I’m wondering what kind of ‘significant’ problems they solve and by this is not possible with regular technology.
I have a strong sense that blockchain technology is a solution that has yet to find a relevant problem to solve.
I think the same is true for cryptocurrencies but I would like to keep those out of the discussion, if possible.
Parting suckers with their hard earned money is not likely count.
There is a ton of ‘will’, ‘could’, ‘might’, but no ‘is’. The concrete examples pointed to are sales pitches, announcements, protocols, consortia being organized.
It looks a lot like the answer is no.
That may change I suppose, but it really seems like no one is doing anything practically useful with it.
If you solve a problem with non-blockchain technology, you will get a centralized entity of some kind. Be it a bank, a SaaS service, a social network, a database, or whatever. Sure, it can be open source, but it's still centralized in one way or another, and decisions must be made be someone. If you are the owner or have privilidged access, you may do bad things (alter data, abuse user data, increase prices, etc).
With blockchain technology, you can get around having a centralized entity. Instead, you are developing an incentive schema that allows distributed ownership and decision making, so that all participants have power and are incentivized to behave in the best interest of all.
Besides money, there are many other cases where this make sense, but is the downside of having a centralized entity really large enough to justify the downsides of blockchain (hard to develop, slow, hard to use and manage, etc)? Probably not right now, and maybe it will never get to the point.
IMO, a well-run, transparent, centralized entity can be more trustworthy than a complex technology that is potentially exploitable, buggy, you don't fully understand, and is difficult to change once to initial incentive schema is in place.
A well designed decentralized system will maintain its integrity indefinitely. In practice we've only really seen this play out with Bitcoin so far, but that's because the space is young and people still haven't really gotten their heads around the exact strengths and weaknesses of a blockchain.
And the opposite can also happen. Humans are good at quickly adapting to circumstances and fixing "bugs" in organizations through firing/hiring, new organizational structures, or other means. That's what markets do.
A "perfectly designed" decentralized system may be superior, but I don't believe it's possible to perfectly design an incentive structure from the get-go. The world is incredibly complex, and once you have a bug or mistake in your decentralized system, it's doomed because it can be exploited. There are already countless examples of various tokens and blockchains being hacked/exploited. A centralized, human-led organization is less efficient, but more resilient to such things.
This is similar to the AI question. Are you willing to put your full trust into a system with dynamics not fully understood, or do you put your trust into humans running centralized systems? By "not fully understood" I don't mean the algorithms, but the emergent behavior of an incentive structure, which is incredibly complex because it deals with human agents.
Part of the issue here is that the blockchain space as a whole has been _super_ eager to rush ahead of the safety margins and build everything they can imagine rather than build everything that's comfortably within our understanding of how it works.
I would describe a lot of the building happening today to be similar to Mesopotamians trying to build aircraft carriers. Like yeah, boats are one of the most important inventions in history, but you can't just go from river boat to crossing the ocean in one step.
Tangent, but this is poor phrasing. If posed this way, an astute response would be that we don't fully know how human brains or emergent group behaviour in humans works either (which is why the social sciences are so hard!), so how is the second option meaningfully different from the first beyond tradition?
The key thing that separates AI systems and human systems is lack of intuition for AI behaviour. So the question should really be phrased: is it safe to trust a system you don't have an intuitive model for?
There are some cases where the answer is yes e.g. we trust airplanes built and ratified by experts even if we don't know how airplanes work on the presumption that, at least in the conditions we care about, airplanes have been tested and behave correctly.
> There are some cases where the answer is yes e.g. we trust airplanes built and ratified by experts even if we don't know how airplanes work on the presumption that, at least in the conditions we care about, airplanes have been tested and behave correctly.
A big difference is that airplanes do not interact with humans, and humans have no incentive to exploit airplanes. They are a system that purely interacts with the physical world, or physics, which seems to be simpler to model than human behavior and is not fundamentally adversarial.
With many blockchain networks, e.g. Bitcoin, you are in an adversarial environment - exploiting the network yields huge payoffs. With a fully autonomous AI-based decision making system you can get something similar, depending on where it's applied. For example, tricking recommendation systems to uprank your product, automated trading systems (responsible for flash crashes), impersonalization through voice/face recognition, etc. To be fair though, most AI systems are not deployed in adversarial environments, but blockchains seem to be, since you can almost always profit from exploiting them.
That’s a giant leap of faith.
If the system is maintainable it is also corruptible.
I totally agree with you, if someone has the ability to make good changes, that same someone has the ability to make bad changes. And a blockchain is best able to deliver on its promise as a tech when nobody has the ability to make bad changes. Therefore, mature blockchains really should be rigid entities.
What it doesn’t include is any kind of proof-of-work or proof-of-identity, which some people might consider necessary for something to be “blockchain technology”.
Edit, to the downvoters. In order for me to produce better commentary on this topic in the future, I would like to know: Do you view these statements as incorrect, misleading, or simply unhelpful?
The distributed operation is both necessary, and the key challenge for blockchains. There is a heavy cost to secure distributed operations. My personal opinion is that most people don't care so much about distribution, they're fine with a few trusted/regulated actors using more efficient centralized schemes. And this is, in a nutshell, the big challenge of blockchains IMHO. And why some people are tempted to drop the challenging part, put a centralize scheme on top of a Merkle tree and call it a blockchain to ride the hype. I don't think this is correct, both technically and ethically. It's "merklewashing" ;)
It sort of happens now in an ad-hoc way, if you include blogs and such with big fork announcements that sometimes result in an effective change of ownership, but that’s a slow, rare, unreliable process at the moment.
It's the type of thing that you go 30 years without needing it, but then when you do need it you really badly need it. Bitcoin does this well today and there are plenty of people who proactively plan for financial contingencies by holding some percentage of their portfolio in self-custodied Bitcoin.
We also have several examples (Greece a few years ago, Venezuela recently) of this playing out in favor of the prepared in the real world. When your country's financial system melts down, your Bitcoin holdings can give you liquidity and options despite everything else around you being completely disfunctional.
Good or bad, it's exciting to see what the future holds for these currencies. I have my own theories on whats going to happen, but no one actually knows. Obviously some peoples theories will prove correct and they will come out with "yeah I was positive this was going to happen". Not looking forward to that part.
I think this is already relevant for court cases.
It does rely on having some trusted authority making (signing) that timestamp, but for the legal system that's not a problem, probably the other way around - having a digitally signed document with a timestamp from some official provider will be trivially accepted by the court, but any custom solution that somehow places data on some public blockchain will require an extensive and possibly expensive process to get acknowledged.
Decentralization is a trade-off; it almost always incurs an efficiency cost compared to an equivalent centralized solution, so the question is if it brings some specific benefits that justify the drawbacks.
Regarding costs, as I mentioned above, the verification in court (which is the whole point of this service) would be much more expensive for the decentralized scenario and the timestamping services are trivially cheap already, so if we look purely at costs then decentralization does not provide any advantage.
> timestamping services are trivially cheap already
what does it cost, where can I do it right now?
More costly services would be something like DocuSign.
Please be mindful about request rate and content size, we don’t want to abuse the Archive.
Now that I scrolled down it is so obvious I do not know how I could have missed it. Thanks again!
For signing e-documents as an individual with the gov't ID chipcard I get the timestamping services for free (there's probably some limit to quantity, but it's large enough). But that, of course, depends on the national infrastructure - so it's simple and cheap for me, but I have no idea if you can do it right now easily - there are a bunch of companies that offer digital timestamping for something like $10 per a bundle of signatures, but I have no particular recommendations as I haven't tried them.
For larger companies the general practice seems to be that providers of document flow/recordkeeping management software also bundle the digital signature process, integrating the timestamping services there along with other stuff such as verification of digital signatures on incoming documents, and charge some trivial monthly fee for that integration; I believe my employer is paying something like 50 eur/month for that, which is a bunch of money for an individual (but it's free for individuals) but it's tiny compared to, for example, the cost of drafting and filing a court document explaining how you made and published your document hash in some unconventional way. In any case, that means that the company has a pre-existing solution that works reasonably well and has no obvious benefit that a change to blockchain might bring.
And to preempt a suggestion that this nation-specificness is a failure of centralized solutions and a decentralized solution can be global, this is not really the case - since the key purpose of e-signatures (and timestamps) is to integrate with national legal systems, a decentralized solution with no integrations doesn't work anywhere. E.g. here's a EU list of trusted providers https://webgate.ec.europa.eu/tl-browser/#/ - it's decentralized in some manner (there are many providers providing very different services in very different ways), but it's centralized in the sense that the law acts as a gatekeeper of what signing providers are considered trustworthy. You can have a "we'll put this stuff on the blockchain" signing provider, but doing the exact same thing yourself won't be as trusted, you'll need to (expensively) demonstrate how you're doing that and prove that it's actually the exact same thing.
I imagine for a court case this would be better. One less thing to explain.
I think for a court case you would have to prove that the block chain is a historical record, not just some data you and your friends made up.
I think the free service of https://originstamp.com/ publish a daily bulk-hash in a german newspaper. (they call it "root-hash")
I couldn't find the info on their website anymore, but on the branded portal of the newspaper itself: https://blockchain.suedkurier.de/ (german)
China explicitly allows for it though: https://www.scmp.com/tech/article/2163487/china-accepts-bloc...
Large transactions for illegal goods such as drugs.
Transferring money out of controlled currencies.
This isn’t meant to be a joke. I’m illustrating that the price of cryptocurrency is indeed backed by some of its utility and not 100% a money making scheme.
Also where do you base your case though? What % of bitcoin is used for crime?
All i have seen is total amounts, and bitcoin nor other crypto coins don't come even close.
Heck, all major banks were openly laundering narco money and nobody gave fuck. What makes you think that bitcoin changes anything?
'Bitcoin Money Laundering: How Criminals Use Crypto' (https://www.elliptic.co/our-thinking/bitcoin-money-launderin...)
'Bitcoin Has Lost Steam. But Criminals Still Love It.' (https://www.nytimes.com/2020/01/28/technology/bitcoin-black-...)
Also its public which tumbler was used for laundering so it can become target for law enforcement too.
It sounds like you feel really strongly about the subject and don't like crypto at all but I think you are being unfair here.
I have never claimed cryptocurrency to be better solution than fiat money.
I am simply pointing out that false claims and perceptions that are often being spread.
There is a lot issues with bitcoin but that doesn't make fiat somehow flawless solution.
And just be be precise...
The idea behind bitcoin is not to directly controlled by government. That is exactly what government can't do with bitcoin and what they are doing now - print money like crazy in a hope that ceos of multinationals somehow fix current crisis.
Government and law is absolutely required to go after criminal elements. You cant solve crime with blockchain.
1) Involve coordination between parties who don't trust each other; if they trust each other, a regular database will do fine and be much more efficient.
2) Exist completely within the ledger; once something is in the ledger it's tamper-proof, but bad information can still enter the ledger from the outside world. This is the reason it doesn't serve much purpose for anything physical, like delivery confirmation. If someone wanted to fake a delivery they could just... enter fake information.
That makes for a very narrow set of legitimate use-cases, most of which are crypto-currency, whose status as a "solution to a problem" is dubious at best.
Providing an example of blockchains solving real problems aside from cryptocurrency should be trivially easy at this point: well funded companies have had /years/ to do this now.
It's not just startups either - IBM and other big consultancies have been pushing blockchain solutions really hard.
How much longer do we have to wait for someone to build something that's actually useful, and that genuinely couldn't have been built cheaper and faster without a blockchain?
India has a huge problem with spam calls and messages (not so much in times of Corona, work from home, and lockdown) and how the phone numbers of users are obtained. There are lists of emails and phone numbers that is bought and sold in an informal market too. There is no first hand record of consent about whether or not any registered entity can call or message me. Almost everyone receives messages and calls from unsolicited numbers asking to buy insurance, loan, or a credit card. Its a huge problem so much that an average customer would get 2-3 calls a day. TRAI tried to curb it earlier with a DND mechanism, but that did not work given it is very easy to register a new handle, and no easy way report a caller/message sender.
What they are proposing is to have consent in a blockchain is that there would always be one final state. I dont know much but it means only registered telemarketers would be allowed to call and to only those where consent is explicit and recorded in the blockchain. No mining but seems like an effective solution on paper.
More links: https://m.economictimes.com/industry/telecom/telecom-news/bl...
This is a presentation on the same: https://www.itu.int/en/ITU-D/Regional-Presence/AsiaPacific/S... (cant verify the date, apologies)
I would like to point out that any blockchain like thing with some kind of coin/token with value could be used for this. Like in theory this could be done with Bitcoin it's just very very slow and due to the rather high transaction fees its probably not really interesting.
After years of being interested in blockchain tech and hundred of hours research this is the only real world use case that is deployed, used and most importantly generally makes sense, that I know of.
There are a bunch of other projects like Brave that are technically deployed and working but IMO do not solve a problem just recreate the existing problem with a fancy token.
Ripple the company that builds on the XRPL, recently released new numbers. They say that the volume in dollar that used the XRPL for cross border payments, has increased by 294% in the last quarter. % is hard math so for thous who don't know, that means nearly tripled in 3 month. Obviously it can't grow that fast for long but still impressive and a clear sing that it actually solves a real problem.
This is not ‘substantial’
Some argue this is the only data necessary on-chain — all other application data can remain in normal data stores while the identities interacting with that data are immutable and auditable.
Laying the groundwork for a lot of neat stuff
So the ledger must by design, anonymise each entity involved.
If you anonymise each entity, then every entity is Sybil.
You have no more confidence in anything than you would've had pre-"blockchain".
The reason I ask is that the security of Blockchain comes at a cost (both in additional complexity and, for PoW at least, energy use). Have people who need those records in the real world found the additional tamper-proofness worth the cost?
It's been done. But has it really solved a problem? I'm not sure. Perhaps it's just better to use a simpler solution. A key on an iot device could sign every entry.
The obvious and biggest application of this is money. The original Bitcoin use case. Today the banks handle all our monetary transactions and we trust that they don't act maliciously (we also do a lot of auditing/regulation/manual verification, but ultimately that is imperfect so it really boils down to trust). If you want to have a truly trust-less monetary system the only solution I can imagine is blockchain.
Another potential solution I can see for blockchains: Certificate Authorities. Today CAs ultimately roll up to one of a handful of root CAs. In other words, there are a handful of entities that we just implicitly trust. They get audited, regulated, etc, but ultimately we just trust them. If you want to move to a truly trust-less CA model it has to be on blockchain.
There is also a third, kind of cheat answer: automation. You obviously don't need blockchain here, but if you want to automate something and you need to get funding from a VC, or a boss, or anyone else, blockchain is a good buzzword to throw in there to get some extra $$$. This is less true since the crypto crash, but still provides some value.
But mostly, again: your answer is all about hypotheticals, not about the 'now'.
For most use cases, Ethereum is too expensive and the blocks are too full, the same is true for Bitcoin.
Once second layer solutions are more mature and layer 1 blockchains are substantially cheaper due to new consensus protocols, you will see more applications for blockchain.
Until then, blockchain is too expensive for the free world, and is largely only somewhat useful to those in failed states.
You have a stab at one of the most important issues within the space here. You are right, most projects either do not have any utility or they are so far up their idea and tech that they think it will produce value by itself. Unfortunately, most things end here. For most, this value will never surpass the simple value of "exchanging value" or "storing value" (both are important I agree, but we are talking about tech, not money).
However, that is not how it should be. Projects should be building and solving issues, adding utility and providing solutions, otherwise, we are stuck in a system which produces the point zero problem. This can get us cemented in the past with no hope of any future.
Check out cyber. It is a decentralized google with a mission to open the semantics field and decentralize the service of the internet with the use of blockchain and economic incentives.
It's not an idea. Both, the chain and the initial app are working as planned. Yes, the project is still in testnets, but, it is 100% open-source and the idea is provably implemented.
Cyber managed to prove that it can change the current search mechanism and make it work. The main use of the network is to build an open, decentralized knowledge graph, by the users themselves to create a shared database of knowledge. All transactions in the network are made to target that purpose in one way or another.
Cyber utilizes the use of computation, bandwidth and storage and produces a useful computer with several use-cases, with the most obvious is the creation of an open and provable search in a trustless and censorship-free environment without the illnesses of web2 tech..
Don't get me wrong. the Project might be awesome. I may even use it some day. But I see it a niche project like I2P or Freenet, It's good that we have these for when we might need it but there is no way people will replace something they use now with it.
1) It is centralized
2) Your data is being used without your approval
3) Companies like Cambridge Analytica build on the semantics field and use it for economics, politics and other purposes. The fact that a semantics field is closed, leads to magnitudes of problems in almost all the fields of your life
4) You cannot search for anything freely. The internet was originally intended for the search of scientific papers, today this is not available. You might say. Hey, i don't nee it. Then its a bit hard to argue. You might not. But the reality is that its the most valuable database we have as humans, our knowledge, which is today projected not by scientific research, but by Wikipedia (owned by alphabet) and by companies like Cambridge Analytica, who build on the semantical field
5) Results aren't provable. At all. There is no proof for any root results - blockchain solves this
6) There are no incentives
7) Knowledge graphs are owed to 90% by one company, which means that the answers you're searching for. The knowledge you're acquiring today is 90% follows a black-box principle and has in it what you are lead to believe etc, etc, etc.
TBH, there are about 100 reasons why search should be changed and is crazy underlooked by a lot of people as a problem
This is the very tip of the iceberg. And Im glad you bring this up
2) That's not an inherent property of web search at all. Its the business model of some web search provider.
3) All true but again has nothing to do with web search. The whole privacy things in general is a problem of web monetization anyway. Private data is collected for ads not for search results. web search is not broken, web monetization probably is.
4) I can search the internet freely. I may not find what I'm looking for because there are laws preventing people from putting stuff on the net and in general webhosters are usually privately owned and can decide to not allow certain things. So if you can't find X its probably because X is not on the net or its intentional hidden because its somehow illegal or just generally unwanted or there is simply no one somehow motivated to host it. The internet is kinda backward if you want to insert something you have to play for that while if you take something is usually "free". So for something to be put online there must be a some kind of motivation else simply no one will do it. This is not a flaw in web search at all.
What the internet originally was intended to do seems to be irrelevant. The internet we have now is what we deal with and if enough people want to make a scientific paper library, well then they can build that perfectly fine on the internet we have today. But like I said there must be some kind of motivation. but you can't blame the lack there off to Wikipedia or it's owners and certainly not to web search.
5) Web search is not querying a database where you get 3 results if there are 3 matching entities. Everyone can implement web search the way they want it and think its the most useful. There is nothing to prov. If I search for "1999" I would expect a search engine to give me stuff mostly related to the year 1999. But 1999 is also a prime number. The name of a bunch of albums, tracks, movies and what not. Is the search result now bad because it mostly assumed a year? Its good for me as it did what I expected but may be bad for someone else.
6) Money is the incentives for web search. Obviously that is far from perfect and has a bunch of known flaws but again has nothing to do with web search. Also decentralization/blockchain etc. can not remove the incentive money from the system.
7) That sounds little bit too much conspiracy-theories-like for me. True knowledge over a specific topic is the same regardless of where you got it from.
I already agreed to that in my first reply. There is bunch of stuff concerning with today's popular web search services. But its function not broken and I don't see why it would need to be replaced. If a wheel rolls but sometimes breaks we should address that maybe change the material? maybe put some rubber on it? But not re-invent the wheel.
2) Not exactly, it's the follow up of a closed semantics field and the client-server model. The internet can be very different. As it was intended to be
3) Again, we are talking about the semantics field. Web search doesn't work, as in barely
4) No, you cannot. You are searching through blackbox intermediaries. Always. Its called a knowledge graph. Moreover, you cant search for nearly 80% of the things. I don't need an ISP telling me what I can or cannot search. Currently, according to freedom house, ~24% of the internet is free. Why should I care about censorship of ISP's? For all I know (minor in history) censorship killed more people than all of the liberals put together. An example, holocaust or let's get closer to today's reality. COVID and whats happening in counties like China, Russia, etc
5) what it doesn't do now, doesn't mean it shouldn't do. The whole idea is that I want to know that what I searched for can be provable and relevant. With the current page rank its impossible. That has to be changed
6) No, it doesn't and it shouldn't! It allows you to change the flow of monetization and empower a non-zero sum game + let eCommerce flourish fairly
7) I wish it was. But this is just the reality
There is no need to reinvent the wheel. People search for questions, in which, it should be noted, there are no bad intentions. People get answers. It's as simple as eating a cake =)
What has to be changed is several things:
- Location-based addressing has to go (thanks ipfs, dat, swarm, git, and any blockchain or tangle like protocol)
- blackbox opinions
- data loss and re-selling
- one at a time ISP architecture
- the understanding of how we use the internet as client-server
- the number of beneficiaries has to grow, drastically
You try really hard to intentional misunderstand me so I won't reply any further.
Like I said it my first post "It solves a niche problem for cyperliberalism" all your arguments go straight in that direction. The real world don't care. And no I don't like that but I accept it as a fact. You probably should too.
In the airline space, for example, all the airlines pay OAG to file schedules. OAG is a central authority they trust, and pay. Blockchain could replace that, and save them all some money. Hasn't happened though.
I don't think that can be proved to be true? I can easily imagine that any blockchain would introduce obvious weaknesses in the process for everybody, and such which can be avoided by having a central authority, which keeps the central authority option being cheaper for everybody.
For as long as humans have engaged in trading, we have relied on trust that's built over time. There are bad actors from time to time, sure, but I'm not sure if that's enough of a problem (perhaps it is in cannabis circle) to justify making blockchain a centerpiece of one's endeavor to modernize the purchasing experience.
The same goes for other current applications of blockchain such as trading card games. I left the event feeling most of the presenters just forcefully shoehorned blockchain tech into their applications, with one exception: cryptocurrencies use in countries with oppressive regimes and poor banking system).
Do you have a source for where this is actually use in production and not as POC in a lab?
The biggest use "in the wild" right now is in multi-party smart contracts where no one party is an authority of trust.
My mind just melts reading that page. None of those things seem to really solve a 'real' problem to me.
The few times I’ve dig into a blockchain company that had a $100MM theft, it’s hard to understand where those “assets” came from, and who the customers/users were that deposited those assets, how the businesses were built, etc.
I’m guessing some are smoke and mirrors, and others are stealthy and/or opportunistic.
If there’s a list of viable blockchain companies doing business that is documented and can be understood, would love to get a pointer to it.
As for other applications, yeah they are all made up so far. And anticipating any other comments, the world could easily do without cryptocurrencies.
this is being tried already in parts of the world
here: the ledger is public, the government is a body made of many independent small entities with not necessarily aligned incentives
would help to avoid corruption and maintain a legitimate source of truth
If we also added the following conditions:
- All agents of the government sign their commits
- Whenever a commit is made to a copy of the repository (perhaps all government agents make a commit to a single repository hosted by the government) then there are several independent parties that make copies of this commit, and in addition there exists a mechanism to establish consensus between these copies of the repository when a conflict arises
THEN we might have something that could replace a blockchain.
Conversely, if the government agents all committed to a single repository and nobody bothered with making immediate copies and consensus, then the agent could double spend / rewrite the repository.
Seems like a massive lack of patience and long term thinking. It took nearly a century for the first airplane to go anywhere and another half-century for it to be widespread and practical.
It took decades before the internet and mobile phones had any significant market penetration, and then within the space of a few years there are fewer people without it than with it. Technology adoption typically follows a Gompertz function: initially slow, but then rapid adoption before declining as there's no larger audience to adopt it.
Bitcoin presents a fundamental shift in how we treat money which can have a knock on effect on every other industry, just as the internet did. If you think it's time to call it off after 10 years (despite continued new interest over that time), this is a bit short-sighted.
The issue with "cryptocurrency," is unlike Bitcoin, they don't actually provide us with any new innovation. They are scams designed to enrich their creators, who pretend that changing a few variables in a codebase can replicate the invention of Bitcoin. All "cryptocurrency" are useless because they don't have the permanent fix for inflation that Bitcoin has. They introduce inflation by design - they are fiat money made digital. Bitcoin's key innovation is the fix for inflation, which is now impossible to replicate because Bitcoin already exists.
With blockchain it’s reversed: we have suddenly tech but after 11 years still no idea other than use it to sell drugs, and boil the oceans.
Who is "we?"
A small group understood the applications early on and was way ahead of the curve. Obviously costs coming down in the 90s enabled a wider audience to access the technologies - but most were clueless of its potential until they were already using it.
This is the case for Bitcoin now. Selling drugs has little to do with it, other than demonstrating the future role of the State meddling in people's personal finance. Bitcoin is about sovereign control of one's own property - a way of saving money which cannot be unjustly taxed. All other applications of the technology will emerge from the fact that it's better money for anybody who actually has any.
Are you just another Krugman, who still didn't realize the internet's potential in 1998?
> “The growth of the Internet will slow drastically, as the flaw in ‘Metcalfe’s law’ becomes apparent: most people have nothing to say to each other! By 2005, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s”
Oh, and "cryptocurrencies" are like the Intranets of the 90s. Everyone wants their own, for now, until they realize that being part of the global digital money network has far more advantages than trying to work with walled gardens.
We knew what we wanted, but the interface was a problem and Apple solved it.
We knew what we wanted but we could not get there, until then.
None of the bitcoin/blockchain people can exactly explain why blockchain or bitcoin is relevant. Even after 11 years they can't.
> than demonstrating the future role of the State meddling in people's personal finance.
A citizen pays their due taxes, as required to run a decent society. Cryptopeople just want to have a means for tax evasion: to support criminal behaviour.
> Are you just another Krugman, who still didn't realise the internet's potential in 1998?
Haha, I don't think so. The purpose of the internet was very clear. It was just too hyped. But it recovered. crypto and blockchain are hyped, but the purpose is not clear at all. Big difference.
> Oh, and "cryptocurrencies" are like the Intranets of the 90s. Everyone wants their own, for now, until they realize that being part of the global digital money network has far more advantages than trying to work with walled gardens.
We have already money. And we already have means to pay people in other countries. And they are overall more convenient and the transaction costs are not an issue for most applications.
The relevance of Bitcoin has already been explained to you: it provides for the first time in history, a form of money which is inflation-proof, censorship-resistant, easily verifiable and possibly private (or at least plausibly deniable), making it potentially unconfiscatable.
Bitcoin isn't merely about transaction costs or means of paying people. It is about having sound money. It has a use case for anybody who wants to save money, which is impossible to do with fiat money, because it is rapidly devalued due to the monetary policy of central banks.
Other "crypto" or "blockchain" is irrelevant. We can agree on that. Only Bitcoin matters.
Just because you have not seen the need for Bitcoin yet, does not mean there is no need for it. You are like those who would mock the mobile phone or the dial up internet of the '80s, with very little insight into what value Bitcoin can bring to the world. Bitcoin will be used to bypass warrantless surveillance and State-enforced restrictions, and yes, even to avoid paying taxes - which you might consider "criminal behavior," but this merely highlights your state-worshipping world view. Tax is theft - and a significant amount of "criminal behaviour" is coming directly from the State itself.
With blockchain it’s the other way around.
Air power was already militarily important by 1916.
You might better have cited the laser, which took three decades to find heavy use, or microwave technology, worked out around 1890 but not used much until the 1940s.
That said there might be a lot of fun geeky “uses” like creating smart contracts that you share about and use. But the practical problem is the transaction and conversion costs and currency fluctuations make it hard to take that from fun to useful for business.
That said, cryptographically signed GDPR conforming Event sourcing might be a good idea. I wonder if that would still count as blockchain though.
I think cryptocurrency is the best use case for blockchain technology. It is a very narrow use case but an extremely important one. It gives a group of people access to powerful financial tools that are otherwise completely out of reach for regular people.
The idea that communities can have their own micro-economies is going to be radical and completely change how we do business.
One specific use case which I've identified is the ability to use a cryptocurrency to represent shares in a business. It offers small businesses powerful financial tools which are not available to normal businesses of that size. For example, you can use business profits to do token buybacks (which are like share buyback which corporations use); with decentralized exchanges, it's even possible to do buybacks without relying on any intermediaries (e.g. no accountants or brokers). Token buybacks are a simpler alternative to distributing dividends to shareholders. Token buybacks (and subsequent burning of bought tokens) allow a company to pay shareholders through capital appreciation by diluting the cryptocurrency's total supply; this gives small businesses access to the same financial tools which big corporations use to reduce their shareholders' tax liability among other things (capital gains are typically taxed much lower than income and only paid when they are realized; I.e. when tokens are sold). Also, having a tradable cryptocurrency gives a business exposure to influential outsiders (e.g. journalists, wealthy investors, politicians) who have an incentive to participate in the underlying small business and then use their influence to help grow that business and its cryptocurrency. 'Airdrops' can also be carried out in highly targeted ways to create a favorable economic and political environment for the business.
With cryptocurrency it's also possible to pay contributors (employees) using the token instead of fiat. It also helps make sure that contributors' incentives are aligned with all other stakeholders. I'm currently part of a business which works like this. We have 7 contributors and everyone has only been paid using crypto for the past few months. We have a buyback-and-burn deflationary mechanism in place so everyone knows that each token is (on average) guaranteed to always go up in value. You can also pay for marketing and other services using the token - I was quite surprised by how many people were willing accept our cryptocurrency in exchange for services; it feels like the majority of people.
> does not rely on the coercive legal powers of a government
It's always this extremely paranoid negative view on governments that seem to fuel support for blockchain.
Obviously, there are some 'bad' environment, but if your mistrust of government is that bad, no blockchain is going to fix your problems.
I could be mistaken myself but I think a lot of people may on a fundamental level misunderstand how trust plays a role in our societies.
I work on tezos smart contracts for tokenized decentralized rewards issuing on baking (mining but delegated proof of stake so efficient and not killing the planet). This however has jackshit to do with blockchain as a datastructure as there is no representation of it within the tezos smart contract language (michelson). This is useful and maybe what you understand as blockchain but I cannot name any specific application that you (going by your blog) will not spin of as being pointless because of some buzzwords because its easier.
problem #2 - adaptation to the needs of the complex system like modern society
those are kind of ‘significant’ problems, technologies like Internet, blockchain etc, provide sequential approximations to the solution of those problems.
A bit strange to exclude the one and only answer to your question.
I’m sure the responses would be similar. Blockchain is still in its infancy, give it a decade or two and I think you’ll be surprised how it became “an overnight success”.
Like someone else already said I think it's less about the "blockchain" and more about finding ways to decentralize traditionally centralized services.
A blockchain is a trust minimizing, independent network which allows participants to interact with eachother such that:
1. Everybody knows who did what, in what order
2. Significant confidence exists that the order is fixed / finalized (git can't give you this)
3. There is no set of controlling parties that could reasonably be expected to change the rules of the system, even if they were all trying to work together.
When someone says "blockchains are going to change the world", they are talking about the above three properties, not about the ability to commit to a thing that commits to other things.
At the end of the day distributed trust literally means we all trust each other to do the right thing because, at the end, it's more cost effective and more beneficial for everyone. Directly from the Bitcoin whitepaper:
"The incentive may help encourage nodes to stay honest. If a greedy attacker is able to
assemble more CPU power than all the honest nodes, he would have to choose between using it
to defraud people by stealing back his payments, or using it to generate new coins. He ought to
find it more profitable to play by the rules, such rules that favour him with more new coins than
everyone else combined, than to undermine the system and the validity of his own wealth."
I experienced the 90's, so let me tell you why email will never take off, since we have a trustworthy postal service:
1. Almost nobody you know has an email address, but everyone has a real address.
2. People want to have something they can touch, a personal, perfumed handwritten letter. Not a cold virtual thing with printed letters.
3. You can enclose a polaroid picture in an envelope, this is impossible with email.
4. If you really want, you can send a VHS video tape with the post. This is impossible with email.
5. They say email is faster, but if you need someone urgently, you just call them.
So therefore, email will never become as popular as sending envelope mails. I rest my case.
In contrast, we’re a decade in with much lower barriers to entry, huge media presence, and massive VC cash infusions but nobody has managed to make something which anyone outside that world needs. The closest I’ve seen are the companies successfully using FOMO to sell centralized databases with digital signatures to large companies.
Maybe the main point I wanted to bring across is that blockchain will not live in the present, it will live in the future.
The polaroid picture in my email comparison it really nice in that sense. Nobody was taking digital photo's. For a long time it was even unclear if digital photography would ever surpass traditional. (and some companies made some painful decisions here).
Nothing important is in the blockchain yet, so what can you really accomplish with smart contracts now anyway?
But I agree with you that it is unclear if it will take of or not in the future. But you cannot dismiss a technology because it is not viable in the present.
Email and digital photography have very clear benefits and those where totally transparent from the beginning . I can see none for bt.
You probably never lived in the age where people were convinced that digital photography would never reach the quality of "real" photography.
If blockchain ever takes of, I'm sure it was all obvious from the start to everyone.
I've lived long enough to know human reasoning.
You know, it was immediately clear why digital photography would be so beneficial: no film. Instant gratification / feedback. So less hassle.
It would be only a matter of years before the tech - as with moore's law - would catch up. Which it did.
Blockchain is not obvious at all. It doesn't seem to solve a problem we have.
Maybe blockchain shows that we do trust each other more than we think.
I find that it's not hard to imagine some problems that exist due to the lack of digital scarcity (pre-blockchain). I invite you to open your mind and imagine some for yourself.
Why is this a problem? Ask a creative content creator.
How is blockchain solving this in practice? One example: https://www.niftygateway.com/
If you don't think that's valuable, consider the value that humans put on first edition books, signed original works, ownership of exclusive editions, etc. Everyone can own a copy of "To Kill a Mockingbird" or "Dune" for a few dollars but signed, first editions goes for thousands of dollars.
This question may also have been baffling to most people when corporations had just been legalized.
The answer is; it solves problems for participants and creates problems for non-participants. That's why it will definitely succeed as an economic instrument.
The rest of "cryptocurrency" is snake oil. Most of it attempts to reintroduce inflation and undermine the fix which Bitcoin introduced. While they may come up with a bunch of reasons for their decision to mint new tokens - the sole purpose of the new inflation is to enrich the creators, who intend to exchange their zero production cost tokens for some other tangible wealth before the naive buyers of the tokens realize they've been scammed.
Building on top of Bitcoin is the way to solve real problems because each development strengthens the permanent fix on inflation and enables Bitcoin to be more accessible.
A "blockchain" is just a linked list where each tail item is content addressed.
I want my money to be backed up by a government that wants to keep society stable.
Sad to see that bc is always so tied to distrust of governments. That way of thinking seems so naive.
The only "volatile" is the exchange rate market of Bitcoin to USD. Obviously, this is going to be volatile for some time because demand varies from day to day. What's obvious, however, is that the trend in demand is continuing to increase over time. If you look at purchasing Bitcoin to hold for 4 years or more (or indefinitely), then you aren't concerned about the day to day fluctuations in the exchange rate.
If you purchased Bitcoin at any time in the past 10 years, and held onto it for 4 years, there is no point at which you could've made a loss. In fact, on average, you would've almost doubled your money if you converted it back to USD after 4 years.
They say past performance is no indication of success, but next month we enter another "quantitive hardening" period in Bitcoin, where the new supply released over the next 4 years is half of the supply released over the previous 4 years. If the rate of growth in demand stays the same, the exchange rate will continue to rise - but that itself causes an increase in demand because more people want to hold onto an appreciating asset rather than a depreciating dollar. Especially true given that the Fed has committed to rapidly devaluing the dollar this year in a struggle to deal with COVID-19.
Bitcoin doesn't care about the virus. There's nobody to bail out bitcoiners. The State is the virus, and Bitcoin is the remedy.
That's exactly what I would say if I have cryptocoins
That is the pyramid scheme part. Convincing people to buy as not to miss out.
- Garages log maintenace + mileage.
- Accidents are logged.
- Spare part replacements are logged.
- Government logs changes of owners (maybe privacy concern here?).
You sell or buy a second hand car? You verify the blockchain history if everything checks out.
This is a nice use case since multiple parties come into contact with a car, and so a central entity is hard to create.
And as an added bonus, the transaction of changing car ownership can be done with a smart contract to atomically transfer both money and ownership. Less shady things.
What use is your internet token now?
The problem with tokens which merely proxy ownership of something else is that this link can be undone by humans in the real world, and then the ledger does not map to reality. If you need the ledger to map to reality, you need somebody who has the authority to adjust the ledger without having every other user of the ledger sign off such modifications. Inevitably: the ledger ends up being controlled by a single authority - at which point you figure that the blockchain was actually a waste of time because the central authority could've done it cheaper with MySQL.
It only makes sense that the internet token represents ownership of the token itself. If it is a proxy for ownership of something else, it is no better than a penned signature on paper. It's not the paper that is valuable, but the car.
However, with Bitcoin, it is the bitcoin itself which is valuable. The bitcoin isn't a proxy for some other wealth, but the token encapsulates the wealth. Given that we have a token which can encapsulate wealth, what purpose are there for N other tokens which purport to do the same thing?
Ownership is indeed trickier, but nothing says that you have to undo previous entries, you can add a new entry tagged with the "official authority" certificate.
Central authority will remain a big problem in the car industry, also because cars go over country borders all the time.
No blockchain needed.
Of course, this can be sidestepped by having work done on the vehicle and not updating the log. How do you prevent that?
You buy the second hand car with history, not the one without.
- Currencies that cannot be manipulated/controlled by a government / external forces (plenty of examples why that’s a real problem in history, including runaway inflationary policies, payments restricted from certain individuals eg sex workers)
- Cheap accounting (see digital autonomous companies), you can run a company with lower costs by programmatically handling all transactions. eg running a justgiving type site should be cheaper on a blockchain, in theory
- Fully traceable payments (i.e. knowing who paid who how much throughout history, makes paying taxes, illegal transactions easier)
- A single place where a piece of data can be guaranteed to be accurate (eg you can publish data on a blockchain and prove it was published then at a later date, and there’s no way to manipulate this)
There’s more, I’m sure... Whether these justify the hype or are big enough problems are different questions
Blockchain TODAY is the backbone for a $200B financial system that lets you store or transfer billions of dollars worth of value within minutes for cents in transaction fees, completely peer-to-peer with no middle men
Scalable blockchains will generalize this same benefit to let developers add crypto into any kind of application (just like we had web-apps, we'll have crypto-apps):
– Instant global p2p payments
– Completely transparent, efficient marketplaces / clearinghouses with no switching costs
– Ability for users to own their own data and assets, removing liability for platform operators but also eliminating lock-in
– Open source, open state, serverless code that runs directly on-chain and thus can be built on with no platform risk (google "blockchain composability")
– Software that can be governed / controlled by the users that have stake in it
You mean, email and group messaging, file transfer, reference lookups, access to remote servers and other things which people were paying for and generating real business value from?
There were plenty of companies which were generating value significantly prior to broadband becoming universal and that was despite the much higher barriers to entry (computers were far more expensive, phone charges were a major barrier for non-rich people).
The blockchain comparison isn’t valid either because despite a much longer period of time before showing positive results there isn’t much real-world impact: the paper value may look high, almost all of that is within the system — the number of outside businesses which would have problems if it disappeared is close to zero, and a large fraction of the people “using” it are using a middleman service rather than directly participating.
the criticism isn't entirely invalid: the blockchain space has a lot of proving to do – there's a lot more work ahead than behind
> "Last June, 10 of the world’s largest pharmaceutical companies – including Johnson & Johnson, AstraZeneca and GlaxoSmithKline – announced they would pool data for an AI-based search for new antibiotics, which are urgently needed as antibiotic-resistant bacteria have proliferated across the world, threatening the growth of untreatable disease.
> That historic agreement was made possible by the development of a secure, blockchain-based system that allows an algorithm to search rival companies’ data with full traceability – but without revealing commercial secrets to competitors. The advantage of using blockchain is that companies can trust the code rather than their partners." 
To your point, cryptocurrency enables reconstructing the entire financial infrastructure on blockchain. Everything from car loans (https://twitter.com/DMMDAO) to rental real estate (https://twitter.com/RealTPlatform) to interest-bearing savings accounts (https://compound.finance/) to derivatives and trading (https://www.synthetix.io/), to decentralized storage (https://sia.tech/), etc. There's hundreds of projects I follow regularly and I find new ones cropping up all the time. There's a Cambrian explosion of apps in blockchain right now.
I recommend reading https://bankless.substack.com/ and https://thedefiant.substack.com/ to stay on top of the topic. Watch some of the presentations from ETHDenver 2020 that was held 2 months ago (https://www.youtube.com/channel/UCgz9NU06t_FkT0Py1Vadczw)
Follow some of the thought leaders on Twitter, et al. Tons of promise in this space.
Hyperledger is a blockchain that is mainly used for these private blockchains that are used in corporate settings. However, a public chain has 100% uptime, is permissionless, and is by far the most useful application of the tech.
https://www.baseline-protocol.org/ Baseline Protocol is a collaboration between Ernst & Young and Microsoft to use Ethereum as a secure, cross-enterprise business process collaboration layer, which is powerful but you'll have to some knowledge of how back offices in enterprises currently work in order to grasp it.
Finance is incredibly substantial. Everything you know is powered by finance. It's a multi hundred trillion dollar industry.
Could you provide a reason why, with some examples?
It seems easy to do because anyone wanting to pay or be paid has to somehow advertise this.