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What use case is there for a distributed ledger that is superior to a centralized ledger? As soon as a critical mass is formed around a particular use case, co

What use case is there for a distributed ledger that is superior to a centralized ledger? As soon as a critical mass is formed around a particular use case, consortiums, i.e. governments will form to regulate and enforce trust and the system will move to far more efficient centralized ledgers.

mrb 9y ago
The main use cases for decentralization are: absolute control of your money, and censorship resistance. Think deeply about what this means. Most people have no idea. Just a few examples (typing on the phone): no company or system can accidentally/intentionally deny your transactions, no merchants can charge you against your will, harder for oppressive government to seize wallets of targeted citizens/organizations, etc.
- zorked 9y ago
  Sort of. You can implement a KYC layer on too of Bitcoin, and have government-sanctioned "clean" versus illegal "tainted" coins.
- canoebuilder 9y ago
  I see the appeal in those things for some people. But I think most people are happy to forego those things and not have to worry about losing significant chunks of cash to fat-finger mistakes or hacks. When most people barely know what a browser is, illuminating them to the intricacies of bitcoin seems a tall task. And if they can just use some system like Coinbase and "not even know they're using bitcoin," then they're essentially just using Paypal. It's hard to see how it ever goes beyond a very niche market, and as long as that niche market is in a speculative frenzy it's hard to see how it becomes of much use to that market beyond a vehicle for speculation. And should some group trade amongst themselves while avoiding censorship from some other group, the persecuted group as it grows in number becomes likely to use it's numerical sway to influence the govt doing the censorship in a new direction, or form a new govt that facilitates more efficient trade between the group. And efficiency here refers not just to a couple ledgers instead of thousands, but also the massively reduced overhead of every member not having to do extensive security themselves, but rather offloading the security to central authorities. Trust is beneficial to society, the more trust in a society the better a society scores on a host of other metrics.
  - mbrock 9y ago
    Bitcoin and other blockchains enable more or less trusted associations to form using side channels. A typical example is using off-chain collaboration to exchange signed transactions of deposited funds. It seems reasonable to consider trustless cryptocurrency as a base layer for "international settlement." Coinbase is significantly different from PayPal because of this final public settlement layer that is open and well-defined, unlike the proprietary bank systems.
    - canoebuilder 9y ago
      That was my point. I don't see how using "side-channels" or "off chain" systems are materially different from using the Visa or the Kroner system, and then when you want a public settlement layer that is open and well-defined converting some funds from those systems to a crypto system. What's the difference? Can't off chain systems be seen as simply analogous to transacting in deposited funds with paypal where your paypal password is the signature? Maybe these systems send something out to a public blockchain, but you're still trusting them to honor withdrawals of your deposited funds in the same way you would with paypal, correct? What is the actual use in practice of side channels and off chain systems these days?
      - mbrock 9y ago
        Blockchain payment channels can have security properties that go way beyond just trusting a third party with deposits. Here's a little example of setting up a reasonably secure payment channel with the help of an Ethereum smart contract: https://medium.com/@matthewdif/ethereum-payment-channel-in-50-lines-of-code-a94fad2704bc https://medium.com/@matthewdif/ethereum-payment-channel-in-5...
- grey-area 9y ago
  The problems with this vision are manifold. 1. Governments have laws backed by guns to prevent things they don't like (like transactions or investments escaping taxation). If you want to change the system of governance, that's fine, but a currency is not going to do it alone, because they will mandate control over your currency or ban it outright. You can't opt out of government. Perhaps we need a new form of government people subscribe to rather than are opted into at birth, but I don't see bitcoin as a step on that road, as it tries to ignore the question entirely. 2. A cryptocurrency in no way gives you absolute control over your money - like any other currency you are buying in to a system, which has points of control - for example in bitcoin those points of significant control are currently the small group of devs who decide on the rules, and the miners who run the network. Both have the ability to manipulate the currency or lead it in directions you don't like. Past that the currency is a system of trust influenced by everyone who buys it or transactions in it - if that trust fails your money is worthless. So like fiat you have very little control over your money and its value. 3. Censorship resistance - this is the strongest point but still vulnerable because transactions can be traced, and anything you do in the real world can lead them back to your addresses. Given sufficient importance and interest from state actors, I doubt anyone could remain anonymous for long. 4. You seem to be assuming companies and systems will be forced to accept bitcoin (or some other flavour), they can easily deny your transactions by refusing to accept it without validated identity (for example KYC laws).
  - mrb 9y ago
    1. Decentralized cryptos certainly do help evade oppressive authorities. It's easier to discover & seize a bank account than to discover & seize someone's memorized warpwallet password. Compare that to Chinese using VPNs to evade the GFW. Sure, the GFW is pretty good at blocking VPNs (see my experience: http://blog.zorinaq.com/my-experience-with-the-great-firewall-of-china/ http://blog.zorinaq.com/my-experience-with-the-great-firewal...) but they certainly do help evade it. 2. I think your are being pedantic on the definition of "absolute". For all practical purposes, in the entire history of Bitcoin, its users have had absolute control over their money. There has never been a single documented event of a protocol change to block, or miners colluding to block a particular transaction (except obvious bugs like the 2010 int overflow where someone created X billion illegitimate bitcoins.) 3. Again, decentralized cryptos certainly do help evade censorship, compared to traditional centralized financial systems. A bank account is trivial to seize. A Bitcoin warpwallet, not so much. 4. No I don't assume that. I had more in mind the example of a user wanting to donate to wikileaks, and credit card companies deciding to block these transactions. Bitcoin prevents this from happening.

mrb 9y ago

The main use cases for decentralization are: absolute control of your money, and censorship resistance. Think deeply about what this means. Most people have no idea. Just a few examples (typing on the phone): no company or system can accidentally/intentionally deny your transactions, no merchants can charge you against your will, harder for oppressive government to seize wallets of targeted citizens/organizations, etc.

zorked 9y ago
Sort of. You can implement a KYC layer on too of Bitcoin, and have government-sanctioned "clean" versus illegal "tainted" coins.
canoebuilder 9y ago
I see the appeal in those things for some people. But I think most people are happy to forego those things and not have to worry about losing significant chunks of cash to fat-finger mistakes or hacks. When most people barely know what a browser is, illuminating them to the intricacies of bitcoin seems a tall task. And if they can just use some system like Coinbase and "not even know they're using bitcoin," then they're essentially just using Paypal. It's hard to see how it ever goes beyond a very niche market, and as long as that niche market is in a speculative frenzy it's hard to see how it becomes of much use to that market beyond a vehicle for speculation. And should some group trade amongst themselves while avoiding censorship from some other group, the persecuted group as it grows in number becomes likely to use it's numerical sway to influence the govt doing the censorship in a new direction, or form a new govt that facilitates more efficient trade between the group. And efficiency here refers not just to a couple ledgers instead of thousands, but also the massively reduced overhead of every member not having to do extensive security themselves, but rather offloading the security to central authorities. Trust is beneficial to society, the more trust in a society the better a society scores on a host of other metrics.
- mbrock 9y ago
  Bitcoin and other blockchains enable more or less trusted associations to form using side channels. A typical example is using off-chain collaboration to exchange signed transactions of deposited funds. It seems reasonable to consider trustless cryptocurrency as a base layer for "international settlement." Coinbase is significantly different from PayPal because of this final public settlement layer that is open and well-defined, unlike the proprietary bank systems.
  - canoebuilder 9y ago
    That was my point. I don't see how using "side-channels" or "off chain" systems are materially different from using the Visa or the Kroner system, and then when you want a public settlement layer that is open and well-defined converting some funds from those systems to a crypto system. What's the difference? Can't off chain systems be seen as simply analogous to transacting in deposited funds with paypal where your paypal password is the signature? Maybe these systems send something out to a public blockchain, but you're still trusting them to honor withdrawals of your deposited funds in the same way you would with paypal, correct? What is the actual use in practice of side channels and off chain systems these days?
    - mbrock 9y ago
      Blockchain payment channels can have security properties that go way beyond just trusting a third party with deposits. Here's a little example of setting up a reasonably secure payment channel with the help of an Ethereum smart contract: https://medium.com/@matthewdif/ethereum-payment-channel-in-50-lines-of-code-a94fad2704bc https://medium.com/@matthewdif/ethereum-payment-channel-in-5...
grey-area 9y ago
The problems with this vision are manifold. 1. Governments have laws backed by guns to prevent things they don't like (like transactions or investments escaping taxation). If you want to change the system of governance, that's fine, but a currency is not going to do it alone, because they will mandate control over your currency or ban it outright. You can't opt out of government. Perhaps we need a new form of government people subscribe to rather than are opted into at birth, but I don't see bitcoin as a step on that road, as it tries to ignore the question entirely. 2. A cryptocurrency in no way gives you absolute control over your money - like any other currency you are buying in to a system, which has points of control - for example in bitcoin those points of significant control are currently the small group of devs who decide on the rules, and the miners who run the network. Both have the ability to manipulate the currency or lead it in directions you don't like. Past that the currency is a system of trust influenced by everyone who buys it or transactions in it - if that trust fails your money is worthless. So like fiat you have very little control over your money and its value. 3. Censorship resistance - this is the strongest point but still vulnerable because transactions can be traced, and anything you do in the real world can lead them back to your addresses. Given sufficient importance and interest from state actors, I doubt anyone could remain anonymous for long. 4. You seem to be assuming companies and systems will be forced to accept bitcoin (or some other flavour), they can easily deny your transactions by refusing to accept it without validated identity (for example KYC laws).
- mrb 9y ago
  1. Decentralized cryptos certainly do help evade oppressive authorities. It's easier to discover & seize a bank account than to discover & seize someone's memorized warpwallet password. Compare that to Chinese using VPNs to evade the GFW. Sure, the GFW is pretty good at blocking VPNs (see my experience: http://blog.zorinaq.com/my-experience-with-the-great-firewall-of-china/ http://blog.zorinaq.com/my-experience-with-the-great-firewal...) but they certainly do help evade it. 2. I think your are being pedantic on the definition of "absolute". For all practical purposes, in the entire history of Bitcoin, its users have had absolute control over their money. There has never been a single documented event of a protocol change to block, or miners colluding to block a particular transaction (except obvious bugs like the 2010 int overflow where someone created X billion illegitimate bitcoins.) 3. Again, decentralized cryptos certainly do help evade censorship, compared to traditional centralized financial systems. A bank account is trivial to seize. A Bitcoin warpwallet, not so much. 4. No I don't assume that. I had more in mind the example of a user wanting to donate to wikileaks, and credit card companies deciding to block these transactions. Bitcoin prevents this from happening.