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Bitcoin's Shared Ledger Technology: Money's New Operating System

59 points by thedoctor 11y ago

kordless 11y ago
It's unfortunate this is basically (another) piece on the funding that chain.com recently landed. The article itself has about zip in the way of new content related to blockchain technologies.
natrius 11y ago
The "shared ledger" analogy for blockchains is limiting. If you want to understand the potential applications, you should stop using it in your thinking. Blockchains give us publicly writable databases. Such a thing never existed before. A blockchain has one or more programs that define what can be written to the public database. Bitcoin's program is mostly about distributing the 21 million coins to miners and preventing users from sending more bitcoins than they own. A blockchain's program can manage any data, though. There are so many human interactions that are governed by private databases—that used to be the only way to do it. The sea change you are about to witness is those interactions transitioning to public databases. Everything will be rebuilt, especially where companies are charging for those interactions, like Uber and Airbnb. Applications will be able to read from and write to all of the public databases, and they will all use the same cryptographic identities for seamless integration. Every application can trivially have payments built in. Or ride hailing. Or package shipping. Network effects are public goods, and we now have the technology to provide them in a public manner. Go build something.
- TheDong 11y ago
  It gives you a publicly writable database that is only secured by people desiring to throw away large sums of computation in an environmentally unfriendly manner. Writes are also slow (10 mins...) and requires relatively high bandwidth and space to be used securely. There's no reason that AirBnb or Uber would want their database to be public, slower, and broken as soon as people lose interest in splitting up mining. In fact, the more valuable stuff goes on a block chain, the more people will want to break it in order to be able to manipulate that information. It's neat how the generals problem can work when the blockchain is for money. If it weren't for money, then why would people have an incentive to throw computation at it? To secure their AirBnb trip? If it's only AirBnb that has such an incentive, then suddenly it's a massively expensive enterprise to do so compared to running a normal distributed database that they control read/writes to.
  - natrius 11y ago
    Blockchains can be built without 10 minute block times or wasteful proof-of-work for mining. You can just pick people the users trust to make blocks or use proof-of-stake mining. Blockchains are harder to break than most corporate databases. Reading up on Ethereum will answer most of your questions.
    - TheDong 11y ago
      If your "blockchain" doesn't have a proof-of-work beyond trusted people, that's hardly different than a company publishing their database full of signed transactions. I'm aware that 10 minutes is a configurable number, but there's a reason it's as high as it is. I'm also familiar with Ethereum, and I still don't see it as better than a company-run database for anything like uber/airbnb/etc with a central company behind it. > Blockchains are harder to break than most corporate databases. Strange, Google and Amazon and many other sites have done just fine with databases (though there are exceptions like Ashley Madison etc) while there have already been real double-spends with the bitcoin Blockchain and numerous other issues. Proportional to usage, I'd say bitcoin has proven to be terrible compared to databases. So yeah, citation needed. Additionally, if you change your mining to be "people users trust", your security is now equivalent to corporate database security -- a lead pipe to the head to get a password in.
      - brighton36 11y ago
        There's precisely two (and maybe one) reasons where blockchains offer an economic efficiency. Immutability and/or regulatory arbitrage. When you can buy crack on Google and Amazon, then we'll no longer see an efficiency with blockchains.
      - natrius 11y ago
        > I'm also familiar with Ethereum, and I still don't see it as better than a company-run database for anything like uber/airbnb/etc with a central company behind it. It's better because no one is taking a cut off of the transactions that the network enables. No one has to approve a new application that uses the network, so every application can build on top of the network. The people own the network, not companies. This isn't just better, it's better to the degree that the Internet was better than private networks. That difference was world changing, and this one will be too. > Additionally, if you change your mining to be "people users trust", your security is now equivalent to corporate database security -- a lead pipe to the head to get a password in. Blockchains have programs that validate transactions. You'd have to get every validator to incorporate a fraudulent transaction. Hacking three financial institutions at the same time, for example, is pretty hard. Ten is even harder.
- dogma1138 11y ago
  Calling it a public database is misleading, it's not really public even the Bitcoin blockchain ins't really public as it's access isn't free (proof of work). The blockchain that will be used by banks won't be public just like SWIFTNet and other similar banking networks aren't public. What WS and the banks want is a private blockchain to replace the current messaging and clearance systems and services into something which will be cheaper, faster and will have lower intrinsic risk. Banks, clearinghouses and other similar financial institutions will have access to it and will provide the needed infrastructure to support it, it will allow them to conduct their financial operations at a much lower costs increasing their profit margins it's not meant for you to be accessing it from your mobile phone everytime you use apple pay.
  - natrius 11y ago
    Access isn't free, but anyone can write to it without permission. That makes it public. Individuals couldn't compete with SWIFT because they had no way to coordinate their actions. Public databases change that. The first phase will be financial institutions using blockchains to lower their costs. The second phase will be financial institutions pursuing new business models around blockchains anyone can access every time they use Apple Pay. The genie is out of the bottle. Middlemen are no longer necessary for anything.
    - dogma1138 11y ago
      Again you think that those blockchains will be publicly accessible which is incorrect, they'll have their own blockchains for their own settlement, maybe they'll have some sub-chains in the long run for end-users but still you can bet your house on that they'll find a way to ensure that users can't simply join the blockchain "fully" (e.g. find a way to separate wallets from mining, like BC does with mining pools for example but for another reason) like they can currently with Bitcoin. And having a non-free access make it non-public by definition sorry. Bitcoin is moderated by the amount of effort needed to perform certain operation, some take very little like generating your key and address tomorrow they can change that to a point where only the large bitcoin farms could do it would you still call it a public system? If so so is SWIFTNet sure you just need a couple of billion and to open a bank but hey any one can join.... BTW you see a similar thing today, BC is "complicated" this is why things like coinbase become more and more popular, people don't keep their bitcoins in their own wallets anymore they use a 3rd party mostly in the form of various bitcoin exchanges. If a "public" based system has already degraded into pretty much a hierarchy what do you think a system designed by the financial sector will turn out like?
- kalleboo 11y ago
  > Blockchains give us publicly writable databases. Such a thing never existed before Not true. We had Microsoft SQL Server[0] [0] https://en.wikipedia.org/wiki/SQL_Slammer https://en.wikipedia.org/wiki/SQL_Slammer
- hliyan 11y ago
  I think the shared ledger analogy is meant as a simplification for the general public. I did the same thing in my explanatory article two years ago: http://zen.lk/2013/11/28/how-i-finally-understood-bitcoin/ http://zen.lk/2013/11/28/how-i-finally-understood-bitcoin/
kolbe 11y ago
One of two things: I either do not understand Wall Street's obsession with blockchainesque technologies, or Wall Street's obsession with it is totally emblematic of their buzzword-obsessed technology-ignorant groupthink that fried the tech industry in the late 90's. I'm seeing companies like this pop up all over the place. Blythe Masters's new venture[1], which made the cover of this month's Bloomberg Business, seems to be the pinnacle. Bitcoin technologies solved some very important problems in the creation of currencies: double spending, decentralization, cost distribution, &c. These are not problems that need to be solved in securities trading. One company running on one platform doesn't have a double spendng problem. Decentralization is irrelevant. And cost is no issue. Yes, the securities trading industry is wrought with disgusting inefficiencies, and technology should play a central role in becoming more efficient, but I do not see how shoehorning in blockchain tech helps in any way. If keeping track of ownership and transfer of securities is such a cumbersome process, make a company that keeps track of ownership and transfer of securities. Use computers. Use web interfaces. Make transactions publicly viewable. Create robust contract definitions. Remove paper trails. Hire programmers. Pay AWS. But I have no clue how they think blockchain technology adds to any solution here. I don't know. Someone please explain. [1] http://www.bloomberg.com/news/features/2015-09-01/blythe-masters-tells-banks-the-blockchain-changes-everything http://www.bloomberg.com/news/features/2015-09-01/blythe-mas...
- natrius 11y ago
  People pay Nasdaq to make their trades reliable and safe. Reliable and safe trades can now be done by a swarm of computers running free software, and they only charge a tiny margin over the costs of bandwidth, energy and storage. How is Wall Street supposed to make money now? They're all trying to find out, and they all need to be the first. Financial profits will be much smaller, and the slow movers will have a smaller slice of a smaller pie.
  - lsc 11y ago
    > People pay Nasdaq to make their trades reliable and safe. How much of the value people see in Nasdaq is the technical systems that execute the trades? I'd argue that the technical systems that reliably execute trades are important; Nasdaq would fail if they didn't work reliably, but having a reliable system to execute trades doesn't make it easy to setup a competitor to the Nasdaq, you know what I mean? The technical systems are necessary but not sufficient; the rest of what you need to set up a stock exchange is absolutely huge. I'll make the analogy of e-bay. I think most people would agree with my assertion that the technical challenges of building a competitor to ebay are trivial when compared with the effort that would be required to get the buyers and sellers to leave ebay and join your new platform.
Ologn 11y ago
For all the bubble talk...if there is any sign of a bubble, it is Bitcoin. Bitcoins are completely worthless, they have no value. The price action shows it - they are currently bouncing between $230 and $235, six months ago that was $260, and one year ago it was $400. It is headed to $0. The smell of scam is all over it. The inventor hides his identity. Bitcoin companies are awash in scams and criminal charges - Mt. Gox, Butterfly Labs etc. The Bitcoin hype machine can't answer one simple question - why do Bitcoins have any value? They can't give a rational answer to this. You can get a Florida real estate swamp land sales shop, or MLM organization running for a little while, but eventually it folds. I'm glad to see that two people who have had a long, long history of observing financial markets agree with me - Warren Buffett and Charlie Munger. They've been around long enough to see every snake oil scam under the planet. That's why Munger says Bitcoins are "rat poison" and Buffett expressed similar sentiments. Incidentally, I knew this when Bitcoin was $460 and even mentioned it on HN ( https://news.ycombinator.com/item?id=6753545 https://news.ycombinator.com/item?id=6753545 ). Those who listened to me saved themselves from losing half their investment. Soon enough I will be pointing to this post when it halves again to $115-$118.
- kordless 11y ago
  Making a value immutable instantiates trust in a system. Systems that have trust in them are, historically, worth more than untrustworthy systems. Blamers, like you, spend most of their time trying to convince others what to do based on biased arguments. Biases are cheap hacks/workarounds to establishing human trust and have no value to anyone, even if they did listen to you.
- vfdfv 11y ago
  > Bernie Sanders scam Bernie Madoff? Different guy.
- joeyspn 11y ago
  > The Bitcoin hype machine can't answer one simple question - why do Bitcoins have any value? They can't give a rational answer to this. The answer is simple: Because there's enough number of people that agrees to use it as commodity money and medium of exchange.
EGreg 11y ago
Why do blockchains need proof of work at all? It seems that this is only to solve the Byzantine Generals problem, not to prevent spam or something like that (which HashCash used). Given a network where every node eventually communicates with every other node, a vector clock is enough. You can simply have append-only trees! This data structure is ideally suited for distributed applications. In a smaller network, question about double-spend is simply solved by having a MAJORITY of parties report that they've seen a certain precondition at time A (ie Person X has Y coins) before any subsequent transaction is considered validated. What is also beautiful about appending to a TREE instead of a ledger is that you can have subsets of the network which care about a particular subtree. You don't need everyone to store everything!
- TheDong 11y ago
  Proof of Work does disincentive spam a little because you can only spam as quickly as the network can incorporate transactions (6tps iirc) due to the slow nature of the network. If the network were more efficient and used vector clocks, you could spam much more efficiently too. If the majority of parties can decide such things without a proof of work, then a single person can just create a large number of accounts and own the network. You need to avoid the problem of fake accounts somehow. Proof of Work does that and you don't propose a solution.
  - brighton36 11y ago
    Miner fees mediate spam, not the transaction count. (which btw is likely to be enormously higher than 6tps)
    - TheDong 11y ago
      https://en.bitcoin.it/wiki/Scalability#Scalability_targets https://en.bitcoin.it/wiki/Scalability#Scalability_targets > Today the Bitcoin network is restricted to a sustained rate of 7 tps due to the bitcoin protocol restricting block sizes to 1MB. I've heard the number from other sources as being 6 or 7 before too, particularly after the scale tests I believe. I know there's the blocksize increase debate which will make this comment inaccurate soon. Also, I believe that a 0 fee transaction will still get processed eventually and, since such a thing is valid, it's not going to stop spam entirely, just slow it a lot.
vectorpush 11y ago
Bitcoin and blockchain enthusiasts have been claiming that bitcoin (or etherum) is going to take the world by storm any day now, yet all I ever see anywhere are big claims (revolutionizing payments, disrupting remittance, ending wars, freeing the people, destroying the banks etc, ad nauseam) with very little substance and lots of scams, frauds and dead-end ventures. Dark markets, internet gambling and a handful of other novelty and niche communities can extract genuine utility from bitcoin, and that should continue into the foreseeable future, but the general population just has no use for it. None. Despite all the hand wringing about having to endure the treachery of big banks, pull style payments, and entering long credit card numbers, bitcoin is still harder to use, even harder to keep secure, and without any guarantees, assurances or consumer protections. Bitcoin is an interesting novelty at best, and everyone knows it, even many bitcoin enthusiasts. Now, in recent months, we're suddenly hit with a bevy of stories about big name financial brands and famous VCs pouring cash and research into the blockchain, and just like that, the goalposts have shifted. This is what we've all been waiting for; this is what will really bring bitcoin into the mainstream, there has to be something big here when you look at all the colossal mountains of cash that have been dumped into the bitcoinverse... yet somehow, we're still at a loss as to exactly how the "x but with blockchains" formula is meant to revolutionize everything. If the 100 million dollar investment into 21inc's vision of putting a bitcoin miner in every refrigerator is any indication of what we're to expect from all this investor cash, I think we can safely assume that what we're witnessing is simply the hyperbolic bitcoin hype machine functioning within normal parameters. Of course, I'm probably just an idiot who doesn't "get" bitcoin, it's pretty difficult to understand, since even after all these years I just can't grasp the amazing potential of bitcoin. What other explanation could there be?
- deet 11y ago
  It's very difficult to dispute your assertions that Bitcoin currently provides very little utility outside niche markets, that a lot of the investments being made are laughable, and that the shifting goalposts phenomenon is in full effect. But remember, a lot of things we use the internet and mobile phones for today were envisioned and promised in the late 90s but failed to materialize in a practical, mainstream way until very recently, over a decade later. Who knows what cryptocurrencies, or the concepts behind them, will mean in another 5, 10, or 20 years. Maybe nothing, maybe a lot. It's still too early to tell. (I'm skeptical myself, especially in actual currency applications, but open minded.)
j_lev 11y ago
> By early 2014 the three had $4 million in seed funding and had narrowed their focus to Bitcoin apps. But they found that the software tools they needed to build those apps didn’t exist and pivoted to building the tools themselves. > ON A MONDAY MORNING seven Chain.com employees sit in a circle on their Aeron chairs plotting the week’s plan of attack for various projects. The shoptalk is a jargon-fest of “open assets,” “confirmation time,” “UI,” “sidechains,” “federated chains” and, of course, “coins.” Khosla Ventures’ Rabois, the company’s lead VC investor, says he backed Chain.com because it had a nucleus of “10X engineers,” which he defines as “engineers who have the output and insight that’s ten times better than a regularly good engineer.” Elite groups like these, he says, are essential to build tools “so more regular engineers can build applications” for blockchain. In The Industry, how common is investing $4 million in a company before they have even "narrowed their focus to Bitcoin apps," based on the unproven potential of the founders? What am I missing?
sigma2015 11y ago
> Express now collect 1% to 3% of domestic credit and debit transactions, generating more than $70 billion a year in fees in the U.S. market alone. “That’s a tax on all payments,” says Wedbush analyst Luria. With Bitcoin that goes practically to zero. There are and will be also tx fees for Bitcoin. > Here’s how primitive the infrastructure is now: The Bitcoin blockchain can currently handle 7 transactions a second That's not an infrastracture issue but an intentional limitation by design. [http://bitcoin.stackexchange.com/questions/855/what-keeps-the-average-block-time-at-10-minutes http://bitcoin.stackexchange.com/questions/855/what-keeps-th...]
laurashin 11y ago
Hi, I'm the writer who wrote this story. Someone on Twitter alerted me to the conversation. Thanks, Paul Pajo! I didn't get to read the whole thread as I am heading out on a flight today but I just wanted to say that I am coming out with a story tomorrow morning Eastern Time that addresses some (though not all) of the initial question. This is the Forbes page where you can watch for the story. http://www.forbes.com/sites/laurashin/ http://www.forbes.com/sites/laurashin/ One thing I will mention quickly is that the main thrust of my story is that Wall Street is interested in using it to make their own processes more efficient. In a developer economies, because or existing systems work so well, we will have a slower road to consumer adoption than developing economies will. One of the sidebars to the story goes into this a little bit. Plane is pushing back from the gate, so I have to go. But I hope hats helpful.
deleted 11y ago
[deleted]
laurashin 11y ago
This is my followup story, which answers some of the questions about how we'll end up using Bitcoin, and how people in developing economies will likely deal with it more directly than people in developed economies -- at least at first: http://www.forbes.com/sites/laurashin/2015/09/14/bitcoin-blockchain-technology-in-financial-services-how-the-disruption-will-play-out/ http://www.forbes.com/sites/laurashin/2015/09/14/bitcoin-blo...

59 points by thedoctor 11y ago

It's unfortunate this is basically (another) piece on the funding that chain.com recently landed. The article itself has about zip in the way of new content related to blockchain technologies.

natrius 11y ago

The "shared ledger" analogy for blockchains is limiting. If you want to understand the potential applications, you should stop using it in your thinking. Blockchains give us publicly writable databases. Such a thing never existed before. A blockchain has one or more programs that define what can be written to the public database. Bitcoin's program is mostly about distributing the 21 million coins to miners and preventing users from sending more bitcoins than they own. A blockchain's program can manage any data, though. There are so many human interactions that are governed by private databases—that used to be the only way to do it. The sea change you are about to witness is those interactions transitioning to public databases. Everything will be rebuilt, especially where companies are charging for those interactions, like Uber and Airbnb. Applications will be able to read from and write to all of the public databases, and they will all use the same cryptographic identities for seamless integration. Every application can trivially have payments built in. Or ride hailing. Or package shipping. Network effects are public goods, and we now have the technology to provide them in a public manner. Go build something.

TheDong 11y ago
It gives you a publicly writable database that is only secured by people desiring to throw away large sums of computation in an environmentally unfriendly manner. Writes are also slow (10 mins...) and requires relatively high bandwidth and space to be used securely. There's no reason that AirBnb or Uber would want their database to be public, slower, and broken as soon as people lose interest in splitting up mining. In fact, the more valuable stuff goes on a block chain, the more people will want to break it in order to be able to manipulate that information. It's neat how the generals problem can work when the blockchain is for money. If it weren't for money, then why would people have an incentive to throw computation at it? To secure their AirBnb trip? If it's only AirBnb that has such an incentive, then suddenly it's a massively expensive enterprise to do so compared to running a normal distributed database that they control read/writes to.
- natrius 11y ago
  Blockchains can be built without 10 minute block times or wasteful proof-of-work for mining. You can just pick people the users trust to make blocks or use proof-of-stake mining. Blockchains are harder to break than most corporate databases. Reading up on Ethereum will answer most of your questions.
  - TheDong 11y ago
    If your "blockchain" doesn't have a proof-of-work beyond trusted people, that's hardly different than a company publishing their database full of signed transactions. I'm aware that 10 minutes is a configurable number, but there's a reason it's as high as it is. I'm also familiar with Ethereum, and I still don't see it as better than a company-run database for anything like uber/airbnb/etc with a central company behind it. > Blockchains are harder to break than most corporate databases. Strange, Google and Amazon and many other sites have done just fine with databases (though there are exceptions like Ashley Madison etc) while there have already been real double-spends with the bitcoin Blockchain and numerous other issues. Proportional to usage, I'd say bitcoin has proven to be terrible compared to databases. So yeah, citation needed. Additionally, if you change your mining to be "people users trust", your security is now equivalent to corporate database security -- a lead pipe to the head to get a password in.
    - brighton36 11y ago
      There's precisely two (and maybe one) reasons where blockchains offer an economic efficiency. Immutability and/or regulatory arbitrage. When you can buy crack on Google and Amazon, then we'll no longer see an efficiency with blockchains.
    - natrius 11y ago
      > I'm also familiar with Ethereum, and I still don't see it as better than a company-run database for anything like uber/airbnb/etc with a central company behind it. It's better because no one is taking a cut off of the transactions that the network enables. No one has to approve a new application that uses the network, so every application can build on top of the network. The people own the network, not companies. This isn't just better, it's better to the degree that the Internet was better than private networks. That difference was world changing, and this one will be too. > Additionally, if you change your mining to be "people users trust", your security is now equivalent to corporate database security -- a lead pipe to the head to get a password in. Blockchains have programs that validate transactions. You'd have to get every validator to incorporate a fraudulent transaction. Hacking three financial institutions at the same time, for example, is pretty hard. Ten is even harder.
dogma1138 11y ago
Calling it a public database is misleading, it's not really public even the Bitcoin blockchain ins't really public as it's access isn't free (proof of work). The blockchain that will be used by banks won't be public just like SWIFTNet and other similar banking networks aren't public. What WS and the banks want is a private blockchain to replace the current messaging and clearance systems and services into something which will be cheaper, faster and will have lower intrinsic risk. Banks, clearinghouses and other similar financial institutions will have access to it and will provide the needed infrastructure to support it, it will allow them to conduct their financial operations at a much lower costs increasing their profit margins it's not meant for you to be accessing it from your mobile phone everytime you use apple pay.
- natrius 11y ago
  Access isn't free, but anyone can write to it without permission. That makes it public. Individuals couldn't compete with SWIFT because they had no way to coordinate their actions. Public databases change that. The first phase will be financial institutions using blockchains to lower their costs. The second phase will be financial institutions pursuing new business models around blockchains anyone can access every time they use Apple Pay. The genie is out of the bottle. Middlemen are no longer necessary for anything.
  - dogma1138 11y ago
    Again you think that those blockchains will be publicly accessible which is incorrect, they'll have their own blockchains for their own settlement, maybe they'll have some sub-chains in the long run for end-users but still you can bet your house on that they'll find a way to ensure that users can't simply join the blockchain "fully" (e.g. find a way to separate wallets from mining, like BC does with mining pools for example but for another reason) like they can currently with Bitcoin. And having a non-free access make it non-public by definition sorry. Bitcoin is moderated by the amount of effort needed to perform certain operation, some take very little like generating your key and address tomorrow they can change that to a point where only the large bitcoin farms could do it would you still call it a public system? If so so is SWIFTNet sure you just need a couple of billion and to open a bank but hey any one can join.... BTW you see a similar thing today, BC is "complicated" this is why things like coinbase become more and more popular, people don't keep their bitcoins in their own wallets anymore they use a 3rd party mostly in the form of various bitcoin exchanges. If a "public" based system has already degraded into pretty much a hierarchy what do you think a system designed by the financial sector will turn out like?
kalleboo 11y ago
> Blockchains give us publicly writable databases. Such a thing never existed before Not true. We had Microsoft SQL Server[0] [0] https://en.wikipedia.org/wiki/SQL_Slammer https://en.wikipedia.org/wiki/SQL_Slammer
hliyan 11y ago
I think the shared ledger analogy is meant as a simplification for the general public. I did the same thing in my explanatory article two years ago: http://zen.lk/2013/11/28/how-i-finally-understood-bitcoin/ http://zen.lk/2013/11/28/how-i-finally-understood-bitcoin/

kolbe 11y ago

One of two things: I either do not understand Wall Street's obsession with blockchainesque technologies, or Wall Street's obsession with it is totally emblematic of their buzzword-obsessed technology-ignorant groupthink that fried the tech industry in the late 90's. I'm seeing companies like this pop up all over the place. Blythe Masters's new venture[1], which made the cover of this month's Bloomberg Business, seems to be the pinnacle. Bitcoin technologies solved some very important problems in the creation of currencies: double spending, decentralization, cost distribution, &c. These are not problems that need to be solved in securities trading. One company running on one platform doesn't have a double spendng problem. Decentralization is irrelevant. And cost is no issue. Yes, the securities trading industry is wrought with disgusting inefficiencies, and technology should play a central role in becoming more efficient, but I do not see how shoehorning in blockchain tech helps in any way. If keeping track of ownership and transfer of securities is such a cumbersome process, make a company that keeps track of ownership and transfer of securities. Use computers. Use web interfaces. Make transactions publicly viewable. Create robust contract definitions. Remove paper trails. Hire programmers. Pay AWS. But I have no clue how they think blockchain technology adds to any solution here. I don't know. Someone please explain. [1] http://www.bloomberg.com/news/features/2015-09-01/blythe-masters-tells-banks-the-blockchain-changes-everything http://www.bloomberg.com/news/features/2015-09-01/blythe-mas...

natrius 11y ago
People pay Nasdaq to make their trades reliable and safe. Reliable and safe trades can now be done by a swarm of computers running free software, and they only charge a tiny margin over the costs of bandwidth, energy and storage. How is Wall Street supposed to make money now? They're all trying to find out, and they all need to be the first. Financial profits will be much smaller, and the slow movers will have a smaller slice of a smaller pie.
- lsc 11y ago
  > People pay Nasdaq to make their trades reliable and safe. How much of the value people see in Nasdaq is the technical systems that execute the trades? I'd argue that the technical systems that reliably execute trades are important; Nasdaq would fail if they didn't work reliably, but having a reliable system to execute trades doesn't make it easy to setup a competitor to the Nasdaq, you know what I mean? The technical systems are necessary but not sufficient; the rest of what you need to set up a stock exchange is absolutely huge. I'll make the analogy of e-bay. I think most people would agree with my assertion that the technical challenges of building a competitor to ebay are trivial when compared with the effort that would be required to get the buyers and sellers to leave ebay and join your new platform.

Ologn 11y ago

For all the bubble talk...if there is any sign of a bubble, it is Bitcoin. Bitcoins are completely worthless, they have no value. The price action shows it - they are currently bouncing between $230 and $235, six months ago that was $260, and one year ago it was $400. It is headed to $0. The smell of scam is all over it. The inventor hides his identity. Bitcoin companies are awash in scams and criminal charges - Mt. Gox, Butterfly Labs etc. The Bitcoin hype machine can't answer one simple question - why do Bitcoins have any value? They can't give a rational answer to this. You can get a Florida real estate swamp land sales shop, or MLM organization running for a little while, but eventually it folds. I'm glad to see that two people who have had a long, long history of observing financial markets agree with me - Warren Buffett and Charlie Munger. They've been around long enough to see every snake oil scam under the planet. That's why Munger says Bitcoins are "rat poison" and Buffett expressed similar sentiments. Incidentally, I knew this when Bitcoin was $460 and even mentioned it on HN ( https://news.ycombinator.com/item?id=6753545 https://news.ycombinator.com/item?id=6753545 ). Those who listened to me saved themselves from losing half their investment. Soon enough I will be pointing to this post when it halves again to $115-$118.

kordless 11y ago
Making a value immutable instantiates trust in a system. Systems that have trust in them are, historically, worth more than untrustworthy systems. Blamers, like you, spend most of their time trying to convince others what to do based on biased arguments. Biases are cheap hacks/workarounds to establishing human trust and have no value to anyone, even if they did listen to you.
vfdfv 11y ago
> Bernie Sanders scam Bernie Madoff? Different guy.
joeyspn 11y ago
> The Bitcoin hype machine can't answer one simple question - why do Bitcoins have any value? They can't give a rational answer to this. The answer is simple: Because there's enough number of people that agrees to use it as commodity money and medium of exchange.

EGreg 11y ago

Why do blockchains need proof of work at all? It seems that this is only to solve the Byzantine Generals problem, not to prevent spam or something like that (which HashCash used). Given a network where every node eventually communicates with every other node, a vector clock is enough. You can simply have append-only trees! This data structure is ideally suited for distributed applications. In a smaller network, question about double-spend is simply solved by having a MAJORITY of parties report that they've seen a certain precondition at time A (ie Person X has Y coins) before any subsequent transaction is considered validated. What is also beautiful about appending to a TREE instead of a ledger is that you can have subsets of the network which care about a particular subtree. You don't need everyone to store everything!

TheDong 11y ago
Proof of Work does disincentive spam a little because you can only spam as quickly as the network can incorporate transactions (6tps iirc) due to the slow nature of the network. If the network were more efficient and used vector clocks, you could spam much more efficiently too. If the majority of parties can decide such things without a proof of work, then a single person can just create a large number of accounts and own the network. You need to avoid the problem of fake accounts somehow. Proof of Work does that and you don't propose a solution.
- brighton36 11y ago
  Miner fees mediate spam, not the transaction count. (which btw is likely to be enormously higher than 6tps)
  - TheDong 11y ago
    https://en.bitcoin.it/wiki/Scalability#Scalability_targets https://en.bitcoin.it/wiki/Scalability#Scalability_targets > Today the Bitcoin network is restricted to a sustained rate of 7 tps due to the bitcoin protocol restricting block sizes to 1MB. I've heard the number from other sources as being 6 or 7 before too, particularly after the scale tests I believe. I know there's the blocksize increase debate which will make this comment inaccurate soon. Also, I believe that a 0 fee transaction will still get processed eventually and, since such a thing is valid, it's not going to stop spam entirely, just slow it a lot.

vectorpush 11y ago

Bitcoin and blockchain enthusiasts have been claiming that bitcoin (or etherum) is going to take the world by storm any day now, yet all I ever see anywhere are big claims (revolutionizing payments, disrupting remittance, ending wars, freeing the people, destroying the banks etc, ad nauseam) with very little substance and lots of scams, frauds and dead-end ventures. Dark markets, internet gambling and a handful of other novelty and niche communities can extract genuine utility from bitcoin, and that should continue into the foreseeable future, but the general population just has no use for it. None. Despite all the hand wringing about having to endure the treachery of big banks, pull style payments, and entering long credit card numbers, bitcoin is still harder to use, even harder to keep secure, and without any guarantees, assurances or consumer protections. Bitcoin is an interesting novelty at best, and everyone knows it, even many bitcoin enthusiasts. Now, in recent months, we're suddenly hit with a bevy of stories about big name financial brands and famous VCs pouring cash and research into the blockchain, and just like that, the goalposts have shifted. This is what we've all been waiting for; this is what will really bring bitcoin into the mainstream, there has to be something big here when you look at all the colossal mountains of cash that have been dumped into the bitcoinverse... yet somehow, we're still at a loss as to exactly how the "x but with blockchains" formula is meant to revolutionize everything. If the 100 million dollar investment into 21inc's vision of putting a bitcoin miner in every refrigerator is any indication of what we're to expect from all this investor cash, I think we can safely assume that what we're witnessing is simply the hyperbolic bitcoin hype machine functioning within normal parameters. Of course, I'm probably just an idiot who doesn't "get" bitcoin, it's pretty difficult to understand, since even after all these years I just can't grasp the amazing potential of bitcoin. What other explanation could there be?

deet 11y ago
It's very difficult to dispute your assertions that Bitcoin currently provides very little utility outside niche markets, that a lot of the investments being made are laughable, and that the shifting goalposts phenomenon is in full effect. But remember, a lot of things we use the internet and mobile phones for today were envisioned and promised in the late 90s but failed to materialize in a practical, mainstream way until very recently, over a decade later. Who knows what cryptocurrencies, or the concepts behind them, will mean in another 5, 10, or 20 years. Maybe nothing, maybe a lot. It's still too early to tell. (I'm skeptical myself, especially in actual currency applications, but open minded.)

j_lev 11y ago

> By early 2014 the three had $4 million in seed funding and had narrowed their focus to Bitcoin apps. But they found that the software tools they needed to build those apps didn’t exist and pivoted to building the tools themselves. > ON A MONDAY MORNING seven Chain.com employees sit in a circle on their Aeron chairs plotting the week’s plan of attack for various projects. The shoptalk is a jargon-fest of “open assets,” “confirmation time,” “UI,” “sidechains,” “federated chains” and, of course, “coins.” Khosla Ventures’ Rabois, the company’s lead VC investor, says he backed Chain.com because it had a nucleus of “10X engineers,” which he defines as “engineers who have the output and insight that’s ten times better than a regularly good engineer.” Elite groups like these, he says, are essential to build tools “so more regular engineers can build applications” for blockchain. In The Industry, how common is investing $4 million in a company before they have even "narrowed their focus to Bitcoin apps," based on the unproven potential of the founders? What am I missing?

sigma2015 11y ago

> Express now collect 1% to 3% of domestic credit and debit transactions, generating more than $70 billion a year in fees in the U.S. market alone. “That’s a tax on all payments,” says Wedbush analyst Luria. With Bitcoin that goes practically to zero. There are and will be also tx fees for Bitcoin. > Here’s how primitive the infrastructure is now: The Bitcoin blockchain can currently handle 7 transactions a second That's not an infrastracture issue but an intentional limitation by design. [http://bitcoin.stackexchange.com/questions/855/what-keeps-the-average-block-time-at-10-minutes http://bitcoin.stackexchange.com/questions/855/what-keeps-th...]

laurashin 11y ago

Hi, I'm the writer who wrote this story. Someone on Twitter alerted me to the conversation. Thanks, Paul Pajo! I didn't get to read the whole thread as I am heading out on a flight today but I just wanted to say that I am coming out with a story tomorrow morning Eastern Time that addresses some (though not all) of the initial question. This is the Forbes page where you can watch for the story. http://www.forbes.com/sites/laurashin/ http://www.forbes.com/sites/laurashin/ One thing I will mention quickly is that the main thrust of my story is that Wall Street is interested in using it to make their own processes more efficient. In a developer economies, because or existing systems work so well, we will have a slower road to consumer adoption than developing economies will. One of the sidebars to the story goes into this a little bit. Plane is pushing back from the gate, so I have to go. But I hope hats helpful.

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laurashin 11y ago

This is my followup story, which answers some of the questions about how we'll end up using Bitcoin, and how people in developing economies will likely deal with it more directly than people in developed economies -- at least at first: http://www.forbes.com/sites/laurashin/2015/09/14/bitcoin-blockchain-technology-in-financial-services-how-the-disruption-will-play-out/ http://www.forbes.com/sites/laurashin/2015/09/14/bitcoin-blo...