12 ms·

The separation of "bitcoin" and "blockchain" is not only correct, but further more it's a good thing people/media are becoming aware of the distinction between

by retube 11y ago

The separation of "bitcoin" and "blockchain" is not only correct, but further more it's a good thing people/media are becoming aware of the distinction between the blockchain as a protocol and bitcoin as an application (one of potentially thousands) based on this protocol. Big finance doesn't give a sh*t about bitcoin. They don't see it as a threat, it barely registers. What they do see is the enormous applications and potential cost-savings that blockchains could enable - in areas like settlements, transaction signing, new products and so on. Hence coverage is moving from "Bitcoin" to "Blockchain".

CydeWeys 11y ago
The blockchain is only useful if you need decentralization across pseudo-anonymous actors. This doesn't apply to Big Finance. The blockchain is also only useful with a large mining base, because security is achieved through having a large aggregate hashing power that cannot be overpowered by a bad actor. That is why almost all Bitcoin competitors are worthless -- they have nowhere near the hashing power, and are thus nowhere near as secure. The network effects here are huge. Having multiple blockchains is like running multiple competing power distribution networks across the country operating at different voltages. It makes more sense to standardize and have everything operate on one good one. And that's what Bitcoin already is.
- seanalltogether 11y ago
  This is like saying AT&T should have no interest in VOIP because they already have a PSTN protocols. Banking systems are full of very antiquated technologies hobbled together to allow them to work. They would be dumb not to investigate the benefits of blockchain type systems. Even if the system is limited to trusted parties and forgoes the whole mining incentive, there's still a lot of value there.
  - CydeWeys 11y ago
    > Even if the system is limited to trusted parties and forgoes the whole mining incentive, there's still a lot of value there. If you take away proof-of-work, then it's no longer a blockchain. It's just a unary Merkle tree, an idea which has been around for a long time. You can't surgically extract out the most fundamental and important part of a given idea and then call what remains the same thing.
    - wmf 11y ago
      I guess it would be too embarrassing for banks to admit that they're just now getting interested in adopting 1990s technology.
      - evgen 11y ago
        They will just point out that PoW incentive systems existed in the 90s along with Merkle chains; bitcoin marries the two but maybe its rise is simply revealing to banks how useful distributed consensus protocols could be for building private exchanges instead of these crypto primites remaining one among many in the huge collection of esoteric crypto protocols to arise in the crypto-Cambrian era of the 90s.
    - aakilfernandes 11y ago
      I don't thonk thats a fair definition. We need some term to encompass PoS, round-robin, multisig, and not-yet-known consensus mechanisms.
      - brighton36 11y ago
        Subjectively true databases. If it's not objectively true - it's not a blockchain.
- brighton36 11y ago
  Nice work Cyde. @retube seems to think blockchains are for notarizating messages between trusted parties, instead of value transfer between untrusted parties.
- deleted 11y ago
  [deleted]
- bduerst 11y ago
  The bitcoin network isn't as mighty and powerful as you make it out to be. The hashing power you talk about is spent doing redundant work, and the network caps at 7 transactions a second (by design). Hashing power is moot when organizations can (and routinely do) bring down the network by spamming it with "stress tests". Just because there haven't been any wildly successful block chain implementations doesn't mean that the technology can't be employed elsewhere. Many technologies are in play today that were once deemed as not being useful, and even though I'm critical of block chain, I can still think of a few validation use cases for big banks with it.
  - empath75 11y ago
    >the network caps at 7 transactions a second (by design). That's going to be changed fairly soon. I suspect that a lot of people are just going to use the bitcoin blockchain out of inertia, just because it's easier to use a proven platform than something you build yourself. Unless someone needs a feature that bitcoin doesn't provide, I don't see any competing blockchain taking its place.
    - bduerst 11y ago
      >That's going to be changed fairly soon. No, it's not. We have already seen four individual proposals to the network to increase the block size. Each requires a consensus by the miners and each was shot down. The miners are incentivized not to increase the transaction rate, because they profit from the increased competition and fees from smaller blocks. By design, the decentralized control of bitcoin is actually what is preventing it from improving itself.
      - CydeWeys 11y ago
        The miners are incentivized to do whatever is best for the value of Bitcoin, because that's what their block rewards and transaction fees are paid off in. Maximizing the block fee in a way that hurts Bitcoin itself would be myopic and irrational, and they aren't doing that. Most pools are on board with increasing the block size.
- woah 11y ago
  Bitcoin can't handle more than 7 transactions per second. It's barely viable as a niche speculation currency.
zeeshanm 11y ago
A blockchain is only as good as its network. And bitcoin happens to be on the biggest blockchain network to date.
- detaro 11y ago
  That you have to share with everybody else, with flooding attacks, ... For other categories of "good", the biggest network is not necessarily the best.
  - CydeWeys 11y ago
    Can you provide some links to these flooding attacks? I'm curious. I'm not aware of Bitcoin having seriously been impacted in this manner.
    - detaro 11y ago
      https://medium.com/blockcypher-blog/a-bitcoin-spam-attack-post-mortem-s-la-ying-alive-654e914edcf4 https://medium.com/blockcypher-blog/a-bitcoin-spam-attack-po...
      - CydeWeys 11y ago
        Interesting. It definitely sounds like it did some damage, but not a lot, and software has already evolved to handle it better. Plus, such an attack continues getting more and more expensive as the transaction fees you need to spend to keep it going get higher. Obviously I'm not saying this is a good thing for Bitcoin, but on the whole of things it seems like a blip. It's not like any of the fundamental algorithms underlying Bitcoin were seen to have vulnerabilities. And if I have to put up with increased transaction fees every so often during an attack in order to have a decentralized currency, well, there's worse things in the world.
zekevermillion 11y ago
You can have a blockchain without bitcoin, but why is that useful or interesting? Isn't the Nakamoto distributed consensus the key innovation of bitcoin as a protocol? Without that incentive structure in place, we can't trust the state of the blockchain without also trusting the participants. This may work fine for banks, but so does ACH.
- detaro 11y ago
  > You can have a blockchain without bitcoin, but why is that useful or interesting? Isn't the Nakamoto distributed consensus the key innovation of bitcoin as a protocol? What does the second have to do with the first? Just because bitcoin was the first to use it, doesn't mean everything that uses same mechanism suddenly is "Bitcoin", at least not in the commonly used sense.
  - tlrobinson 11y ago
    Parent commenter answered that: "that incentive structure" The "blockchain" works because all the mutually-distrustful participants' incentives are roughly aligned (in theory). You can't attack the network without spending a huge amount of money on mining hardware, and as long as you're financially motivated you'd be better off just mining (again, in theory) You could have a "blockchain" without mining, but it wouldn't provide the same properties Bitcoin does, and solutions that give you similar properties to such a system have been around for a long time, and are probably faster and more efficient. I think banks are now interested in the "blockchain" because of some combination of hype, FOMO, and fundamentally misunderstanding Bitcoin/blockchain.
    - detaro 11y ago
      Yes, but there are tons of blockchains that have mining and the same incentive structure, but you wouldn't call them "Bitcoin"? from "simple variations" (Litecoin) to projects building additional features like Ethereum. Bitcoin is only one application using such a blockchain.
      - 11y ago
IkmoIkmo 11y ago
The blockchain is nothing. It's just a database with some transactions which have a hash of the previous blocks... it's just a simple database in and of itself, no better than an ordinary (centralised) database. The cool part is that it's decentralised, and you can only do that with bitcoin, or some equivalent decentralised value token (call it a currency if you want, doesn't matter but there has to be a token with value). Big finance has very silly ideas about a bitcoinless blockchain. No other POW or equivalent protocol has a value token anywhere near the size of bitcoin, and thereby nowhere near the security. The blockchain is nothing without bitcoin, until it is usurped and there's zero indication of that happening. There are lots of 'internal' blockchain ideas floating around right now, i.e. not decentralised, proprietary 'blockchains', which are really just ordinary centralised databases which have nothing to do with the concept 'blockchain' at all and are not novel in any way and have been around for many, many years, and Big Finance is eating that stuff up. It's nonsense really.
- deleted 11y ago
  [deleted]

by retube 11y ago

CydeWeys 11y ago

The blockchain is only useful if you need decentralization across pseudo-anonymous actors. This doesn't apply to Big Finance. The blockchain is also only useful with a large mining base, because security is achieved through having a large aggregate hashing power that cannot be overpowered by a bad actor. That is why almost all Bitcoin competitors are worthless -- they have nowhere near the hashing power, and are thus nowhere near as secure. The network effects here are huge. Having multiple blockchains is like running multiple competing power distribution networks across the country operating at different voltages. It makes more sense to standardize and have everything operate on one good one. And that's what Bitcoin already is.

seanalltogether 11y ago
This is like saying AT&T should have no interest in VOIP because they already have a PSTN protocols. Banking systems are full of very antiquated technologies hobbled together to allow them to work. They would be dumb not to investigate the benefits of blockchain type systems. Even if the system is limited to trusted parties and forgoes the whole mining incentive, there's still a lot of value there.
- CydeWeys 11y ago
  > Even if the system is limited to trusted parties and forgoes the whole mining incentive, there's still a lot of value there. If you take away proof-of-work, then it's no longer a blockchain. It's just a unary Merkle tree, an idea which has been around for a long time. You can't surgically extract out the most fundamental and important part of a given idea and then call what remains the same thing.
  - wmf 11y ago
    I guess it would be too embarrassing for banks to admit that they're just now getting interested in adopting 1990s technology.
    - evgen 11y ago
      They will just point out that PoW incentive systems existed in the 90s along with Merkle chains; bitcoin marries the two but maybe its rise is simply revealing to banks how useful distributed consensus protocols could be for building private exchanges instead of these crypto primites remaining one among many in the huge collection of esoteric crypto protocols to arise in the crypto-Cambrian era of the 90s.
  - aakilfernandes 11y ago
    I don't thonk thats a fair definition. We need some term to encompass PoS, round-robin, multisig, and not-yet-known consensus mechanisms.
    - brighton36 11y ago
      Subjectively true databases. If it's not objectively true - it's not a blockchain.
brighton36 11y ago
Nice work Cyde. @retube seems to think blockchains are for notarizating messages between trusted parties, instead of value transfer between untrusted parties.
deleted 11y ago
[deleted]
bduerst 11y ago
The bitcoin network isn't as mighty and powerful as you make it out to be. The hashing power you talk about is spent doing redundant work, and the network caps at 7 transactions a second (by design). Hashing power is moot when organizations can (and routinely do) bring down the network by spamming it with "stress tests". Just because there haven't been any wildly successful block chain implementations doesn't mean that the technology can't be employed elsewhere. Many technologies are in play today that were once deemed as not being useful, and even though I'm critical of block chain, I can still think of a few validation use cases for big banks with it.
- empath75 11y ago
  >the network caps at 7 transactions a second (by design). That's going to be changed fairly soon. I suspect that a lot of people are just going to use the bitcoin blockchain out of inertia, just because it's easier to use a proven platform than something you build yourself. Unless someone needs a feature that bitcoin doesn't provide, I don't see any competing blockchain taking its place.
  - bduerst 11y ago
    >That's going to be changed fairly soon. No, it's not. We have already seen four individual proposals to the network to increase the block size. Each requires a consensus by the miners and each was shot down. The miners are incentivized not to increase the transaction rate, because they profit from the increased competition and fees from smaller blocks. By design, the decentralized control of bitcoin is actually what is preventing it from improving itself.
    - CydeWeys 11y ago
      The miners are incentivized to do whatever is best for the value of Bitcoin, because that's what their block rewards and transaction fees are paid off in. Maximizing the block fee in a way that hurts Bitcoin itself would be myopic and irrational, and they aren't doing that. Most pools are on board with increasing the block size.
woah 11y ago
Bitcoin can't handle more than 7 transactions per second. It's barely viable as a niche speculation currency.

zeeshanm 11y ago

A blockchain is only as good as its network. And bitcoin happens to be on the biggest blockchain network to date.

detaro 11y ago
That you have to share with everybody else, with flooding attacks, ... For other categories of "good", the biggest network is not necessarily the best.
- CydeWeys 11y ago
  Can you provide some links to these flooding attacks? I'm curious. I'm not aware of Bitcoin having seriously been impacted in this manner.
  - detaro 11y ago
    https://medium.com/blockcypher-blog/a-bitcoin-spam-attack-post-mortem-s-la-ying-alive-654e914edcf4 https://medium.com/blockcypher-blog/a-bitcoin-spam-attack-po...
    - CydeWeys 11y ago
      Interesting. It definitely sounds like it did some damage, but not a lot, and software has already evolved to handle it better. Plus, such an attack continues getting more and more expensive as the transaction fees you need to spend to keep it going get higher. Obviously I'm not saying this is a good thing for Bitcoin, but on the whole of things it seems like a blip. It's not like any of the fundamental algorithms underlying Bitcoin were seen to have vulnerabilities. And if I have to put up with increased transaction fees every so often during an attack in order to have a decentralized currency, well, there's worse things in the world.

zekevermillion 11y ago

You can have a blockchain without bitcoin, but why is that useful or interesting? Isn't the Nakamoto distributed consensus the key innovation of bitcoin as a protocol? Without that incentive structure in place, we can't trust the state of the blockchain without also trusting the participants. This may work fine for banks, but so does ACH.

detaro 11y ago
> You can have a blockchain without bitcoin, but why is that useful or interesting? Isn't the Nakamoto distributed consensus the key innovation of bitcoin as a protocol? What does the second have to do with the first? Just because bitcoin was the first to use it, doesn't mean everything that uses same mechanism suddenly is "Bitcoin", at least not in the commonly used sense.
- tlrobinson 11y ago
  Parent commenter answered that: "that incentive structure" The "blockchain" works because all the mutually-distrustful participants' incentives are roughly aligned (in theory). You can't attack the network without spending a huge amount of money on mining hardware, and as long as you're financially motivated you'd be better off just mining (again, in theory) You could have a "blockchain" without mining, but it wouldn't provide the same properties Bitcoin does, and solutions that give you similar properties to such a system have been around for a long time, and are probably faster and more efficient. I think banks are now interested in the "blockchain" because of some combination of hype, FOMO, and fundamentally misunderstanding Bitcoin/blockchain.
  - detaro 11y ago
    Yes, but there are tons of blockchains that have mining and the same incentive structure, but you wouldn't call them "Bitcoin"? from "simple variations" (Litecoin) to projects building additional features like Ethereum. Bitcoin is only one application using such a blockchain.
    - 11y ago

IkmoIkmo 11y ago

The blockchain is nothing. It's just a database with some transactions which have a hash of the previous blocks... it's just a simple database in and of itself, no better than an ordinary (centralised) database. The cool part is that it's decentralised, and you can only do that with bitcoin, or some equivalent decentralised value token (call it a currency if you want, doesn't matter but there has to be a token with value). Big finance has very silly ideas about a bitcoinless blockchain. No other POW or equivalent protocol has a value token anywhere near the size of bitcoin, and thereby nowhere near the security. The blockchain is nothing without bitcoin, until it is usurped and there's zero indication of that happening. There are lots of 'internal' blockchain ideas floating around right now, i.e. not decentralised, proprietary 'blockchains', which are really just ordinary centralised databases which have nothing to do with the concept 'blockchain' at all and are not novel in any way and have been around for many, many years, and Big Finance is eating that stuff up. It's nonsense really.

deleted 11y ago
[deleted]