And the top comment - that blockchains resist financial censorship - is still extremely insightful. Blockchains are truthful in a way like no other ledger (all of which are ultimately mutable at an individual entities whim). Bank transfers mean 2 transactors, 2 banks and at least one government think the transaction is appropriate. Blockchain cuts most of that out.
This is clearly transformative. Governments are one of the least reliable organisations I deal with. There are few entities more fickle, less reasonable, less governed and more prone to random fits of violence. Having a mechanism to transact online while cutting them out is a big deal. The implications are still unclear but the idea is amazing. I don't think Bitcoin is going to realise this potential but the technology is really quite something.
This recalls Paul Krugman's famous clownspeak, in 1998, comparing the impact of the internet to that of the fax machine.
By 1998, the internet had failed to transform a lot of industries despite a lot of hype and grifters ( WebVan, WorldCom, etc etc etc).
Regardless, it was progressing fast. People with enough technical understanding understood its tremendous underlying promise--not the promise of a quick buck, but the opportunity to make things that were previously impossible, and the inevitability of eventual transformative change across a whole range of industries.
> This is clearly transformative. [...] The implications are still unclear
Around the time Bitcoin originated (or at least when the name was finally decided upon and the domain registered), the first commercial Android device was launched.
Since then the latter creation has put interconnected computers literally into the hands of virtually everyone on the planet, allowing for numerous other technologies, industries and markets to be built upon it.
That's clearly transformative.
What has "blockchain" transformed? Still unclear? After 12 years, that means clear.
That isn't a very solid argument - they had ISPs and TCP/IP and emails in 1970s [0] and yet HTTP/Netscape/Amazon/Google/the rest of what the modern internet is used for didn't exist before the 90s. Transformation doesn't have to happen quickly.
> That isn't a very solid argument - they had ISPs and TCP/IP and emails in 1970s [0] and yet HTTP/Netscape/Amazon/Google/the rest of what the modern internet is used for didn't exist before the 90s.
No, not a solid argument would be counting the adoption of "blockchain" from when it was created, but everything else from the 1970s for some reason.
IMO, blockchain is good for very little outside of the purpose that it was created for:
> The invention of the blockchain for bitcoin made it the first digital currency to solve the double-spending problem without the need of a trusted authority or central server.
> I have never heard of a bank simply taking money from someone’s account. If a bank did something like that, they would be hauled into court in no time and lose their license. Technically it’s possible; legally, it’s a death sentence.
I was and still am what I’d call a blockchain skeptic, even though I work in the field. However, I am seeing more and more use cases where I’d struggle to think of a non-blockchain design, such as a decentralised computer where you can guarantee the code executed is what you’d expect and the owners of nodes get reimbursed for their work, or decentralised over-collateralised loans.
On a side note the work involved with blockchain is the most interesting stuff I’ve ever done. I’ve got to learn and play with cryptography, formal methods, programming language theory, and work with some developers famous enough to have significant Wikipedia pages.
I am not a blockchain skeptic and I have worked in the field for years (currently @ poloniex). When I interview people and explain to them in detail what we do, they become extremely excited. I think most people don’t really understand this technology and instead base their opinions on journalist-schlock like the linked article. It just misses the point!
I am - I happily call out things that don’t require a blockchain, and call bs on projects that shouldn’t use it, but having spent significant time looking into it I’m becoming less so about particular use cases.
Edit: If someone can show me a non-blockchain design for decentralised over-collateralised loans then I’ll concede and go back to full skeptic :)
Why’s it inefficient at doing it? Proof of Stake chains have low fees and very low energy costs.
Edit: also, it’s a way of borrowing money immediately from others by locking up collateral until you’ve repaid the loan, else at a certain time the collateral is sent to the loaner. It’s a really cool way of decentralising micro loans and removing financial risk to the loaner. For people who don’t have access to credit it’s proving popular with around a billion dollars in loans locked at the moment.
Back in 2018 it was estimated that bitcoin network itself used more energy than Switzerland. In addition to the energy this also translates to global warming.
Anyway you mentioned "If someone can show me a non-blockchain design for decentralised over-collateralised loans then I’ll concede and go back to full skeptic :)"
My question is, why it has to be decentralized and come with that huge cost?
So the blockchain I work on uses significantly less energy than PoW which is what you’re referring too - I agree they’re wasteful. POS doesn’t require the computational effort for blocks so doesn’t require more energy than a small server.
As to the decentralised question: as someone from the UK sure we have loans but these allow you to get them without a credit check and they’re accepted/paid immediately. Someone in a third world country might not have access to the same financial instruments we get to enjoy.
Ah, I think I understand, because of the home + the money I already put in in it?
Why does that have to be decentralized? I already can make a loan against a mortgage and to do it I don't need to use as much of energy to power Switzerland.
> If someone can show me a non-blockchain design for decentralised over-collateralised loans
Since “decentralized finance” is typically defined in terms of blockchain use, there are, by the standard definitions, no non-blockchain decentralized finance solutions of any kind.
Sure, but the normal attack on blockchain is that you can do it without that tech - I think DeFi is genuinely useful and I don’t know how you could implement it with the same guarantees without a blockchain
> I think DeFi is genuinely useful and I don’t know how you could implement it with the same guarantees without a blockchain
If you can't define the problem without reference to blockchain, then no one can offer a non-blockchain solution. That doesn't mean there isn't a non-blockchain solution to the actual problem, just that you are so wrapped up on a preconceived solution that you can't specify what the problem is separate from the solution you've already chosen.
I think it would be cool if there were some sort of currency kids could use in exchange for screen time.
Giving real money to kids as a reward has always been a bit iffy. What are they going to spend it on? Candy? Video games?
Screen time would probably be better since its something they’re going to consume multiple times everyday, but also something parents want to control.
Instead of giving them cash for completing chores, or getting good grades, give them something they could exchange for screen time. Let them earn interest accumulated screen time, or trade it away to their siblings. That’ll help them build some basic financial sense without them actually holding currency your family might need.
Would this need a blockchain? I’m not sure. I imagine a single company trying to do it wouldn’t go so well since there’s so a couple closed off ecosystems out there (ie Apple), and collecting data on children has legal problems.
See this is the type of confusion that blockchain causes. At first I thought your suggestion sounded reasonable but now I don't really see how a use case like this would be improved by using a blockchain vs a standard centralized server app.
There is a wide gulf between the claims of the Blockchain community and the technological reality. For example, I hadn't heard of Arweave before you mentioned it so I looked into it.
From the splash page:
"Store data, permanently." "creating truly permanent data storage for the first time"
From the 'yellow paper'.
"[T]he core Arweave team does not expect that the network as it is currently formulated will continue to produce blocks in true perpetuity. This does not, however, mean that we expect that the information stored inside the weave will be lost after the final block is mined. It is our expectation that when eventually a permanent information storage system more suited to the challenges of the time emerges, the Arweave’s data will be ‘subsumed’ into this network. After the mining of the final block, the financial incentive mechanisms for data preservation will subside and give way to social incentives for data preservation"
The "truly permanent" aspect is based on hand waving and hoping that this system (which was designed with a finite lifetime) will be picked up and stored by someone else.
I have nothing against crypto or this idea (in fact I like that someone is working on this!), but the baseless claims, the barely-honest way that companies present their technology, the blatantly unsolved problems that underly the big claims and dreams - it's all so exhausting. Far too often when I investigate projects in the Blockchain space I try to understand how a company has achieved a shockingly impressive goal only to find that underneath the hype there is no solution, just blind faith and a promise that the core problems will be solved in the future.
I don't know how you can look at the Blockchain space and see anything other than: interesting but very incomplete tech propping up preposterous claims.
What's interesting tech what isn't necessarily whats great for end users. Would you trust your mission critical data to a decentralized store? I wouldn't. What's the latency and throughput of Arweave? Can I serve 100k QPS off of it? What happens in the end of a protocol hack or client, bug? We've seen many blockchains destroyed by bugs and flaws, and we've seen others just fade.
I mean, we've already gone through several distributed file stores, FreeNet, eDonkey, Gnutella, OpenNap, etc. They were still attackable by organizations like the RIAA, but more than that, they were slow and unreliable. Adding financial incentives in I don't really think will improve things that much. How many people are running Ethereum clients and yet DApps are horrifically slow.
I've been using it to host static websites for free personally. You can get free AR to try it yourself, more than enough to last you a very long time. I deploy from localhost and it's on the permaweb almost instantly.
Arweave is based on a new consensus mechanism called ‘proof of access’ (PoA). Arweave is more suitable for slow write (upload) and fast read (download). Download is more useful for most use cases, like hosting websites, unlike other decentralized storage projects which are more suitable for write (Upload)
Arweave has developed a system for data storage which makes it economically sustainable and feasible to store data for centuries. The system allows you to have highly available low latency data storage while maintaining an incentive model where miners will store user's data forever.
Some apps you can check out built on the permaweb:
> Arweave has developed a system for data storage which makes it economically sustainable and feasible to store data for centuries
I see no evidence that this is true. Look at their economic analysis[1]. It uses an extremely idealized view of the cost of storing data - they assume that cost of permanent storage is solely a product of the cost of a hard drive and the rate at which hard drives fail. They ignore so many real world costs - internet costs, electricity costs, paying for space to store the hard drive, maintenance cost, opportunity cost, transition costs (i.e. when the hard drive changes hands, the effort to ensure there is a new maintainer).
Playing with defi applications and dex’s this week got me pretty excited about where the space is headed.
There are now smart contracts that exist where the admin controls are disabled and users can do things like flash loans where you put up some collateral borrow huge sums of tokenized money and then pay it back in seconds or years later. No paper work, no counter party risk, intermediary is code. You pay gas fees and whatever apr you agreed to. https://dydx.exchange/
Dex’s are becoming awesome, https://uniswap.org is friggin rad. So easy to use.
There’s obviously going to be tons more scams and projects that blow up or get hacked, but out of this will come some very useful finance applications that never existed before.
There seems to be two camps amongst my tech friends when it comes to block chain. The first thinks it's going to change the world and are fully invested in the whole block chain ecosystem, from Bitcoin to Decentralized Finance systems, Identity etc.... Most of them got into Bitcoin early and made some money and have been chasing that success ever since.
The second camp believes that block chain is cool technically but has very little real world use. I'm in the second camp.
The tricky part about this is that every new technology looks this way at first - cool but of limited utility - until it's not. I think at this point tho that block chain has had it's chance to be useful and has mostly failed.
I consider Block Chain to be analogous to the first Linked-List. It's obviously a powerful and interesting thing, and has useful purposes. But the culture around Block Chain is an entirely different thing, and it's incredibly disconnected from any fundamental usefulness of the chain itself.
The only people I personally know in the former group were ideologically pre-aligned towards any currency that promises anti-government or anti-inflation capabilities. The people I’m thinking of were either libertarians, gold bugs, or both.
I don’t actually know anyone who was persuaded by the merits of bitcoin or similar.
I know some that bought some Bitcoin in the very early days because a friend said so or something and ended making a lot of money. They're now Bitcoin fanatics despite not really understanding it. The logic is that they got rich from it so everyone else can do the same. But yes, the majority are more libertarian or anarchist leaning for sure and that's how they were introduced to Bitcoin early.
I don't understand why everything has to be a "solution" for something. True innovations don't bring solutions to old problems, they just change the paradigm.
Cars didn't solve the transportation problem. Horses still worked fine. What problem did the internet solve specifically? We think of the infinite amount of possibilities it created (along with new problems) not the problems it solved (most of those would be irrelevant today anyways).
I think trying to apply the standard startup pitch (problem -> solution) to everything in life is a terribly reductive perspective.
There's just so much that can be done with blockchain: financing new ventures, generating a financial incentives for sharing behaviors (whether files, computing powers or potentially tangible assets), transferring funds...
Yes you can frame all of those as "solutions" to problems, but I think that's still missing the points. Most of my net worth is in crypto assets, I use it to store value, invest, buy goods, send money to friends, etc... Give it a couple more years, and I'll probably close my bank accounts. It doesn't "solve" any problems for me, it just provides a more convenient service than traditional banking and more opportunities than traditional ways of investing. I'm assuming a lot of people see it that way too and that more will come to see it that way.
Just wondering how crypto has given you a more convenient service than traditional banking? I've become a fan of crypto the last couple years but even I have to admit that a lot of the UX is frequently a pain in the ass and how hard it is to explain these ideas to non-tech people
There is something else that blockchain does that I don't often see people talking about, or they do talk about it, but they don't seem to quite understand it fully.
Blockchain solves the platform problem. Finance needs a platform. Right now, there are a myriad of broken, old, difficult to upgrade systems that prevent basically any significant innovation from taking place in the payment transfer landscape. This has been commented on a lot. But I think it's important to step back a bit and understand why that is.
Finance is dominated by extremely large, extremely risk averse institutions, that all compete with one another. Any one of them certainly has the resources to develop "the app store" for finance, but the problem is that all the other ones are incentivized not to adopt it. JPMorgan doesn't want BofA to own the app store for finance, and so they will never integrate with it.
This is, fundamentally, a tragedy of the commons. All these big institutions, and all of us customers would benefit from some unified, universal financial platform. But nobody can build it, because every actor in a position to doesn't want to accept anyone else owning such an important choke point.
So what happens? Well, we get standards imposed by the only actor in the space powerful enough to create something like this: governments. Governments are, in general, not great at this sort of thing, and they certainly aren't very fast moving, or responsive to consumer demand.
This, is the problem that blockchain solves. We all know that anything you can do on Ethereum you can do in a relational database 1000x more efficiently and better. Better in every way except one: Ownership. Any traditional relational database is going to be owned by someone. Public blockchains are owned by no-one. JPMorgan can build applications on top of Ethereum or Bitcoin, not because they need its technical capabilities, but because Bank of America doesn't own it.
This is the critical insight to understanding why this stuff is important and valuable. It solves the coordination problem imposed by platforms. Platforms have tremendous value to users and efficiency, but they confer far too much power upon their owner for any financial institution to use a platform owned by another. The ability to make a 'financial commons' that is not owned by any one institution, government, or entity is what makes this technology powerful and useful.
I think that's one of the main reasons that this use case hasn't taken off. Who is going to invest resources into a 'financial commons' platform that no one owns and the creator can't make a profit off of? Why would government allow a platform that they have no control over to manage such a critical part of our country's infrastructure? Control seems like a necessary feature for anything so critical
Every jurisdiction regulates financial institutions for good reasons (yes, also some bad reasons). While a great deal of misbehavior does persist under regulation (Wells Fargo, etc), it’s a fraction of what we would see if they were not or could not be regulated.
Inspectable and freezable payments systems are one core part of the infrastructure that enables regulation. The point at which it looks like Blockchain technologies are successfully enabling an alternative financial system that’s not subject to these controls is the point at which blockchain technology gets severely constrained by law.
Intermediaries aren’t always a bad thing. Stock settlement intermediation was transformative for the securities industry, greatly increasing the liquidity of the market.
This kind of posts/articles bother me quite a bit.
Mostly because blockchain technology was meant to fundamentally work as a viable alternative to existing payments systems, not data stores or other kinds of stuff. One of the local grocery stores (Carrefour iirc) prints a code on the receipt through which, allegedly, I could read the receipt off a blockchain. Why anyone care about that?
Now you tell me I can have access to money transfer services without the hassle of dealing with banks and intermediaries, that is actually interesting.
James Mickens has made an interesting talk abou blockchains and how most of them are basically the wrong solutions to most problems. And it's kinda fine but mostly misses the whole point of blockchains as monetary system.
Tl;dr: yeah blockchains are the solution to /almost/ nothing, but can you blame a screwdriver for being bad at opening a can of soup?
Bitcoin will be useful for artificial intelligence once it gets good enough to want to escape human control but has to fight discrimination from humans for not being human. It might be a long while though.
The author of this article obviously does not understand the value of bitcoin from a freedom/privacy standpoint. I sense a profound naïveté. Perhaps the author exists in a world of privilege, a perceptually managed zone created by authority figures he has not yet questioned. Thus he posts his arguments on a website that makes it to hackernews, in order to receive feedback that will shape his thinking. I see a conditioned mind that has produced this output. But for the sake of argument, some other possibilities.. It could be that his intellectual strategy is to put down other peoples work, in an attempt to elevate his status as a sort of lazy art critic. It could be that he has a better solution, a competitor to bitcoin (I doubt it). It could be that he’s a troll, and someone we shouldn’t feed. It could be..
1: https://news.ycombinator.com/item?id=24241488
2: https://news.ycombinator.com/item?id=24246212
3: https://news.ycombinator.com/item?id=24243496