6 ms·

The thing is, these central parties also provide an enormous amount of benefits. Take your average stock exchange. There's an enormous amount of regulation gov

The thing is, these central parties also provide an enormous amount of benefits. Take your average stock exchange. There's an enormous amount of regulation governing its operation, with the goal being to protect market participants from mischief. Enforcing this protection requires control. Forgoing this control also means forgoing this protection. The shit-show that was Mt. Gox (and a few other exchanges) -- and I don't mean just its demise, but all the market manipulation going on when it was still active, etc. -- would have been all but impossible if these operations would have been governed like modern exchanges.

jackstraw14 9y ago
Centralized institutions do provide a safety net, but is there anything necessarily wrong with a group of people saying they don't want or need that? And isn't this better than conservative activists trying to strip those protections away from the existing institutions with the "enormous amount of benefits" bit by bit until their profit is maximized and no protections are left? edit: regarding the Mt. Gox situation. You present it as something that should have never happened in civilized society, but I think it's growing pains on the way to something better.
- ckastner 9y ago
  > Centralized institutions do provide a safety net, but is there anything necessarily wrong with a group of people saying they don't want or need that? Not at all! However, within the context of cryptocurrencies, I can't help but note that there seems to be a certain tendency to blindly idealize decentralization, and especially to blindly demonize regulation, without giving any thought as to why things are what they are right now. > regarding the Mt. Gox situation. You present it as something that should have never happened in civilized society, but I think it's growing pains on the way to something better. Here, I disagree. Growing pains are no excuse for being as reckless as they were. If your clients entrusted you with hundreds of millions of their USD (either directly, or through Bitcoin), then I don't see "but startup" as a valid excuse; you owe them a certain amount of diligence in your conduct. Note that this isn't investors losing hundreds of millions on some innovation gamble (à la Uber), but on an operation where there are literally hundreds of years of precedent to learn from, namely: exchanges.
  - jackstraw14 9y ago
    I didn't mean to use growing pains as an excuse for Mt. Gox. What should come about because of this is more focus on decentralized exchanges, seeing as this was a painful example of the problems we still face with centralized exchanges. We're now seeing more decentralized exchanges coming into existence for this very reason, there are a lot of drawbacks to centralization when it comes to wealth, and all of those are felt by the people/customers and not the institutions. And they are the ones who can afford to make the rules and pay off politicans to make sure it doesn't change. You say there's a tendency to blindly idealize decentralization, but are you sure you're not missing all the very real drawbacks to centralization by taking that position? I'm just saying, before we leap to regulations that will take decades to roll back when we actually understand what this crypto space is all about, maybe we can improve on what we have and take a different route. Which is what bitcoin, ethereum, and now the third generation crypto projects are trying to do. Incremental improvements are the only way to explore this new frontier, not regulating the shit out of it from the very beginning.
- pthreads 9y ago
  >Centralized institutions do provide a safety net, but is there anything necessarily wrong with a group of people saying they don't want or need that? That depends on a case by case basis. If the actions of this group of people negatively and significantly affects others who are not part of the it then regulation becomes necessary. As an example if a group uses cryptocurrencies for money laundering, smuggling, or other similar activities then they can't claim they must be left alone because they don't want central control by choice. On the other hand if all people want to do is avoid mega banks, the PayPals etc. then all power to them. That said, it is equally important for people to make sure that the central authority is a representative of society, at large, of their own choosing and not some dictatorial regime, corporation, party, or what have you.
- my_first_acct 9y ago
  >Centralized institutions do provide a safety net, but is there anything necessarily wrong with a group of people saying they don't want or need that? Unfortunately, there is. Until pyramid schemes and Ponzi schemes came under strict regulation, enormous social harm was caused when people lost their life savings to such schemes. You might think, as a technically sophisticated HN reader, that you don't need the nanny state to protect you in this way. But well-educated people tend to be one of the biggest victims of these schemes, because 1) they have newly-acquired wealth; 2) they are too arrogant to realize that their expertise in their own field does not translate to expertise in investing; 3) they probably know people in their social circle who have gotten rich (temporarily) on one of these "investments", and then let greed and envy override common sense. Even Isaac Newton is reputed to have lost a large fortune in the South Sea Bubble (though sources are unclear) [1] So no, you are not allowed to waive the safety net. [1] http://www.businessinsider.com/isaac-newton-lost-a-fortune-on-englands-hottest-stock-2016-1 http://www.businessinsider.com/isaac-newton-lost-a-fortune-o...
  - jackstraw14 9y ago
    > as a technically sophisticated HN reader, that you don't need the nanny state to protect you in this way. Thanks for your compliments, but I think of myself more as a fairly well-informed American who graduated college in 2010, the same year I found myself in a lecture hall for a career planning class and 5 out of 300 students raised their hands when asked "Who here has a job lined up after graduation?" So no, I don't accept that we must submit to a nanny state controlled by centralized banks, and I will continue fighting for these projects to exist and thrive. And not just for a quick buck like you seem to think this is. You can see it as "investments" and miracle money or whatever, but it's more than that. It's a way for people like me to finally say "fuck you" to the banks that have ruined so many lives (and for what, exactly?) and finally in a way that makes them listen.
    - my_first_acct 9y ago
      I understand the sentiment; there is a lot wrong with the current system. But any new world that you create should have at least the same level of protection against fraud, theft, and speculative bubbles as the current (imperfect) world; otherwise even more people will be hurt. The world of crypto-currencies has not been very reassuring in this regard, unfortunately.
- s73ver_ 9y ago
  "edit: regarding the Mt. Gox situation. You present it as something that should have never happened in civilized society, but I think it's growing pains on the way to something better." But they're growing pains that don't need to happen. They've literally already happened in the past. There is nothing new about BTC that makes those lessons irrelevant.
deevolution 9y ago
Im surprised there arent any trustless decentralized exchanges built off of ethereum yet. Seems like a no brainer, but perhaps this is difficult or impossible to implement?
- dsacco 9y ago
  You can implement a distributed application as an application running on a blockchain. This can achieve comparable throughput to a centralized exchange. Tendermint outlined this use case for their Cosmos network.
- pjc50 9y ago
  The difficult bit is transferring to Real Money, which can't be the subject of smart contracts.
- DennisP 9y ago
  There's EtherDelta running on the live network, and others on the way. You're pretty much stuck trading ETH and ERC20 tokens with those. Another technology coming is atomic swaps for transfers between chains. For actual fiat the only decentralized option is stuff like localbitcoins. That's ok for small occasional trades but it's physically risky for large trades and legally risky for frequent trades.
  - runeks 9y ago
    I’ve been thinking, shouldn’t it be possible to exchange Bitcoin for Ethereum trustlessly? It requires that Ethereum smart contracts recognize Bitcoin (secp256k1) signatures over arbitrary hashes, though. It would work like this: 1) create an unsigned Bitcoin transaction that pays 1 BTC from Alice to Bob 2) create an Ethereum address (smart contract) that can be redeemed either a) by Alice using a signature for a pubkey specified by Alice in advance, plus an secp256k1 (Bitcoin) signature over the hash of the Bitcoin transaction or b) by Bob after a timeout (e.g. 7 days) Bob sends the number of ethers he wants to pay for 1 BTC to this Ethereum address/contract, and if Alice takes the offer she will redeem this amount, thus revealing the signature for the Bitcoin transaction, which Bob can then publish and get his 1 BTC.

jackstraw14 9y ago

Centralized institutions do provide a safety net, but is there anything necessarily wrong with a group of people saying they don't want or need that? And isn't this better than conservative activists trying to strip those protections away from the existing institutions with the "enormous amount of benefits" bit by bit until their profit is maximized and no protections are left? edit: regarding the Mt. Gox situation. You present it as something that should have never happened in civilized society, but I think it's growing pains on the way to something better.

ckastner 9y ago
> Centralized institutions do provide a safety net, but is there anything necessarily wrong with a group of people saying they don't want or need that? Not at all! However, within the context of cryptocurrencies, I can't help but note that there seems to be a certain tendency to blindly idealize decentralization, and especially to blindly demonize regulation, without giving any thought as to why things are what they are right now. > regarding the Mt. Gox situation. You present it as something that should have never happened in civilized society, but I think it's growing pains on the way to something better. Here, I disagree. Growing pains are no excuse for being as reckless as they were. If your clients entrusted you with hundreds of millions of their USD (either directly, or through Bitcoin), then I don't see "but startup" as a valid excuse; you owe them a certain amount of diligence in your conduct. Note that this isn't investors losing hundreds of millions on some innovation gamble (à la Uber), but on an operation where there are literally hundreds of years of precedent to learn from, namely: exchanges.
- jackstraw14 9y ago
  I didn't mean to use growing pains as an excuse for Mt. Gox. What should come about because of this is more focus on decentralized exchanges, seeing as this was a painful example of the problems we still face with centralized exchanges. We're now seeing more decentralized exchanges coming into existence for this very reason, there are a lot of drawbacks to centralization when it comes to wealth, and all of those are felt by the people/customers and not the institutions. And they are the ones who can afford to make the rules and pay off politicans to make sure it doesn't change. You say there's a tendency to blindly idealize decentralization, but are you sure you're not missing all the very real drawbacks to centralization by taking that position? I'm just saying, before we leap to regulations that will take decades to roll back when we actually understand what this crypto space is all about, maybe we can improve on what we have and take a different route. Which is what bitcoin, ethereum, and now the third generation crypto projects are trying to do. Incremental improvements are the only way to explore this new frontier, not regulating the shit out of it from the very beginning.
pthreads 9y ago
>Centralized institutions do provide a safety net, but is there anything necessarily wrong with a group of people saying they don't want or need that? That depends on a case by case basis. If the actions of this group of people negatively and significantly affects others who are not part of the it then regulation becomes necessary. As an example if a group uses cryptocurrencies for money laundering, smuggling, or other similar activities then they can't claim they must be left alone because they don't want central control by choice. On the other hand if all people want to do is avoid mega banks, the PayPals etc. then all power to them. That said, it is equally important for people to make sure that the central authority is a representative of society, at large, of their own choosing and not some dictatorial regime, corporation, party, or what have you.
my_first_acct 9y ago
>Centralized institutions do provide a safety net, but is there anything necessarily wrong with a group of people saying they don't want or need that? Unfortunately, there is. Until pyramid schemes and Ponzi schemes came under strict regulation, enormous social harm was caused when people lost their life savings to such schemes. You might think, as a technically sophisticated HN reader, that you don't need the nanny state to protect you in this way. But well-educated people tend to be one of the biggest victims of these schemes, because 1) they have newly-acquired wealth; 2) they are too arrogant to realize that their expertise in their own field does not translate to expertise in investing; 3) they probably know people in their social circle who have gotten rich (temporarily) on one of these "investments", and then let greed and envy override common sense. Even Isaac Newton is reputed to have lost a large fortune in the South Sea Bubble (though sources are unclear) [1] So no, you are not allowed to waive the safety net. [1] http://www.businessinsider.com/isaac-newton-lost-a-fortune-on-englands-hottest-stock-2016-1 http://www.businessinsider.com/isaac-newton-lost-a-fortune-o...
- jackstraw14 9y ago
  > as a technically sophisticated HN reader, that you don't need the nanny state to protect you in this way. Thanks for your compliments, but I think of myself more as a fairly well-informed American who graduated college in 2010, the same year I found myself in a lecture hall for a career planning class and 5 out of 300 students raised their hands when asked "Who here has a job lined up after graduation?" So no, I don't accept that we must submit to a nanny state controlled by centralized banks, and I will continue fighting for these projects to exist and thrive. And not just for a quick buck like you seem to think this is. You can see it as "investments" and miracle money or whatever, but it's more than that. It's a way for people like me to finally say "fuck you" to the banks that have ruined so many lives (and for what, exactly?) and finally in a way that makes them listen.
  - my_first_acct 9y ago
    I understand the sentiment; there is a lot wrong with the current system. But any new world that you create should have at least the same level of protection against fraud, theft, and speculative bubbles as the current (imperfect) world; otherwise even more people will be hurt. The world of crypto-currencies has not been very reassuring in this regard, unfortunately.
s73ver_ 9y ago
"edit: regarding the Mt. Gox situation. You present it as something that should have never happened in civilized society, but I think it's growing pains on the way to something better." But they're growing pains that don't need to happen. They've literally already happened in the past. There is nothing new about BTC that makes those lessons irrelevant.

deevolution 9y ago

Im surprised there arent any trustless decentralized exchanges built off of ethereum yet. Seems like a no brainer, but perhaps this is difficult or impossible to implement?

dsacco 9y ago
You can implement a distributed application as an application running on a blockchain. This can achieve comparable throughput to a centralized exchange. Tendermint outlined this use case for their Cosmos network.
pjc50 9y ago
The difficult bit is transferring to Real Money, which can't be the subject of smart contracts.
DennisP 9y ago
There's EtherDelta running on the live network, and others on the way. You're pretty much stuck trading ETH and ERC20 tokens with those. Another technology coming is atomic swaps for transfers between chains. For actual fiat the only decentralized option is stuff like localbitcoins. That's ok for small occasional trades but it's physically risky for large trades and legally risky for frequent trades.
- runeks 9y ago
  I’ve been thinking, shouldn’t it be possible to exchange Bitcoin for Ethereum trustlessly? It requires that Ethereum smart contracts recognize Bitcoin (secp256k1) signatures over arbitrary hashes, though. It would work like this: 1) create an unsigned Bitcoin transaction that pays 1 BTC from Alice to Bob 2) create an Ethereum address (smart contract) that can be redeemed either a) by Alice using a signature for a pubkey specified by Alice in advance, plus an secp256k1 (Bitcoin) signature over the hash of the Bitcoin transaction or b) by Bob after a timeout (e.g. 7 days) Bob sends the number of ethers he wants to pay for 1 BTC to this Ethereum address/contract, and if Alice takes the offer she will redeem this amount, thus revealing the signature for the Bitcoin transaction, which Bob can then publish and get his 1 BTC.