What does "blockchain" even mean in this generalised context? When we are talking about crypto currencies, it is a distributed database with a consensus mechanism that is extremely costly to run. But this is not something you would need or want in most other situations, because there is always some degree of trust with your counterparties (and legal recourse if necessary).
If we strip away the consensus mechanism, all that is left is a trivial data structure that anyone with a CS background could come up with. So, the question becomes where the real value proposition is in "blockchain technology" outside of the realm of crypto currencies. What are the things you can only do with "blockchain technology" that cannot be achieved with existing technology? It looks more like a marketing buzzword than anything that has actual merit for the average use case.
Coming from a logistics background, coordinating tracability data is painful within a company, even with help of ERP like SAP. But when you need tracability across an industry, it becomes almost impossible.
I had professional experience in an industry where we had to go to the plants to ensure rolls of paper certified from suppliers using responsibly-managed forests were physically separated from the non-certified ones. We needed the paperwork coming from China, then another one from the transformation plant in Morocco, then in customer warehouses across Europe.
An external protocol that would provide universal tracability, usable by any actor of the chain, seem like a great solution to a real problem. Blockchain provides some "neutrality", ie no need for each actor to find its own certificate provider (I imagine that service shops would help larger companies set up their systems, but the back-end would be common across all actors).
I'm not very convinced by pseudo-decentralized apps in most domains, but in logistics... very bullish !
I never quite got my head around the value proposition for distributed ledgers in logistics ('smart warehouses / supply chains') and manufacturing ('industry 4.0').
Say you want to trace eco paper rolls around the globe. What could the blockchain do for you? Who are the nodes/miners/coins in this application?
When you suspect some intermediate in the paper chain to exchange eco paper for cheaper ordinary paper, how does distributing the information that he has X rolls on store prevent this scenario.
I think the OP stated that blockchains would alleviate the bureaucratic pains of international trade considerably. As bureaucracy requires labour, which is costly, I feel the value proposition is plausible.
Another feature is not related to inventory. Ledgers that have acute accountability features attached, where some stakeholders may have incentives to fake the records.
Like, for example transport truck driving schedules. Drivers are allowed only to drive so much, and there are penalties involved if the drivers don't rest enough. The main accountability measure here is the driving ledger. Whose maintainer has incentives to fudge it (the driver or the employer of the driver).
Logistics are a great place for this technology, but first you must purge your mind of Cryptotokens and their economics. They aren't applicable for a logistics use case.
To understand this, first you have to understand why we structure mining. In the case of Bitcoin or Ethereum, you need a method that allows any arbitrary computational device to verify and add to a given blockchain. In lieu of trusting that device, the blockchain makes it do a massive amount of busywork, called mining, to prove it isn't bullshitting the network. Different implementations have different busywork, but it's designed to make it hard to change the network by arbitrary devices. This is why we can allow any untrusted device on the network.
In the case of logistics, we are already operating under some amount of trust. This is through a mechanism of certification of goods, suppliers, verifying the goods are what they say they are, and the verification of those approvals and certifications. Even in a trusted environment, managing that coordination of certifying and verifying is slow, bureaucratic, and grows with the size of the logistic network. Additionally, many supply chains generally certify new entrants before allowing them to contribute. This creates a barrier to entry when establishing trust in the same way busywork creates a barrier for devices. Then there are whole units of auditors that go through and recheck all those certifications to make sure the whole chain is authentic with regards to the goods moving through it.
Blockchain technology is a mechanism of creating certifications (signing a transaction) and verifying those certifications (miners/verifiers on a chain) that can operate in a decentralized but coordinated way. It allows for the whole system to better coordinate information and certification that used to be done manually.
This is helpful I am total neophyte when it comes to blockchain but its continued to surface in a number of conversation that seem credible- I need to launch a anonymous,but verified, de-centralized but coordinated way where users can contribute and consume with appropriate transaction costs- Blockchain seems to be an approach, as an underlying structure but I am concerned that its too hyped to be taken seriously and also seems to compete directly with other database approaches that today have computational scale issues but wont always due to low cost distributed technology- thoughts?
Thanks a lot for your explanations. I'm very interested in that space. However, I'm a complete outsider. Would you have any pointers how to break into logistics + blockchain space as a developer? Like blogs to follow, companies, suitable jobs etc? Very much appreciated
I'd love to read more about this if you or someone else has written about it in-depth. I'm still not clear on the connection between "mining" (spending computing power) and the type of work that logistics professionals do when verifying parts of your supply chain.
Mining, or intentional computational busywork, is one method of allowing anonymous transaction processors, uh, process transactions. A logistics system does not need anonymous transactors; it can rely on it's own network of trust. A logistics solution is much more like Proof of Stake model, where reputation is the collateral instead of a fictional financial token.
In this model, I'll refer to it as Proof of Reputation (PoR), an actor might be a certified as a reputable party in the network. You might be a certified producer of bananas, verified and certified as fair trade and humane organic hand-crafted conditions by other organizations. I'm a buyer of bananas, but I want to make sure I'm buying fair trade bananas. I can look at your certification-of-origin and verify that you are reputable as fair trade. A port authority can confirm that I bought your bananas and put them on the USS Boaty McBoatface destined for Los Angeles to meet the huge banana split market. You as a consumer can check these certifications at the store.
As it stands, all of these processes operate haphazardly and it's insanely difficult for major countries to coordinate and verify what is going on. The coordination technologies, like Ethereum's GHOST implementation, combined with public-key infrastructure helps reduce the "deadlock" time of coordinating these large public and private bureaucracies.
I know I'm not explaining this well. I'm still working on a more concrete model. In my mind the process of creating, signing, and verifying a cryptotoken transaction is eerily similar to what logistics management is all about. You need to prove the origin, verify they made the transaction, and then have a reputable actor process said transaction. There's still a lot of manual work, but the system of sharing and coordinating that work is also painful and manual. The technologies that power cryptotokens can help with the latter problem.
How do you verify that the physical objects the digital certificate is attached to, is actually attached to the things it is meant to certify, and not replacement counterfeit?
The same way you verify it now. The technology does not change the process of physically inspecting the product. It makes it far easier to coordinate the paperwork of certifying and verifying.
At it's heart logistics is a global concurrency problem. The "locks" we use now are large sprawling bureaucracies that manually coordinate the transfer of information among many independently moving agents. Getting information into and out of this organization is a tedious, labor-intensive, and time consuming process. The technology that empowers cryptotokens is an alternate computerized concurrency management for this kind of information transfer and lookup that doesn't rely on a central organization or system.
Ok, but if _someone_ is certifying who can and who cannot write to the blockchain, why wasn't this solved 2 decades ago with that someone running a database with an API front-end that all involved parties can use?
Sorry, I replied somewhere else, I don't feel like copypasting, but roughly the blockchain would not prevent false declaration. It would 1) considerably simplify the non-fraudulent papertrail 2) provide an auditable record for investigation in case of either fraud investigation or certification audit
I've heard the logistics value prop from a number of people, and not a single person has ever been able to fully articulate an answer to "okay walk me through how it works". I once literally went through 5+ iterations of this with a friend that devolved into hand-waving.
how about scanning a barcode or a RFID reader ? This information is already read and stored in ERP. Is it such a technological step to imagine a RFID reader or an ERP module that would write the information in a blockchain? I don't see the objection here.
The blockchain would be a decentralized papertrail accessible to all actors of the supply chain, down to the end consumer ideally, instead of the current nightmare of shipment papers, siloed ERPs and so on
Lazy actor: receiver will scan the codes and see that data doesn't match, thus they can't trust the sender.
Bad actor: unless you intend to use rolls by yourself, what do you gain? You can't sell the better rolls as such, because you have broken chain of trust.
But such arguments lead nowhere. Of course you can come up with scenarios which can be misused. The real challenge (and one that is being solved by lots of people in crypto world - well, at least those that aren't consumed by greed) is finding scenarios that work. The ability to store information cheaply and immutably can change many industries, but technology must be deployed in such way that it makes sense.
"If we strip away the consensus mechanism, all that is left is a trivial data structure that anyone with a CS background could come up with. So, the question becomes where the real value proposition is in "blockchain technology" outside of the realm of crypto currencies. What are the things you can only do with "blockchain technology" that cannot be achieved with existing technology?"
To paraphrase -- "if you discount everything a blockchain does, what can you only do with a blockchain". This is not a reasonable approach.
Yes, blockchains are (now, at least), trivial. A merkle tree or simile distributed database with multiple writers and time-based consensus...a lot like git, really. There are an enormous number of potential uses of such a technology -- security and land ownership, contracts, etc. Virtually anything where you want an auditable, immutable historical record and where the data has many interested parties. This historically was accomplished via a centralized trusted database, but that doesn't mean that's the only solution.
HN, in many ways, is overly cynical at times, and is too eager to try to knock down the hypesters, throwing the baby out with the bath water to make a point.
You do not answer the question: What are the things you can only do with "blockchain technology" that cannot be achieved with existing technology? The things you mention can already be done with centralized trusted databases, just as you said.
GP means to say that git can cover most use cases via Merkle operations/properties. What Merkle does is give a trustless distributed ledger. Mining/PoW allow fully trustless+anonymous while other methods are trustless in the sense you can create rules and identites leveraging signatures atop the Merkle in various ways and audit changes before voting, eg. PKI in my experience.
It's funny how all these replies are almost an answer in an of themselves. You laid down a basic truth: the only thing technically distinctive about a blockchain is the trustless consensus algorithm. The rest of it is perfectly run of the mill tech. And yet the deluge of replies is completely focused on the run of the mill tech like merkle trees and distributed datastores. Some good ideas maybe but nothing to do with blockchains.
The question that no one bothers to ask is, "What problem is this technology solving that can't be solved cheaper and just as effectively with 'traditional' technology?" When you look at it this way I think the realistic use cases go way down.
Those are commonly copy-pasted claims but the reason why it keeps coming up is that the question of what makes it better is either unanswered or, in cases like voting or storage, known to be worse.
Your language is inadvertently quite revealing: “non-believer” isn’t how you talk about technical issues with well understood tradeoffs. It’s how you talk about something which you’d like to be true but isn’t.
^ Detailed analyses that explain why blockchain is an appropriate solution
But please do elaborate how they are "known to be worse." By whom and can you cite the analysis that proved so? Certainly not known by Google if they invested in a blockchain-based storage solution?
>well understood tradeoffs
That's definitely not the case if you take the time to read any blockchain-related thread on HN. But, please, feel free to tell me what are better solutions for the cases I mentioned.
Your second link discusses the problems with voting and correctly votes that they are unsolved, which was the entire point. Every solution proposed so far is a huge regression for privacy or coercion, so it’s dishonest to claim that as anything other than an area which could become not-worse if future fundamental breakthroughs occur.
File storage is similar: lots of people want you to buy their pet project but if you want reliable, secure, and cost effective it’s all “maybe sometime in the future when we have something different”. Talk about it as an advantage when it’s competitive for most people.
I thought the point was that "they are known to be worse."
>Every solution proposed so far is a huge regression for privacy or coercion
Can you please elaborate how is the solution proposed in the paper linked in the first URL a regression over non-blockchain solutions?
>it’s dishonest to claim that
I replied to the question of "what problem is this technology solving," and the paper you mentioned claims that "it seems reasonable that blockchain technology can help to achieve some of the desired properties." What exactly am I being dishonest with? I cited a paper where a protocol is proposed to help solving the eVoting problem. It directly answers the question I was aiming to answer--I never said my list was about already working, deployed, tested solutions.
>File storage is similar: lots of people want you to buy their pet project but if you want reliable, secure, and cost effective it’s all “maybe sometime in the future when we have something different”. Talk about it as an advantage when it’s competitive for most people.
Right... so your counter-argument is that "it's not yet ready" despite claiming that "they are known to be worse." No one said they're ready. They're using experimental technology and they're small teams. They already have beta implementations out if you want to test them. Yes, they're not polished and ready for consumers, is this your entire point?
> I thought the point was that "they are known to be worse."
Yes, for example, here's the full quote about voting including the sentence immediately after the one you quoted:
> Due to the requirements, it seems reasonable that blockchain technology can help to achieve some of the desired properties. However, to the best of our knowledge, so far no solution has been proposed that has been shown to be secure, verifiable, and private and there are still many open challenges.
There's simply no proposed system which is not worse than the status quo, and that's ignoring the additional challenge that even in the event of a major academic advance you'd have the additional concerns of having to be cost-competitive and establishing public trustworthiness before you could call it better. That kind of work is measured in decades.
The situation is less severe for file storage since you don't have as many attacks but, again, there just isn't something which is comparable on cost, performance, or reliability. I'm comfortable saying that's “known to be worse”.
> It simply gets tiring for people to argue ad infinitum about this with every non-believer.
And the true believers are the ones who will be lambo rich as long as they keep buying and holding, right? Just keep hyping up all these empty promises... some rube out there will buy into it.
- Brendan Eich was purged for being found to have donated to anti-gay marriage campaigns. Therefore, donating anonymously is obviously desirable for many people as your current beliefs may affect your career when the general rhetoric changes. Similarly, anonymous donations, which are very common, may be your preferred choice simply because you don't want the receiver or anyone else to know
- You were diagnosed with a mental disorder in your home country, and you move to a different country. In the new country, the medication you were prescribed is not available for pharmacies to sell. All the alternative medications you tried do not work, and it's illegal to buy your medication that was legal in the other country. With non-anonymous payments, buying the medication through financial services would put you at a high risk, so you would be forced to sacrifice your wellbeing/mental health.
- Your government is aggressively hyperinflating your national currency or capital controls limit the amount that you can cash out daily to $X. Use of credit or debit to pay out of the country is banned. You want to use a decentralized currency that need not be approved by the government or any other third party that you need to trust. Anonymity is optional, but perhaps you don't want to risk having your digital wealth traced back to your real ID.
- You value your privacy. Maybe because you don't want companies to sell your data for machine learning algorithms to track your payment behavior and apply "price discrimination" algorithms to you. Maybe you believe that it is only your business who you pay and what you pay for, and you don't trust that any of these will not be used against you in the future if used via a centralized entity.
All based on real events.
>I think that's where we disagree
We disagree that situations that are not relevant to you may be relevant to others?
"Brendan Eich was purged for being found to have donated to anti-gay marriage campaigns. "
I love how the takeaway from this is always, "We need more private ways to exchange money!" rather than, "You know, maybe you should have opinions that respect the human rights of others."
At the time, neither Hillary or Obama supported gay marriage. No political view can stand the wind of time. Should Hillary have been a viable candidate in 2016, given that she "didn't respect the human rights of others" in her 2008 run for the dem nomination?
A mere 10 years later you are insulting someone you likely don't know for 'not respecting human rights'!
Example 1: It's possible that eating non-labgrown meat will be considered a crime within fifty years. Who knows? Are you sure you want all of your current actions judged by some unknown future values?
Example 2: How sure are you that future society will agree with the current 'clump of cells' argument? Would you want to be on the record forever donating to abortion clinics? Your political ideology may not always be in charge either (Mike Pence).
Example 3: Society in a decade might consider us brutes for driving cars manually. How do we accept ~1/X000 high school students dying in car crashes, mostly by preventable causes (drinking, distractions, speeding, seat belt, etc).
We have not reached moral perfection as a society. Future society practicing moral relativism is not guaranteed. So, protect your future self, and protect your privacy.
It was an example. Change it to pro civil rights in the south in the 60s or something you agree with that becomes unpopular when political opinions change.
It's not perfect for that either. There have already been cases where tokens were stolen and blockchains were forked to recover them. The very last thing I want for my money is for errors and/or malicious acts to be permanent and uncorrectable.
> being able to undo transactions is a feature not a bug of the modern financial system.
Best takedown of cryptocurrencies that I've seen. Explains, as succinctly as possible, the fatal flaw in the idea. I'm gonna steal this line for the future.
yeah that’s also why cash and gold are worthless XD. who in the world would take cold hard cash or gold bullion in exchange for goods??!! you can’t reverse it!! and guess what, someone can hold a gun to your head and take it.
> and guess what, someone can hold a gun to your head and take it.
Those are contradictory statements. The government can absolutely reverse a criminal taking your money by arresting them and returning the stolen cash.
Can't the government do the same with cryptocurrencies though? They can also "arrest the criminal and return the stolen cryptocurrencies". Not very practical 99% of the time though...
> it also protects you in cases where someone holds a gun to your head and forces you to make a transaction.
No. The only case when someone ever threatened to hold gun to my head and demanded money was taxation. With cryptocurrency it's possible to avoid that, because they don't know how much money you have. And even when they do know, it's much harder for them to take it, they need to know password.
Because there's no point in going through all the steps, but that's exactly where it would end if you absolutely refused to pay taxes and refused to pay fines or go to jail for not paying.
I fail to see how having a gun to your head is in any way true. Can you give any examples of this happening?
Tax evasion is a crime and you should go to jail (you are exploiting the benefits you have received from society). But big companies find tax loopholes all the time and they go to white-collar prisons or get away with it anyways.
Transactions aren't "undone". In the event of fraudulent charges to your bank account, they simply eat the cost and comp you. As a result, some portion of the fees that you pay to bank are dedicated to these fraudulent charges.
> they simply eat the cost and comp you. As a result, some portion of the fees that you pay to bank are dedicated to these fraudulent charges.
It is important to note that "they" is usually the company that charged the card, not the bank or merchant processor. It is very similar to receiving a refund.
In the real world, ownership is more complicated than that, which is why the law is interpreted by judges and not computers.
E.g., courts can transfer ownership of your car from you to someone else for a variety of reasons, without your consent. How does this work in a blockchain world?
Your answer might be that the State (or the judicial system, I suppose) should have some special private key that lets them sign transactions transferring anything to anyone, even if the previous owner doesn't consent.
If so, why is that better than just having a plain old centrally controlled, publicly accessible database that the State signs with their private key? What does blockchain technology give you over that?
Agree there is much hype over blockchain, but there is some advantage in the context you raised.
Currently, if you want to buy or sell real-estate, you have to record that transaction on a central government database. These "databases" used to be paper documents, but are now slowly moving to electronic systems. But they are still centrally controlled, and often even new systems are horribly out-of-date and require specialized real-estate companies to record transactions and pull transaction history, with hefty service fees, often several thousand dollars per sale.
If this real-estate system was based on the blockcahin, it could remove the government as a central source of trust and title companies that specialize in interacting with it would face far more competition. In theory, it could reduce transaction costs to buy and sell real-estate. Admittedly, this may solve some problems but create others, but the benefit is quite clear.
Just a transaction record from one account to another of $2M isn't proof that ownership of that property was transferred.
You need to connect that transaction to a contract and the contract in turn needs to be verified by some third-party and some process. In a develop country, that process is going to be tied to government.
"Proof" is a legal definition, and legal definitions are defined by the government. Accordingly, I entirely agree that any real property transaction must be tied in some way to the government.
That said, you should take a look at the current system. In many counties, it's still a large ledger of transactions in pencil and paper. In "modernized" counties, but with with extremely restricted access, made intentionally hard-to-access to keep title insurance companies in business.
Title insurance companies charge thousands of dollars on every sale to insure legal claims to property. Any trustworthy publicly accessible database, crypto-based or not, would be a huge improvement over the current system.
why should the state have any claim to my property? that’s your best argument. regardless, i’ll answer your question.
blockchain are immutable and public. therefore the government can’t be corrupt and steal/funnel people’s property like they do in the real world now. we can all scrutinize the transactions.
That sounds like you're arguing against the idea of the government having a judicial system... If I steal someone's car, and the police catch me and have proof it's stolen, the justice system can take the car away from me and return it to its rightful owner.
How does that work in a blockchain world? If I stole the car's digital title (via hacking, coercion, etc.) and after getting caught, I refuse to cough up my private key... I can effectively prevent any transaction returning the car to its rightful owner. At that point either the ledger is broken and useless OR you need a judge to be able to force a hard fork, and system is no longer decentralized.
Your second paragraph about having an immutable public record to prevent corruption seems like it could be solved more simply by just having the government continually publish a record of transactions, which anyone can archive or mirror to verify the government never tries to secretly rewrite the past. I.e., a public git repo could solve that, no?
The other part to talk about relating to trust is that do you want to be on a system with people that you are blind to knowing, and especially on a system that is designed to allow manipulation of it; there's research that could be referenced showing a few different efforts to boost the value of incentivized crypto-assets.
In this context, it mostly means private, permissioned distributed ledgers serving as a fancy distributed, shared database with some business logic built in. The cost and complexity makes some sense when you have several assorted players taking part in various parts of a value stream. Tradionally each has its own slightly unique copy of the data, lots of legacy, integration and conciliation between them. Some scenarios a company appears whose sole purpose is to be a mediator and custodian of this data, adding complexity and cost to the process. This shared database solution allows everyone to have consensus on the rules, the transactions, and the current state of the data, removing lots of complexity and some intermediaries. This shared database could be a mysql, oracle or whatever instance, but blockchain characteristics make it interesting for this use case, when each member of the consortium doesn't necessarily trust each other, you want equal shared ownership of this distributed database instance, and so on.
More generally, modern blockchain technology brings a lot of capabilities besides this replicated, ownerless consensus that personally I see as building blocks for your architecture. Most of them are not necessarily exclusive to blockchain, in fact lots are cryptography capabilities, but are enabled or facilitated by blockchain architecture or by each other. These are things like:
- Immutability, which is the guarantee that you have a historical record of data stored, and it won't be further changed, accidentally or maliciously.
- Notarization, which is the ability to record and identify the authencity of the originator of the information, even if you don't want to reveal the infromation or the originator identity.
- The balance between transparency, anonimity and privacy: you have tools when designing your solution to make all transactions and information trackable or not. For example you can design it so you can record transactions without revealing sender, receiver and values and still guarantee the consistency of the whole, that there's no double spending or creation of resources. Or you can design it so you can track the whole history of a resource from its creation to its consumption.
- And the coins/tokens per se, particularly when you are not looking at them as general currency or toll tokens that you simply buy and spend somewhere but when you look at them as incentives where you can control how they are created, distributed, deposited, what it means to hold/deposit them, and how to spend them. You can change who the stakeholder is and monetize user's attention, his data, behaviour. I don't think people quite figured it out yet how to properly apply this for things like social networks, journalism or creative work ("patreonism"), but it's being explored and moving along.
Everything is still quite immature and moving at breakneck speed with uncountable new projects and ideas appearing all the time, which I see them as proof of concepts of the capabilities above, variations of them, of even new different ones. And lots of scams or profiteers wanting to get into the blockchain/ICO hype.
It's quite hard to find the balance between the exagerated hype and the naysayers (which I feel lots are just an exagerated reaction against the hype), but I assure you, it's way more than just what anyone with a CS background can come up with.
It is interesting that even in an article like this that they still say things like "for all its potential, blockchain is still in its early days." It is sticking with the unfounded assumption that it will be a success in the future, if only it is given more time. In technological terms, it is old. Innumerable efforts have been attempted, yielding almost no fruit.
At what point are the fundamental assumptions going to be questioned?
I think the fundamental assumption is that "Satoshi invented a useful solution to decentralized consensus".
What people don't realize is that Satoshi's solution only works if two assumptions hold true:
1. Mining is decentralized: If mining is centralized than relying on proof-of-work for consensus is waste since the centralized entity controls the blockchain anyway.
2. Consensus rules don't change: If you see the threat of #1 and so take power away from miners (like Bitcoin has done), then you cannot ever change the consensus ruleset because aside from proof-of-work, Satoshi did not give any solution to the problem of choosing between 2 chains that have slightly different consensus rules. If you change the consensus ruleset (ie. make any changes where 2 nodes disagree on if a block is valid or not), then you need an oracle to tell you which chain to choose. We've seen this when Core developers chose the 0.7 Bitcoin chain in 2013 and when Vitalik chose the forked Ethereum chain in 2016.
At the end of the day, the blockchain's decentralization is a myth because it relies on false assumptions. Satoshi invented a Rube Goldberg machine that is currently using as much electricity as a medium-sized country (and also enabling things like money laundering, drug trafficking, etc.).
Cryptocurrency mining is as close as one can get to a theoretical free market in the real world. Free markets have known modes of failure [1]. One of these is where first-mover advantage and economies of scale combine to produce a barrier to entry; the result is oligopoly or monopoly.
Except that so far it remains to be seen if that can work at scale. Bitcoin is moving towards the lightning network which changes things quite a bit, in particular potentially adding some centralization and giving some nodes advantages over others (well connected nodes with large open channels will have an advantage over a newcomer without connections for instance).
Bitcoin cash is trying an other route with bigger blocks but it remains to be seen if it scales well enough to real-world currency usage. And of course there's the big problem of cryptocurrencies being useless as currencies because they're not stable enough. Which itself can be largely blamed on their limited supply and inflationary nature which is necessary to bootstrap them (there's an incentive to get in early) but seems to turn against them in the long run since nobody wants to spend something that's by design supposed to become scarcer and scarcer.
It might be theoretically free but it doesn't work great so far. And of course we could discuss whether a completely free market is a good or a bad thing, but that's a whole different debate.
>Bitcoin is moving towards the lightning network which changes things quite a bit, in particular potentially adding some centralization and giving some nodes advantages over others (well connected nodes with large open channels will have an advantage over a newcomer without connections for instance).
The centralization narrative involving LN is somewhat mischaracterized IMHO. Given that source-routing puts control of payments into the the payer, you can choose to mitigate the custodial risk of a single hop holding up your funds in their payment channel a number of ways. For instance, there is no reason one payment from person A to person B needs to involve only one route.
Intelligent wallet software, on the order of tens of milliseconds, could break up one payment of $10 into 100 different routes across numerous payment channels. In addition to giving you custodial risk mitigation, its also beneficial for privacy as well.
I think the average human being values convenience and low fees much more than privacy (otherwise Facebook and credit cards wouldn't be quite as popular). That means that I expect that wallets and stores that offer the smallest fee will be the ones people use most. A well connected node will be cheaper to transact with by virtue of not having to open a new channel.
That gives well connected "bank" nodes a lot of power because they can decide who they connect with (you could imagine paying a "bank" node to connect with you to enable cheaper transactions for your customers) and as a user you have an incentive to host your coins in one of these bank nodes so that it remains easily and cheaply available for purchases. Meanwhile a small indie shop (or some guy selling socks on ebay) won't have any channel so transacting with them will end up more expensive than buying from a popular store.
Basically you've reinvented Visa without the insurance, regulations and customer protection. At least that's how it looks like to me.
I guess we'll know soon enough which one of us is right. Maybe the truth is somewhere in between.
> I think the average human being values convenience and low fees much more than privacy
I think it ends up being more nuanced than that, with plenty of gradations of all of those factors.
If it means, "Literally nobody can know whether I prefer pads or tampons, and where I get them, not even the person I buy pads or tampons from", then I'm going to lean toward paying cash at some random drug store. A brick and mortar because getting things shipped to me requires giving them identifying information, and cash because it has literally zero fees and leaves no paper trail.
If I have to buy something online, then I already have to give them my name and address so I can get it shipped to me. At that point I may not care if my bank and the credit card processing agency also have a record of the transaction, because the info's already out there. At that point it's just a question of whether there are privacy laws that prevent parties from selling too much information or not - either way, I'm guessing 1 and 3 parties will ultimately fall in roughly the same equivalence class, on the privacy front.
Personally, I don't see a middle path where blockchain is preferable to either of those options. If I want complete privacy, then I don't want that transaction appearing on the blockchain, either. If I don't, well, might as well get some consumer protection.
In reality, the average person is going to buy pads or tampons in a way that is most convenient to them.
Only the subset of privacy concerned consumers who don't want anyone to know whether they prefer pads or tampons will go out of their way to visit a random drug store.
That's not the argument. The idea is that if a given amount of bitcoins is set to increase in value as time passes (as is supposed to happen if the currency is successful) you don't have a lot of incentive to invest or spend your money.
If you have $100 on your bank account today then you've got incentives to spend or invest it soon because it's slowly losing value because of inflation, your $100 will probably buy you fewer goods and services in the future that it does now.
Now if you have BTC100 on your wallet and you believe that Bitcoin will succeed as a currency then you know for a fact that these bitcoins will be more valuable in the future than they are now (because the demand will grow but the supply is capped). Ergo you have strong incentives to hoard your bitcoins and not spend or invest them. Your savings gain value without actually being invested in anything. They don't contribute to the economy, they don't fund anything.
I don't understand why most cryptocurrency enthusiasts don't see a huge problem in this. How will you get a loan to start your company in the bitcoin world? Who would want to take such a risk when they'll keep getting richer by not doing anything at all? You'd have to promise them ridiculously high returns (higher than bitcoin's deflation at least). The rich gets richer by virtue of being rich, the poor needs to buy food and basic utilities so they can't save their coins to become rich. Basically what we have today, only worse.
I am a big supporter of crypto currencies, and I do see a problem in that. However, the current volatility will level off significantly once there is wider adoption. That will help reduce incentive to hold. I would never recommend somebody give/accept loans in crypto currencies right now. The time will come though (unless governments squash crypto through regulation or outright banning).
That said, there's no guarantee that BTC or any crypto will appreciate indefinitely; in fact quite the opposite. It can (and does) lose value.
This also overlooks the benefits of a non-fiat currency, such as protection against things like hyper-inflation (most of us don't think about this right now, but if you have any friends in Venezuela ask them how important this protection is).
I'd imagine very useful - just sell it for a few thousand and then "Including Venezuela's equivalent of food stamps, the total pay package now rises to 250,531 bolivars, or $32.19 a month" so it should cover that for a while. Or a flight out.
Except that Bitcoin was mostly minted by a small group of users who simply horde it, hoping to sell it to other users who due to the software will not be able to generate it for as low cost as the early users.
It's zero sum (minus the cost wasted in maintaining the network), and the game theory Satoshi designed will inevitably disincentive new users from adopting it as the barrier to entry increases and alternative options will likely obsolete BTC.
Bitcoin is still deflationary, which makes it unusable as money. Inflationary currencies like USD incentivize people to spend and invest. Deflationary currencies incentivize people to hoard.
Bitcoin is inflationary until the mining period ends, which it hasn’t. You could then still increase the virtual money supply through fractional reserve banking; also “investing” is a lot more like hoarding than it is spending…
So far I don't really know if you can call it inflationary or deflationary because while it's true that the supply keeps increasing the main source of variation for the currency's value is speculation. BTC barely qualifies as a currency today so I don't think we can think in these terms, it's more about what it could end up being if it manages to turn into a proper currency.
>You could then still increase the virtual money supply through fractional reserve banking
You can't do fractional reserve banking on-chain as far as I know so that would mean having your money managed by 3rd party banks who would take ownership of your coins, pool them with other people's coins and manage them for you. So... Back to the start?
Furthermore I don't think it solves the problem of deflation, even with a fractional reserve the bank has no incentive to invest the money if the expected return are less than what it would end up with by not doing anything at all (and therefore not taking any risks either). If you have inflation of, say, 2% then any investment expected to create value or even lose less than 2% is a good one. If you have deflation of 2% then an investment that managed to generate 1% of additional value over your investment actually made you lose money because you'd have been better off not doing anything.
Therefore deflation will make it a lot harder to loan money, fractional reserve or not. Interest rates will be a lot higher to make up for it. The poor will pay the price for being poor, the rich will reap the reward for being rich.
>“investing” is a lot more like hoarding than it is spending…
Depends what you invest into I suppose, if you "invest" in gold bullions then you're right, if you're investing in a startup or loaning money to people buying houses then you're powering the economy.
If you compare the thousands of years where deflationary currencies were working well to the modern Era I think most would prefer an inflationary currency.
It would appear the choice between deflationary and inflationary monetary systems was, at some point along the way, democratised.
And the majority chose inflationary monetary systems.
Each of us is free to offer to pay for goods and services with, say, for example, gold, and each of us is free to ask you trade your gold for legal tender and give us that instead - yeah, the one the tax agency accepts.
The only thing stopping deflationary currency from being used by most people is that most people are too busy surfing / skiing / rock climbing / recovering from a hang over / what have you to care much about how monetary value is exchanged. People, on the whole, only seem to really care about convenience. And more specifically, the more convenient it is to spend money, your own or credit, the better.
But is that the way it should be? Also, this isn't universally true. There are some vendors that started accepting Bitcoin as payment. Some of them stopped accepting it a few months ago when transaction fees were insane, but there are still some that do. You can even get debit cards that automatically convert to fiat on the backend, so the consumer can hold crypto and pay in fiat.
Actually, it's the exact opposite. The security of a blockchain is fundamentally dependent on mining being expensive. That is the only defense against a 51% attack. Cheap energy just drives up consumption to the point where mining is expensive enough to deter attacks.
This is ultimately what I think will sink blockchain as a medium of exchange (not necessarily as a store of value). By its very nature it cannot be cheap, so TTPs will always be able to beat it on price.
I'm not even sure that mining being expensive is a great defense against a 51% attack.
If things do end up being an oligopoly, then any one of the members of that oligopoly will only have a relatively small sprint between their current position and a 51% attack. And quite a few options for how to attempt such a sprint.
I meant that the variation in electricity costs harms the reputation of the blockchain. Work needs to be approximately the same difficulty for everyone.
Work needs to be approximately the same difficulty for everyone
Unfortunately the main design and math of of Satoshi's PoW means that users who ran the BTC software app 2009-2014 worked far far far less and spent much less CAPEX and OPEX to generate the majority of BTC that will ever exist.
No, the fundamental assumption is that distributed consensus in itself is useful. So far, there are some applications (databases), but for the stuff they are using the blockchain for, not so much.
Are there other means of distributed trustless consensus as secure as PoW? Secure being the operative word here. Lots of attempts, but none yet convincingly as or more secure.
People who are not crypto-anarchists don't realize that the only reason for proof of work is so you don't have to trust anyone. If there is trust, a centralized database is better in every way vs. Blockchain.
People who do not read modern research don't realize lots of the things they think are true about the state of research are totally false.
They also think that it's Proof of Work that provides a lack of trust. While that's involved, what's actually more meaningful is the demand to quickly select a "profitable" branch to mine and re-mine on. That can exist in PoS as well.
Hedera Hashgraph recently revealed that it supports more than a million transactions per second based on current usage by developers, that's enough to support decentralized servers and open source MMO environments. It uses gossip protocol and a form of voting protocol.
I'm invested a bit in Credits which claims it'll do a million transactions per sec but it's kind of bs - they can do nearly half a million in very limited conditions but in the real world the numbers will probably be far less and I'm a bit skeptical of such claims. I'm not sure that fast is necessary though - credit cards do a few thousand transactions a sec globally so if you can handle that you could potentially at last use crypto to pay for your coffee etc https://medium.com/@viruseslovers45/credits-the-best-blockch...
Yeah, Hashgraph appears to do high tps at relatively small number of nodes, aka will probably work in permissioned/consortium style environment with limited nodes, but whether it can scale in a public environment with unlimited nodes is an open question.
A non sharded public blockchain that doesn't do some kind of validator delegation will always be bottlenecked by a single validators computational capacity, which is on the order of 100-1000. Hedera is really pushing the line on making fraudulent claims here.
Hashgraph doesn't use blockchain - look into interviews with Dr Baird if you're interested. MachineZone, the big game company, is now building on Hashgraph:
Of course, but those aren't trustless per my question. They're designed for single administrative environments like corporate data centers where a trusted entity controls the environment.
The other two possible environments being multi-administrative (permissioned DLT deployed among a consortium of banks or entities sharing administrative privileges) or no-administrative (public permissionless blockchains like Bitcoin/Ethereum). The hard problem is developing consensus algos for the latter that scale while maintaining security of the shared ledger.
There is a large amount of r&d being put into BFT-style proof of stake for Ethereum, it’s always been part of the roadmap. Much work still needs to be done beyond the test net, but so far no fundamental showstoppers have been found. There is also constant collaboration between the researchers and developers of major projects to move the entire field forward.
It’s still early days, unfortunately the hype got far ahead of the tech but progress is being made everyday. I think the same of VR/AR.
If only someone could think to google "BFT Raft extension" or "BFT paxos extension" and find published research. And if only papers from that search had citations. And if only those cited had links to foundational research on generalized BFT strategies. Oh if only we lived in such a world.
If only. If Only. IF ONLY. iF oNLY. If OnLy. iF oNlY.
But one of the biggest selling points of Bitcoin itself was mathematically limited supply. A new cryptocurrency appearing every day fundamentally undermines the value proposition.
Blockchain may have value as a decentralized ledger in other areas, but “lots of blockchain based currencies” aren’t really one of them since it’s self-sabotaging.
And by prospered I mean, never made money, never became self-sustaining at all.
Facebook is still expanding in its 15th year.
MySpace never earned a profit pre Fox acquisition (the Google deal gave it a one time bump).
In historical terms, MySpace is barely a bump in the road, about the size of an Ask.fm type service (ie trivial in today's hyper scale). It's like looking back and thinking Excite was a juggernaut and therefore a supporting piece of evidence that Google is going to die soon.
Facebook will earn ~$20 billion in 2018 and will end the year with $50 billion in cash. That's 86 times what MySpace sold to Fox for.
MySpace peaked in size at a mere 75 million monthly active users. Facebook is nearly 30 times larger.
MySpace then is to Facebook now, what AltaVista at its peak is to Google today.
That doesn't mean that creating a new social network automatically besets the network effects of the most dominant platforms. I realize that platforms sometimes get replaced. It is early days for crypto, to be sure. It certainly hasn't reached maturity yet. However, there are examples of other monopolies (AT&T, Microsoft, GE, etc) that have lasted for many decades.
Network effects, yes like how BTC is owned by a tiny pool of oligarchs who need other users to transfer real capital in for their zero sum pyramid scheme.
One important point: if we actually include all 7 billion
people on the earth, most of whom have zero BTC or
Ethereum, the Gini coefficient is essentially 0.99+. And
if we just include all balances, we include many dust
balances which would again put the Gini coefficient at
0.99+. Thus, we need some kind of threshold here. The
imperfect threshold we picked was the Gini coefficient
among accounts with ≥185 BTC per address, and ≥2477 ETH
per address. So this is the distribution of ownership
among the Bitcoin and Ethereum rich with $500k as of July
2017.
In what kind of situation would a thresholded metric like
this be interesting? Perhaps in a scenario similar to the
ongoing IRS Coinbase issue, where the IRS is seeking
information on all holders with balances >$20,000.
Conceptualized in terms of an attack, a high Gini
coefficient would mean that a government would only need
to round up a few large holders in order to acquire a
large percentage of outstanding cryptocurrency — and with
it the ability to tank the price.
With that said, two points. First, while one would not
want a Gini coefficient of exactly 1.0 for BTC or ETH (as
then only one person would have all of the digital
currency, and no one would have an incentive to help boost
the network), in practice it appears that a very high
level of wealth centralization is still compatible with
the operation of a decentralized protocol. Second, as we
show below, we think the Nakamoto coefficient is a better
metric than the Gini coefficient for measuring holder
concentration in particular as it obviates the issue of
arbitrarily choosing a threshold.
...However, the maximum Gini coefficient has one obvious
issue: while a high value tracks with our intuitive notion
of a “more centralized” system, the fact that each Gini
coefficient is restricted to a 0–1 scale means that it
does not directly measure the number of individuals or
entities required to compromise a system.
Specifically, for a given blockchain suppose you have a
subsystem of exchanges with 1000 actors with a Gini
coefficient of 0.8, and another subsystem of 10 miners
with a Gini coefficient of 0.7. It may turn out that
compromising only 3 miners rather than 57 exchanges may be
sufficient to compromise this system, which would mean the
maximum Gini coefficient would have pointed to exchanges
rather than miners as the decentralization bottleneck.
Conversely, if one considers “number of distinct countries
with substantial mining capacity” an essential subsystem,
then the minimum Nakamoto coefficient for Bitcoin would
again be 1, as the compromise of China (in the sense of a
Chinese government crackdown on mining) would result in
>51% of mining being compromised.
For a decentralized currency, the limited supply is the only value proposition that made it viable. Otherwise the currency itself becomes flooded by mining rather than purchased with other forms of currency, which leads to more miners trying to cash out than people trying to buy in, which leaves the currency itself into a constant, downward price based on sheer supply and demand.
Any type of currency that doesn't have something limiting the supply (not fixed, but at least constrained) becomes valueless by default.
Even if Bitcoin is limited, if cryptocurrencies themselves are not then we're all just giving people a license to print money.
At least with the Federal Reserve there is a governing body limiting the supply of new dollars entering into the system.
> "Satoshi invented a useful solution to decentralized consensus".
I think that even if decentralized consensus is workable, it's irrelevant for Wall Street projects because these organizations already have experience creating strong trust relationships and useful governance for collaboration (e.g., traditional contracts).
PoW is just one of available consensus algorithms. Blockchain doesn’t imply decentralised consensus, you can run it on paxos, raft, authority round or something else, especially for internal, private or semi-private networks. What you get is trail log with proofs that’s immutable and strongly protected against temper.
If your definition of "blockchain" is any distributed database with signed rows and a public read-only API, it's miles away from what Satoshi was talking about... Why don't you just call it a "distributed database with signed entries" or something.
When meeting my company's Head of Blockchain (not sure if the pun is intended) a while ago, I asked him if git would qualify as blockchain technology. He replied that "blockchain is not a technology, It's a paradigm shift". Literally. That statement was so absurd I didn't even know what to say, so it worked out well for him.
This is exactly what's driving my skepticism. The people who I've met who are most vocal about "blockchain" are also the ones who know little to nothing about the algorithm itself (and algorithms in general).
That is exactly the kind of thing I would expect to hear from a "Head of Blockchain". Your company made a great hire, and they will clearly push the boundaries of marketing bullshit with regard to blockchain.
No, very much not. There is no such thing as consensus in blockchain. Can you
(you in particular) even define the term "consensus"? Can you explain how does
your definition relate to what is commonly used in computer science and how it
works with the impossibility proofs?
> (and also enabling things like money laundering, drug trafficking, etc.).
If you're trying to take a dig at blockchain technology for its decentralized nature and ability to circumvent government controls, you should be aware that this is considered a good thing. See https://news.ycombinator.com/item?id=16702684, for instance. The recent SESTA/FOSTA debacle is one example of why such decentralized networks are needed.
I disagree with 1, because the real controller in any cryptocurrency is the software users of the coin are running. You could have trillions in mining hardware but that doesn't matter a bit if a popular implementation changes the mining algorithm to no longer work on your hardware and the userbase starts using that hard fork.
Its the problem that the advocates for larger blocksizes in BTC ran into. So long as the ecosystem itself was predominantly going to stay on the bitcoin core implementation, the advocates for change couldn't force it. Eventually they just hard forked into BCH, while the more popular original chain keeps on going.
That also means that nothing is really decentralized unless you can cause sea change amongst all participants in a cryptocurrency - if you disagree with what the most common implementation is doing, you can't do squat about it, and commit access is never decentralized or democratized. Theres always someone with the master key to the repo. And we have seen plenty of evidence that once established unseating a popular implementation of any crypto is nigh-impossible, regardless of what the developers do.
Aside from the fact that proof-of-work on a world scale utterly defies the CAP theorem, there has never been an economic system that can scale to the level of, say, one order of magnitude close to ubiquity where there are no trusted intermediaries. Human civilizations just won't organize this way.
There is another, more social, assumption he is making: value that is stored on mathematical concepts (e.g., blockchain) is more appealing as value that is stored on more traditional concepts (e.g., reputation, trust).
The social question is the more interesting one. Tech history has suggested that people slowly but surely gravitate to more open systems, but asking folks to hold their life savings in digital currencies that rely on mathamatical promises completly foreign to the average user seems like quite a stretch. It does not exactly help that just about day there is a news article of some new data breach of an online system.
Mainly because known markets were shut down (maybe some new ones have cropped up which are not in that tracker?) and the dominant use of bitcoin transactions currently is wild speculation.
> If you change the consensus ruleset...then you need an oracle to tell you which chain to choose.
What are you talking about? The rule to choose the correct chain is well defined and simple. The longest chain, i.e. the one with the most work done, is the correct chain.
I'm not sure if you've spoken to any Bitcoin developers recently, but they'll tell you you're wrong and that it is the valid chain with the most work, not the chain with the most work. They'll then tell you what valid means.
Some developers would agree with you though, like Gavin Andresen [0].
Either way, you end up with either centralized miners deciding the fate of the chain, or centralized developers deciding the fate of the chain. Both outcomes are contrary to what Satoshi envisioned.
It has always been the longest valid chain though. If miners were to introduce double-spending transactions in a block, full nodes would--by default--reject the blocks, regardless of how much work the chain contains. This also highlights why miners don't control the network and never had.
My understanding is that the danger of miner control is not "double-spending" but making multiple spends and being able to pick the most favorable one after the fact.
As a non-controller if you try to double-spend, you can't know which one of your attempted transactions will be recorded in the ledger and which will be rejected. As a 51% controlling miner, you can choose the 'correct' transaction.
This allows the 51% controlling miner to engage in futures arbitrage.
Double-spending just means spending the same output in multiple transactions--there are many ways to perform a double-spend attack. Your interpretation of a 51% attack is correct.
If it wasn't clear, my comment was referring to a double-spend that would result in an invalid block i.e. both transactions are on the same chain. I simply used an example to argue that it's always been the case that invalid chains are rejected by honest nodes.
A sufficiently large miner could, right now, create a block which created a million bitcoins from nowhere and gave those to them and it would - for a while at least - be the longest chain. No other clients would accept it, of course, but by your definition the chain where someone just made themselves a billionaire would be Bitcoin.
The really funny thing is that we are going to see more and more coins moving towards regular changes to their algorithm to keep ASICs out, and effectively surrender their decentralization.
Taken to the logical conclusion, a supernode that is issuing algorithm changes is no different from a supernode that is signing blocks directly, just vastly more inefficient. Since you are already centralized, there is no reason to have miners at all. It becomes a ponzi scheme where the rewards are paid out randomly to participants.
> and also enabling things like money laundering, drug trafficking, etc.
At this point, I don't worry about those; criminals would operate with or without Bitcoin and we have government agencies dealing with those; I'm more concern about suicide rate that will spike due to BTC/altcoins losing 80% of value.
I have too many acquaintances on my Twitter that last summer were showing me "this cool blue app that helps make 15% a day" and now they remain silent. I tried to contact two of them via cell and it goes nowhere.
Looking at BTC/ETH/altcoins charts, I can only image brain-halt it caused so many people that we putting second/third mortage on their house just to "invest in a blue iphone app" and many cashing out their 401k just to be lest with 5% of their money not even year later.
TCP was created in the mid 70's. The internet as we know it didn't offer the average user much value until the mid 90's and even then it was a very small amount of the population capable of using it / benefiting from it.
Electric cars were around in the late 1800's. In the early 1900's they were on a par with gasoline / steam powered car sales. It has taken us well over 100 years to get to a stage where they're considered a viable option again for most people again...
Bottom line - technology morphs over time so long as there are people passionate about it and continuously working to improve it. There are literally thousands of developers working full time in the blockchain space and it's one of the hottest growth areas around in technology in terms of developer mindshare.
It's not going to die any time soon, regardless of what price Bitcoin is.
> The internet as we know it didn't offer the average user much value until the mid 90's
The Internet was useful to academic, financial, government and military users in the 1970s [1]. It was built and iterated to solve real problems. Real users' inputs, many of whom were experts in their fields, were incorporated into its design.
Not to mention corporate email was popular in the 1980s, long before the Web reached a large number of traditional consumers. Even the Queen of England sent an email across Arpanet back in 1976. Microsoft Mail came along in the late 1980s.
> TCP was created in the mid 70's. The internet as we know it didn't offer the average user much value until the mid 90's and even then it was a very small amount of the population capable of using it / benefiting from it.
Using it directly.
I don't personally own any equipment that speaks ATM, but I benefit from the existence of networks that use that protocol all time.
Heck, I doubt I'll ever touch a Bloomberg terminal, and I'm not entirely sure if their existence really benefits me at all, directly or indirectly, but that doesn't mean financial companies can't easily find uses for them.
It took centuries for the fundamental hermetic assumptions of alchemy to be questioned, and it had to come from 'insiders' (like Boyle and Newton) rather than total skeptics. Even then it was never refuted in any official sense, it just sort of faded out of fashion as its surrogate children, the sciences, took over more and more of its academic spotlight. Blockchain-ism, the alchemy of the internet age, will probably have to follow the same arc, though sped up by an order of magnitude thanks to the much improved knowledge-sharing network of the present day.
Good point. Having a strong 3rd party intermediary moderating/backing transactions is a feature not a bug. This is why people bank with JP Morgan and similar huge banks. Although they charge fees you do get something for the money. They are governed by laws, have physical locations, people to talk to, fraud prevention and raw financial, legal, and regulatory power. I have no love for them but I believe they will guard my money effectively.
You're probably referring to a strong 3rd party intermediary as the aggregate of our financial system when you refer to its regulatory power here, but that it reads like the bank itself has regulatory power is the critique of money provided by Bitcoin in a nutshell. Regulatory capture IS the problem of scalability with our monetary system. Bitcoin exists to prove this.
The problem in 2008 was the investment, not the deposit arm of banks.
Bitcoin has had problems with both the investment, and the deposit arms. Most ICOs are pure fraud, and i've lost count of the number of robbed exchanges.
2008 was not really a question of trusting banks in a way that our savings were harmed. It was more that our investments were harmed. Separating bank liability for either of those things is hard, but it is not a simple case to assign all the blame on them.
Bitcoin needs blockchain to verify that a bitcoin is authentic.
I have no idea why a company would use blockchain for logistics or file storage considering how its massively expensive to constantly pay miners for transactions.
My centralized server can do everything needed for logistics or file storage.
Benefits of blockchain are overblown. There are uses, but centralized servers are really good.
Now I agree that a lot of ideas for how blockchain will be used are just unnecessary and stupid, but there are some good ones as well.
You mentioned file storage but actually I think blockchain could be useful for this. Allow me to elaborate.
I don’t want to rely on Dropbox or Google or any other single company for the long-term storageof my data. And I don’t want to accidentally upload unencrypted data. And I don’t want a single company to decide what platforms they will support.
I want an open protocol and a nice open source client. Different people have different wishes. For me that would be far more attractive than the centralized storage you are suggesting, because it’s not just about the servers and the storage it’s also about the people and the software ecosystem around it.
And besides, if I gave like hundreds of GB of data to one company then they could easily start charging me more in the future and I might not be able to do much about it. With a distributed system I think there is a better chance that competition might drive prices down more.
And that’s just one kind of use-case. There are more as well.
I think blockchain in general is cool and also I like projects that aim to make worldwide payment be really fast and cheap and for the banks to hold less power over my money.
There are already open file storage protocols, and open source clients that supports many storage providers. I use git-annex, which supports about a dozen commercial services, plus any machine that supports SFTP, SMB, Webdav or rsync, among others. And of course, it encrypts everything locally before uploading.
Sure, you can sync to your own drives or to several commercial storage providers, but it's not as cheap as it should be. We're talking geographically distributed storage on an open marketplace, cryptographically enforced for extremely cheap prices.
Wasabi and B2 are pretty much the only commercial services which could even attempt to compete on price with something like Sia today (Filecoin and others in the future potentially), but they're only in single DCs and if they lose your data you have no one to go after. In the cryptocurrency-based systems, this is all automated.
For as many incredibly stupid and useless applications of blockchains as there are, this isn't one of them in my opinion. It may not be unique, but it's actually something that could have a competitive edge over a centralized service.
>Wasabi and B2 are pretty much the only commercial services which could even attempt to compete on price with something like Sia today (Filecoin and others in the future potentially)
It would be nice to see Sia/Filecoin provide some basic DB metrics like availability, durability, latency, bandwidth... things that any prospective client would absolutely need to know.
Not sure how git-annex works, but with blockchain your files are automatically distributed among geographically diverse nodes, and there's an embedded payment method to reward others for hosting your content--all while not having to communicate with a corporation or any other third party and providing pretty good built-in security.
Dropbox got a similar response, no? That it can be replaced by rsync.
New non-blockchain distributed ledgers like Hedera Hashgraph can support 300,000 transactions per second. That's enough to decentralize servers, or host an open-source MMORPG. No more single point of failure.
Sure but I don’t want to own the storage drives myself. Also I want it to be simple as Dropbox. I have other things to do than to dick around with storage and syncing and all that — believe me I did spend a lot of time on it already.
The point of the blockchain is to allow me to rent storage space on other people’s computers.
It's younger than most technology is when it becomes successful. Much younger when you realise you think about the age of the concepts, designs, algorithms, etc. that eventually become successful rather than a specific attempt at implementation.
Imagine if a bunch of investors walked into the Homebrew Computing Club [1] in 1976 and offered to buy anything and everything its members made for $1 million. With the benefit of hindsight, blockchain is the story of a neat database technology trashing its near-term prospects by marketing itself as a currency.
Blockchain is a shit database concept. It's use as a currency is one of its best uses. This idea that blockchains are a good database is an absurd myth. Blockchains are useful specifically for doing distributed consensus, and almost nothing else. Currencies are one of the best applications of distributed adversarial consensus. There are others, but currency is pretty near the top of the list.
I think this paper [1] made a decent case for permissioned blockchains (i.e. "where the participants are limited to a predefined set") in cases where one must store state, accommodate multiple writers who do not trust each other and does not have access to an always-online trusted third party. The number of cases where the final condition applies is small, but positive.
> cases where one must store state, accommodate multiple writers who do not trust each other and does not have access to an always-online trusted third party
Ya, that's distributed adversarial consensus. Decentralized currencies are an excellent instance of such conditions. They really are a useful and interesting application. That doesn't mean they deserve all this hype in the form of investment from the average person, but if they weren't so hyped, they'd have a serious use-case as a world reserve currency and they'd make a very nice international settlement layer. Because all of the countries in the world would know that the currency was politically neutral. I think that's a pretty sweet/useful property to have.
There are definitely a few other cases where adversarial consensus problems exist too. I think decentralized prediction markets are a pretty great application of smart contracts, for instance. But yes, a lot of these things are way way over-hyped and being pushed for things way beyond their useful scope.
Right now such currency is USD, with the Fed acting as a trusted third party. That's one of the reasons why other countries are investing in "blockchain technology", whatever that entails
The Blockchain is a clever combination of two preexisting concepts: distributed merkel trees, and a consensus algorithm. If you remove one of them, you no longer have a Blockchain, you just have one of its preexisting components.
"Permissioned blockchains" is like someone thought "what if we took the radios out of cellphones and connected them by cables" and proceeded to call that a brand new invention.
That's not actually true. Git is a blockchain, for instance. Permissioned blockchains are a real thing. Even centralized blockchains can be useful (e.g. a government publishing property record transactions, the blockchain aspect would be useful to ensure retroactive modifications weren't made, even if the gov. was still in full control of the chain itself).
No, they're just merkel trees! The attempt to co-opt them to make "blockchains" seem more useful than they really are - and to justify all the money dumped in these projects - is disgraceful.
But irrespective of its conceptual quality, why should anybody care, outside of compsci? Why doesn't the doubly linked list get to be a household name or a hotly tipped investment buzzword?
Because at a fundamental level, distributed adversarial consensus commoditizes trust. Institutional trust is an enormous bottleneck in our economy. It is a virtuous cycle that ossifies industries, e.g. banking, and consumer finance. Why does it still take longer to send money to someone in another country than it does to mail them a package? Why are credit cards a pull architecture, even though that is pretty obviously incorrect?
The reason is that the institutions that created these things are extremely well insulated from competition. They are well insulated from competition, in part, because they have acquired the public's trust, through a long track record of not stealing everyone's money.
Solutions to the distributed adversarial consensus problem provide a way to give new businesses access to the same, or even greater, levels of public trust. Now - obviously there are still scams in this space. When I say 'trust', what I mean is, in the sense that two counterparties can transact in a way that doesn't require intermediation to ensure the completion of the transaction.
This really is a fundamentally novel and socially significant innovation. It really does reshape the competitive landscape of a number of industries. At least, it has the potential to. But it is also true that there is an enormous amount of greed and hype floating around. And this isn't in any way intended to justify the ICO scams, or the sky high prices of the existing currencies. It's not clear that anyone has yet figured out the right interface and set of practices for actually realizing all these economic gains. Nobody has yet made the iPhone of blockchain.
But the basic technical problem - distributed adversarial consensus was indeed solved by Satoshi. And that really does have substantial, positive social implications for the future. And I fear that people here are losing sight of that because of the gyrations of these silly markets.
It absolutely does no such thing. Trust has nothing to do with technology and you'll never escape the need to trust real world, meatspace based institutions and humans. At the end of the day you are arguing "code is law", which is a pile of fresh horse manure, clear to anybody who saw what happened to The DAO.
Technology is created and governed by humans and you have to trust those humans. You need human meatspace based institutions in place to deal with when that trust is broken. No technology will replace this--at least in any kind of world I'd want to live in.
Satoshi's Glorious Blockchain will never succeed because it is a technological solution to a problem that can never be solved by technology.
> It absolutely does no such thing. Trust has nothing to do with technology and you'll never escape the need to trust real world, meatspace based institutions and humans. At the end of the day you are arguing "code is law", which is a pile of fresh horse manure, clear to anybody who saw what happened to The DAO.
Anecdotes are not arguments. You keep making statements, but providing no justification for them. You could say all of the things you just said about the internet in the mid 90s. And people did. And then in 2001, those people felt vindicated. But today, they look like the fools that they were.
Why is it not? It's slow, expensive and wasteful. You could host a regular MySQL on commodity hardware that could handle ten times the rate of transactions of the bitcoin blockchain. You could publish signed dumps publicly for people to replicate and monitor as they see fit.
The only interesting feature of bitcoin is the trustless consensus but it's not as useful or revolutionary as the hype would have you believe. In particular it's only working as intended as long as you remain withing the digital world, as soon as meatspace is involved you need trusted third parties and arbiters. "Blochain technology" whatever that is, is a solution in search of a problem.
I guess you've never heard of CQRS then. Blockchains are not on-demand databases, but rather sources of truth from which derived, queryable databases can be constructed.
>Command Query Responsibility Segregation is a software pattern that divides the system into two distinct parts, an append-optimised command side and a read-optimised query side.
My point was about the "append-optimised" part. Of course the blockchain can be arbitrarily fast to query but you can only make about 5 transactions (or "inserts") per second on the bitcoin blockchain on average. Not very impressive as far as DBs are concerned.
CQRS is great. But you can implement it very efficiently using standard logging techniques. Blockchains are just a slow, inefficient implementation of CQRS.
The idea of a neutral "third party"(!) operating a globally available transaction ledger, with standardised APIs and agreed meanings to contracts and data structures is appealing to everyone in every sector.
the sizzle of blockchain is enticing, it solves huge problems that are darn well intractable without "disruption".
for example in finance the global clearing system is an embarrassing hodge podge that only benefits the fraudulent and the incompetent - and replacing that completely over night has enormous attractions for pretty much every actor. but ... it is really a silver bullet - if it was so easy to replace global clearing, to get everyone agreeing on one representation of a trade or an instrument or a hundred other things i honestly never understood, if it was that easy it would have happened.
this sort of sector wide cohesion comes with either one dominant player or many years of government level negotiations
The web only blew past everyone in most areas because there were no global communications between parties at all in the areas the web now dominates (cf social media vs international shipping documentation)
I don't see how blockchain fixes any of the clearing/settlements issues in a way which is better than a trusted third party (or which doesn't involve trusted third parties).
Let's take settlements. Some instruments are (still, in this day and age) ultimately issued in bearer form (ie, if you have the piece of paper, you own the bond/shares/title to the land/whatever, just like cash). This has a number of problems (you'd be surprised how many people lose bearer instruments). There's a similar, but less serious, problem with requirements for paper certificates in registered form.
The only real way to fix those is to change the law so that instruments can be dealt with in purely electronic registered form and the bearer instruments don't exist to start with.
Some jurisdictions haven't changed the law to allow this so we are stuck with legal title being bearer or paper certificate based. Blockchain by itself as such can't fix the problem of "what happens if you lose the instrument" and can't fix the problem of "what happens if you refuse to hand over the instrument in performance of a valid contract".
A trusted third party (nominee/custodian/etc), by contrast, can fix some of this pretty well (trusted third party keeps the instrument in a vault and issues its own electronic registered form instruments which confer "good enough" title most of the time).
i did not make myself clear (i should stop
posting from my phone).
i was trying to say that the sizzle was more than the reality - a trusted (neutral) third party will solve all the claimed issues - it's just that the reason this has not happened in many sectors is because the issues the third party / blockchain can solve are not the issues preventing adoption - it's like car manufacturers would like to dump their dealers and sell direct - but no one is prepared to risk a huge downside. Tesla might be "disruptive" but no one seriously thinks Tesla will replace all other car sales - and so dealer networks will remain (for a while).
I saw a very good presentation regarding this HyperLedger project, and IMO this kind of projects are the ones that will form the future of blockchain technology.
There's zero need for a blockchain in that case; all you need is for each insurance company to public a hash-chained log of their policies. The closest example is the CT logs, but every single invoicing software in my country was doing that before the Bitcoin paper was published, as part of the mandatory implementation of SAF-T: https://en.wikipedia.org/wiki/SAF-T
This is an announcement of a future prototype. It is literally not useful. It is hype.
I'm all for people trying things out; prototypes are how we learn. So good for them for trying it and seeing what happens; maybe one day it will be useful. But it's maddening that people keep confusing marketing-driven press releases for actual delivered utility.
The reason I put that link was to provide some context. I know one person in IBM (here in Mexico) related to this project in Mexico and the project is already working in production.
I'm not "being dense". Every time I ask for examples of a blockchain project actually delivering value in a way that a simple database or checksummed transaction log wouldn't, I get pointed at proposed projects by people who have seen exciting presentations. Every time.
You were responding in a contradictory fashion to somebody saying, "Innumerable efforts have been attempted, yielding almost no fruit." The only thing that could usefully contradict that is proof of something yielding fruit. A press release isn't. Neither is the fact that they've managed to get the prototype running. There are a lot of blockchain prototypes running. Many of them are proposed and built by consulting companies that get paid by the hour, whether or not any actual business value is delivered. IBM has such an enormous conflict of interest here that they're just not a reliable source.
I'm sure you're friend's sincere, but there are plenty of sincere blockchain proponents. There were plenty of smart, sincere people who believed in 3D TV, Google Glass, and the Zune as well.
Really? This doesn't seem true at all. I feel like it takes decades for many good ideas in tech to get traction, usually going through many, many failed iterations.
As We May Think[1], anyone? Or self-driving cars, which go back to at least 1984 in CMU, and yet are still "[near] future tech" now. Neural Nets were a half-century old idea[2] before they became actually useful...
I mean, the question is not "Is Bitcoin as implemented by following the original whitepaper going to be the future of mankind?" It is whether or not there is something big in that whole area (blockchains, decentralized tokens of exchange, PoW/PoS/etc) and, if so, how big?
Of course, for a lot of people, the question is "By, say 2025, is my BTC going to make me rich or is it is not even going to be worth the bits it is encoded in?" Equally hard question to answer, but much less interesting.
The current cycle of blockchain furor could all end up badly (I hope it doesn't, but who knows), and yet that won't mean the tech has no future. Now, it could be like VR/AR/AGI, which are always the future, of course ;)
I cannot agree with you more. I'd actually love to chat more about this so feel free to reach out if you're interested. I work on building new technology for municipal governments, and the last 9 months have consisted of cities asking me about my blockchain strategy. I'm still struggling to explain a distributed ledger does not solve any of the problem they describe. Yet "cutting edge technologists" have told them it's the most important thing for distributed data. I ask what they think about SQLite and they ask me what SQL is.
No it's not. It took double entry accounting hundreds of years to spread around the world, why would you expect triple entry accounting to take over any faster? We already know it's going to succeed because it's objectively better by a very significant margin, but that doesn't mean it's not going to take decades to do so.
> It took double entry accounting hundreds of years to spread around the world, why would you expect triple entry accounting to take over any faster?
Here in modern times information moves orders of magnitude faster than when double entry accounting was invented.
By modern standards, blockchain is ancient and has yet to move beyond its current use as the world's greatest platform for financial fraud ever invented.
> Here in modern times information moves orders of magnitude faster than when double entry accounting was invented.
The speed of information is about as relevant as the cost of tea in China. What matters is how fast people actually change their minds, which isn't any faster. All of the older generation basically just has to die before the new best practices can get widely adopted. If anything change likely happens more slowly these days because people are living longer.
Blockchain shysters speak in such vague terms that they are effectively saying absolutely nothing while still reeling in the rubes to buy into their scams. Case in point. Your post.
by me, now, and in the past. and by lots of other people. but websites and tv probably get a lot more views for articles that talk about people getting rich quick. i bet alot of people who have followed bitcoin since the early days are pretty neutral on it, or even negative.
governmemts are thinking of putting assets and laws on Blockchain, stock exchanges are waiting for scalability to start putting everything on the blockchain. Immutable government records already exist. Where do you base your argument?
But if the government is corrupt they'll just say that the original transaction was invalid for X Y Z reasons and carry on... the truth being obvious has never been a problem for corrupt regimes
Git provides centralized version tracking that can be cloned easily -- no miners required. And authenticity, while not truly unique is likely unique enough.
> And how would a blockchain stop a government from putting a counterfeit record in to start?
Or any entity? Sure you can trust that once it is in the blockchain it won't get tampered with but you still have to trust the source of that record.
... which is where all these stupid "do your inventory management on the blockchain" things fall apart with even an ounce of thought. Who gives a crap if the blockchain trustlessly says the wine was made with grapes from peru if a corruptible human had to enter it...
At some point, all data comes from humans and you have to trust those humans to do the right thing. And when those humans breech that trust, you need meatspace based institutions to sort out the mess...
“governmemts are thinking of putting assets and laws on Blockchain”
Two things: this statement is so vague it borders on meaningless. What assets? Who will put it in there? The president? Why would a government do that? Is it free to do or is there budget? Etc.
Secondly, even if we could surmount the vagueness that plagues not just this idea but all blockchain ideas, the Herculean effort required to move governments which can barely move themselves seems like it would delay the whole thing by decades.
It all starts with how vague the ideas are. It really requires simply staring at the ceiling and figuring out precisely what you mean when you talk about blockchain ideas.
The vagueness of Blockchain reminds me of the same “Cloud” vagueness. CEOs and CIOs read these articles about how great “Cloud” is and how everything is moving to “Cloud” and they turn around and declare things like “I want Cloud” and “We need to work on Cloud!” and “Invest in Cloud”. Just parroting what they read in HBR or what some IBM consultant told them. Then a whole bunch of money is spent on “Cloud” with often not much to show for it at the end, besides a bunch of opportunistic Cloud providers getting rich.
Rinse and repeat for Big Data, ML, AI, Bockchain, and whatever the next fad will be.
The value proposition of the cloud was that it saves time and sometimes money because of usage pricing. The only advantage of blockchain is that it's supposedly more secure against tampering.
Yes, businesses try out different things and some things stick and some don't. This doesn't even have anything to do with technology. Businesses use computers because some idiot in a suit read an article.
Many companies are making a lot of money from implementing or integrating "Cloud", "Big Data" and "ML". They're not fad technologies. Blockchain hasn't done anything yet so should not be lumped in with them.
assets like everything from real estate records to money to corporate stocks to car ownership to birth certificates.
What you call vagueness I call short sightedness and failing to see the big picture. It has been done before with all major breakthroughs since the applications are not immediately obvious to everyone.
There are a large number of people who... believe there was a conspiracy to produce a falsified birth certificate for the previous president of the United States. If it were on a system where the original record could be viewed in a transparent forgery resistant way then that wouldn't have been an issue. Maybe.
what do you mean? you are too focused on SV "solve a problem mantra" you keep repeating it.you can think of tamperproof, speed, transparent, public keywords.
you want private land ownership records? private tax records? private stock ownership records? you hate it so much your reasoning becomes blurry man. think a bit
Several states in the US are accepting tax payments in bitcoin. Additionally ever out of counties in the US which are putting real estate transactions on a block chain
> Several states in the US are accepting tax payments in bitcoin.
Citation needed. The Arizona senate barely passed one such bill, but it would still need to pass the House and the governor. Arizona's government is known to do silly things in a vain attempt to be tech relevant.
BTC alone has a market cap of more then 100 billion USD, hence your statement and premisse is inaccurate. Wall Street firms just attempt to use it in places where it's not useful and where there are simple alternatives.
Yeah, I agree the way Wall Street approaches this seemed rather defensive. They are trying to appear on top of things, while in reality still are not sure how to tackle bitcoin long term.
> Combined they're sitting at ~$165 billion dollars in created value.
Huh? Bitcoin and Ehtereum are purely speculative assets, they have not enabled any new production or efficient distribution,
they have not increased economic activity. They aren't even marginally useful in electronics production like gold is.
This is like saying printing dollars creates value (though the dollar is at least useful as an instrument of trade).
> they have not enabled any new production or efficient distribution
You know of another way to transfer massive amounts of money around the globe without middle men? This claim that cryptocurrency offers no value is completely ignorant of the most basic and fundamental properties of the technology.
You do need middlemen. The middleman is whatever service you must use to convert btc or eth to local currency which will actually be accepted for payments.
The question is whether Bitcoin and Ethereum have provided value. "Have" means in the past up to and including the present.
You are implicitly agreeing with the statement that Bitcoin is only speculative, by admitting that it will only be useful without middlemen in a hypothetical future where it achieves wide adoption.
Nope. In reality, the tax office comes along, demands to see the seller’s records, and if they haven’t kept comprehensive records of all transactions and the fair market value of the coins at transaction time in local currency, then they get fined, or if they’ve been actively evading tax, jailed. Plus, even if they’ve kept records perfectly, they need to get local currency at tax time in order to pay their tax bill.
Bitcoin is useless for any legitimate business. The costs of using it vastly exceed any benefits.
A lot of dopes who think they’re smarter than the tax-man because they’ve been evading taxes by using bitcoin are going to have a ‘Martin Shkreli’ moment in the next few years.
If I buy a grain of sand off of a beach for $1, the market cap of that beach is trillions of dollars. That doesn't mean the beach produced trillions of dollars.
Crypto does not equal blockchain. Blockchain has a huge number of potential industry uses other than cryptocurrency. IBM has done a lot of work with companies making blockchain products that don't involve cryptocurrencies. When multiple companies are in a shared relationship they can benefit greatly from the tech. There are government regulation opportunities keeping track of sales and trades on regulated public markets. Crypto is just the craze that got the word out. Even calling crypto a failure feels like an over statement.
Coming from a logistics background, coordinating tracability data is painful within a company, even with help of ERP like SAP. But when you need tracability across an industry, it becomes almost impossible.
I had professional experience in an industry where we had to go to the plants to ensure rolls of paper certified from suppliers using responsibly-managed forests were physically separated from the non-certified ones. We needed the paperwork coming from China, then another one from the transformation plant in Morocco, then in customer warehouses across Europe.
An external protocol that would provide universal tracability, usable by any actor of the chain, seem like a great solution to a real problem. Blockchain provides some "neutrality", ie no need for each actor to find its own certificate provider (I imagine that service shops would help larger companies set up their systems, but the back-end would be common across all actors).
I'm not very convinced by pseudo-decentralized apps in most domains, but in logistics... very bullish !
If anybody can enter and add entries to your blockchain, how do you ensure that they don't insert bogus data? If you're tracing a roll of paper what prevents somebody from adding an entry saying "the shipment got stolen" then immediately making a new entry for it with different attributes pretending it's something else? Or simply at the source pretending that something is of a higher quality than it is?
The answer is that you need some kind of vetting and certification of the people contributing to your traceability database. So you need a trusted 3rd party to coordinate all that. So you don't need a blockchain. Instead why not just have the trusted 3rd party issue certificates like a CA on the web for instance? People would digitally sign the paperwork and you could collect the documents and their signatures in a central database. If somebody notices something wrong you can show that somebody made a fake or erroneous document and hold them responsible. Then you can publish dump of the database at regular intervals for people to mirror so that they can see if you attempt to rewrite history. There, problem solved using good old 1990's technology.
>very bullish !
Interesting that you finish your technical argument with trading lingo. Hodl, am I right?
This is generally my main source of skepticism relating to blockchain solutions. The ledger is 100% trustable as long as it describes digital assets that are entirely confined within the distributed ledger, but a digital token doesn't stop men with guns from taking your house. Just like a digital signature provides no guarantees that the associated information is true.
Isn't that EXACTLY the problem solved by cryptography, ie I can reliably know that only supplier X could have signed the message with the public key of supplier X ?
Cryptography lets you make signatures that can't be falsified by anybody not having your key but that's it. It doesn't mean much if you have no way to know who is actually behind the signature.
I could generate a PGP key for Bill Gates right now, distribute it to the keyservers and sign a message saying that "I owe simias on hacker news one billion dollars". You could verify that the message was signed by my key beyond a doubt but so what?
Bitcoin doesn't have this problem thanks to PoW, when a miner submits a newly mined block the network doesn't need to check the miner's credentials, the block itself proves (statistically) that the miner did a certain amount of work to come up with the block. That's all that matters and the coins/fees are credited to the miner's address. That works because all the data necessary to create the consensus are available "objectively" on the blockchain for all to see. It doesn't matter if the miner pretends to be Abraham Lincoln, that's not what the blockchain works with.
Most problems don't have these properties, if I tell the blockchain "I have a brand new PS4 and I'm going to send it to X in exchange for n bitcoins" the blockchain has no objective way to track this transaction.
I know that, but I don't understand why it is seen as such a roadblock. A supplier would add its tag on thousands of parts each day, which would find their way into thousands of products and thousands of end-consumers each day. The suppliers would be well identified by their physical location and the physical products they produce.
I think people raising these objections have not worked in a physical supply chain in the floor plant? I don't know, I have a difficulty to wrap my head around the objection. I am receiving a truckload of parts that I ordered - these parts have a barcode or a RFID identifier that tracks their provenance - the only change in the system would be that when I acknowledge the reception of the truckload, another block is appened to the blockchain-based history of the parts : Supplier + me the manufacturer. And so on across the supply chain.
I don't understand, are we talking about a scenario where a rogue actor would send me for fere a truckload of parts I have not ordered or something like that ?
I have worked on factory floors before but honestly I don't see how it's relevant. Toyota and similarly competent manufacturers are are perfectly capable of using centralized databases to track the motion of parts around extremely convoluted manufacturing plants. Blockchain primarily solves the double-spend problem of a distributed spreadsheet. So some supplier can't claim to have sent the same parts to two factories on some spreadsheet. That's solving a non-problem. I expect blockchain to have a massive impact on industries primarily concerned with abstract ledgers (finance), but I have serious doubts about the utility of the technology when applied to problems involving meatspace. I would be happy to be proven wrong.
More like a rogue actor sending you a truckload of parts that are not what they're supposed to be.
Take for instance the blockchain De Beers (the diamond cartel) says it wants to create to track diamonds. Things like country of origin, quality etc... Tracking diamonds is especially important because you want to make sure that the diamonds you buy are not from a conflict zone, the so-called "blood diamonds".
Now imagine that you have a completely trustless bitcoin-like blockchain to track this. What prevents an African warlord from pretending to be Canadian and create fake entries for its diamonds into the blockchain pretending that they were mined in America? Then he can trade them without issue. The blockchain is unable to detect that a user hasn't the right nationality, nor can it track the physical origin and location of a diamond without having to trust somebody to tell it. Ergo your trustless blockchain is no more valuable than a random file on pastebin.com.
To solve this issue you'd need some trusted certification authority that would audit miners and grant them access to the blockchain once they've asserted that they are who they pretend to be. But if you do this then you have a trusted 3rd party and the blockchain can advantageously be replaced by any regular database of your choice managed by this 3rd party.
You can apply this reasoning to any physical good, from organic produce (how do you make sure that the producer isn't lying about making organic oranges?) to paper rolls (how do you know the producer isn't lying about using sustainable foresting techniques?). You need trusted third parties certifying and controlling these things to weed out cheaters.
would the 3rd-party database be natively open to 4rth party apps, like an open API ? Given that no third-party actor has offered a tracability solution from source to consumer (the only one that comes to my mind is the beef tracability in Europe following mad cow disease, very paper intensive), what has changed that makes you think the industry can pull it?
It depends on the security of supplier X's private keys.
I think there's a general conflation of the security of the cryptography with the security of the system overall.
Why does this need to be a public blockchain? Just make it a permissioned industry chain with access from each of its members. Someone lied, well they signed it, go talk to them, you have immutable proof now. Or smart contract style, someone lied? Send the items back and escrow won't release your money as proof of return it could be signed by the courier and the original sender.
Because you have sent them a purchase order and they have sent you a truckload of parts that you ordered? I'm sorry I don't understand the objection here
I've thought about this some and one way to at least "sort of" map a private key to a single trusted real-world individual/entity is to require it always keep a balance of some "high" amount on it to be considered valid. So three banks start out signing some new "blockchain" ledger with their private keys, each with $100M on it, and they probably are going to be really careful with those keys from then on, and not let anybody who doesn't really represent the entity sign things with them?
I think this is the idea behind proof-of-stake. I don't see how it mitigates the fact that while the cryptography may be secure, the humans handling the keys are less so.
Hehe. Thats actually a nice artifact, thanks bitcoin. Now individuals can consider the potential of ideas to pan out and participate in funding them. Sure, sounds good -- I'll throw in 1,000$. Suddenly 1,000 like-minded individuals can satisfy the need of projects. Of course thats not always so popular here ;-). I should just mind my own business and focus on the coding right?
Anyhow. I do think you are right. The integrity of the data has to be questioned. But I question why we have to assume that its useless just because it cannot be trusted? This paper trail is immutable. That is valuable. Future evidence can expose prior lies. Once you know that you have to maintain a lie for life, suddenly you are questioning if its really worth making.
Immutability is easy to achieve. Anything distributed widely enough is effectively immutable. Anything published on the cover of Time magazine is immutable. Anything commited to the linux kernel is immutable. Anything distributed on thepiratebay is immutable. Anything put in the Ubuntu package repository is immutable.
You can amend it and publish new versions but you can be sure that somebody somewhere will have a copy. You want to make your paper trail immutable? Sign it and publish it widely using any medium you want. Burn it on CDs and mail them to random addresses. Tie them to balloons and release them.
Man trusting paper more at this point is the most backward thing I've heard. You really want us to keep using paper for all contracts, needing to be on site to sign documents, sending documents through fax, making physical backups... when all of it can be done digitally?
You an achieve the same results from writing things to a git repo and publishing it. Any edits on previous commits would result in the entire repo being changed. Publish it to the world, push every commit hash on twitter/RSS/Email. Done.
" Now individuals can consider the potential of ideas to pan out and participate in funding them. Sure, sounds good -- I'll throw in 1,000$. Suddenly 1,000 like-minded individuals can satisfy the need of projects."
You mean Kickstarter, which has nothing to do with blockchain?
"Anyhow. I do think you are right. The integrity of the data has to be questioned. But I question why we have to assume that its useless just because it cannot be trusted? This paper trail is immutable. That is valuable. Future evidence can expose prior lies. Once you know that you have to maintain a lie for life, suddenly you are questioning if its really worth making."
Says who? Both Bitcoin and Etherium have gone through forks of their chains.
>You mean Kickstarter, which has nothing to do with blockchain?
Blockchain is having all of the functionality (and more) of Kickstarter with 10-20x more reach. Also, explain how you would use kickstarter to crowd-fund a gold-backed digital currency without Blockchain?
>Says who? Both Bitcoin and Etherium have gone through forks of their chains
The whole point if a Blockchain is you can tell if it's been forked, and really forks are just the exception proving the rule of immutability. Meaningful forks have happened a handful of times and they've been
heavily publicized. How many times has a bank issued a chargeback?
Haha no I initially purchased all the tokens in supply-chain related fields, but I sold them a while ago at a loss. It doesn't matter - I still think these projects are very relevant for the future.
I do not have the answers to your objections. I was replying to the common theme of "this is a solution is search for a problem". I am stating that there is a problem in search for a solution
What you've described is provenance I believe. And that is the only, imho, use case for blockchain that makes any sense.
It's the only one where the substantial additional overhead and complexity of blockchain is actually still less than the alternative, as your example clearly illustrates.
To attempt to answer a question from sibling comments: these systems are private or closed blockchains, not public. You have a traditional credentials database (the blockchain itself could also be used for this, but that won't usually have inherent benefits) to track who is allowed access to read or submit transactions. Those parties may run a node or you may have one independent third party run all the nodes. It's so different from cryptocurrency setup that it's hard to apply too much of the stuff we've learned from Bitcoin et al to these setups.
If we imagine the best-case scenario, where all actors are handling their keys with care, and a system works to somehow produce an immutable, always consistent log of all actions, I still don't see how this will be usable for most products. You basically also need an immutable link between the physical product and some kind of cryptographically provable ID in this magic log.
When receiving an item you want to check the provenance of, you need some way to securely identify the product in the log. Otherwise some bad actor along the way could unlink the actual product from the ID in the log, for example by duplicating and stealing a known-good ID, yielding all the provenance information useless.
I guess this could work for electronic products where you could deeply embed something like a TPM that could provide this ID securely (which would be to expensive to extract to make it worth duplicating), but for something like a shipment of steel or even worse coal/oil/grain etc, I don't see how this would work.
I agree, that's the issue. I suppose it will depend on the application need, and the criticality.
If you need to prove that life-saving drugs have been kept at the correct temperature throughout their shelf-life, you can probably afford a RFID tag per pack, with a unique ID.
On the other end of the spectrum, if you are talking about low-criticality tracability of shipments of bulk materials, you can probably admit supplier-defined batch numbers. You could imagine that a rogue manufacturer would try to cheat and re-use a batch number from a "premium" raw material while using a cheaper one. Blockchain would not provide a protection against false declaration, it would on the other end provide an immutable papertrail in case of later legal investigation / certification audit (ie "you purchased X premium parts and Y inferior parts, but you logged using X+Y premium parts, how do you explain that?")
The poster's point is that the link between that and the actual object of value is a huge weak point. Let's use expensive art as an example since it's such a commonly cited use case. Blockchain says I own an original Picasso painting. You pay me 1 BTC in exchange for me transferring ownership of the painting to you: blockchain says the painting is now yours, _and_ I have to ship you the physical painting so you can hang it in your house / art gallery / whatever rich people do with art.
The problem is, how do you know I didn't ship you a fake replica and keep the original for myself, sell it to someone else on the sly, etc.? Sure, you could have a TPM which securely holds some data linking the physical smart card to the blockchain provenance record... but what links the physical smart card to the physical painting? Couldn't I just give you the fake painting + real smart card?
You could get an art expert to authenticate the physical painting, of course -- but that's exactly the same reliance on a trusted third party that art collectors have today, and blockchain has done nothing to improve the situation...
I feel like a private/closed blockchain would defeat the purpose. I want a future where a public blockchain would act a repository of everything that has happened to the final product throughout its history, on top of which applications would be developped, relevant for each step of the chain. The producer A that would input certification of origin, the manufacturer B, and the end consumer C would need very different services, web, app, industrial applications, ERP integrations and so on.
To express it in an analogy with current services, I would like the blockchain to be a database, exposing a universal API. I don't really see a private blockchain allowing this, but I may be wrong. And indeed there will be the thorny authentication issue... I don't know the solution, really !
I have read somewhere else a very interesting way to look at token projects. There are merely incentive for protocols that could have been baked into our browser.
For example, we could have had an identity verification protocol, bound to our browsers, that would have logged us in websites. We would not have needed FB oauth for ex. But it was not prioritized, and now that the Web has been taken over by closed garden, individual companies have very little incentive to contribute to these general-benefits protocols.
Token can be seen a way to incentivize adoption of these general-benefits protocols
I don't know. What about Git ? Errors happen, then you correct them, but you can see the error and its correction, and it's considered quite healthy, right?
You might want to look into VeChain then, which is a blockchain platform aimed at solving that exact problem, and is already being used by large customers such as DVG NL and China Tobacco. Jim Breyer and DFJ are both strong backers.
I feel like shilling contains a lot of negative connotation. Most people still don't know that there are existing coins aiming to solve this exact issue. Some other coins are Ambrosus and WaltonChain. There are a few others that I can't recall on top of my head. So it seems like there are people out there that have recognized this specific use case and started capitalizing it.
My question is if your conclusion is that blockchain is a solution in search of a problem, what was all that effort being spent on (not just in finance, but everywhere blockchain is being considered)?
I'm not saying that blockchain is not a valid solution to a problem, but as a veteran of the online industry, I can say I've seen a lot of hype around new technology, actual effort being put into it, and then the realization that the effort was for nothing. Either the solution is no better than the old solution, just different, or the solution is so obscure, that the cost of maintaining it is greater than the value it generates.
In the end, the costs of the choices of these institutions are being paid for by you and I, and I hope they don't go too deep into their project before realizing: “Basically, it became a solution in search of a problem,”
I'm in a tech-adjacent industry and see it all the time. Competitor A comes out with "shiny new technology" and markets the hell out of it. My company panics because we're suddenly lagging behind and rushes a competing project into development. Competitor B sees all of this and hops in too. All of a sudden it's the new direction of the industry and dominating trade shows, despite the origin being a mediocre product with some clever marketing. 5 years later it's never spoken of again.
I'm not familiar enough to say for sure this is what happened with "blockchain", but from a distance it has a lot of familiar markers.
GPU acceleration in scientific computing. My god in 2011 it was the only thing anyone talked about. Every COTS solver package cobbled together support in less than a year and were promising order of magnitude speedups.
In 2018 it's still hanging around but realizing a 20% speedup on certain classes of problems. Maybe.
Relevant war story: I was one of the engineers who initially started looking at GPGPU computing at one of my former employers. This was circa 2007 and people were getting really excited thanks largely to NVIDIA's hype machine. 2007 BTW, was when the first Teslas were making their way into the wild.
I was part of a group that developed signal processing algorithms and my boss's boss pulled me aside and asked me what we ought to do about this stuff. I told him that there are a few applications where this works very well, but it's pretty niche overall and we shouldn't do more than what we'd already done. He was a bit surprised because he thought I'd be one of the kool-aid drinkers given how much I knew about and liked playing with the tech. But he deferred to my judgement.
It turned out to be one of the most significant conversations I've had. I was still a junior engineer fresh out of college, but my bosses realized that I could be trusted put aside naive enthusiasm about the tech and make cool-headed decisions about what was strategically important. And I learned to trust my intuition about what was useful and what was just hype.
> it's still hanging around but realizing a 20% speedup on certain classes of problems
It really varies though. In grad school I felt like god when some molecular dynamics simulations running on my pair of GTX 760s finished faster than the same thing running on my advisor's 96-core CPU cluster.
Point taken, though, that it was over-hyped. There were lots of conference presentations with GPU-acceleration in the title (kind of like deep learning is now).
At the same time, I really wish that GPUs would take off in neuroimaging, where 90% of the steps performed in an analysis pipeline are not modeling-related, but rather basic image manipulations / pre-processing (i.e., scaling, smoothing; stuff that GPUs are actually good at).
"Scientific Computing" was probably too general of a term to use. I focus more on FEA/CFD type problems where it's effectively been a bust. Most of our benchmarks show 8 cpu cores + 1 GPU is roughly equivalent to 10 cpu cores, and a second GPU has little additional benefit.
I'm sure there are other disciplines that have seen a larger benefit.
Well, "digital transformation" is not a technology -- it's this strategic paradigm of how technology is diffused across an organization. The opposite of "digital transformation" is "IT infrastructure" -- the idea that technology works as an infrastructural layer supporting business operations, rather than dispersed across operations themselves.
"IT" has for long been this back-office area where specialists get to dictate business policies because they know computers. (A classic on this genre is the Bastard Operator from Hell [0]) -- but now lusers bring their own computers and phones to work, and hell if they don't have technological ideas of their own. IT has been commoditized, cloudified, outsourced.
If "digital transformation" sounds bogus is because management consultants are bogus. But in practice it can be a real thing that's not as much about new sexy tech (in the sense of blockchains, RISC chips and so on) as about putting what's already available into operation using business knowledge.
My major questions have always been: where is the business value in blockchain applications? what can a blockchain app do that can't be done by non-blockchain (beyond decentralization - bc I don't think this produces much business value)?
This is really the main selling point, decentralizing consensus so no one party becomes to big to fail, or so big they are unable to be opposed which leads to tyranny.
The sad part is that the blockchain is the least interesting part of this hype. The interesting part is making all mutations of state require signed inputs which has given a really needed push to the PKC UX. Metamask is fucking amazing and interacting with applications that utilize metamask as the source of identity is so simple, something that you'd be hard pressed to find before all this hype.
Sending money without fees and delay? Have you ever tried a normal bank transfer? How long did it take?
Have you ever tried, say, nano? It literally takes seconds and 0 fees.
Here is some value.
He's not talking about Bitcoin, do people realize there's literally 1000+ projects (Most irrelevant) with some clear innovation going on. We're already way past bitcoin and PoW as the future of blockchain tech.
The delays have little to do with technology, and a lot to do with regulations and bureaucracy. Largely put in place to combat money laundering, fraud, terrorist financing, etc etc. Yes, there's some small banks that have horrible APIs and shoddy servers, but for most transfers the delays come down to things that if cryptocurrency were ever mainstreamed would be tacked onto it.
That is why it takes time to get approved on coinbase and other exchanges that try to follow the law.
There is literally no place to tack on a middleman with nano/btc. Yes it will take some rethinking of how we combat what society conceives as improper use of funds.
> There is literally no place to tack on a middleman with nano/btc.
BTC is just a widely distributed set of middlemen imposing delays and costs (both mining rewards and transaction fees are costs to everyone holding or using BTC that run from holders/users to miners.)
I plan on only accepting crypto for consulting this year, it filters out clients and I have limited time.
At some point I will exchange to USD to pay whatever I owe in taxes and to pay any vendor that does not take crypto. I imagine if I were an unscrupulous actor I would skip the tax step and avoid vendors that don't accept crypto.
Good for you. I have rent to pay, so I need to be paid in USD. That brings us back to my original question: Are the people I have to go through to exchange crypto to USD not middlemen?
Why can't you build on top of these protocols, nothing is stopping them from being underlying technology that new banks and financial institutions can be built on top of.
> Have you ever tried a normal bank transfer? How long did it take?
For less than $5,000 it is free and instantaneous in the United States (e.g. Zelle). For more, it is free and instantaneous (wire; my bank waves the fee; most charge $15 to $35).
The number one thing holding back the blockchain from becoming a proper database technology is its proponents insistence on applying it to problems that already work faster and cheaper.
In the UK we can do that without the blockchain, in many situations, thanks to the real-time payment system [0]. So for me, a normal bank transfer is free and easy, whereas every time I've tried to do something involving blockchain it's meant delays, fees, and messing around on shady-looking websites.
I take the point that in other places the norm is a lot worse and blockchain systems are producing better results, but it won't be long before banks get their act together and improve their services to match modern expectations (for fear of becoming obsolete), and then the blockchain competitive advantage is gone.
SEPA Instant Pay allows transactions of up to 15k in 10 seconds (bigger transactions fall back to the 1 day SEPA rule, I think), and some banks provide it for free. This is only relevant within the EU and associated regions, obviously.
I’m glad some people get it. Banks do zero delay and zero cost transactions between themselves already. The idea that “if only we coukd figure out where to use blockchain, everything would be FREE” is really naive. You take away a banks ability to charge for X, don’t be surprised when Y gets a new fee.
As to decentralized, there seems to be a wonderful libritarian ideal around cryptocommodities but I’m reality they are much more centralized than anyone wants to admit. There are probably 10 people that if they wanted to could absolutely demolish bitcoin.
Too much hype around all of this. Not even getting into the massive waste of power and potential.
Just about everyone that's worked in finance professionally gets it - netting, collateral calls etc all happen daily and instantaneously and have been for decades.
Having worked in computational finance the entirety of my career, I still don't totally understand how this combination of Dunning-Kruger and Libertarian leanings somehow became a thing.
The financial times while back had an interesting take: there's a structural reason why VC throws money at seemingly non-nonsensical ideas (Theranos, wireless charging etc) - many have a policy portfolio mandate to shoot for 100x returns and as such they will throw money at impossible things as part of their fiduciary duty. So, especially in the climate of free money, funding a slightly-better-widget-startup takes a backseat to things with lottery odds that may not make any sense at all.
In Canada, the gov'ment told the banks they had to offer cheap, instant transfers. Today, it's free to send money to anyone in the country and it takes minutes.
Yeah, in Australia it's currently overnight between banks (but generally instant from one account to another within a bank), and they're bringing out a new real-time payments platform over the next few months so you will be able to transfer instantly to anybody knowing only their 'pay ID', which can be a mobile number, Australian Business Number (ABN), etc.
Atomic transactions of money on one hand, and ownership on the other.
For big amounts, transfers of money are either slow (big wire transfers between banks) or unsecure (cash, how do you know if those bills are real?). Therefore either the money or ownership stays insecurely in limbo on one side.
Therefore escrow services currently provide a solution for this, or notaries. But in the end they are still not atomic, and not free either.
If both money and proof of ownership are both on blockchain, you can do a REAL atomic transaction. This could work for selling cars, houses, etc, on an international level without much fuzz.
"My question is if this is your conclusion is that it's a solution in search of a problem, what was all that effort being spent on (not just in finance, but everywhere blockchain is being considered)?"
That strikes me as a very rich question that would be interesting to investigate. Yes, we know people can get involved in hype cycles, but what was it about this technology that made it the thing that got hyped exactly?
Perhaps a subconscious association with BitCoin and getting rich quick hit the people most prone to hype? Some of the blockchain projects being proposed, I honestly couldn't see how they were planning on profiting from it. I don't just mean profiting enough, but profiting at all; what was the mechanism by which money is transferred from some set of customers to the blockchain creators? Preferably with the transfer of some valuable good or service in the other direction, but, you know, technically that's optional from a business perspective.
I understand the answer for new cryptocurrencies; the creators start with more of it than the incoming users and that becomes valuable as the currency becomes valuable. The non-currencies I didn't always see an answer. Which is why my best guess is some sort of subconscious belief that anything that has a blockchain will automatically somehow become wildly valuable via (underpants gnomes step 2 here). It's kinda a copout answer but it's the best I've got. Improvements? (Again, beyond just "people do hype." Why this hype and not something else?)
Brick-and-mortar plus mail-order was a viable business model for decades. Building the network infrastructure and software interconnections to move from that state to today’s online commerce and delivery model took years to accomplish and was (is) filled with hyped innovations.
Blockchains may never reach their hyped potential, or we may simply be attempting to evaluate at very early stages vs. the point where utilities are clear.
I’m not sure I follow. I did not mean to imply I’m studiously watching every permutation of the blockchain hype cycle, simply, when it comes to new technologies which are billed as successors to long-lived incumbencies, I tend to take the middle ground.
I try to keep a measured view of the optimisic hype and the pessimistic nay-saying, and don’t expect clarity for a few more years regarding blockchains’ potential.
In general this philosophy towards technology has served me well enough. I miss out on the bleeding edge, but don’t fall into the trap of being “all in” before realizing a concept’s promise was oversold.
Asymmetry: it is very hard to irrefutably defeat someone proposing some highly amazing, low-probability-of-coming-to-pass future. The best you can do is say "hard to see how that happens, but who knows?..." Meanwhile the bullshitter is utterly convinced by their own koolaid. In the end it is a bug in the human brain firmware.
Of course banks can do it better with the traditional technologies. They operate in a centralized, trusted and regulated environment. Their consensus algorithm is "settling disputes in courts".
And still, it takes up to 5 days to receive a payment from USA in the EU and the sender pays 40$ for the wire transfer.
The blockchain technologies will disrupt the banks themselves, because they are the intermediaries in this industry. I can receive the equivalent of $1 mil in BTC from oversea in less than 10 minutes and the sender pays fractions of a dollar in fees.
The banks will be in a tough position the more people accept payments for their services and products in BTC. We're not there yet, of course, but who knows where we'll be in 5-10-20 years.
> it takes up to 5 days to receive a payment from USA in the EU and the sender pays 40$ for the wire transfer
U.S. dollar Fedwires are “immediate, final, and irrevocable“ [1] regardless of from where they are initiated. If your EU bank takes 5 business days to swap between the world’s two most liquid currencies, you have a uniquely shitty bank.
> In 2008, approximately 7,300 participants made Fedwire funds transfers. The Fedwire Funds Service is generally used to make large-value, time-critical payments.
seems like maybe the crux of this discussion is that, all of the sudden the features of banking have been automated. that’s definitely not the same as “the features of banks, regulation, etc...” have been automated.
But certainly, we can see that the Fedwire is not a consumer product, where BTC clearly is
> In 2008, approximately 7,300 participants made Fedwire funds transfers
To be a Fedwire participant you have to be a Federal Reserve member, i.e. a bank. Consumers arrange Fedwires through their banks. When I send a wire, I'm not a Fedwire participant--my bank is. If you have a U.S. dollar bank account, you have access to the international Fedwire system.
Fedwire is only usable by banks that have a working relationship with the Federal Reserve, which will only be large international banks with a US presence. With most international transfers you're stuck with SWIFT, which is complete garbage. Hopefully replaced by Ripple entirely ASAP.
> it takes up to 5 days to receive a payment from USA in the EU and the sender pays 40$ for the wire transfer
Only if you use a wire transfer. Payment by credit card is instant and costs about 1% for the merchant and maybe another 1% in change fees if there is a currency conversion needed.
Hardly. Chargebacks on credit cards can occur up to 3 months after payment. Good for customers who need that dispute feature but bad for others because those costs are socialized onto merchants and other consumers.
>Payment is still instant unless there is a dispute
If that was the case a merchant could withdraw cash immediately after someone paid them with a credit card. Which patently isn't the case. So no, Payment cards are not instant.
The payment happens and confirms instantly. Withdrawal of funds from the payment processor is not the payment, because payments are not limited by 'time to cash liquidity'.
Let's say that merchant accepts payment via Visa on Day 1. On Day 2, Visa goes out of business. The merchant will never receive the payment. So no the payment is not instantaneous. The merchant receives an IOU from Visa that settles in a few days. IOUs != settled payments.
Yes, in your carefully crafted hypothetical where a billion dollar company goes out of business tomorrow, it means that company can't make payments tomorrow. What about nuclear winter? Dissolution of the U.S.? Alien invasions? We need account for these hypotheticals too when discussing the validity of payments.
The delay event(bankruptcy, Visa’s servers go down for an hour) is meaningless. The point of debate is “Is the payment settled?”. To which the answer is a simple “no”.
This is one of the problems with cryptocurrencies though. Consumers are unlikely to accept a system where they can't contest charges, either through a trusted large institution (e.g. Visa) nor through the courts. I haven't heard an explanation yet of how to solve that without layering on central authorities, which undermines the decentralization that's supposed to be crypto's #1 advantage.
What's stopping them is a simple question: who are you transferring the money to?
A lot of banks allow customers to do instant transfers between customers of that bank, but for this to be a killer feature, you have to have enough customers that this is significant. In NYC, Chase is almost there--they have enough of a share of NYC that it's worth asking if the person you're transferring to has Chase so you can use their instant transfer system.
But the vast majority of transactions are still between customers of different banks, and there's not much reason for a bank to process a competitor's payment quickly--it doesn't give you a competitive advantage, while processing slowly allows you to collect interest on the money while it's in transit.
> But the vast majority of transactions are still between customers of different banks, and there's not much reason for a bank to process a competitor's payment quickly
Zelle sounds great, and I really want it to work, but my experiences with it so far have been really frustrating.
3 separate experiences:
1. My friend was sending me $750, and had to structure it as 4 separate payments each 24 hours apart due to some sending limit that either Zelle or his bank imposes.
2. I sent my brother money, and for whatever reason he had trouble accepting the transfer, so I had to resend it a week later when it failed.
3. Someone sent money to me, and it was my first time using Zelle, so I had to login to my bank after clicking a link in a text. But after logging in, nothing happened... It didn't tell me where the funds went, and they weren't in my account. 3 days later they magically showed up. I think the transaction was pending??
Do you really have to ask? Is it a separate system or something?
In Australia, you must pay using the normal way (which is pretty much always free), and if it’s the same bank it’s processed instantly and if it’s not it’s processed generally overnight.
Pretty much everybody’s moving to a new real-time payments platform in the next few months too, so it should just always be instant for domestic transfers.
well, to transfer money between banks requires the use of the ACH system (or a wire transfer), but looking at how ACH works https://www.nacha.org/ach-network it essentially requires that your money get processed by what is essentially the federal reserve's mainframe computers. Given that these machines only process transactions during government business hours, such a delay is reasonable.
> The project, which had successfully tested with startup Digital Asset Holdings (DA), was shelved because banks and other potential users believed the same results could be achieved more cheaply using current technology, he said.
This is more or less the curse of the almighty blockchain; it's very hard to think of a plausible, actually useful, application which can't be accomplished far more cheaply and simply using conventional means.
It's really not hard to think of useful applications for blockchain.
The problem HN has with blockchain is that a lot of HN users are the problem which decentralization solves. The basic startup monetization strategies these days revolve around centralizing user data and then collecting rent (usually in the form of ads) or centralizing transactions and then collecting a percentage. Decentralization is the antithesis of these models: you can't collect rent or percentages if you don't have centralized control of the platform. The problem blockchain solves is that it cuts out a lot of middle men and what middle men it leaves (miners) have to compete.
For the vast majority of HN users, blockchain doesn't solve problems you want to solve, but that shouldn't be mistaken for meaning that blockchain isn't a revolutionary technology that solves a lot of problems. If anything, the technology is important because it affects your future. Data and transaction middle men are the problem that blockchain solves, and as middle men you should be paying attention.
I don't hold any resentment toward people trying to run a centralized business, but I do find it amusing when people are pushing blockchain forward to their own detriment.
The first sentence of the Bitcoin white paper describes a problem that can't be solved by a normal DB.
"A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution."
> "A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution."
Except it failed completely at that. The blockchain has proven through real world use that it is unusable as a currency. By its very design, it is fundamentally impossible to scale it to even serve even a moderate sized city worth of transactions.
> By its very design, it is fundamentally impossible to scale it to even serve even a moderate sized city worth of transactions.
1. This is far from proven. Scaling is definitely a problem, but I don't think it's at all been proven to be impossible.
2. You still have to admit that bitcoin has solved this problem at a small scale, which isn't nothing. Transactions without a trusted central authority are literally impossible with previous technologies.
But that problem isn't solved by Bitcoin (not can it be solved by any digital currency); Bitcoin doesn't allow online payments to be sent from one party to another without the need for third party clearance, it just increases the number of parties required for clearance.
> Anything where decentralized trust is useful: money, anonymous messaging, voting, etc.
I completely disagree with your examples: trust in money is centralized because I trust a central government will ensure it is legal tender, and that a central bank will act in the best interest of stability. If there's no centralized trusted party in messaging - how can I trust the messages? Trust has to be rooted somewhere - when a newspaper quotes anonymous sources, I'm implicitly trusting the newspaper and its source-vetting process. When it comes to voting - confidence in the vote counter is essential.
I suspect our difference is more fundamental - I assume that just like any other system - decentralized systems can be subverted, and there will be parties who will subvert it. The only difference is that for centralized system, I usually will trust the central authority to fix/mitigate problems. When "decentralized" systems are subverted, you will discover that they were centralized after all when it emerges that someone (unilaterally or by way of some vote) can make "fixes" that affect the entire system (forking the blockchain, dropping some "rogue" transactions, changing the algorithm, etc).
The difference between centralized trust and decentralized trust is you can actually audit and reason about the system. In centralized trust you are typically hoping that human actors obey rules both written and unwritten. In decentralized trust the system is solely responsible and the code of the system is the exact rules it will follow. The tricky part of decentralized systems of course is have their designs been done flawlessly, so there are no vulnerabilities. (A very hard thing to do) In practice, perhaps decentralized systems do not have to be perfect, but just better than the centralized alternatives.
If you trust a central authority such as the government, then blockchain doesn't solve a problem you have.
That doesn't change the fact that many people don't trust the central authorities, often because their situation differs from yours such that it is not rational for them to trust the central authorities. In some cases blockchain solves their problems.
Blockchain solves real problems. They just aren't problems you (or most people on HN) have.
I think Conway's law is something important to note in this context, where there are benefits to running centralized businesses over decentralized (ie communication). Decentralized communication between people is a problem itself, namely, decentralized decision making and the speed at which decision are made.
Vast majority of projects don't need the complexity of a multi-master geographically distributed append-only immutable database with uncertain transaction finality because other, simpler and better understood solutions already exist. Vast majority of projects don't have to deal with the Byzantine Generals problem that makes it so difficult to create a permissionless distributed value transfer system like Bitcoin.
I get suspicious whenever I read about companies piling on to technology trends, not least because of the damage it does to the rank and file developers who work on it. The short version is: leaders got bamboozled and their subordinates suffered, but it's a little more nuanced than that.
We tend to think of large companies as either these monolithic beasts that act according to their own best interests, or as emergent hiveminds that move in a direction because they smell money. These have the advantage of allowing us to presume that the actions taken by these organizations were vetted by many people and arrived at via consensus.
However, there is a third, less popular, way to view organizations, and that's as an organ of a handful of people, if not one person. This is an important framing because it allows us to consider the actions of these large companies as reflecting the foibles of the individuals at the helm. Viewed this way, Apple under Steve Jobs was an extension of one man's vision and design priorities. Microsoft under Ballmer was an extension of one man's putting the MBA approave above the tech approach.
I can't help but wonder if, within these Wall Street companies as well as throughout SV, there wasn't a single person or a handful of people who swallowed the blockchain coolaid and started these projects. Pitched high hopes to developers. Hired developers. Set goals. Failed to meet goals. Made their developers' lives miserable. Gave up. Blamed their subordinates. Moved on.
This is a tale as old as tech itself, but somehow it just keeps happening. To all young developers deciding where to invest their time and talent: be very careful choosing to follow an individual, because individuals are stupid enough to fall for nonsense like "blockchain for banking."
DTCC is a central authority by definition; there's no amount of handwaving that you can do to make a distributed quorum system fit this particular problem...unless you're just trying to raise VC money.
Isn't the core still being worked on? Meaning things like the lightening network and proof of stake? There has been tremendous buzz about this tech even in its limited state so imagine when it becomes very friendly/usable/stable/focused/possibly efficient... in use case and where things like Mt. Gox don't happen anymore. I think its a work in progress and we are at the whim of the impatient and non-technical media.
It is. These speculation cycles come and go regularly. HN general knowledge of blockchain is similar to HN general knowledge of AI: slightly above average. There are many smart engineers laying down the foundations of the Bitcoin protocol as we speak, and the hype cycle will come back.
Wall Street only cares about money extraction. Blockchain projects are currently milked dry with no where to squeeze out money. It's no surprise that they are "rethinking" it. If it should start growing fat again with lots of opportunities to extract money, Wall street will jump right back in.
I mostly hear it described as Internet 2.0, or Web 3.0. However, analysts are starting to talk about Blockchain 2.0 now; this could probably fill the role of Internet 3.0.
None of these people have any idea what they're talking about.
At the end of the day there are tons of practical applications for blockchain. There is a lot that is staked on bitcoin and other cryptos and that will probably decline until the blockchain's true value is hit. That being said institutional investors will still want to play this market. JP Morgan and Morgan Stanley are still planning to build clearing houses for crypto this summer.
I think blockchain is like 3D movies. It is intriguing enough to put the foot on the door of public imagination so people with vested interests have a crack to keep pushing their agenda through.
I've never understood why large companies want to get into blockchain. At best, a distributed ledger (blockchain or not), is able to provide a trustworthy database that anyone can engage with. Large banks also provide a trustworthy database, but which only they can edit. With blockchain, the trust is built upon protocols and technology. With banks, the trust is built upon reputation and insurance. They seem in direct competition with each other.
There’s probably not a lot of interest for retail use for the reasons you state. Outside of wealth management that is more about the cryptocurrencies than the tech.
But there is still interest in peer to peer usage. When each bank keeps their own version(s) of the truth, the cost of reconciling, resolving disputes etc is huge.
The most interesting features, in this scenario, are the mutable->immutable and time ordering aspects. The literal blockchain, in other words. The consensus and transparency aspects aren’t particularly interesting though.
And the key (excuse the pun) to these useful aspects is the cryptography used in interesting ways. Blockchains didn’t invent any of this stuff but they did open people’s eyes to the possibilities.
> When each bank keeps their own version(s) of the truth, the cost of reconciling, resolving disputes etc is huge
I'm not a banker, but I'm not sure I entirely believe this. There is undoubtedly a cost of reconciliation, but is it "huge"? Seems low on the totem poll.
Basically the finance industry is trying to shoehorn their legacy business systems into blockchain, which of course will not make any advantage obvious other than finding out it is much more difficult to reimplement what is already working with a different system. My view on this is that blockchain ought to find a very specific problem (e.g. trust as a service) that cannot be achieve with existing technology.
Looking at the history of Wall Street, it should be safe to predict that Block chain technology will be the reason for next global meltdown. They can and will do wonders generating derivates after derivates and make huge bonuses.
I have never understood why financial instruments like derivates like options etc. exists. I understand what they do but I do not understand what value they add to the economy specifically.
If you agree with the premise that regular equities markets provide value (in that competitive allocation of capital leads to a more optimal result than centralized allocation), it seems to follow pretty naturally that derivatives and options provide value by allowing participants in the market to turn more nuanced beliefs into a position than they could otherwise.
The great correction is here
https://www.coingecko.com/en shows total red
Everyone needs to start waking up.
Blockchain solves transfer of value really well, took years for it to prove that it works. What has the other projects proven?
I would take any article like this with a grain of salt. There is not a lot of useful or technical information here, and I believe it is more designed as click bait and FUD to create shock value and hurt the public sentiment about Blockchain technology and investing in crypto currencies.
That said, on the flip side, a lot of people have been considering Blockchain as some kind of magic solution to all of the world’s problems, and that is also very far from reality. If it takes an article in Reuters for people to realize this than so be it.
I have believed for a while that Blockchain technology in the context that many big companies refer to it is not very useful. Usually these are the same people who claim that Bitcoin is useless and Blockchain technology is where the real value is. I think they are either mistaken or misinformed.
In my opinion, anyone who plans to build a centrally controlled Blockchain is making a mistake. Even if the data is signed/hashed and distributed, it only takes one bad actor inside the organization who has access to the nodes to alter the Blockchain by performing a 51% attack (changing the transaction data on more than half of the nodes). Therefore the entire idea of a Blockchain being immutable is thrown out the window. You would be much better off using an open source database like MySQL or Postgres or Mongo. Blockchains are expensive to run and operate and are extremely slow.
However, the idea that Blockchains are a solution in search of a problem that the article suggests is also a bit misleading. I think it’s more likely that these companies are trying to find solutions for things that aren’t problems in the first place which isn’t the fault of Blockchain technology itself. I feel pretty strongly that blockchains have already solved a few problems.
- They solve the double spending problem (the idea that the same tokens can be spent more than once)
- They allow people to store value without depending on any third party (such as a bank)
- They remove all the intermediaries required for sending payments/data from one person to another.
- They make it cheaper and faster to send any amount of money to anyone in the world
To me, those are all transformative properties of blockchains, and anyone who overlooks them is somewhat missing the point. That said, in order to check off all these bullet points, you need to have a peer to peer, decentralized network where peers are rewarded with crypto currencies for securing the network, not just a few servers running inside of a company as a replacement for a centralized database.
Will there be good Blockchain applications outside of crypto currencies? I’m not sure, but to me, there is nothing wrong with that. If, in the future, banks and cash become obsolete and everyone stores their money on their own secure, digital wallets, then I would say that Blockchain technology changed the world for the better.
> I would take any article like this with a grain of salt. There is not a lot of useful or technical information here, and I believe it is more designed as click bait and FUD to create shock value and hurt the public sentiment about Blockchain technology and investing in crypto currencies.
There's a wave of this sentiment lately— which is funny timing. Goldman Sachs apparently will have an operational cryptocurrency trading desk by the end of June.[0]
The TSX is slated to have a cryptocurrency brokerage desk with backing of the Bank of Montreal over the coming months sometime as well.[1] This came out days after BMO blocked all cryptocurrency purchases with consumer credit and debit cards.[2]
The more cynical side of me wants to guess that they're trying to establish a gatekeeping initiative. Knock everybody about, then when they want back in they have to come through you.
That’s a pretty interesting perspective. I have definitely been thinking for a while that they are trying to drive the general public out so that they can accumulate more for cheaper, but I never considered the idea that they want you to use THEIR tools.
It actually makes a lot of sense cause the SEC has also been going pretty hard lately to try to shut down trading of tokens that had ICOs and to make life difficult for current exchanges.
I have always believed that Wall Street does not like the fact that the regular public got first stab at crypto currencies, and they didn’t. This could be their way to try to rectify that.
If we strip away the consensus mechanism, all that is left is a trivial data structure that anyone with a CS background could come up with. So, the question becomes where the real value proposition is in "blockchain technology" outside of the realm of crypto currencies. What are the things you can only do with "blockchain technology" that cannot be achieved with existing technology? It looks more like a marketing buzzword than anything that has actual merit for the average use case.