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The benefits of blockchain outweigh the initial costs involved in kickstarting the ecosystem. The same initial flurry of investment happened when the internet w

by arbol 9y ago

The benefits of blockchain outweigh the initial costs involved in kickstarting the ecosystem. The same initial flurry of investment happened when the internet was created. Look how that turned out.

tonyjstark 9y ago
Which benefits exactly? I've yet to see a problem where Blockchain is the best solution except doing ICOs which is not a problem. Also comparing the internet (having utility form the start) to blockchain (since 10 years nothing but gambling) does not make any sense...
- kirillseva 9y ago
  not trying to assume any position here, just want to point out that you're looking at the world through the gucci glasses of someone who lives in a 1st world country with functional financial and legal systems. There are plenty of people in the world who live in countries where the legal system doesn't work, the do not have access to banks, their fiat currency gets manipulated by the corrupt government. And these people now have smartphones and Internet.
joosters 9y ago
Why do you think the comparison with the internet is fair? Why not compare it with the initial flurry of investment into dotcom no-hopers like pets.com and webvan.com ?
- arbol 9y ago
  They are one and the same. There are of course plenty of "no hoper" ICOs that will cease to exist, much like the dotcom boom. The internet democratized the sharing of information. Prior to this it was quite difficult and expensive to communicate with thousands of people all over the world. With the advent of the internet, it became cheap and accessible to anyone with a connection (I am obviously skewing my world view by considering only those with connections). With cheap communication comes increased trade and we initially saw many companies trying to cash in on the new routes to market (Amazon, eBay, Pets.com, ...). However, these have more or less developed into monopolies over time. How many startup retailers could challenge Amazon? Blockchain should result in the democratization of transactions as it reduces the barrier to entry for anyone with access to a shared global computer which utilises smart contracts. It's useful to highlight this with an example: I have $1000 of gold and you have $1000. We need to exchange these items. We could just meet in the street and exchange the items but this would be considered risky as either one of us could attempt to mug the other and run off with $2000 worth of assets. Therefore, we employ the services of a mediator or escrow. Q - Is it better to pay the mediator $10 each or $100 each? -------------------- Think carefully -------------------- A - $100 This is counterintuitive as we obviously would prefer to pay $10 each and receive $990 in assets at the end of the trade. However, the incentive for the escrow to simply run off with the assets is greatly reduced if we pay them more for the trade. An escrow who takes $200 from a $2000 trade only needs to complete 10 trades before they have $2000 in assets. An escrow who takes $20 per trade would need to complete 100 trades before they have $2000 in assets. You may be wondering why I'm telling you this so I'll cut to the point. The escrow in this example is a real person. The escrow in blockchain is a smart contract that literally cannot run away with the money. It can only send funds from one account A to account B or from account B to account A when it has received both sets of assets. The cost of this smart contract is therefore (in Ethereum's case) the cost of the computation on the network, which is exceptionally low in comparison to the human escrow. Even if someone was to create a contract that took %10 per trade, someone else could copy the contract and reduce the fee. This would happen until the cost of running and maintaining escrow contracts found it's market value. In summary, the $200 fee becomes cents. These kind of operations are made available to the general public on a world computer. This approach can be applied to ANYTHING that can have it's value represented as a digital token. Take a minute to consider this - it's grand. In the short term, Monopolies like Amazon and eBay begin to lose their competitive edge. This is the democratization of trade. In the long term, we have a global interoperable platform capable of trading anything you can imagine. (For a science fiction extrapolation of this see "Whuffie" in Down and Out in the Magic Kingdom by Cory Doctorow).
  - lucozade 9y ago
    OK, I'll bite. How does your contract move gold from you to me? If it doesn't (which it obviously doesn't), how is it removing the utility of escrow? In fact, what is it achieving in this case that does something different to a traditional payment system? And in what conceivable way has this anything to do with the utility of Amazon or eBay? That's not to say that smart contracts cannot have any utility, they can. I could imagine, for example, that they could replace a lot of the functions of notaries. Or, in fact, any case where the primary problem is a common understanding of the state changes of a digital asset. But I can't see how they have any utility in any of the examples you cite beyond a mundane payment system.
    - arbol 9y ago
      Excellent! They do not move the physical gold - they move the ownership of a digital token tied to gold, at a far lesser fee than current digital escrow. This is the same as ETF gold currently. Not many people receive actual, physical gold. In the case that you needed to receive the physical gold, the cost of trusting a delivery person remains fairly constant (until we have autonomous delivery robots). However, the proof of ownership can no longer be tampered with, as it exists on a global ledger. This reduces the overall transaction fee. The transaction is a transfer of value. Amazon and eBay are also facilitators of value transactions. The same economic rules apply albeit on a much smaller scale. Extrapolate this and any transaction of a digital asset can benefit from reduced mediator fees. The scale of this is quite large. I think this is well summarised here: https://www.ibm.com/blogs/insights-on-business/retail/transactions-trust-value-blockchain-technology/ https://www.ibm.com/blogs/insights-on-business/retail/transa... Text between asterisks is added by me. "Consensus: Thanks to the value that smart contracts and shared ledgers offer blockchain users, consensus can be more easily agreed upon and confidently understood. Using blockchain, users can make decisions based on factual data – helping to eliminate disputes, confusion and time (reduced mediator fees). Consensus is built at each step of the supply chain not just at the beginning, when the order is placed and the end, when the order is received. This process enables all parties to resolve issues as they occur and have visibility to take alternative actions if necessary. From a supply chain perspective, this adds tremendous value to merchants, logistic companies, vendors and all others working together to deliver timely, efficient inventory deliveries, re-orders and more. This is particularly important when you factor in that data – and data alone – is what leads supply chain leaders in their immediate and future decisions. Without concrete data to refer to and analyze, decisions cannot be as precisely made between both internal and external partners alike." TLDR: reduced mediator fees reduce barriers to entry in any market where value transactions occur.

by arbol 9y ago

The benefits of blockchain outweigh the initial costs involved in kickstarting the ecosystem. The same initial flurry of investment happened when the internet was created. Look how that turned out.

tonyjstark 9y ago

Which benefits exactly? I've yet to see a problem where Blockchain is the best solution except doing ICOs which is not a problem. Also comparing the internet (having utility form the start) to blockchain (since 10 years nothing but gambling) does not make any sense...

kirillseva 9y ago
not trying to assume any position here, just want to point out that you're looking at the world through the gucci glasses of someone who lives in a 1st world country with functional financial and legal systems. There are plenty of people in the world who live in countries where the legal system doesn't work, the do not have access to banks, their fiat currency gets manipulated by the corrupt government. And these people now have smartphones and Internet.

joosters 9y ago

Why do you think the comparison with the internet is fair? Why not compare it with the initial flurry of investment into dotcom no-hopers like pets.com and webvan.com ?

arbol 9y ago
They are one and the same. There are of course plenty of "no hoper" ICOs that will cease to exist, much like the dotcom boom. The internet democratized the sharing of information. Prior to this it was quite difficult and expensive to communicate with thousands of people all over the world. With the advent of the internet, it became cheap and accessible to anyone with a connection (I am obviously skewing my world view by considering only those with connections). With cheap communication comes increased trade and we initially saw many companies trying to cash in on the new routes to market (Amazon, eBay, Pets.com, ...). However, these have more or less developed into monopolies over time. How many startup retailers could challenge Amazon? Blockchain should result in the democratization of transactions as it reduces the barrier to entry for anyone with access to a shared global computer which utilises smart contracts. It's useful to highlight this with an example: I have $1000 of gold and you have $1000. We need to exchange these items. We could just meet in the street and exchange the items but this would be considered risky as either one of us could attempt to mug the other and run off with $2000 worth of assets. Therefore, we employ the services of a mediator or escrow. Q - Is it better to pay the mediator $10 each or $100 each? -------------------- Think carefully -------------------- A - $100 This is counterintuitive as we obviously would prefer to pay $10 each and receive $990 in assets at the end of the trade. However, the incentive for the escrow to simply run off with the assets is greatly reduced if we pay them more for the trade. An escrow who takes $200 from a $2000 trade only needs to complete 10 trades before they have $2000 in assets. An escrow who takes $20 per trade would need to complete 100 trades before they have $2000 in assets. You may be wondering why I'm telling you this so I'll cut to the point. The escrow in this example is a real person. The escrow in blockchain is a smart contract that literally cannot run away with the money. It can only send funds from one account A to account B or from account B to account A when it has received both sets of assets. The cost of this smart contract is therefore (in Ethereum's case) the cost of the computation on the network, which is exceptionally low in comparison to the human escrow. Even if someone was to create a contract that took %10 per trade, someone else could copy the contract and reduce the fee. This would happen until the cost of running and maintaining escrow contracts found it's market value. In summary, the $200 fee becomes cents. These kind of operations are made available to the general public on a world computer. This approach can be applied to ANYTHING that can have it's value represented as a digital token. Take a minute to consider this - it's grand. In the short term, Monopolies like Amazon and eBay begin to lose their competitive edge. This is the democratization of trade. In the long term, we have a global interoperable platform capable of trading anything you can imagine. (For a science fiction extrapolation of this see "Whuffie" in Down and Out in the Magic Kingdom by Cory Doctorow).
- lucozade 9y ago
  OK, I'll bite. How does your contract move gold from you to me? If it doesn't (which it obviously doesn't), how is it removing the utility of escrow? In fact, what is it achieving in this case that does something different to a traditional payment system? And in what conceivable way has this anything to do with the utility of Amazon or eBay? That's not to say that smart contracts cannot have any utility, they can. I could imagine, for example, that they could replace a lot of the functions of notaries. Or, in fact, any case where the primary problem is a common understanding of the state changes of a digital asset. But I can't see how they have any utility in any of the examples you cite beyond a mundane payment system.
  - arbol 9y ago
    Excellent! They do not move the physical gold - they move the ownership of a digital token tied to gold, at a far lesser fee than current digital escrow. This is the same as ETF gold currently. Not many people receive actual, physical gold. In the case that you needed to receive the physical gold, the cost of trusting a delivery person remains fairly constant (until we have autonomous delivery robots). However, the proof of ownership can no longer be tampered with, as it exists on a global ledger. This reduces the overall transaction fee. The transaction is a transfer of value. Amazon and eBay are also facilitators of value transactions. The same economic rules apply albeit on a much smaller scale. Extrapolate this and any transaction of a digital asset can benefit from reduced mediator fees. The scale of this is quite large. I think this is well summarised here: https://www.ibm.com/blogs/insights-on-business/retail/transactions-trust-value-blockchain-technology/ https://www.ibm.com/blogs/insights-on-business/retail/transa... Text between asterisks is added by me. "Consensus: Thanks to the value that smart contracts and shared ledgers offer blockchain users, consensus can be more easily agreed upon and confidently understood. Using blockchain, users can make decisions based on factual data – helping to eliminate disputes, confusion and time (reduced mediator fees). Consensus is built at each step of the supply chain not just at the beginning, when the order is placed and the end, when the order is received. This process enables all parties to resolve issues as they occur and have visibility to take alternative actions if necessary. From a supply chain perspective, this adds tremendous value to merchants, logistic companies, vendors and all others working together to deliver timely, efficient inventory deliveries, re-orders and more. This is particularly important when you factor in that data – and data alone – is what leads supply chain leaders in their immediate and future decisions. Without concrete data to refer to and analyze, decisions cannot be as precisely made between both internal and external partners alike." TLDR: reduced mediator fees reduce barriers to entry in any market where value transactions occur.