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ICO's are clearly enjoying a use. Largest crowdfunding in history can't be ignored - whether it ends in tears for most investors is another matter entirely.

by corv 9y ago

root_axis 9y ago
I asked for a practical example. Just because a bunch of people decided to spend their money on internet tokens does not mean it is useful. How is it useful?
- deleted 9y ago
  [deleted]
- nemo44x 9y ago
  Groups of actors across the world can make an agreement that is enforced by a smart contract. When an actor fails to live up their obligation they are refused payment. There is no way to take off with something that is not yours. There is no reliable or efficient way to cheat. You don't have to know the other actors you are making an agreement for something with. Can you do this now without a smart contract? Of course. The usefulness is in that it's universally visible and lowers the barrier to entry and is far less complex.
  - aaron-lebo 9y ago
    If it's so uncheatable, why did the original DAO get hacked?
    - mr_spothawk 9y ago
      IIRC, It wasn't "hacked". Rather the contract was written incorrectly from the outset, and the "hacker" merely used the withdraw method to ... withdraw.
      - lordnacho 9y ago
        In the real world, you appoint a judge who decides based on cultural convention (civil law, common law, sharia law, idk) what the contract was supposed to mean. Sometimes it does come down to punctuation, but all of the time it comes down to what was meant with the contract. Letting the system only mean what it says is not great for users, either. You get an overhead of always having to check and double check everything you do.
  - root_axis 9y ago
    > make an agreement that is enforced by a smart contract Please give me an example of how an agreement can be enforced by a smart contract. > When an actor fails to live up their obligation they are refused payment It works the same way with colored pebbles. > There is no way to take off with something that is not yours Why not? I know this is an abstract question in this context which is why I asked for a practical example so we could share a thought experiment regarding how the use of a smart-contract would play out in real life. > There is no reliable or efficient way to cheat Cheat what? Once again this is totally abstract. Seems to me like cheating is just as easy if not easier because the role of law-enforcement is questionable at best and nonexistent at worst. To cheat, all I have to do is agree to the terms of the contract then violate it after I have secured the funds or property. Then what? > You don't have to know the other actors you are making an agreement for something with I'll grant that this is possible and useful in special cases (e.g. online drug markets), but that is a benefit of blockchain money and smart contracts don't offer any benefit > far less complex This is certainly not the case, as victims of the DAO and orphaned eth blockchain can attest to.
    - cercatrova 9y ago
      Okay, I'll give you a practical example. Here is an excerpt from the book Blockchain Revolution. "bAIRBNB VERSUS AIRBNB bAirbnb is a distributed application (DApp), a set of smart contracts that stores data on a home-listings blockchain. The bAirbnb app has an elegant interface: owners can upload information and pictures of their property. The platform maintains reputation scores of both providers and renters to improve everyone’s business decisions. When you want to rent, the bAirbnb software scans and filters the blockchain for all the listings that meet your criteria (e.g., ten miles from the Eiffel Tower, two bedrooms, four-plus star ratings only). Your user experience is identical to that in Airbnb, except that you communicate peer to peer on the network, through encrypted and cryptographically signed messages not stored in Airbnb’s database. You and the room owner are the only two people who can read these messages. You can swap phone numbers, an exchange that Airbnb blocks to preserve future revenues. On bAirbnb you and the owner could communicate off-chain and complete the transaction entirely off-chain, but you are better off completing the transaction on-chain for a few reasons. Reputation: Because the network records the transaction on the blockchain, a positive review from each user improves your respective reputations. The risk of a negative review motivates each party to remain honest. Remember, people with good reputations can use the same persona across multiple DApps and benefit from continuity as a good person. Identity Verification: Because we are not dealing with a centralized system that checks ID on our behalf, each party needs to confirm the other party’s identity. The blockchain calls up a contract from a “VerifyID” application, one of many contracts that bAirbnb, SUber (blockchain Uber), and other DApps use to verify real-world identity. Privacy Protection: VerifyID doesn’t track and store all transactions in a database. It simply returns a TRUE or FALSE when it receives a request for verification of a public key (persona). Different kinds of DApps can call VerifyID, but VerifyID never knows details of transactions. This separation of identity from activity greatly improves your privacy. Risk Reduction: Home owners currently store customer identities and financial data on their own servers, which can be hacked and leaked, exposing owners to litigation and large liabilities. On the blockchain, you needn’t trust a vendor with your data; there is no central database to hack and leak. There are only individual peer-to-peer pseudonymous transactions. Insurance: Today Airbnb offers $1 million insurance for owners and compensates them for theft and damage. On bAirbnb, owners can get the bAirbnb insurance DApp. Renters with good reputations like you have lower insurance rates and needn’t subsidize renters who lack caution, scrutiny of prospects, or poor treatment of property. When you submit a booking request, bAirbnb sends your public key (persona) to the insurance contract for a quote. The insurance DApp contacts a list of trusted providers; fake insurers need not apply. Insurers perform their own calculations in real time through autonomous agent software based on the inputs to the contract—such as the market value of the owner’s house, how much the owner wants insured, owner reputation, your reputation as a renter, and rental price. bAirbnb takes the best bid and adds it to the nightly fee the owner wants to charge. The blockchain processes this calculation in the background; owners and renters have a comparable user experience to that of Airbnb but a superior and more equitable value exchange. Payment Settlement: Of course, on the blockchain, you transfer funds to the owner in seconds, not days as with Airbnb. Owners can manage security deposits more easily with smart contracts. Some parties use escrow accounts to release payments partially (nightly, weekly, hourly, etc.) or in full as the parties agree. In disputes involving smart contracts, parties can call for arbitration. Property Access Using Smart Locks (IoT device): A smart lock connected to the blockchain knows when you have paid. When you arrive, your near-field communication-enabled smart phone can sign a message with your public key as proof of payment, and the smart lock will open for you. Owners need not drop keys off to you or visit the property unless they want to say hello or address some emergency. You and the owner have now saved most of the 15 percent Airbnb fee. Settlements are assured and instant. There are no foreign exchange fees for international contracts. You need not worry about stolen identity. Local governments in oppressive regimes cannot subpoena bAirbnb for all its rental history data. This is the real sharing-of-value economy; both customers and service providers are the winners." Essentially, it can turn any centralized middleman system, which are most companies in the world today, into decentralized ones, where the processing happens not on central servers but in the decentralized network.
  - disconnected 9y ago
    > There is no way to take off with something that is not yours. There is no reliable or efficient way to cheat. I'm a bit rusty on my crypto-currency knowledge, but I seem to remember that there is the possibility of a 51% attack, wherein if an evil actor managed to control 51% or more of the network, they could basically wreak all sorts of havoc on the network, from denial of service, to double-spending of coins to rewriting of (recent) transaction history. As for feasibility, some mining groups have already briefly obtained 51% control of the network "by accident", but if you want to go the black hat route though, DDOS a large portion of the network, spin up a few dormant bots and presto, you have your 51%. So it isn't impossible to cheat, and certainly not impractical. This is a major problem. Has this problem been addressed at all?
    - colatkinson 9y ago
      While not a failsafe method, lots of newer cryptocurrencies use proof-of-work that is "ASIC-proof." This means that CPU and GPU mining will remain profitable, theoretically preventing the degree of centralization seen in Bitcoin. While this doesn't remove all risks (e.g. an incredibly large mining pool), it is certainly harder to disable thousands of independent miners than it is to do so to a single centralized operation.
- nemo44x 9y ago
  You did ask for practical. First I'll say this isn't easy to answer in concrete terms. But someone will one day. One concept would be to raise funds that can allow you arbitrage at a scalable level. Request funds (ICO) and have the smart contract enable a certain subset of those funds for your organization to use to arbitrage other crypto's. Profits are spread across stakeholders based on their investment, represented as the tokens they generated in the ICO. Enforce this by only allowing a certain part of the funds to become available at certain times based on performance. Stake holders could vote using a contract to determine if more funds should be released.
  - root_axis 9y ago
    > First I'll say this isn't easy to answer in concrete terms. But someone will one day. This is not unreasonable, but you have to admit that it is a far cry from imminent revolution and a key reason why people are skeptical of this technology especially considering the bottomless pit of grandiose hype that accompanies it. > One concept would be to raise funds that can allow you arbitrage at a scalable level. Request funds (ICO) and have the smart contract enable a certain subset of those funds for your organization to use to arbitrage other crypto's. Profits are spread across stakeholders based on their investment, represented as the tokens they generated in the ICO. Ok, but all you've really described here is a higher level abstraction for playing the cryptomarkets rather than a useful product or service that is enabled by the technology itself. If you aren't interested in gambling your money on the cryptomarkets then this idea is useless.
    - nemo44x 9y ago
      I wouldn't say imminent. And I wouldn't even say probable. But possible? For sure. I find the entire thing interesting and in fact the most boring bit is the instant millionaire greed fueling unfounded hype. If I had the great idea I wouldn't be hear talking about it. I'm getting a better and better grip I feel but it could all be fallacy too! But, someone or some group are going to be far more able to see the bigger picture I imagine and unleash something completely new, practical and useful.
    - nemo44x 9y ago
- gorthol 9y ago
  For example you could implement a credit system where anyone could be a creditor and vote (with their digital signature) what requests get approved. Then, once the money changes hands, the smart contract would automatically deduce que periodic payments, including the interests, and distribute it to the lenders in the correct proportions. If a payment is missed, a penalization or increased interest could be implemented. I don't know if this would be currently possible with Ethereum because I haven't looked very deep into its technology, but if not I'm pretty sure some blockchain will allow this kind of interactions. For more examples, check: https://www.ethereum.org/token https://www.ethereum.org/token
  - acdha 9y ago
    What advantage does that really offer? You still need to deal with the expensive parts (assessing credit worthiness, dealing with fraud or malfeasance) and if you have the infrastructure to do that, how much is a rigid contract-as-code system which you don't control really adding? Consider what happens if someone takes the loan and never repays it. If you have a government with a functioning court system you can use any commonly accepted contract form, even a signed IOU, so a blockchain adds no value even if you do convince the court it's trustworthy; if you don't have a reliable court system, they can just walk away and you've just spent a lot of money on irrelevant infrastructure. If you have a credit rating system and sufficient proof of identity there might be a consequence but in every case the real value appears to be created by other entities (government IDs and courts; private credit rating services), none of which even need to know what a blockchain is.

ICO's are clearly enjoying a use. Largest crowdfunding in history can't be ignored - whether it ends in tears for most investors is another matter entirely.

by corv 9y ago

ICO's are clearly enjoying a use. Largest crowdfunding in history can't be ignored - whether it ends in tears for most investors is another matter entirely.

root_axis 9y ago

I asked for a practical example. Just because a bunch of people decided to spend their money on internet tokens does not mean it is useful. How is it useful?

deleted 9y ago
[deleted]
nemo44x 9y ago
Groups of actors across the world can make an agreement that is enforced by a smart contract. When an actor fails to live up their obligation they are refused payment. There is no way to take off with something that is not yours. There is no reliable or efficient way to cheat. You don't have to know the other actors you are making an agreement for something with. Can you do this now without a smart contract? Of course. The usefulness is in that it's universally visible and lowers the barrier to entry and is far less complex.
- aaron-lebo 9y ago
  If it's so uncheatable, why did the original DAO get hacked?
  - mr_spothawk 9y ago
    IIRC, It wasn't "hacked". Rather the contract was written incorrectly from the outset, and the "hacker" merely used the withdraw method to ... withdraw.
    - lordnacho 9y ago
      In the real world, you appoint a judge who decides based on cultural convention (civil law, common law, sharia law, idk) what the contract was supposed to mean. Sometimes it does come down to punctuation, but all of the time it comes down to what was meant with the contract. Letting the system only mean what it says is not great for users, either. You get an overhead of always having to check and double check everything you do.
- root_axis 9y ago
  > make an agreement that is enforced by a smart contract Please give me an example of how an agreement can be enforced by a smart contract. > When an actor fails to live up their obligation they are refused payment It works the same way with colored pebbles. > There is no way to take off with something that is not yours Why not? I know this is an abstract question in this context which is why I asked for a practical example so we could share a thought experiment regarding how the use of a smart-contract would play out in real life. > There is no reliable or efficient way to cheat Cheat what? Once again this is totally abstract. Seems to me like cheating is just as easy if not easier because the role of law-enforcement is questionable at best and nonexistent at worst. To cheat, all I have to do is agree to the terms of the contract then violate it after I have secured the funds or property. Then what? > You don't have to know the other actors you are making an agreement for something with I'll grant that this is possible and useful in special cases (e.g. online drug markets), but that is a benefit of blockchain money and smart contracts don't offer any benefit > far less complex This is certainly not the case, as victims of the DAO and orphaned eth blockchain can attest to.
  - cercatrova 9y ago
    Okay, I'll give you a practical example. Here is an excerpt from the book Blockchain Revolution. "bAIRBNB VERSUS AIRBNB bAirbnb is a distributed application (DApp), a set of smart contracts that stores data on a home-listings blockchain. The bAirbnb app has an elegant interface: owners can upload information and pictures of their property. The platform maintains reputation scores of both providers and renters to improve everyone’s business decisions. When you want to rent, the bAirbnb software scans and filters the blockchain for all the listings that meet your criteria (e.g., ten miles from the Eiffel Tower, two bedrooms, four-plus star ratings only). Your user experience is identical to that in Airbnb, except that you communicate peer to peer on the network, through encrypted and cryptographically signed messages not stored in Airbnb’s database. You and the room owner are the only two people who can read these messages. You can swap phone numbers, an exchange that Airbnb blocks to preserve future revenues. On bAirbnb you and the owner could communicate off-chain and complete the transaction entirely off-chain, but you are better off completing the transaction on-chain for a few reasons. Reputation: Because the network records the transaction on the blockchain, a positive review from each user improves your respective reputations. The risk of a negative review motivates each party to remain honest. Remember, people with good reputations can use the same persona across multiple DApps and benefit from continuity as a good person. Identity Verification: Because we are not dealing with a centralized system that checks ID on our behalf, each party needs to confirm the other party’s identity. The blockchain calls up a contract from a “VerifyID” application, one of many contracts that bAirbnb, SUber (blockchain Uber), and other DApps use to verify real-world identity. Privacy Protection: VerifyID doesn’t track and store all transactions in a database. It simply returns a TRUE or FALSE when it receives a request for verification of a public key (persona). Different kinds of DApps can call VerifyID, but VerifyID never knows details of transactions. This separation of identity from activity greatly improves your privacy. Risk Reduction: Home owners currently store customer identities and financial data on their own servers, which can be hacked and leaked, exposing owners to litigation and large liabilities. On the blockchain, you needn’t trust a vendor with your data; there is no central database to hack and leak. There are only individual peer-to-peer pseudonymous transactions. Insurance: Today Airbnb offers $1 million insurance for owners and compensates them for theft and damage. On bAirbnb, owners can get the bAirbnb insurance DApp. Renters with good reputations like you have lower insurance rates and needn’t subsidize renters who lack caution, scrutiny of prospects, or poor treatment of property. When you submit a booking request, bAirbnb sends your public key (persona) to the insurance contract for a quote. The insurance DApp contacts a list of trusted providers; fake insurers need not apply. Insurers perform their own calculations in real time through autonomous agent software based on the inputs to the contract—such as the market value of the owner’s house, how much the owner wants insured, owner reputation, your reputation as a renter, and rental price. bAirbnb takes the best bid and adds it to the nightly fee the owner wants to charge. The blockchain processes this calculation in the background; owners and renters have a comparable user experience to that of Airbnb but a superior and more equitable value exchange. Payment Settlement: Of course, on the blockchain, you transfer funds to the owner in seconds, not days as with Airbnb. Owners can manage security deposits more easily with smart contracts. Some parties use escrow accounts to release payments partially (nightly, weekly, hourly, etc.) or in full as the parties agree. In disputes involving smart contracts, parties can call for arbitration. Property Access Using Smart Locks (IoT device): A smart lock connected to the blockchain knows when you have paid. When you arrive, your near-field communication-enabled smart phone can sign a message with your public key as proof of payment, and the smart lock will open for you. Owners need not drop keys off to you or visit the property unless they want to say hello or address some emergency. You and the owner have now saved most of the 15 percent Airbnb fee. Settlements are assured and instant. There are no foreign exchange fees for international contracts. You need not worry about stolen identity. Local governments in oppressive regimes cannot subpoena bAirbnb for all its rental history data. This is the real sharing-of-value economy; both customers and service providers are the winners." Essentially, it can turn any centralized middleman system, which are most companies in the world today, into decentralized ones, where the processing happens not on central servers but in the decentralized network.
- disconnected 9y ago
  > There is no way to take off with something that is not yours. There is no reliable or efficient way to cheat. I'm a bit rusty on my crypto-currency knowledge, but I seem to remember that there is the possibility of a 51% attack, wherein if an evil actor managed to control 51% or more of the network, they could basically wreak all sorts of havoc on the network, from denial of service, to double-spending of coins to rewriting of (recent) transaction history. As for feasibility, some mining groups have already briefly obtained 51% control of the network "by accident", but if you want to go the black hat route though, DDOS a large portion of the network, spin up a few dormant bots and presto, you have your 51%. So it isn't impossible to cheat, and certainly not impractical. This is a major problem. Has this problem been addressed at all?
  - colatkinson 9y ago
    While not a failsafe method, lots of newer cryptocurrencies use proof-of-work that is "ASIC-proof." This means that CPU and GPU mining will remain profitable, theoretically preventing the degree of centralization seen in Bitcoin. While this doesn't remove all risks (e.g. an incredibly large mining pool), it is certainly harder to disable thousands of independent miners than it is to do so to a single centralized operation.
nemo44x 9y ago
You did ask for practical. First I'll say this isn't easy to answer in concrete terms. But someone will one day. One concept would be to raise funds that can allow you arbitrage at a scalable level. Request funds (ICO) and have the smart contract enable a certain subset of those funds for your organization to use to arbitrage other crypto's. Profits are spread across stakeholders based on their investment, represented as the tokens they generated in the ICO. Enforce this by only allowing a certain part of the funds to become available at certain times based on performance. Stake holders could vote using a contract to determine if more funds should be released.
- root_axis 9y ago
  > First I'll say this isn't easy to answer in concrete terms. But someone will one day. This is not unreasonable, but you have to admit that it is a far cry from imminent revolution and a key reason why people are skeptical of this technology especially considering the bottomless pit of grandiose hype that accompanies it. > One concept would be to raise funds that can allow you arbitrage at a scalable level. Request funds (ICO) and have the smart contract enable a certain subset of those funds for your organization to use to arbitrage other crypto's. Profits are spread across stakeholders based on their investment, represented as the tokens they generated in the ICO. Ok, but all you've really described here is a higher level abstraction for playing the cryptomarkets rather than a useful product or service that is enabled by the technology itself. If you aren't interested in gambling your money on the cryptomarkets then this idea is useless.
  - nemo44x 9y ago
    I wouldn't say imminent. And I wouldn't even say probable. But possible? For sure. I find the entire thing interesting and in fact the most boring bit is the instant millionaire greed fueling unfounded hype. If I had the great idea I wouldn't be hear talking about it. I'm getting a better and better grip I feel but it could all be fallacy too! But, someone or some group are going to be far more able to see the bigger picture I imagine and unleash something completely new, practical and useful.
  - nemo44x 9y ago
gorthol 9y ago
For example you could implement a credit system where anyone could be a creditor and vote (with their digital signature) what requests get approved. Then, once the money changes hands, the smart contract would automatically deduce que periodic payments, including the interests, and distribute it to the lenders in the correct proportions. If a payment is missed, a penalization or increased interest could be implemented. I don't know if this would be currently possible with Ethereum because I haven't looked very deep into its technology, but if not I'm pretty sure some blockchain will allow this kind of interactions. For more examples, check: https://www.ethereum.org/token https://www.ethereum.org/token
- acdha 9y ago
  What advantage does that really offer? You still need to deal with the expensive parts (assessing credit worthiness, dealing with fraud or malfeasance) and if you have the infrastructure to do that, how much is a rigid contract-as-code system which you don't control really adding? Consider what happens if someone takes the loan and never repays it. If you have a government with a functioning court system you can use any commonly accepted contract form, even a signed IOU, so a blockchain adds no value even if you do convince the court it's trustworthy; if you don't have a reliable court system, they can just walk away and you've just spent a lot of money on irrelevant infrastructure. If you have a credit rating system and sufficient proof of identity there might be a consequence but in every case the real value appears to be created by other entities (government IDs and courts; private credit rating services), none of which even need to know what a blockchain is.