcash, Monero, Dash, Quisquis, Grin, etc.) there are real and similar dangers here. It is very hard to monitor money, and see when fraud happens. Some kind of fraud, not up for ethical debate, is the creation of money out of thin air. Zcash actually just caught one such bug[1] and there has been others in the past.

[1]: https://z.cash/blog/zcash-counterfeiting-vulnerability-succe...

> When anyone will be able to launch their own cryptocurrency, we will have a chance to free ourselves from the coercive influences of debt, venture capital and corporations.

You can borrow cryptocurrency.

You can invest cryptocurrency with terms that are bad for the business you invest in.

Corporations can use cryptocurrency.

What, exactly, have you changed?

You are correct with borrowing, I'm not sure what that's about, happy to be enlightened by OP though.

Not sure about investments, haven't done too much research into the benefits of ICOs and letting more people invest.

I think corporations are a good point though. If more companies became DAOs, we'd have much better checks and balances and transparency for corporations.

> If more companies became DAOs, we'd have much better checks and balances and transparency for corporations.

Why on earth would any corporation ever want to become a DAO?

The transparency benefit there is roughly that a DAO must, by design, not be able to keep any secrets, since it's incapable of having nonpublic state. Similarly, the "checks and balances" benefit seems to be just "more literal enforcement of contracts".

Is there a positive advantage, something doable with a DAO that's not doable with just "a court system", besides doing illegal things where you can't rely on courts (which is, at least, a valid use case)?

And note, too, courts already exist, and there are plenty of folks with very exciting weapons eager to enforce their judgements. Your smart contract's bytecode may say you don't have to pay somebody, but if the sherriff's office shows up to start seizing your assets... Well!

More crowdwisdom. Also stops corporations from acting unethically. Consumers will have to start preferring DAOs over regular companies for DAOs to become mainstream unless crowdwisdom has a huge impact.

Or do DOAs become more like our current political conundrum, where it's a popularity contest full of opinionated misinformation with people who don't have the expertise or time to become sufficiently informed.

With a DAG based voting proxy, there may be interesting applications within a business. Like putting support behind higher ups or something like support for RFCs. I'd expect anything applied to the wide population to be manipulated.

Yep, that's definitely a concern. There are different voting mechanisms/design systems that help deal with this. Definitely a work in progress though.

You could totally build a DOA framework / platform without a blockchain though. (added it to the endless todo list... ;)

The monetary supply schedule is deterministic, for one.

As a technical person I do need to trust the technology, because I'm not going to spend the time understanding the math and code in a language I don't use. It's a highly complex system that extends and is impacted by social, economic, and human decisions.

Not only do I need to trust the blockchain technology, I also need to trust every piece of technology around it. Phones, emails, the Linux kernel, TLS, browsers ... and all the people building this technology. Look at the recent NPM exploit, or the Crypto exchange CEO who died without a plan for his password.

Because the blockchain doesn't get hacked, it's the tech and humans around it that gets exploited.

>Cryptocurrencies have the potential to greatly improve the financial system by making it simpler, fairer and more transparent. When anyone will be able to launch their own cryptocurrency, we will have a chance to free ourselves from the coercive influences of debt, venture capital and corporations.

When "anyone will be able to launch their own cryptocurrency" it will become completely useless. This is what many technical folks who don't understand economics don't see. The utility of fiat is twofold - first of all, real guns, missiles, tanks, and planes are protecting your fiat dollars. Technical cryptobulls (and non-technical crypto mega-bulls) seem to miss this point entirely.

A corollary to this is a world with only cryptocurrency invites chaos. If we're all being paid in crypto, and crypto is anonymous, what incentive does one have to pay taxes to the government? No one will pay. Or some might, but others won't, and it will be the burden of the few taxpayers to subsidize the taxes of the many who skip out.

>chance to free ourselves from the coercive influences of debt, venture capital and corporations.

Yes, you'll also be freeing yourself from the influences of public roads, highways, and public schools. You'll free yourselves from the coercive influence of venture capital and corporations and governments/banks (latter is implied) and we'll free ourselves straight into an anarchic/chaotic society.

Second, a central entity (or a few entities) determining an agreed-upon exchange rate between various fiat currencies keeps the system running without severe loss of efficiency. We already see highly illiquid, inefficient markets in cryptospace. Sure, people should be able to launch their own toy cryptocurrencies for fun purposes, but it will have zero utility.

This will not be fixed by adding MORE cryptocurrencies - it will only exacerbate the problem. This will be fixed by adding more users to a basket of existing cryptocurrencies. Crypto/blockchain certainly have powerful use cases but to decry fiat as some extraordinary evil which should be 100% supplanted by cryptocurrency is, quite frankly, a display of a lack of understandings of economics, sociology, civics, and what have you.

Anyone can launch their own currency. I have some Timcoin I can sell you if you are interested. In spite of that bitcoin retains some value. Most of the value of any currency comes from the social network of people who use it.

If you're a technical person, you don't need to trust Blockchain technology; you can verify that it works on your own. If you're not a technical person, you can find independent technical experts to verify it for you.

Not really. Just as an example, the only people who expect to verify encryption algorithms all on their own are those incompetent at it. The competent take the "best of breed", note what other experts say, keep an eye on bulletins and so-forth. If you think you can verify the functioning of bitcoin personally, you probably shouldn't be trusted for other things either.

On the other hand, fiat money is constantly being secretly manipulated.

The supply of fiat money can be increased. Markets can be manipulated too - but fiat money markets are many times more transparent than bitcoin markets.

When anyone will be able to launch their own cryptocurrency, we will have a chance to free ourselves from the coercive influences of debt, venture capital and corporations.

This claim makes no sense.

>> but fiat money markets are many times more transparent than bitcoin markets.

How so? When the Fed creates money out of nothing and engages in so-called 'open market operations':

- Who brokers these deals?

- Do they get a commission on those deals? What percentage?

- When the Fed buys bonds/debt from the government through those brokers, who gets their hands on the credit when the government spends it? Is it the same corporations who get all the big government contracts (e.g. Palantir, IBM, Oracle...)?

- What do the corporations who get all the big government contracts and subsidies do with that money? Stock buybacks? If so, isn't this the same as if the government just gave the money to corporate shareholders directly?

I don't think I've ever met someone who could answer these questions. Certainly less than 0.1% of the holders of the currency can so how can we say that it's transparent?

A trivial amount of research would answer your questions. Open market operations are conducted from the trading desk of the Federal Reserve Bank of New York, buying bonds through primary dealers listed on its website which fulfil the solvency requirements for buying and selling millions in securities at short notice. But anyone can buy and sell government bonds on regulated secondary markets (for that matter individuals can also buy Treasury securities direct)

The equivalent question with regard to crypto is who "mines" the BTC and what rate do they pay for electricity. Good luck getting systematic information on that...

I'm not sure why you decide to conflate the orthogonal issue of how the government spends funds it debt-finances, but government spending is unusually well documented, especially compared with "how crypto miners spend their profits". And corporations which get big government contracts use the funds they have paid to deliver the services paid for under the contract, with what is left over being profit for the firm to see fit (I thought cryptolibertarians liked capitalism!) Obviously giving the money to shareholders will not have the same effect as the shareholders do not have the capacity to deliver fighter jets, manpower, software or toiletries.

The intricacies of how money is created are is not widely understood, but I don't think many cryptocurrency users can audit blockchain code, name the largest actors in mining or evaluate whether rates on exchanges are being manipulated by wash trades either.

Also, there is a big difference between manipulating the apparent value of a currency by using real funds to temporarily generate artificial spikes in supply or demand versus manipulating supply by creating new funds out of thin air. The former entails risk, the latter does not.

>fiat money markets are many times more transparent than bitcoin markets.

Absolutely not. USD is purposefully manipulated by an organization that doesn't want their decisions to be known too far in advance. If inflation is about to increase, only a small cabal is supposed to know before the official announcement. For a decision like this to be made in Bitcoin, it would take lengthy discussion to get enough nodes on board. Even segwit caused a fork, the old Bitcoin (BCH now) is still around. Inflation can't be manipulated by a central organization that makes secret plans in advance using special powers. Whether or not that's a desirable quality is up for debate, but to act like the USD market is more transparent is absurd.

When anyone will be able to launch their own cryptocurrency, we will have a chance to free ourselves from the coercive influences of debt, venture capital and corporations

That's the goal with my side project https://coinpress.cc

"If you're a technical person, you don't need to trust Blockchain technology; you can verify that it works on your own. If you're not a technical person, you can find independent technical experts to verify it for you."

That holds for Proof-of-work based currencies... It seems like it's trickier than that for proof-of-stake, as these have to be trustful systems.

Because exit scams are a thing, it may be difficult to prove that a proof of stake blockchain will always be trustworthy, but it should be possible to verify that historic proof of stake records are accurate. I'd expect we will see some independent auditing tools of this type for monitoring PoS blockchains.

I'm not sure why having trusted actors is necessarily a bad thing. DNS Authorities, and Certificate authorities are both examples of decentralized systems with trusted entities.

Indeed, the proof-of-work of bitcoin is way easier to understand than the byzantine agreements used by other cryptocurrencies.

Blockchain's trust model is broken anyhow because it seems whoever is managing the tokens used by the system keeps losing them. The way the tokens are handled at the edge where layer 8 is involved to some degree is the weakest link and it has proven itself not to be trustworthy.

Another classic in this genre, though more focused on world impact, is Charlie Stross's "Why I want Bitcoin to die in a fire" (2013)


I may not be quite as strident as either of these takes, but I agree that the proponents are significantly overselling on a variety of axes... (while also believing that distributed append-only systems with consensus mechanisms can sometimes have value)

I don't see why you think this article is a case against Bitcoin. The article is saying "I don't want Bitcoin to exist", but nearly everything else is listing you reasons to invest in it (even if you dislike the reasons, it's like buying stocks in a company who will be bailed out, even though you don't agree with the bailout).

1. yes there is a trust flow when you join a network:

* you need to trust the paper behind the consensus mechanism

* you need to trust the people who have implemented the client, and trust them to maintain it

* you need to trust the TLS connection you use when you download the client. Meaning the whole CA system

* you need to trust your own machine, when running the client

* you need to trust the first peers you connect to when you join the network

* after you're connected to enough peers, you can usually feel safer. But you'll still have some out-of-band comparison to do between your chain and other people's chains.

2. supply-chain with blockchain = scam to me. I'd be interested in hearing about a real use-case, but when you're trying to bridge the gap between reality and the blockchain, then it usually doesn't work well.

3. Here is my mental model of consensus and why it can be useful: we have protocols that work well when everyone is honest. They mostly break when malicious peers start appearing. Consensus is the cryptography field of study that attempts to solve this issue. You need a good chunk of people to be honest when you run such a protocol in a "public" setting. We recently discovered, with bitcoin, that financial incentives work well. So now we have:

* financial incentives can help us make public consensus protocols work

* research brought us good consensus mechanisms that we can use in more private settings

The technology works well when you think of banking. Many banks want to cooperate in the way they exchange money between them, but they don't necessarily trust each other, or their security. So they form a protocol using a consensus mechanism.

Now, a cryptocurrency is exactly the same thing, but in a way where anyone can connect directly to the backbone of these banks' infrastructure. You will necessarily have plenty of issues stemming from that: what if you lose your money, get it stolen, what if the exchange you use get hacked, etc. But the benefits are still pretty awesome: you are not going through a bank, you are directly connected to the system.

Just my 2 cents.

One of the main points of the article is that the government and the legal system is an effective mechanism of trust. If you're worried someone will squelch on their end of the deal, you write up a contract and thereby get to sue them if they fail to do so.

This is usually where the bitcoin adherents start referring to corruption and the ilk to explain why government can't be trusted. But Schneier has the rebuttal: we know damned well from experience that you can't write bug-free, secure code. Bitcoin requires hidden trust in the programmers of the software, and in the community to move forward on decisions, and history has borne out that this trust is misplaced.

Blockchain isn't trustless, it just replaces trust in a system that is designed to efficiently enforce sanctions against those who violate trust with a system where every participant is responsible for policing trust individually.

I think it's nice that people can make a choice. I can definitely see how people from different background, communities or countries might have more trust in a decentralized system.

Personally I put most of my money in my bank, because this is who I trust. I tend to trust European banks more than American banks as well because I've heard horror stories here of people being impersonated and banks refusing to refund such scams.

Ideally, if everyone's bank would work on a decentralized network (that works, is bug-free, scales, has high-throughput, etc.), banking throughout the world would be a simpler experience. Decentralized and centralized at the right places.

I completely agree with this. Why would the average Joe trust the chain you describe more than a Corporation with a physical address and humans to interact with?

What are your thoughts on stuff like the many blockchain real estate related projects? e.g. "tokenized real estate" "100% liquidity" etc etc.

I'm not aware of the blockchain real estate stuff. But my guess from your description is just to transform real estate into an ETF? Then you could do that without a blockchain in the first place.

I quite like technologies / ideas / concepts like Merkle-Trees, DHT's, P2P and have them on my CV. Those companies that know what they're doing engage me on these topics. When somebody talks about blockchain I usually leave the room though. When I was still on LinkedIn I made the mistake to have blockchain in addition to those mentioned above in my profile and got bombarded with ICO scams and people adding me with "blockchain" in their titles. (the type that used to do SEO or growth-hacking before but have no idea about anything). Removing blockchain from the list dramatically reduced these requests.

Although I can't say if it was just that or whether I simply exhausted the pool of those that harassed me by trolling them back. Here is some fun I had: I made an extra 400-600 every other month by emailing people who spammed me with ICO crap. They always first connected on LinkedIn then exported their data to mailchimp abusing the Mailchimp ToS (and back then upcoming GDPR too) I sent them a requests for immediate removal from their system and an invoice. This required a little research on my part on the type of spam e.g. by filtering for those in my legal jurisdiction and getting names of people involved in their scam ... The invoice was a modest fee just above €100,- to reimburse me for my time wasted. I also attached all smtp headers, accompanied by a strongly worded letter that it would be handed over to my lawyer if the money wasn't paid within 7 days. The invoice came from an EU based Ltd operating under the same jurisdiction (no point in going after companies weak EU jurisdictions with very long legal process, ... but France, Germany, Holland, etc worked well). Only 2 of the spammers didn't pay up immediately and they got referred to my lawyer which then ensured I got the money within a month and without further fights. It did cost me around ~30-40 mins in time spent (some considerably longer but this was on average) to prepare the invoice and do the actual research on the people behind the corp (little bit of social engineering with those that seemed to be faceless and dangle some investment did the trick). It wasn't really a way of earning money but I enjoyed the extra thrill and exposing these idiots. Good times and great fun to waste a little bit of my time with figuring out how they worked (or how big they were compared to how big they claimed their operation was on social media ...)

I think it's a big but easy mistake to make. There is a lot of noise and scams do represent a huge majority of the market right now.

But if you look underneath, you will see that the academic community has been at work and a lot of research about byzantine agreements is coming out. It's quite the exciting field actually if you can segregate the noise from the actual good stuff.

Completely agree with this. I was also getting slightly disillusioned with the ecosystem until I attended Grincon and met a bunch of people who were actually interested in building, researching, and exploring new tech.

Grin seems interesting, they gave a talk at Real World Crypto last year. I'm wondering why they think proof-of-work is the way forward though, I'm not sure I would agree with proof-of-work nowadays.

> What blockchain does is shift some of the trust in people and institutions to trust in technology. You need to trust the cryptography, the protocols, the software, the computers and the network. And you need to trust them absolutely, because they’re often single points of failure.

This is wrong. You do not need to trust them, because you can verify their correctness yourself. You cannot similarly inspect the rectitude of your local bank manager's moral compass.

I find it very odd that someone like Schneier wouldn't recognize this obvious truth. Is there "no reason to trust AES" because you have to trust the implementation? What kind of silly argument is that?

I agree with you. There's different types of trust. There's the first usual kind: "I trust my friend to give me back the stuff I let him borrow", "I trust my bank to make it easy for me to use my money the way I want and keep doing this forever". Then there's a separate kind, "I trust that I understand this open system correctly". Cryptocurrencies focus on removing the need for that first kind of trust. The second kind of trust is a different kind of issue that's much more tractable. It's an issue that we can make progress on, by having more people study it, by creating better learning materials, by making the system more understandable, etc.

The article really frustrates me because it doesn't draw this distinction at all. To re-state you a little, I feel like one could make a similar article saying that end-to-end encryption is a worthless improvement over Facebook messages because you still have to "trust" something to keep your messages private, which is a false equivalence.

>You do not need to trust them, because you can verify their correctness yourself.

I certainly cannot verify their correctness myself, and I'm a professional programmer! I don't touch cryptography with a thirteen-and-a-half foot pole. Most people wouldn't even know where to start. Only a tiny minority has the skills to singlehandedly verify the economic theory, cryptography, and implementation of a cryptocurrency.

Pretty much all the time, you're trusting other people to have caught bugs and malicious code for you. Many independent reviewers are far more trustworthy than a normal company (which is why I avoid proprietary software), but that doesn't mean you aren't taking someone else's word that the software works as advertised.

Sure, but nobody uses that argument to say that you can't trust AES, RSA or SSL, despite the fact that it applies equally well to them.

Piling on to your comment: even the experts get it wrong. Even if you are the most knowledgeable person in the world, you are going to miss things. Nobody can "verify the correctness", it's not technically possible.

Of course, but that's not the point. The point is that you have the opportunity to check it yourself, even if you choose not to avail yourself of that opportunity. And just by that opportunity being available to people, it keeps people honest.

The author has demonstrated a very amateurish understanding and greatly conflated Bitcoin technology with blockchain technology in general, drawing the reader to make the same poor conclusions as the author.

Just a quick example

> "The second element is the consensus algorithm, which is a way to ensure all the copies of the ledger are the same. This is generally called mining;" - except that is only applicable for (proof of work POW) consensus and does not apply to proof of stake (POS) and delegated proof of stack (DPOS) which several of the top blockchain projects are currently using (even Ethereum is moving to POS). Both of which are far more environmentally friendly and use asset ownership (stake) as the mechanism for consensus, which is much more reliable (in a trust sense).

Gosh there is so much that is conflated here. The article can be completely deconstructed but I just don't have the time. It's unfortunate this is coming from Wired. Tsk. Tsk.

Except the author is Bruce Schneier, world top security guru, if not arguably the most influential of it. And also your "quick" example talks about stuff outside or in the future to happen, while the article is based on current state of bitcoin in particular. Between believing Bruce and you guess who I'm going to trust in.

You obviously didn't read my other comments here if you think this is "future" stuff and not already working in real-world scenarios. Also the title does not say anything about Bitcoin, it uses the term Blockchain technology. For someone who is so professional and partial to the space, I WOULD ABSOLUTELY EXPECT a title and terminology to reflect the actual content and not to so casually and carelessly lob all Blockchain tech in with this analysis. It's really unfortunate because those out there who understand so little of what is actually going on will believe what these "analysts" tell you.

Did not cared to read your other comments, as I replied to this one. Also we are talking about the article not just its title.

> except that is only applicable for (proof of work POW) consensus and does not apply to proof of stake (POS) and delegated proof of stack (DPOS) which several of the top blockchain projects are currently using (even Ethereum is moving to POS).

For POS, you have to trust the rich people and you have to trust that the disincentives to cheating actually work the way they’re supposed to. Neither of these have very compelling arguments right now. The fact that Etherium thinks POS is ready is utterly unconvincing — Ethereum also thought that Solidity and its VM design was ready, and that has withstood the test of time very well.

That is why I'm more of a fan of DPOS and (EOS) where I can take part in a voting mechanism to establish a set of trust worthy nodes who will validate the network.

For (m)ETH, proof of stake has been "just around the corner" for years.

I'm not saying that Blockchain technology doesn't have it's fair share of issues, but this article completely disregards any of the progress and real benefits that it offers outside of what we all know are the issues with Bitcoin.

I read the Bitcoin mentions as examples, but not conflations of the overall issues with blockchains.

Except that is only applicable for (proof of work POW) consensus and does not apply to proof of stake (POS) and delegated proof of stack (DPOS) which several of the top blockchain projects are currently using (even Ethereum is moving to POS)

The fact that while what you just said, in attempting to "clarify" the issue, might make sense to a technical practitioner -- but is sheer gobbledygook to a lay person -- lies at the heart of the disconnect between the Cult of the Blockchain, and the real human beings (and their needs) it purports to serve.

It's unfortunate this is coming from Wired.

It's written by one of the most respected analysts in the industry.

Except for that fact that he proceeds to use Bitcoin as the sole example of all the inherent problems of "Blockchain Technology" while providing absolutely no information about all the ways that Blockchain Technology has improved beyond what Bitcoin is doing. Bitcoin != Blockchain (in totality)

He may be a respected analyst, but he is providing a completely biased and uninformed view of Blockchain technology as it currently exists. That is a bad analyst in my opinion.

He provides "supply-chain security systems" as another example.

Which blockchain(s) are currently successfully using POS or DPOS?

EOS WAX TRON Lisk Cardano Bitshares Steemit ARK Tezos Oxycoin DASH NEO etc..

Well there may be inaccuracies in the article, there are open questions and criticisms to blockchain that the echo chamber deflects rather than engages with.

Maybe with Bitcoin I have to trust the software a little bit, but at least if it turns out to be faulty, I can switch to another app.

That's much harder to do with governments controlling fiat money. Or with banks. What is a person supposed to do, who is denied financial transactions by the established financial service providers (paypal, credit cards,...)? There have now been several cases where paypal and others have tried to silence people by cancelling their accounts. What can you do, in the traditional banking world?

And many complaints are not about things Bitcoin actually promises to do. It doesn't promise to make exchanges safe.

The environmental impact is a concern. Miner power perhaps not so much. For example mining hardware coming from one company doesn't seem that bad - you can simply verify the transactions the miners find before sending them out to the network.

Isn't that the central problem with something like Bitcoin and currencies that can be (read: have to be) mined, though? You gain units of the currency for underpinning the integrity of the system. The average person will never be able to build up a mining system to compete with the likes of China and India where they're mining Bitcoin in farms that potentially devalue the currency every single second.

Edit: For clarity, yes, I understand that there is a finite amount of Bitcoin that can be mined. I'm talking about the value of what's constantly being mined. The US would never use Bitcoin as a currency when other countries already have more of it than we do.

What do you mean by "farms that potentially devalue the currency every single second"?

Any currency is only as valuable as the goods or services that they can be exchanged for. The value of money comes from its inherent scarcity as, in the case of fiat currency, only a government or federal agency can issue more of it. With Bitcoin, farms are generating more of the currency all the time. If I generate a ton of Bitcoin but never spend it or use it in exchange for goods and services, I'm simply devaluing the currency that's already out there by making it less rare and, by extension, less valuable.

This may be a misplaced example but I think Star Trek is a decent analogy. Money becomes worthless once replicators are invented in that universe because you can just make more of whatever you need. If China can just mine more Bitcoin than the average citizen of any other country, then China starts to determine what the value of that currency is. It's one of the main reasons why I don't think Bitcoin will ever replace fiat currency. It's already being exploited.

If you mine a Bitcoin and don't spend it, you are making the remaining Bitcoins more valuable (in theory). You have reduced the overall supply.

With Bitcoin, the maximum number of Bitcoins that will ever exist is fixed.

It doesn't really matter who mines them. Of course at the moment, indeed, new Bitcoins are mined all the time, but the timeline for the future is clear.

Whether it is a good thing, I don't know. There are a lot of weird aspects about it.

As for China - sure, some miners will accumulate a lot of BTC. But they can only affect the price by selling or not selling it. If they wouldn't mine the BTC, somebody else would. It doesn't really give them that much more power, except for monetary power.

It's probably true that right now there are several people or entities who could crash the Bitcoin price by simply selling off all their BTC. That's not very reassuring.

On the other hand, such a crash could also be a chance to distribute BTC more evenly. It would actually be in the interest of the rich BTC people, too, as it would lead to more adaption and hence more value and stability.

Distribution is a hard problem.

There are several problems with crypto, but they are also interesting, and smart people are trying to solve them. At least it is fun, even if it is unclear if it will be worthwhile in the end.

That's much harder to do with governments controlling fiat money.

What about government supported fiat money implemented with blockchain? The best way to implement that would be to preserve as many of the attributes of blockchain as possible. So the government could take coins in their possession out of circulation, or change mining parameters to print more money. Perhaps they could even print money just by signing it. However, they would not be able to make money disappear out of other party's accounts.

And many complaints are not about things Bitcoin actually promises to do. It doesn't promise to make exchanges safe.

Is it really viable not to have safe exchanges?

"What about government supported fiat money implemented with blockchain?"

Not sure how that would supposedly work.

There is one interesting application of government, though: the distribution of the coins. That is what all the cryptocoins struggle with. A government could give every citizen an equal amount of coins, because they have a database of people.

"Is it really viable not to have safe exchanges?"

Some would say that they don't need exchanges, they want to be able to pay everything with Bitcoin. So they wouldn't need fiat money.

Apart from that, exchanges can be at least as safe as banks or traditional stock exchanges. I am mostly using one that is associated with a bank, in fact.

"If I lose all my Bitcoin because it turns out that Bitcoin was a total scam, at least I can switch my now worthless assets to...wait a second."

Fiat money rarely becomes utterly worthless. Even Zimbabwe currency, unbelievably inflated, is still worth a marginal amount as a collectible.

Blockchain currencies have gone from something to nothing in seconds.

The value of Bitcoin is not something Bitcoin makes any promises about.

The technology is obviously not a scam. At most it could turn out that it has technical flaws, like the crypto algorithms could be broken or whatever.

People selling you Bitcoin or making you promises about Bitoin might well be scammers. But that's not the same thing.

Worthless fiat money: it seems to happen a lot, actually. I have a couple of Billion Reichsmarks I could show you. I don't think Zimbabwe $ are worth enough to support your argument.

Of course to use Bitcoin, you have to trust that it will have or keep some value. In that sense, yes, you are back to trust.

When the Bitcoin network goes offline then every BTC in existence will be worth exactly $0.0000.

When Zimbabwe blew up their money the bills themselves still had marginal utility as wallpaper or as collectibles. Collectively these bills are probably worth millions because there were so many of them.

If you have any Reichmarks around they're actually worth a fair bit considering they're not legal tender. Bills on eBay go for $5 or more depending on their condition, coins for far more. This is almost a hundred years after the implosion of the currency.

Zimbabwe and the Reichmark are extremely rare events. There are hundreds of countries in the world and every decade one or two might suffer from out of control inflation.

Bitcoin may well be a scam. We can't prove it isn't because the creator(s) remain unknown and their intent is based entirely on speculation.

I assure you that Bitcoin physical memorabilia will be worth infinitely more than Bitcoin itself within twenty years. A single shirt or mouse pad will be worth more than the entire market cap of Bitcoin.

I doubt Zimbabwe Dollar paper is worth millions, but OK...

I'll check the value of the Reichsmark, but again, I suspect the market is limited.

Network going down: in theory you could keep it up with a Raspberry Pie, so I suppose somebody will. Although I don't know if all the mining hardware out there would make it nonviable (as anybody could start a mining attack with such mining hardware, against a Pie).

As for proving Bitcoin isn't a scam: we don't need the inventor or their plans, we have the implementations of it. That can be validated, as much as possible. I'd argue that if it still has flaws, then they weren't because of scamming, but because of technical issues nobody could foresee.

Edit: they seem to be selling notes of one billion Reichsmark for 1€ on ebay (here in Germany). Not really worth the effort.

Am I missing something, "switch to another app" in this context also means finding buyers for all your bitcoin and exchanging them for whatever your new coin-de-jour is.

No another app is just another implementation for a wallet. That is what I meant by apps - in response to Schneier's argument that you have to trust the software anyway.

>What blockchain does is shift some of the trust in people and institutions to trust in technology. You need to trust the cryptography, the protocols, the software, the computers and the network. And you need to trust them absolutely, because they’re often single points of failure.

So it is still people and institutions except abstracted into pieces that are more transparent than pre-existing options.

Also it is always hilarious to see the rehashed arguments over and over. First being that necessity of a blockchain is a requirement for successful implementation, and second the complete negation of systems where it actually is a necessity.

"Private blockchains are completely uninteresting. (By this, I mean systems that use the blockchain data structure but don’t have the above three elements.) ... Consensus protocols have been studied in distributed systems for more than 60 years. Append-only data structures have been similarly well covered."

I don't entire agree with this. Yes, distributed systems and various consensus protocols have been studied for many years, but the cryptocurrency boom boosted public interest and applicational development in a way that would not have happened without it.

Private blockchain can have many benefits compared to centralized models. It's not necessarily better and it's more of a trade-off, but it does present solutions that's not otherwise possible. For example, in a distributed system, we can use IoT devices as lightweight nodes for quick validations. This can give security to off-site locations with limited computation power and/or connectivity.

In addition, there's now many consensus protocols that tries to solve or amend the three elements the author mentioned. For example, Stellar-Lumen's implementation of Federated Byzantine Agreement creates the concept of reputation on top of trust. The ledger network is public, and is essentially a directed graph of trusts. Anyone can join but other nodes pre-existing on the network may not necessarily trust your validations, so this at least amends the first element the author mentioned.

In conclusion, blockchain technologies are over quoted for their finance applications. To quote a YouTube video I watched, look at blockchain technologies as the operating system, and cryptocurrency as one particular app on the operating system, like your browser. It surely is over hyped but shouldn't be hated upon solely due to the public's mistaking interest.

Private blockchains are interesting because it causes separate business to share code and data formats. There is a better interface for integrating. Plus you still get the rule of law.

Good point. It also forces them to be accountable, and facilitates regulation from third parties. Something that should be welcomed when you look at how opaque banks are trying to be sometimes.

A really interesting part of this process in helping decision makers within companies that working together and sharing a ledger can actually improve the bottom line. I have a friend who does these types of deals for HyperLedger at IBM. It's even more challenging than The Challenger Sale, because it's multiple and requires coordination.

Author fails to mention that people for sure not only don't trust banks but also governments. the whole argument that trust is not needed because institutions fails in all failed states that author happens not to live in. I remind you the "chancellor on bring of second bailout". that's the value proposition. Lastly, author can't spell Ethereum

> These four elements work together to enable trust. Take banking, for example. Financial institutions, merchants, and individuals are all concerned with their reputations, which prevents theft and fraud. The laws and regulations surrounding every aspect of banking keep everyone in line, including backstops that limit risks in the case of fraud. And there are lots of security systems in place, from anti-counterfeiting technologies to internet-security technologies.

The problem isn't that banks and the government don't trust each other, it's that the people don't trust the banks and governments (see: crisis with the Bank of Cyprus).

If there's one thing I trust, it's that a bitcoin that I 'own' will stay mine (barring oversight on my own part). I have less trust that money in the bank will stay my own.

As of today, blockchain doesn't deserve much trust. Agreed. But it's the early days of blockchain and the experimenting, particularly with certain applications such as crypto currencies, will continue for a few years or even decades. However, if Blockchain projects try hard not to make the same mistakes as today’s broken digital platforms, we might be able to trust in a trustless world... here is my post from yesterday on the topic: https://www.ankerventures.com/blog/trustless-new-world

YC is very Blockchain friendly, Wozniak likes it,Larry Page is mining Ethereum, Jack will bring Bitcoin micropayments to Twitter, inventor of javascript runs a crypto browser now and Reddit CEO loves it too. I wonder why the top comment here is someone that hates bitcoin with all his power. A psychology study will surely be interesting about why some techies hate it so much really.

I've stopped loving, hating, trusting or distrusting it: My client wants to auction thousands of cars with 7 competitors. He wants parts of it on blockchain. If that's the way he can create trust within this group of competitors, so be it. Is it marketing? Maybe. But we've built it and it actually works.

Got a link? Sounds interesting.

I chuckled when I saw the embedded tweet from Vint Cerf:


This extends to: There's no good reason to trust computers... (including Apple)... there are exploits, negligence and malice left and right

1) Schneier evidently doesn't understand alternative consensus algos to mining. That's OK; they're hard to understand. Even permissioned chains apparently hard to understand.

2) Schneier doesn't understand that some people choose to trust the cryptocurrency community more than the banking/government community. If he looked at the first block of bitcoin aka "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks" he'd understand why this seems reasonable to many.

I think it's folly to assert that the only reason someone disagrees with you is that they "don't understand".

I hope you get a chance to see Schneier directly challenged on those topics.

Well, he seems to think consensus = mining; I got news for you -that's not even remotely true! He also seems to think permissioned chains are worthless; hyperledger fabric seems to have a whole lot of investment for a worthless thing. And things like EOS which blend voting/stake with permissioning seem to work reasonably well, even if an EC2 crash would probably take them down.

I'm no blockchain maximalist, and I understand the disgust at the hype around it, but it is an important tech, and Schneier obviously has done no real thinking on the subject. He doesn't even make a distinction between "coins" and ... blockchains. They're not the same!

This is only his misunderstanding of the technical aspects. As I said above, he also misunderstands the social aspects. Some people really trust the crypto community more than they trust banks/governments. It's at least a reasonable hedge, particularly in light of the events described in the bitcoin genesis block.

That's kind of the whole point of it - is that you don't need to trust it.

The point the author is making is that the "you don't need to trust it" is fundamentally misplaced. You do need to trust the institutions, and builders of, much in the same way you need to trust any business you choose to interact with them. The issue of public blockchain is that I now need to trust code and technology in a system where the events are no longer reversible. We know that code and technology is not perfect. This shifting where the trust is placed, without the recourse of law by peers, is why public blockchain may not make it beyond the great experiment. Now add the incentives and protections for malice... what's a reasonable person to trust in public blockchain

Lots of technological systems have non-reversible consequences. For instance hard drives and airplanes for example. Schneier is essentially identifying an inherent trade-off between trusting the correctness of a technological device vs trusting in an institution. This is a trade-off happens all over the place:

1. Many people don't encrypt their email (trust technology) and instead trust gmail and associated intelligence agencies to act in their best interest.

2. Many people encrypt their HTTP connections rather than trusting ISPs and internet providers.

An important difference between encrypting HTTP connections and encrypting email is that one is far more convenient than the other. However encrypting your email does make sense in certain situations and so does Bitcoin.

Why public Bitcoin over a bank's own blockchain solution?

Does a bank's own blockchain require trusting that bank? If so then you probably don't need a blockchain since you already have assumed a trusted third party.

If you are aiming to reduce your institutional trust assumptions to me the question is why not use Bitcoin?

That's sort of my point. I actually don't care about the technology underneath. I care about the monetary system and its adherence (and recourse) to the rules of law that humans have generally agreed upon. Like, if you steal, the societal system will correct the wrong as much as they can.

It's an open question as to whether public blockchains can provide for this trust and requirement.

I think that blockchains can provide more trust than the current system because the ledger is publicly visible. The societal system still kicks in to remediate the effects of a mistake but the blockchain is an additional tool used to provide the evidence and support for such a reversal. For me, personally, I think the best solution is a form of blockchain run by a state/federal agency. You're putting trust in an institution, yes, but the underlying technology helps support that trust.

I don't really want all of my personal actions on a publicly visible system. Consider Facebook's internal data or the Chinese Social Credit system available to the public.

I do like the idea of an internet where every action is traceable to a human, via public keys or sovereign identity.

How you'd retain and verify is an unknown for me.

>What blockchain does is shift some of the trust in people and institutions to trust in technology. You need to trust the cryptography, the protocols, the software, the computers and the network. And you need to trust them absolutely, because they’re often single points of failure.

So it is still people and institutions except abstracted into pieces that are more transparent than pre-existing options.

Also it is always hilarious to see the rehashed arguments over and over. First being that necessity of a blockchain is a requirement for successful implementation, and second the complete negation of systems where it actually is a necessity.

Trust or not, you have to be insanely vigilant not to lose it to bad exchanges, extortionists, theft, automatic software like malware, losing a password, or media that destroys itself.

Those are widespread problems I even had bitcoin destroyed on a failed thumb drive.

Decentralization is a solution without a legally acceptable problem.

> Decentralization is a solution without a legally acceptable problem.

Therein lies the problem—asset forfeiture, genocide, and numerous other horrors have all been legal.

No reason to trust blockchain technology. Just like anything else in life, you have to trust the foundation and the construction material to have a good product.

Correction: you need to trust the technology, just not the actors.

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