10 ms·

Official Response to “Bancor Is Flawed”

90 points by asymmetric 9y ago

sjcsjc 9y ago
For reference: https://news.ycombinator.com/item?id=14591454 https://news.ycombinator.com/item?id=14591454
jstanley 9y ago
> Should all token development stop now that we have ETH? Should ETH never have been created because we had BTC? Should BTC never have been created when the USD was already a liquid medium of exchange? Bitcoin was created because it isn't possible to do Bitcoin with USD. Ethereum was created because it isn't possible to do Ethereum with BTC. Bancor was created because you want to make fat stacks of cash. It would work just as well (or better) if it was using ETH directly instead of having its own token. Disclaimer: I am almost completely uninformed about Bancor.
- arethuza 9y ago
  I must admit that my familiarity with the term "Bancor" was only from Yanis Varoufakis explaining about Keynes, Bretton Woods, the Nixon Shock as background explaining the current plight of the Euro and the Eurozone: https://en.wikipedia.org/wiki/Bancor https://en.wikipedia.org/wiki/Bancor
  - atmosx 9y ago
    Me too. I got to know the Bancor via proxy (Varoufakis). Te idea is more than intriguing, what I would like to know is if JMK expected the US to go with it or knew it was a dead-end but had to pursue it anyway. I believe that it was one of the most obscure and important mewtings of post WWII.
    - hedonistbot 9y ago
      If you are referring to Bretton-Woods Conference, it is not obscure at all. It is probably the most important monetary event in modern history and probably everyone with economics background knows about it. Also it was during WWII. But you are right that parts of it (like the international clearing union and its implications) are just mentioned in passing in economic courses and rarely acknowledged nowadays.
      - arethuza 9y ago
        Do economists look at things like Bretton-Woods from a purely "theoretical" perspective (for lack of a better term) or do they also take into account the political and global power level tensions driving that kind of decision making?
        notahacker 9y ago
        As a general rule, economists tend to look at theoretical models of how systems are supposed to work and whether those assumptions fit the data and economic historians tend to look at why policies were introduced or recommended and what their proponents and detractors thought about then. They do tend to share departments, students and reading lists though.
        arethuza 9y ago
        That would appear to be like someone coming up with a theory of the movement of sailing boats without accounting for the weather! :-)
        hedonistbot 9y ago
        That's economics for you. That's why I switched fields some time ago. It is a "science" that consistently gives flawed predictions and it's is often used to provide cover for political ideologies.
        notahacker 9y ago
        Or evaluating code without intimate familiarity with the internal politics of the dev team that wrote it :-)
- johnnydoebk 9y ago
  > Ethereum was created because it isn't possible to do Ethereum with BTC. I don't think that is true. You can absolutely reuse BTC for your so called "smart contracts".
  - davidgerard 9y ago
    In theory, but in practice almost nobody did. I've been looking into this question. Szabo first proposed "smart contracts" in 1994, but Ethereum is basically the first practical smart contracts platform ever - the first one that people actually use a whole lot. (You can squint at things and say "well that's a bit like a smart contract", but that's retrospectively applying a label - like calling Git a "blockchain". I'm speaking of things that were expressly labeled "smart contracts".)
    - DonbunEf7 9y ago
      Too bad it's not the first secure smart-contract platform; that honor probably goes to the folks who developed Joule, E, etc. in the mid-90s. Szabo and his contemporaries were steeped in capability theory, but Ethereum glossed over all of that in favor of hype and cash.
      - davidgerard 9y ago
        Worse is better, yet again.
  - rhart92 9y ago
    That's not entirely true. Bitcoin's scripting language is not Turing complete, among other limitations that Ethereum addresses. https://github.com/ethereum/wiki/wiki/White-Paper#scripting https://github.com/ethereum/wiki/wiki/White-Paper#scripting
    - BaronSamedi 9y ago
      It is true that Ethereum has a more powerful scripting language. The real question, however, is if that feature has practical value. I think the jury is still out on that question but I personally lean towards no. If and when there are profitable applications of this technology, ones that wouldn't have been possible without ethereum scripts then I will be glad to change my mind.
revmoo 9y ago
NXDOMAIN... Real trustworthy lol
davidgerard 9y ago
yeah, not taking Emin Gün Sirer critiques seriously is not the sort of thing that works out well in cryptos.
- Bartweiss 9y ago
  He's often wrong on the market (infamously told people to sell Bitcoin at like $100), but that mostly seems to be about underestimating optimism. On tech critiques like this... well, he predicted the DAO attack in such detail that people accused him of being the one behind it. Seeing a non-response to Sirer here seems very, very bad for Bancor.
  - davidgerard 9y ago
    yeah, when a computer science professor calls you out for rolling your own math routines ...
    - Bartweiss 9y ago
      Yeah... they had a partial defense there - the simple functions like add and subtract called existing functions with some wrappers for overflow issues, which they claim is standard practice for Ether (I wouldn't know). But the defense of exponentiation was just "there isn't a good one yet, so we built our own, and according to some tests we didn't show anyone it looks fine".
grenoire 9y ago
I went through it, and I can't say that it's any better than what your average corporate response is like. It brushes over Sirer's points by making note of irrelevant 'achievements' they have managed. The format also reads like a high school teacher nitpicking your paper, where most of his arguments boil down to 'yeah but that doesn't really matter, because...' I read the whitepaper (a cryptocurrency-fanatic friend pointed it out to me) just a few days before Sirer's post was published, and I noted a few of Sirer's main arguments immediately after reading it. It's not hard to understand the essential problems regarding limited reserves and market-trailing, and this response addresses nothing. It's wishy-washy investor-rubbing talk, not the legitimate debate and discourse they say the want.
- Flenser 9y ago
  When they started off by saying it was going to be a "line by line response" I knew they weren't going to be applying the principle of charity[0] and addressing the most persuasive form of Sirer's argument and would be dismissing and—as you say—nitpicing his argument or side stepping the real issues. [0] http://philosophy.lander.edu/oriental/charity.html http://philosophy.lander.edu/oriental/charity.html
wpietri 9y ago
This is... not a good response. I've been reading Emin Gün Sirer for years, and his analyses have been very sharp. He's not always right, but he's right often enough that I take him seriously. I don't think it's reasonable for the Bancor people to ask the world for millions and millions of dollars and be sad that people are not always warm and fuzzy in their responses. It reminds me of those people who ask for feedback on something they wrote and then get upset when you give it to them. They didn't actually want feedback; they wanted compliments and ego-boosting. That's also a valid thing to want and ask for from friends when you're struggling through the writing process. But once you publish, the warm fuzzies end. Critics are not there for authors; they're working for readers.
rockmeamedee 9y ago
> Our thinking here is that people invented money to solve the [Double coincidence of Wants] problem in barter, making trade asynchronous, more efficient and predictable. Fun fact, that's not true! It's called "the barter myth", and was put forward by Adam Smith in The Wealth of Nations. But anthropologists everywhere have looked for 'pre-money' societies in their field research and haven't really found any. Bartering today happens in systems like prison where people are used to using money, but they aren't allowed to have (or there isn't) any. Everywhere we've looked, we find complex systems of credit, debt and/or quid pro quo. Read it in a book called "Debt: The first 5000 years".
- bloaf 9y ago
  Wasn't the whole Incan Empire money-free?
  - richmarr 9y ago
    Yep. I think the point that Graeber made in his "Debt" book was that non-monetary debt came first, before money or even barter. The Inca system of communal labour could be seen as being based on a debt of work owed to the community.
    - opportune 9y ago
      In that case, could one not also argue that the pope shitting in the woods is simply the pope repaying the food debt he took on by nature? Not everything is debt. I mean, debt may be the cornerstone of our current financial system, but that doesn't mean it always was so. This just seems like grasping at straws to fit the argument.
      - richmarr 9y ago
        > In that case, could one not also argue that the pope shitting in the woods is simply the pope repaying the food debt he took on by nature? Well the validity of that comparison would be whether the woods would be annoyed if the pope shat somewhere else.
pdimitar 9y ago
I can't see anything substantial in this official response. I am mostly seeing a mild corporate language about how they want to build the future, how their team has credentials, how they opened up for feedback on many places (in the past, not now, convenient isn't it?), and there was zero substance on the article up until the first quotes, and it doesn't get better from there on as well. I see nothing they defend their current business with. They mostly appeal to the past. And not even that, they admit they've been doing other cryptocurrencies in the past. To me that doesn't you mean you're experienced in the area and you have what to offer. To me that means you're now a seasoned veteran who can swindle people with a smile while wearing a suit and using soft language. Sorry, Bancor. You need to write a substantive article to be taken seriously.
shusson 9y ago
> It is hard to reconcile claims like “mumbo jumbo” and “blah blah blah” with legitimate critique I just watched one of their intro videos[1] and can confirm "mumbo jumbo". [1] https://youtu.be/P8EoAvWfFnY https://youtu.be/P8EoAvWfFnY
quantdev 9y ago
I'm a fan of Emin Gün Sirer and I don't like Bancor's approach in this response, especially in criticizing his informal tone (who cares?), but it does seem that they're right that he's misunderstood two main points: (1) Bancor tokens are automatically created and destroyed as needed and (2) the pool is collectively owned by all the token holders and not the issuing company. Disclaimer: I don't know whether this makes Bancor great.
asymmetric 9y ago
Another very interesting response to another critique they received: https://blog.bancor.network/response-to-bancor-unchained-cdb3bd2ba505 https://blog.bancor.network/response-to-bancor-unchained-cdb...
jwildeboer 9y ago
TBH this response IMHO confirms most of the findings of the criticised article. So thanks for the clarification, dear Bancor people. I still fail to see how your system in any way implements the BANCOR plan that Keynes had.
brohee 9y ago
> Every buy and sell order is an (arguably superior) source of knowledge as to what is happening in the real world. If they replaced (arguably superior) with (real if possibly flawed) I might be tempted to take them seriously. But this belief in perfectly efficient market is hilarious, especially in the face of all the people getting rich out of market inefficiencies...
- wpietri 9y ago
  Definitely. I think of markets as a technology. You have problem X, you can solve it with a market structured with A, B, and C. So it's really weird to me the extent to which markets have become a religion. In some quarters, a fundamentalist one. I have similar concerns with Bitcoin. The technology is really neat. But it doesn't have users so much as it has adherent, devotees, and apostles.
0xcde4c3db 9y ago
Disclaimer: I'm not well-versed in these things. Maybe I'm totally misreading the situation. Their response to the "BNT is pointless" thing seems to say that BNT has a point because... they made the service require it. I still don't understand why, apart from the founders wanting something to sell to investors. My understanding is that the main things one looks for in a reserve currency are liquidity in the international market and (relative) stability of value, hence the popularity of the US Dollar and Euro as reserve currencies as opposed to, say, the Zimbabwe Dollar. If that's true, it seems deeply counterintuitive to create a new currency to use as a reserve currency. This sparks a suspicion that the point is not for BNT to add value to Bancor, but rather the reverse. Am I just misunderstanding something here?
- tylersmith 9y ago
  If you are missing something it's because it wasn't present.
franciscop 9y ago
Well they should learn though: - Their clients tell them the message is not clear so they make a video. - "Bancor is Flawed" says too many buzzwords make it unclear and fluffy. - You have to Google to understand the words according to Bancor themselves. - They even have to add parenthesis in this article to explain some words! But they still think their message is clear. While I have no idea about this world, I do care about communicating my products/ideas. So just simplify the message, make it so people can just understand it. The only place where an over-engineered message works IMO is with hyped products as everyone puts a lot of effort to understand it. PS, I got lost in the article mid-way with so many acronyms while I could read "Bancor is Flawed" perfectly...
- deleted 9y ago
  [deleted]
- dmix 9y ago
  The best book for explaining your product idea is "Made to Stick" [1]. It has a great process for breaking your idea down in the most concrete terms and has some useful tools such as analogy to a similar product ("like dropbox for x"). The cliche adage here is that "if you can't explain your product in one or two sentences then I'm not interested". This is why the "Hollywood pitch" developed organically because people love to overcomplicate everything. VCs look for this as well. This is why PhDs such as the author make bad people for communicating products. They love abstract terms and advanced hand wavy generalizations. Same with how corporate marketing people are similarily bad because they love buzz words and trends. Ethereum is full of these companies that are hyper complex and I'm convinced that it's correlated to the number of academics behind all of them. They all have great website designs, they should spend similar time and money on good copywriting - which starts with the founders understanding their own product/service. They all have a problem with communicating anything of substance. Ethereum has the same problem. [1] https://www.amazon.com/gp/aw/d/1400064287/ https://www.amazon.com/gp/aw/d/1400064287/
  - oddsinfinity 9y ago
    Nice analysis. True in a majority of the cases.
JumpCrisscross 9y ago
> With Bancor, there is no need for two opposite wants to exist at the same time in order for the price discovery (through actual trading) to function I don't understand. If everyone wants to buy, nobody will trade and price discovery will not occur. Can someone please help me understand this?
- marcosdumay 9y ago
  That "at the same time" is the important piece. It means there's an speculator in the middle that will guess a price it can buy to sell later and make some money out of the transaction.
  - JumpCrisscross 9y ago
    > an [sic] speculator in the middle that will guess a price it can buy to sell later and make some money out of the transaction That's called market making [1]. The money made is the spread [2]. People have been doing this for centuries. [1] https://www.sec.gov/fast-answers/answersmktmakerhtm.html https://www.sec.gov/fast-answers/answersmktmakerhtm.html [2] http://www.investopedia.com/terms/m/marketmakerspread.asp http://www.investopedia.com/terms/m/marketmakerspread.asp
    - marcosdumay 9y ago
      The person that guess a price anticipating the market valuation is called speculator. This same person may have other names because of related or unrelated actions, but they are speculators.
  - thisisit 9y ago
    My guess is you talking about arbitrage[1]. As Sirer pointed out tokens on Bancor present a huge opportunity for arbitragers and it is bad. As time is an unknown risk factor, the speculator will simply buy on Bancor, take the token out and sell it on exchange immediately to make a profit. [1]http://www.investopedia.com/terms/a/arbitrage.asp http://www.investopedia.com/terms/a/arbitrage.asp
simias 9y ago
I'm flabbergasted by these ICOs and the monetary values associated to them. But that's just the tip of the iceberg really. Then I think "well, let's see what this startup getting founded wants to produce". And then invariably it's some super "high concept" ultra-virtual "product" that is directly related to ethereum itself. It's not a new google, facebook, uber or dyson. No it's a protocol that "enables built-in price discovery and a liquidity mechanism for tokens on smart contract blockchains" or sometimes "an open source messaging platform and mobile browser to interact with decentralized applications that run on the Ethereum Network" or even "a new exchange that facilitates secure trades between people from bank accounts to CryptoCurrency". I'm a coder, I think I have a good general knowledge of how a blockchain works, I even have a passing knowledge of what those smart contracts are and how they're implemented (not enough to, say, implement them correctly myself but definitely more than 99.99% of the general population). Then I read about those innovative products and I'm simply drowning in a see of virtual concepts built on top of other virtual concepts. A concept of a concept of a concept. See this for instance: https://www.youtube.com/watch?v=P8EoAvWfFnY https://www.youtube.com/watch?v=P8EoAvWfFnY (avoid the comments at all possible cost). I've watched the video, perused their website and I'm still not clear at all about: #1 who needs this? #2 why do they need it? #3 how will bancor make money from this? #4 why do they need $144M to do it? #5 what prevents anybody else from just using the same algorithm and providing the same service at a lower cost? The video even ends with the CEO admitting "we're only beginning to discover the different use cases". Well, looks like you have over a hundred million dollars to finish your homework now. It's true for that bancor project, it's also true of https://status.im/ https://status.im/ and a few other big ICOs I've seen in the past few weeks. Projects coming out of nowhere and raising a ridiculous amount of money. And then I google for those projects to see what others think about them and 99% of the hits are only talking about... the ridiculous amount of money they raised and nothing else. I'm not saying that I'm certain that ethereum and those ICOs are scams but I think the ethereum community should work a lot harder to better explain what they're building exactly, because I'm pretentious enough to believe that I'm not dumber than all of those folks who've just collectively pumped millions in those ICOs. I'm willing to bet that many of those people are not betting on the products (or even that they understand those products), rather they see the insane valuations of cryptocurrencies and they want a piece of that.
thisisit 9y ago
If there was a bad response to a critic, this will be it. While Sirer's post was a bit terse, this response doesn't earn brownie points by going the same route. First, they start off as many "responses" in crypto currency seem to start that is - saying this is all FUD and the critic should stop spreading FUD. They also take the Trump route, not a great choice of words - "fake news". Where I lost them was when they equated themselves as being so important to crypto currency space that critiquing them can be used to tag the whole space as being a giant ponzi scheme. On still persisting, I found their clarification on "asynchronous price discovery" very funny. The point of a market making algo is to "make the market" ie they have to act as counter parties to each trade irrespective of whether there is a buyer or a seller (ie not a price matching algo). The price discovery in that process happens on how the market making algo is written. Though I guess being programmers and writing a document for programmers they had to go with a technical term. But with someone who understands economics on their team, they should have done away with it. All said, the most important part of a market making algo is not to provide liquidity or smooth prices. As Sirer put it, smoothing prices is a bad idea. If something is volatile it is because the market deems it to be so. Going against the market is not good. I hope these guys watch this video carefully to understand how trading works: https://www.youtube.com/watch?v=RLySXTIBS3c https://www.youtube.com/watch?v=RLySXTIBS3c
- davidgerard 9y ago
  > Where I lost them was when they equated themselves as being so important to crypto currency space that critiquing them can be used to tag the whole space as being a giant ponzi scheme. To be fair, the whole ICO scene of the past few months largely is a bubble phenomenon: an incoherent idea, incompetent code, and really obviously just creators who see easy money selling to buyers who see easy money. The critique is widely applicable. There are non-bogus ICOs, but mostly it's complete air.
  - thisisit 9y ago
    Agreed but the same could be said about VC money and unicorns like Uber, Snap Inc. etc. It will be laughable if say Uber's CEO equates bashing of Uber's tech or business model as a threat to all unicorns. One of the bigger problems I see with these ICOs is they that they don't offer much in terms of business viability other than maybe "cool" tech. I have been thinking of a purely profit focused contract(coin) on top of ethereum network. Something which provides value to people and the investors as well. Unfortunately not a programmer so it has to remain a plan forever.
EternalData 9y ago
You would get absolutely slaughtered in a public market setting if this happened -- I love the idea of ICOs giving non-accredited investors the ability to invest in risky ventures, but you have to wonder about the diligence layer that comes with it, especially as organizations like Bancor do not have nearly the legal requirements for transparency.
- opportune 9y ago
  Meh, I say let the fools spend their money however they want. Soon they'll understand why there are restrictions on investing in areas like this
  - simias 9y ago
    If they live in a civilized country and they end up going bankrupt it's the state welfare system that's going to have to pay to fix up that mess. Meanwhile the scammers will be busy swimming in money. I know that it isn't very popular in the cryptocurrency world but I really don't think all regulations are absolutely evil. Unfortunately I think some of them are going to figure it out the hard way.
  - wpietri 9y ago
    Nope. It's like feeding pigeons. Pigeon-feeding is illegal because doing it results in an exploding pigeon population and pigeon shit everywhere. It becomes everybody's problem. We want to keep the number of scam artists to a minimum, and especially to reduce the number of training grounds where novice would-be scammers become practiced experts. Even if we have zero compassion for people who get rooked, there are a bunch of negative externalities to scams. A giant one is that trust is the lubricant of the machinery of the marketplace. The busiest and most efficient financial marketplaces are the ones that are the most effectively regulated. E.g., many foreign companies list in the US because people trust US regulators better than the home-country regulators, meaning they can raise money more effectively here. A good analogy is restaurant health and safety inspections. If they didn't happen, more people would get sick. If people were often getting sick at restaurants, they'd go out to eat a lot less. That harms the whole industry, resulting in sub-optimal outcomes for both businesses and consumers.
wbl 9y ago
There is a very simple way to settle this argument. Anyone want to break the Bancor and give Cyber Wednesday a new meaning?
irln 9y ago
The Double coincidence of Wants is solved by any Medium of Exchange (MoE). The bigger issue in my opinion is how to manage the creation of new MoE. The current system "solves" this by empowering a group (banks) to issue new MoE via loans. We have a significant body of history on the "efficacy" of this approach. How does Crypto currency, Bancor or other, improve the management/new creation issues?
redm 9y ago
After reading the comments on HN, this response is so flawed and disliked that the next post may be: 'Offical Response to the flawed "Bancor Is Flawed" Official Response'
cyphar 9y ago
Thanks for confirming that the original article was correct in its analysis and that you have no substantial rebuttal other than nitpicking. Aside from the awful usage of "fake news" (almost as though you think it makes you sound more credible), your first rebuttal is this: > At time of raise its was $153M within 2:25, this has been covered widely including a formal statement on our blog. I think you missed the point the article was making. As someone who isn't very familiar with economics, the original article was clear and concise with very clear Gedankenerfahrung which encapsulated individual problems with the Bancor protocol. While writing technical pieces like that is difficult, this reads more like a bad teacher trying to save face when a clever student shows them up. You're just hurting your own credibility.
sulam 9y ago
This response boils down to a combination of ignoring critical parts of the original post and repeatedly arguing that "yes, we're a ponzi scheme, that's why you want to get in early!"
MichaelGG 9y ago
Their response to the front-running issues is great. "B-b-but miners will behave!" and "Hey, ya ok, so that's bad but like, someone will fix it so whatever".
Outrageous 9y ago
What is wrong with the Bancor team defending themselves from unjustified, and close to vulgar, criticism? They gave very clear arguments, and you try to turn it into an emotional fight. As a professor you should use exclusively rational arguments, and under NO circumstances emotional manipulation. It seems you've been paid enough to do the opposite. Shame on you!
davidgerard 9y ago
The first-up response was on Twitter: https://twitter.com/BancorNetwork/status/876934646344404992 https://twitter.com/BancorNetwork/status/876934646344404992 http://archive.is/75Gqk http://archive.is/75Gqk "This hack job, like the FUD you intentionally spread right before the fundraiser with NO ATTEMPT to contact the team will not age well Emin" (the responses go into his attempts to contact them ahead of time)

90 points by asymmetric 9y ago

For reference: https://news.ycombinator.com/item?id=14591454 https://news.ycombinator.com/item?id=14591454

> Should all token development stop now that we have ETH? Should ETH never have been created because we had BTC? Should BTC never have been created when the USD was already a liquid medium of exchange? Bitcoin was created because it isn't possible to do Bitcoin with USD. Ethereum was created because it isn't possible to do Ethereum with BTC. Bancor was created because you want to make fat stacks of cash. It would work just as well (or better) if it was using ETH directly instead of having its own token. Disclaimer: I am almost completely uninformed about Bancor.

arethuza 9y ago
I must admit that my familiarity with the term "Bancor" was only from Yanis Varoufakis explaining about Keynes, Bretton Woods, the Nixon Shock as background explaining the current plight of the Euro and the Eurozone: https://en.wikipedia.org/wiki/Bancor https://en.wikipedia.org/wiki/Bancor
- atmosx 9y ago
  Me too. I got to know the Bancor via proxy (Varoufakis). Te idea is more than intriguing, what I would like to know is if JMK expected the US to go with it or knew it was a dead-end but had to pursue it anyway. I believe that it was one of the most obscure and important mewtings of post WWII.
  - hedonistbot 9y ago
    If you are referring to Bretton-Woods Conference, it is not obscure at all. It is probably the most important monetary event in modern history and probably everyone with economics background knows about it. Also it was during WWII. But you are right that parts of it (like the international clearing union and its implications) are just mentioned in passing in economic courses and rarely acknowledged nowadays.
    - arethuza 9y ago
      Do economists look at things like Bretton-Woods from a purely "theoretical" perspective (for lack of a better term) or do they also take into account the political and global power level tensions driving that kind of decision making?
      - notahacker 9y ago
        As a general rule, economists tend to look at theoretical models of how systems are supposed to work and whether those assumptions fit the data and economic historians tend to look at why policies were introduced or recommended and what their proponents and detractors thought about then. They do tend to share departments, students and reading lists though.
        arethuza 9y ago
        That would appear to be like someone coming up with a theory of the movement of sailing boats without accounting for the weather! :-)
        hedonistbot 9y ago
        That's economics for you. That's why I switched fields some time ago. It is a "science" that consistently gives flawed predictions and it's is often used to provide cover for political ideologies.
        notahacker 9y ago
        Or evaluating code without intimate familiarity with the internal politics of the dev team that wrote it :-)
johnnydoebk 9y ago
> Ethereum was created because it isn't possible to do Ethereum with BTC. I don't think that is true. You can absolutely reuse BTC for your so called "smart contracts".
- davidgerard 9y ago
  In theory, but in practice almost nobody did. I've been looking into this question. Szabo first proposed "smart contracts" in 1994, but Ethereum is basically the first practical smart contracts platform ever - the first one that people actually use a whole lot. (You can squint at things and say "well that's a bit like a smart contract", but that's retrospectively applying a label - like calling Git a "blockchain". I'm speaking of things that were expressly labeled "smart contracts".)
  - DonbunEf7 9y ago
    Too bad it's not the first secure smart-contract platform; that honor probably goes to the folks who developed Joule, E, etc. in the mid-90s. Szabo and his contemporaries were steeped in capability theory, but Ethereum glossed over all of that in favor of hype and cash.
    - davidgerard 9y ago
      Worse is better, yet again.
- rhart92 9y ago
  That's not entirely true. Bitcoin's scripting language is not Turing complete, among other limitations that Ethereum addresses. https://github.com/ethereum/wiki/wiki/White-Paper#scripting https://github.com/ethereum/wiki/wiki/White-Paper#scripting
  - BaronSamedi 9y ago
    It is true that Ethereum has a more powerful scripting language. The real question, however, is if that feature has practical value. I think the jury is still out on that question but I personally lean towards no. If and when there are profitable applications of this technology, ones that wouldn't have been possible without ethereum scripts then I will be glad to change my mind.

revmoo 9y ago

NXDOMAIN... Real trustworthy lol

davidgerard 9y ago

yeah, not taking Emin Gün Sirer critiques seriously is not the sort of thing that works out well in cryptos.

Bartweiss 9y ago
He's often wrong on the market (infamously told people to sell Bitcoin at like $100), but that mostly seems to be about underestimating optimism. On tech critiques like this... well, he predicted the DAO attack in such detail that people accused him of being the one behind it. Seeing a non-response to Sirer here seems very, very bad for Bancor.
- davidgerard 9y ago
  yeah, when a computer science professor calls you out for rolling your own math routines ...
  - Bartweiss 9y ago
    Yeah... they had a partial defense there - the simple functions like add and subtract called existing functions with some wrappers for overflow issues, which they claim is standard practice for Ether (I wouldn't know). But the defense of exponentiation was just "there isn't a good one yet, so we built our own, and according to some tests we didn't show anyone it looks fine".

grenoire 9y ago

I went through it, and I can't say that it's any better than what your average corporate response is like. It brushes over Sirer's points by making note of irrelevant 'achievements' they have managed. The format also reads like a high school teacher nitpicking your paper, where most of his arguments boil down to 'yeah but that doesn't really matter, because...' I read the whitepaper (a cryptocurrency-fanatic friend pointed it out to me) just a few days before Sirer's post was published, and I noted a few of Sirer's main arguments immediately after reading it. It's not hard to understand the essential problems regarding limited reserves and market-trailing, and this response addresses nothing. It's wishy-washy investor-rubbing talk, not the legitimate debate and discourse they say the want.

Flenser 9y ago
When they started off by saying it was going to be a "line by line response" I knew they weren't going to be applying the principle of charity[0] and addressing the most persuasive form of Sirer's argument and would be dismissing and—as you say—nitpicing his argument or side stepping the real issues. [0] http://philosophy.lander.edu/oriental/charity.html http://philosophy.lander.edu/oriental/charity.html

wpietri 9y ago

This is... not a good response. I've been reading Emin Gün Sirer for years, and his analyses have been very sharp. He's not always right, but he's right often enough that I take him seriously. I don't think it's reasonable for the Bancor people to ask the world for millions and millions of dollars and be sad that people are not always warm and fuzzy in their responses. It reminds me of those people who ask for feedback on something they wrote and then get upset when you give it to them. They didn't actually want feedback; they wanted compliments and ego-boosting. That's also a valid thing to want and ask for from friends when you're struggling through the writing process. But once you publish, the warm fuzzies end. Critics are not there for authors; they're working for readers.

rockmeamedee 9y ago

> Our thinking here is that people invented money to solve the [Double coincidence of Wants] problem in barter, making trade asynchronous, more efficient and predictable. Fun fact, that's not true! It's called "the barter myth", and was put forward by Adam Smith in The Wealth of Nations. But anthropologists everywhere have looked for 'pre-money' societies in their field research and haven't really found any. Bartering today happens in systems like prison where people are used to using money, but they aren't allowed to have (or there isn't) any. Everywhere we've looked, we find complex systems of credit, debt and/or quid pro quo. Read it in a book called "Debt: The first 5000 years".

bloaf 9y ago
Wasn't the whole Incan Empire money-free?
- richmarr 9y ago
  Yep. I think the point that Graeber made in his "Debt" book was that non-monetary debt came first, before money or even barter. The Inca system of communal labour could be seen as being based on a debt of work owed to the community.
  - opportune 9y ago
    In that case, could one not also argue that the pope shitting in the woods is simply the pope repaying the food debt he took on by nature? Not everything is debt. I mean, debt may be the cornerstone of our current financial system, but that doesn't mean it always was so. This just seems like grasping at straws to fit the argument.
    - richmarr 9y ago
      > In that case, could one not also argue that the pope shitting in the woods is simply the pope repaying the food debt he took on by nature? Well the validity of that comparison would be whether the woods would be annoyed if the pope shat somewhere else.

pdimitar 9y ago

I can't see anything substantial in this official response. I am mostly seeing a mild corporate language about how they want to build the future, how their team has credentials, how they opened up for feedback on many places (in the past, not now, convenient isn't it?), and there was zero substance on the article up until the first quotes, and it doesn't get better from there on as well. I see nothing they defend their current business with. They mostly appeal to the past. And not even that, they admit they've been doing other cryptocurrencies in the past. To me that doesn't you mean you're experienced in the area and you have what to offer. To me that means you're now a seasoned veteran who can swindle people with a smile while wearing a suit and using soft language. Sorry, Bancor. You need to write a substantive article to be taken seriously.

shusson 9y ago

> It is hard to reconcile claims like “mumbo jumbo” and “blah blah blah” with legitimate critique I just watched one of their intro videos[1] and can confirm "mumbo jumbo". [1] https://youtu.be/P8EoAvWfFnY https://youtu.be/P8EoAvWfFnY

quantdev 9y ago

I'm a fan of Emin Gün Sirer and I don't like Bancor's approach in this response, especially in criticizing his informal tone (who cares?), but it does seem that they're right that he's misunderstood two main points: (1) Bancor tokens are automatically created and destroyed as needed and (2) the pool is collectively owned by all the token holders and not the issuing company. Disclaimer: I don't know whether this makes Bancor great.

asymmetric 9y ago

Another very interesting response to another critique they received: https://blog.bancor.network/response-to-bancor-unchained-cdb3bd2ba505 https://blog.bancor.network/response-to-bancor-unchained-cdb...

jwildeboer 9y ago

TBH this response IMHO confirms most of the findings of the criticised article. So thanks for the clarification, dear Bancor people. I still fail to see how your system in any way implements the BANCOR plan that Keynes had.

brohee 9y ago

> Every buy and sell order is an (arguably superior) source of knowledge as to what is happening in the real world. If they replaced (arguably superior) with (real if possibly flawed) I might be tempted to take them seriously. But this belief in perfectly efficient market is hilarious, especially in the face of all the people getting rich out of market inefficiencies...

wpietri 9y ago
Definitely. I think of markets as a technology. You have problem X, you can solve it with a market structured with A, B, and C. So it's really weird to me the extent to which markets have become a religion. In some quarters, a fundamentalist one. I have similar concerns with Bitcoin. The technology is really neat. But it doesn't have users so much as it has adherent, devotees, and apostles.

0xcde4c3db 9y ago

Disclaimer: I'm not well-versed in these things. Maybe I'm totally misreading the situation. Their response to the "BNT is pointless" thing seems to say that BNT has a point because... they made the service require it. I still don't understand why, apart from the founders wanting something to sell to investors. My understanding is that the main things one looks for in a reserve currency are liquidity in the international market and (relative) stability of value, hence the popularity of the US Dollar and Euro as reserve currencies as opposed to, say, the Zimbabwe Dollar. If that's true, it seems deeply counterintuitive to create a new currency to use as a reserve currency. This sparks a suspicion that the point is not for BNT to add value to Bancor, but rather the reverse. Am I just misunderstanding something here?

tylersmith 9y ago
If you are missing something it's because it wasn't present.

franciscop 9y ago

Well they should learn though: - Their clients tell them the message is not clear so they make a video. - "Bancor is Flawed" says too many buzzwords make it unclear and fluffy. - You have to Google to understand the words according to Bancor themselves. - They even have to add parenthesis in this article to explain some words! But they still think their message is clear. While I have no idea about this world, I do care about communicating my products/ideas. So just simplify the message, make it so people can just understand it. The only place where an over-engineered message works IMO is with hyped products as everyone puts a lot of effort to understand it. PS, I got lost in the article mid-way with so many acronyms while I could read "Bancor is Flawed" perfectly...

deleted 9y ago
[deleted]
dmix 9y ago
The best book for explaining your product idea is "Made to Stick" [1]. It has a great process for breaking your idea down in the most concrete terms and has some useful tools such as analogy to a similar product ("like dropbox for x"). The cliche adage here is that "if you can't explain your product in one or two sentences then I'm not interested". This is why the "Hollywood pitch" developed organically because people love to overcomplicate everything. VCs look for this as well. This is why PhDs such as the author make bad people for communicating products. They love abstract terms and advanced hand wavy generalizations. Same with how corporate marketing people are similarily bad because they love buzz words and trends. Ethereum is full of these companies that are hyper complex and I'm convinced that it's correlated to the number of academics behind all of them. They all have great website designs, they should spend similar time and money on good copywriting - which starts with the founders understanding their own product/service. They all have a problem with communicating anything of substance. Ethereum has the same problem. [1] https://www.amazon.com/gp/aw/d/1400064287/ https://www.amazon.com/gp/aw/d/1400064287/
- oddsinfinity 9y ago
  Nice analysis. True in a majority of the cases.

JumpCrisscross 9y ago

> With Bancor, there is no need for two opposite wants to exist at the same time in order for the price discovery (through actual trading) to function I don't understand. If everyone wants to buy, nobody will trade and price discovery will not occur. Can someone please help me understand this?

marcosdumay 9y ago
That "at the same time" is the important piece. It means there's an speculator in the middle that will guess a price it can buy to sell later and make some money out of the transaction.
- JumpCrisscross 9y ago
  > an [sic] speculator in the middle that will guess a price it can buy to sell later and make some money out of the transaction That's called market making [1]. The money made is the spread [2]. People have been doing this for centuries. [1] https://www.sec.gov/fast-answers/answersmktmakerhtm.html https://www.sec.gov/fast-answers/answersmktmakerhtm.html [2] http://www.investopedia.com/terms/m/marketmakerspread.asp http://www.investopedia.com/terms/m/marketmakerspread.asp
  - marcosdumay 9y ago
    The person that guess a price anticipating the market valuation is called speculator. This same person may have other names because of related or unrelated actions, but they are speculators.
- thisisit 9y ago
  My guess is you talking about arbitrage[1]. As Sirer pointed out tokens on Bancor present a huge opportunity for arbitragers and it is bad. As time is an unknown risk factor, the speculator will simply buy on Bancor, take the token out and sell it on exchange immediately to make a profit. [1]http://www.investopedia.com/terms/a/arbitrage.asp http://www.investopedia.com/terms/a/arbitrage.asp

simias 9y ago

I'm flabbergasted by these ICOs and the monetary values associated to them. But that's just the tip of the iceberg really. Then I think "well, let's see what this startup getting founded wants to produce". And then invariably it's some super "high concept" ultra-virtual "product" that is directly related to ethereum itself. It's not a new google, facebook, uber or dyson. No it's a protocol that "enables built-in price discovery and a liquidity mechanism for tokens on smart contract blockchains" or sometimes "an open source messaging platform and mobile browser to interact with decentralized applications that run on the Ethereum Network" or even "a new exchange that facilitates secure trades between people from bank accounts to CryptoCurrency". I'm a coder, I think I have a good general knowledge of how a blockchain works, I even have a passing knowledge of what those smart contracts are and how they're implemented (not enough to, say, implement them correctly myself but definitely more than 99.99% of the general population). Then I read about those innovative products and I'm simply drowning in a see of virtual concepts built on top of other virtual concepts. A concept of a concept of a concept. See this for instance: https://www.youtube.com/watch?v=P8EoAvWfFnY https://www.youtube.com/watch?v=P8EoAvWfFnY (avoid the comments at all possible cost). I've watched the video, perused their website and I'm still not clear at all about: #1 who needs this? #2 why do they need it? #3 how will bancor make money from this? #4 why do they need $144M to do it? #5 what prevents anybody else from just using the same algorithm and providing the same service at a lower cost? The video even ends with the CEO admitting "we're only beginning to discover the different use cases". Well, looks like you have over a hundred million dollars to finish your homework now. It's true for that bancor project, it's also true of https://status.im/ https://status.im/ and a few other big ICOs I've seen in the past few weeks. Projects coming out of nowhere and raising a ridiculous amount of money. And then I google for those projects to see what others think about them and 99% of the hits are only talking about... the ridiculous amount of money they raised and nothing else. I'm not saying that I'm certain that ethereum and those ICOs are scams but I think the ethereum community should work a lot harder to better explain what they're building exactly, because I'm pretentious enough to believe that I'm not dumber than all of those folks who've just collectively pumped millions in those ICOs. I'm willing to bet that many of those people are not betting on the products (or even that they understand those products), rather they see the insane valuations of cryptocurrencies and they want a piece of that.

thisisit 9y ago

If there was a bad response to a critic, this will be it. While Sirer's post was a bit terse, this response doesn't earn brownie points by going the same route. First, they start off as many "responses" in crypto currency seem to start that is - saying this is all FUD and the critic should stop spreading FUD. They also take the Trump route, not a great choice of words - "fake news". Where I lost them was when they equated themselves as being so important to crypto currency space that critiquing them can be used to tag the whole space as being a giant ponzi scheme. On still persisting, I found their clarification on "asynchronous price discovery" very funny. The point of a market making algo is to "make the market" ie they have to act as counter parties to each trade irrespective of whether there is a buyer or a seller (ie not a price matching algo). The price discovery in that process happens on how the market making algo is written. Though I guess being programmers and writing a document for programmers they had to go with a technical term. But with someone who understands economics on their team, they should have done away with it. All said, the most important part of a market making algo is not to provide liquidity or smooth prices. As Sirer put it, smoothing prices is a bad idea. If something is volatile it is because the market deems it to be so. Going against the market is not good. I hope these guys watch this video carefully to understand how trading works: https://www.youtube.com/watch?v=RLySXTIBS3c https://www.youtube.com/watch?v=RLySXTIBS3c

davidgerard 9y ago
> Where I lost them was when they equated themselves as being so important to crypto currency space that critiquing them can be used to tag the whole space as being a giant ponzi scheme. To be fair, the whole ICO scene of the past few months largely is a bubble phenomenon: an incoherent idea, incompetent code, and really obviously just creators who see easy money selling to buyers who see easy money. The critique is widely applicable. There are non-bogus ICOs, but mostly it's complete air.
- thisisit 9y ago
  Agreed but the same could be said about VC money and unicorns like Uber, Snap Inc. etc. It will be laughable if say Uber's CEO equates bashing of Uber's tech or business model as a threat to all unicorns. One of the bigger problems I see with these ICOs is they that they don't offer much in terms of business viability other than maybe "cool" tech. I have been thinking of a purely profit focused contract(coin) on top of ethereum network. Something which provides value to people and the investors as well. Unfortunately not a programmer so it has to remain a plan forever.

EternalData 9y ago

You would get absolutely slaughtered in a public market setting if this happened -- I love the idea of ICOs giving non-accredited investors the ability to invest in risky ventures, but you have to wonder about the diligence layer that comes with it, especially as organizations like Bancor do not have nearly the legal requirements for transparency.

opportune 9y ago
Meh, I say let the fools spend their money however they want. Soon they'll understand why there are restrictions on investing in areas like this
- simias 9y ago
  If they live in a civilized country and they end up going bankrupt it's the state welfare system that's going to have to pay to fix up that mess. Meanwhile the scammers will be busy swimming in money. I know that it isn't very popular in the cryptocurrency world but I really don't think all regulations are absolutely evil. Unfortunately I think some of them are going to figure it out the hard way.
- wpietri 9y ago
  Nope. It's like feeding pigeons. Pigeon-feeding is illegal because doing it results in an exploding pigeon population and pigeon shit everywhere. It becomes everybody's problem. We want to keep the number of scam artists to a minimum, and especially to reduce the number of training grounds where novice would-be scammers become practiced experts. Even if we have zero compassion for people who get rooked, there are a bunch of negative externalities to scams. A giant one is that trust is the lubricant of the machinery of the marketplace. The busiest and most efficient financial marketplaces are the ones that are the most effectively regulated. E.g., many foreign companies list in the US because people trust US regulators better than the home-country regulators, meaning they can raise money more effectively here. A good analogy is restaurant health and safety inspections. If they didn't happen, more people would get sick. If people were often getting sick at restaurants, they'd go out to eat a lot less. That harms the whole industry, resulting in sub-optimal outcomes for both businesses and consumers.

wbl 9y ago

There is a very simple way to settle this argument. Anyone want to break the Bancor and give Cyber Wednesday a new meaning?

irln 9y ago

The Double coincidence of Wants is solved by any Medium of Exchange (MoE). The bigger issue in my opinion is how to manage the creation of new MoE. The current system "solves" this by empowering a group (banks) to issue new MoE via loans. We have a significant body of history on the "efficacy" of this approach. How does Crypto currency, Bancor or other, improve the management/new creation issues?

redm 9y ago

After reading the comments on HN, this response is so flawed and disliked that the next post may be: 'Offical Response to the flawed "Bancor Is Flawed" Official Response'

cyphar 9y ago

Thanks for confirming that the original article was correct in its analysis and that you have no substantial rebuttal other than nitpicking. Aside from the awful usage of "fake news" (almost as though you think it makes you sound more credible), your first rebuttal is this: > At time of raise its was $153M within 2:25, this has been covered widely including a formal statement on our blog. I think you missed the point the article was making. As someone who isn't very familiar with economics, the original article was clear and concise with very clear Gedankenerfahrung which encapsulated individual problems with the Bancor protocol. While writing technical pieces like that is difficult, this reads more like a bad teacher trying to save face when a clever student shows them up. You're just hurting your own credibility.

sulam 9y ago

This response boils down to a combination of ignoring critical parts of the original post and repeatedly arguing that "yes, we're a ponzi scheme, that's why you want to get in early!"

MichaelGG 9y ago

Their response to the front-running issues is great. "B-b-but miners will behave!" and "Hey, ya ok, so that's bad but like, someone will fix it so whatever".

Outrageous 9y ago

What is wrong with the Bancor team defending themselves from unjustified, and close to vulgar, criticism? They gave very clear arguments, and you try to turn it into an emotional fight. As a professor you should use exclusively rational arguments, and under NO circumstances emotional manipulation. It seems you've been paid enough to do the opposite. Shame on you!

davidgerard 9y ago

The first-up response was on Twitter: https://twitter.com/BancorNetwork/status/876934646344404992 https://twitter.com/BancorNetwork/status/876934646344404992 http://archive.is/75Gqk http://archive.is/75Gqk "This hack job, like the FUD you intentionally spread right before the fundraiser with NO ATTEMPT to contact the team will not age well Emin" (the responses go into his attempts to contact them ahead of time)