"This is all very simple in practice, the blockchain is barely useful, crypto coins and NFTs have very low utility"
Yes. FOR NOW. But public decentralised blockchains have interesting properties (enabling ownership , Liquidity , composability) and lots of smart people are trying to use those properties to build interesting apps.
These apps are not there yet. I am optimistic that some good apps will be launched in next few years that make use of those unique properties enabled by decentralised public blockchains.
The only thing a blockchain can do is a cryptocurrency.
The cryptocurrency is the only application that works because transactions are performative writings on the blockchain: they define truth. Once it is written on a blockchain that Alice has transferred X tokens to Bob, it instantly becomes a fact by definition, so you can trust what is written on the blockchain.
In any other application, what's written on the blockchain concerns stuff that are external to it. And what's written can thus only be valid if an external (and necessarily trusted, whether you want it or not) third-party can enforce or make what's written on the blockchain to be true. This means that any other application cannot actually exists in the decentralized and fully adversarial setting that would require the use of a blockchain: there is always another, more simple, more elegant, more efficient solution that can be built on top of the trust that must exists somewhere to make things work.
Also, a blockchain needs its cryptocurrency to actually work because there has to be an incentive to participate in the consensus mechanism whether it is PoW ou PoS or other variants, and the incentive cannot be external to the blockchain otherwise you need to trust the third-party which controls it.
Blockchains and cryptocurrencies are basically the solution to their own problem, and to nothing else.
Let’s forget any bridges to physical assets for a minute; cryptocurrencies, or more broadly scarce digital assets, have an unfathomably large TAM. More and more of our lives are being spent online instead of dealing with real world assets, giving increasing value to the GDP of digital assets over time.
First, the entire financial system can and will be made digital, making every dollar you deal with every day a digital asset that can falls under blockchain TAM.
Then, you have all online goods: virtual game items, ad space, Twitter handles, memberships, subscriptions, metaverse property, virtual conference tickets, certificates, domain names, hell it turns out people even want to trade JPEGs as scarce digital assets. There are probably things that I can’t even imagine today that will one day be tokenized digital assets that can be traded on blockchains.
Sure, plenty of the mentioned items can run more efficiently on a centralized database but the question then becomes, “whose centralized database?”
Blockchain is the only solution that provides credibly neutral and publicly interoperable accounting of digital assets, which could one day be 50% of the world economy.
TAM? Maybe define uncommon acronym before using them. I cannot even find its expansion using Google.
> First, the entire financial system can and will be made digital
It already is.
> making every dollar you deal with every day a digital asset that can falls under blockchain
That is a very bold statement.
> Then, you have all online goods: (…)
Those all suffer from the exact same problem than physical assets, they exist and have a purpose outside the blockchain. You already have the oracle problem.
> credibly neutral and publicly interoperable accounting
This is again a very bold statement and facts disagree with you. Blockchains are not interoperable with one another and cannot be, for starters.
> which could one day be 50% of the world economy
This is pure wishful speculation on your part and is based on absolutely nothing.
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EDIT: I found "TAM"'s expansion: total addressable market.
I'm not saying that all digital goods will be traded on blockchains, just that they could be, so they fall under the Total Addressable Market (not an uncommon acronym among yc folk at least).
Likewise, in-game items and other digital assets can exist in or outside of a blockchain. They can serve their original purpose when on-chain as well. I can expand on my point about interoperability:
Blockchains are not typically natively interoperable between them (exception might be rollups), but all assets on a blockchain are. If I create a video game and tokenize my items + currency, I suddenly open up a world of possibilities for users and developers to expand on whatever in-game functionality I can make with my limited team, like:
- Making items tradable on DEXs
- Borrowing and lending services
- New UIs and tracking tools
- Clubs and clans that verify ownership
- Derivatives and staking
In a world with tokenized assets, I could easily make a deal with a guy on the internet to let him stay in my decentraland property for 3 weeks in exchange for a ticket to a digital Marshmello concert - completely trustlessly and transactionally.
You obviously didn't bother reading the link. Both parties add collateral ideally equal to the item price: so the buyer pays 2x the price and the seller pays the list price and sends the item. If the buyer is happy they've received the right item without issue both click a button to release their collateral back to themselves and the buyer's money to the seller. If not they have to agree how much to release to each other since they both have skin in the game.
So in your example you can sell an ice cream for £10. When I buy it for that I pay £20 and you pay £10 and send the item. I eat it and we're both £20 down. So I want my £10 back and click a button. It then releases £20 back to you - the item price and your collateral, and my £10 collateral back to me.
I did read it but you are right my comment doesn't reflect it.
I always thought that this part of a smart contract is ridiculous as it binds the same amount of capital as the transaction is worth on both sides.
It also doesn't fix the issue if someone with much more money than you wants to f** you over.
It also does assume you would find a good solution together just because of the capital invested but you know there are plenty of people who are not able to negotiate proper.
It just doesn't solve the issue and it doesn't solve issues like if the shipment is lost on sea. Or it's getting stolen.
A independent 3th party actually helps solving those issues.
Nothing is perfect but I think in the majority of cases it'll work as well as a trustable third party but without requiring one. If someone with much more money wants to screw people over at least they'll be paying a non-nominal amount. For bigger items that kind of attack would get expensive quickly.
The amount of collateral is configurable by sellers, and since buyers will soon be able to message sellers that means it's negotiable.
It's like any open source project that can be inspected, and it's not in the interests of the project or stakers to screw users. There's testing on testnet to catch bugs
"As long are you are not a criminal, ownership and liquidity are not huge pain, what is the real, tangible benefit of decentralized banking?"
Capital formation for any common purpose without trusting 3rd parties.
As an example -> there are some NFT vault DAOs where strangers pool together to purchase NFTs that are too costly. People Vote on proposals regarding which NFT to acquire and when.
This value of this kind of thing depends on NFTs having value, which I would dispute. As soon as a DAO tries to buy anything in meatspace (a house, a painting, a book), you're back to an oracle problem where someone has to be trusted with the custody or upkeep of the physical item and no amount of DAO votes can force them to do something they don't want to do.
It's difficult because blockchains have not yet scaled the infra yet. The amount of data that we can currently put on most decentralised chains is very less.
This will improve though and allow us to put a decent amount of data on the blockchain.
Ok, then show me a credible 3rd Party where I can store my ownership data apart from Government. (Most corporations which currently store my data proved that they cannot be trusted and they only look after their shareholders. Not users.)
> show me a credible 3rd Party where I can store my ownership data apart from Government
Your "ownership data" does not have any intrinsic value. It only has value because an external authority (your Government's justice institutions) is able to enforce it.
Writing something on a blockchain has no magical effect. You cannot remove necessary third-parties like that.
> Most corporations which currently store my data proved that they cannot be trusted and they only look after their shareholders. Not users.
"My ownership data" has value. perhaps not to you. But for people i interact with.
Example :-
My education degree is something that I own. It can be very useful if I can quickly prove to the world that I indeed really have that degree. (like Twitter allows to prove you own an avatar NFT) .
It would be super helpful if this was on a blockchain instead of some university database with a cumbersome process to avail transcripts.
> "My ownership data" has value. perhaps not to you. But for people i interact with.
I don't think you understood what I meant. I said it has no intrinsic value, meaning that it has no value in itself.
> My education degree is something that I own. It can be very useful if I can quickly prove to the world that I indeed really have that degree.
The fact that it is written in a blockchain that you have a degree has no value in itself, it only works if a necessary trusted third-party, the university where you got that degree, approves it. You are not in a decentralized and fully adversarial setting. You do not need (nor want, for efficiency purpose mainly) a blockchain to solve this problem.
What you want is a cryptographic certificate (just like an X.509 SSL/TLS certificate) of your diploma signed by your university, which would play the role of a Certificate Authority, and which you can trust because the government that accredited your university to deliver actual diplomas has a root certificate (it acts as a Trusted Certificate Authority) and has signed the one of your university with it.
> like Twitter allows to prove you own an avatar NFT
Twitter is a central authority and could very well associate any "NFT avatar" with any of its users without relying on any blockchain.
Right, but think about what happens if there’s some question – say you ran for office and your opponent says you’re lying about your degree or GPA.
People will trust the institution – if a reporter calls them and they say “yes, they earned it” most people will not question it. If they say “never heard of them”, a record on a blockchain won’t help much because it disagrees with the canonical source and then you’ll be hearing about how that degree record was published in error or fraudulently, or that school is a diploma mill, etc.
Electronic records are nice but a 1970s public key signature works just as well at a fraction of the cost because ultimately it comes down to whether or not the reader trusts the issuer.
> if I can quickly prove to the world that I indeed really have that degree.
So as not to bury the lede, certificates of authority as to any legitimacy are a lot like Certificate Authorities; it's the Conway principle. They always want "revocation authority" and it's never "proved" unless they check it again this time... just for you!
I happen to still interact with people who are affiliated with the institution where I "stole" an education. I legitimately obtained certification for completing a course of study in numerical analysis; no cheating. A few years ago I don't know what they did but I strongly suspect a butt sniffing tool for alumni was introduced, because people started being like that.
Cutting to the end, a couple of years ago I ordered a transcript for $11, by regular post, paid with a check. I strongly suspect that now buttsniff shows something like "transcript available".
Good example of a signature! The institution who awarded you the degree should sign it. They are the authoritative source of this information. Everyone who trusts the institution will be able to verify your copy of the signed document. No communication to the institution necessary.
Web3 is just getting started.
Every new paradigm has 2 cycles often both running in parallel.
Building Cycle, where developers and enterpreneurs envision and build awesome products and necessary infrastructure.
Capital Cycle, Speculative & Growth capital goes into such projects leading to bubbles and busts.
What happened recently is Capital cycle bubble broke.
Building cycle is well and truly on.
It's still really hard (or impossible) to find people using any web3 offers in real life though. And the only place web3 is thrown into my face is hacker news. It seems to continue to be a small underground thing ("crypto nerds").
Yes web3 is way too early.
Infra is still barely matured to do anything interesting.
But some nice infra projects entering production stage in few months.
I really expect some nice web3 projects in mainstream before 2024.
You don't have to field this Q, as it seems fairly large. But perhaps you could point me to some sources of info (and if not, all good).
Basically, I'm super skeptical, and anyone who claims there will be use-cases often don't point to any projects. And the use-cases they offer seem to be easily dismantled (perhaps by a lack of vision and imagination and understanding on part of the critics).
But I do think that perhaps in 10-15 years, IF blockchain tech lasts, that it will become implemented to the point where people will be using it whether or not they know it.
But I also think that it can't gain mass adoption without a TON of infrastructure, because as is it just looks like it is piggybacking off of already existing tech (which is understandable).
All that being said... what infrastructure do you think needs to be set in place for mass adoption to gain traction, so that the tech is at all relevant to anyone and everyone?
I may be wrong but the following are what I am bullish on.
Specific Usecases are tough to predict but I can point to THE big problem to be solved by all this infra.
Every year we(younger people predominantly)spend more and more time in Digital spaces (currently they are Twitter, HN , Tiktok etc).
But we don't own anything we do in these places. One of the biggest behaviour shifts we will have in near future (esp among youngsters) is that we will start owning digital artefacts. The best places to store these are neither the government nor corporate databases but public decentralised blockchains.
Infra wise I feel Blockchains need to be modular. Wallets have to be better designed for non-tech savvy people.
The following infra changes is what I am bullish on
1) Zk rollup based chains which will hyper-specialise on certain execution workflows but end up settling data on popular blockchains. (IMX among recent launches and upcoming StarkNet launch by year end for general ZK proof rollups)
2) Wallets will be embedded inside every Web3 app and drastically reduces the friction . Example Stepn's app popularity.
Thank you for the reply. I'll def poke my head around in the things you pointed to, not that I would be able to understand much.
I'll be frank: I don't necessarily see how owning digital artifacts is what younger folks are seeking, but I'm not entirely closed off to this being the cause of the potential sea change. Just because I don't see it/ get it right now doesn't mean it isn't massively appealing to people if given the right tools and platforms.
Perhaps I'm only seeing things cynically, but that level of granular ownership seems like it could become kinda tiresome, restrictive, and limiting (in the sense of who would be able to see and engage with what you decide to share and put out there). But I fully admit I'm at a loss for imagination right now, and many things I thought seemed silly, even with Web 2.0 stuff, I'm now using quite frequently.
Yeah it's because HN is engineering focused, and somehow "crypto" is not supposed to be upheld to the same standards as everything else. Everything is always a few years away, mass adoption right around the corner, killer apps and new paradigms of finance, you just have to wait a bit, we're almost there. But nothing of value has been created in a decade.
In my mind it has one good use, darknet markets, but that doesn't justify this whole nonsensical ecosystem somehow worth billions of dollars around it which does basically nothing, apart from being a huge casino. Cryptocurrencies have worked fine before all the finance bros and gurus came in and hijacked the whole space.
i think its much bigger than darknet. the crypto world brings together a mix of libertarianists and high risk investors. banking is one of the most hated industries and crypto seems to give it good competition. also a lot of bureocracy can be dealt with efficiently with smart contracts
I guess because it's almost impossible to trust an authority which also allows permissionless building on top such data.
Most corps now have proven that they act for their own shareholders and can't be trusted to look after all users.
Gov agencies while are a potential candidate for establishing trustworthy data owners are too beaurocratic to ever allow for permissionaless building on top.
Blockchains sort of allow both trust yourself (by owning private keys) & build permissionlessly on top .
Says the app is not available in your country (India)
If anyone from Vektor is seeing this, can you please add it to Indian App Store ?
India should be one of the compelling markets for such an app, 10s of millions of kids whose parents already feel math is important and ready to do all they can to provide their kids with early advantage.
You can work backwards from that, what are the problems that are in the way of achieving the vision ?
As you break down the problems into further smaller problems you might encounter a problem which is possible to tackle with the currently available resources.
One of the possible outcomes here might be identifying a team within a comp / university who is working on the same problem and then joining them. That can be the first step in the long marathon of innovation.
If you add it to Prybar[1] that's half the battle. We're also working on open-sourcing more parts of the system to make it easier to contribute languages etc.
Would be awesome to read part-2 of this blog post -> http://www.blueraja.com/blog/477/a-better-spaced-repetition-...
Plz plz plz pen down your thoughts on reviewing(part-2 of the post) if you get some free time.