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The original idea of blockchain was at least partially to prevent a central entity from centralizing the value of bitcoin and capturing its value. What you're d

The original idea of blockchain was at least partially to prevent a central entity from centralizing the value of bitcoin and capturing its value. What you're describing is the antithesis of what Satoshi intended. Now, I'm well aware that technology isn't inherently ideological. So you could hypothetically come up with a way to hack it to make it do what you want to do. And a lot of people are trying to do this, i.e. the SegWit folks, but the way they're doing this is by breaking the fundamental decentralization of blockchain to make it more federated/centralized. It's a perversion of Satoshi's vision, but it's not unethical or technically invalid. But the question I have is, why? A business is inherently about taking money from disparate sources and putting it in a central location: your business' bank account. You might be able to do this with blockchain, but it's working against the decentralized, untrusted model, not with it. A datomic-style log handles the ledger aspects of blockchain with a fraction of the technical complexity, and you don't need the untrusted aspects of blockchain if you're running a centralized business (ostensibly, you trust yourself). If you succeed in using blockchain to run a centralized business, it's despite the model, not because of it. There's one exception, which is that the underregulated nature of the current blockchain industries and the hype around blockchain open up some opportunities (i.e. this is why the SegWit folks can make money off this). But that's more about checking the "blockchain" keyword off in your marketing/legal materials than about the actual benefits of the technology (i.e. ICOs--the only benefit blockchain actually gives is that it allows you to skirt financial regulation, which has nothing to do with the technical benefits of the technology). And as regulations are put in place and hype fades, a lot of these opportunities will dry up: most are temporary and the ones that aren't are extremely difficult technically. Blockchain IS a revolution, but it's not a revolution that can be easily coopted by rent-seekers (and make no mistake, that is what you're proposing). The rent-seekers will eventually break it (they always do) but then it will be just another financial instrument, and unless you have an in-depth technical AND social understanding of the technology (like the SegWit folks) you're unlikely to be one of the rent-seekers who benefits from this. There are a lot of lower-hanging fruit out there to build a business on.

JoeAltmaier 9y ago
I don't see it. Waiting forever for transactions, paying a high fee to exchanges for what should be a few milliseconds of code to run - how is this not rent-seeking? How is bitcoin not already centralized?
- kerkeslager 9y ago
  Exchanges don't typically run/implement their own blockchains, which is what my post and the parent were talking about. Most exchanges are 100% centralized, I agree. But it's entirely possible to buy/sell/trade Bitcoins without ever interacting with an exchange, so I'm not sure that means Bitcoin is centralized.
  - JoeAltmaier 9y ago
    What percent of transactions do we suppose are done privately? Compare with the percentage of normal financial/investment options are exercised privately. At a guess, almost the entirety of Bitcoin trades are exchange-based. I'm suspecting that ordinary finances win this round.
    - kerkeslager 9y ago
      I don't think we have a ton of evidence either way, but: 1. Private exercise of of investment options usually occurs within the context of brokerages, hedge funds, and companies exercising their own stocks, no? For the first two, they have to be large enough to have lots of clients, and the last one is limited to one stock. I'd see the brokerages/hedge funds as a form of federation so that it doesn't make sense to distinguish it from exchanges on the centralization/decentralization spectrum, and stuff internal to a company doesn't really occur on the open market in the same way so I'm not sure it's relevant at all. 2. Percentage of trades isn't the only metric: ease of trades is also relevant. I could find a Bitcoiner on Craigslist and give him cash at a coffee shop for coins. Doing this with most traditional financial instruments would be difficult if not simply illegal. Coins for cash at a coffee shop isn't probably the most common use case, but it's certainly easy and possible, and that's relevant.
philipodonnell 9y ago
No objection to the term "rent-seeking", that's just another term for "business". :-) The trick is to add economic value beyond the rent being collected and then capture a portion of that value in the form of rent. Rent-seeking is used in a negative context when it implies capturing rent _without_ adding value. "You can't add value just by forking Bitcoin" may be what you are trying to say here, and I agree. I'm trying to think past that to what value could be added to the blockchain to justify collecting rent while preserving the decentralized trustless nature of the vision.
- kerkeslager 9y ago
  > Rent-seeking is used in a negative context when it implies capturing rent _without_ adding value. Yes, that's exactly what I mean. And I'll explicitly say that SegWit is run by rent-seekers. Yes, they do add value in the sense that they allow bitcoin to scale, but they do so by making it federated: at which point they're an immature, lower-value implementation of the traditional banking system. If you're okay with federation, just use traditional finance. If you're not okay with federation, then you aren't okay with SegWit. In neither case does SegWit add value. > I'm trying to think past that to what value could be added to the blockchain to justify collecting rent while preserving the decentralized trustless nature of the vision. But why though? If your goals are to centralize money in your pocket, using a decentralized structure and keeping it decentralized is like using a screwdriver to catch butterflies. It's the wrong tool for the job. It's using a decentralized, untrusted structure to achieve a centralized, trusted goal. All the existing models I know of for making money off developing a blockchain involve some form of centralization. Either centralized mining (premining, ICOs) or breaking decentralization entirely (SegWit, Ripple).
  - philipodonnell 9y ago
    > But why though? Because that's generally what really drives adoption, investors willing to fund innovation that adds value. > All the existing models I know of for making money off developing a blockchain involve some form of centralization. Lets be creative! Build a 'siphon' into the blockchain to capture small bits of each transaction and re-sell that to generate income? Or treat it as a traditional open source project and position yourself as the best implementation because you designed it. There are also different types of centralization that don't necessarily involve interfering with the blockchain. You can decentralize the ledger but centralize the transaction entry. Or centralize the reporting (anyone can make entries but only the authority can verify them, subject to auditing).

JoeAltmaier 9y ago

I don't see it. Waiting forever for transactions, paying a high fee to exchanges for what should be a few milliseconds of code to run - how is this not rent-seeking? How is bitcoin not already centralized?

kerkeslager 9y ago
Exchanges don't typically run/implement their own blockchains, which is what my post and the parent were talking about. Most exchanges are 100% centralized, I agree. But it's entirely possible to buy/sell/trade Bitcoins without ever interacting with an exchange, so I'm not sure that means Bitcoin is centralized.
- JoeAltmaier 9y ago
  What percent of transactions do we suppose are done privately? Compare with the percentage of normal financial/investment options are exercised privately. At a guess, almost the entirety of Bitcoin trades are exchange-based. I'm suspecting that ordinary finances win this round.
  - kerkeslager 9y ago
    I don't think we have a ton of evidence either way, but: 1. Private exercise of of investment options usually occurs within the context of brokerages, hedge funds, and companies exercising their own stocks, no? For the first two, they have to be large enough to have lots of clients, and the last one is limited to one stock. I'd see the brokerages/hedge funds as a form of federation so that it doesn't make sense to distinguish it from exchanges on the centralization/decentralization spectrum, and stuff internal to a company doesn't really occur on the open market in the same way so I'm not sure it's relevant at all. 2. Percentage of trades isn't the only metric: ease of trades is also relevant. I could find a Bitcoiner on Craigslist and give him cash at a coffee shop for coins. Doing this with most traditional financial instruments would be difficult if not simply illegal. Coins for cash at a coffee shop isn't probably the most common use case, but it's certainly easy and possible, and that's relevant.

philipodonnell 9y ago

No objection to the term "rent-seeking", that's just another term for "business". :-) The trick is to add economic value beyond the rent being collected and then capture a portion of that value in the form of rent. Rent-seeking is used in a negative context when it implies capturing rent _without_ adding value. "You can't add value just by forking Bitcoin" may be what you are trying to say here, and I agree. I'm trying to think past that to what value could be added to the blockchain to justify collecting rent while preserving the decentralized trustless nature of the vision.

kerkeslager 9y ago
> Rent-seeking is used in a negative context when it implies capturing rent _without_ adding value. Yes, that's exactly what I mean. And I'll explicitly say that SegWit is run by rent-seekers. Yes, they do add value in the sense that they allow bitcoin to scale, but they do so by making it federated: at which point they're an immature, lower-value implementation of the traditional banking system. If you're okay with federation, just use traditional finance. If you're not okay with federation, then you aren't okay with SegWit. In neither case does SegWit add value. > I'm trying to think past that to what value could be added to the blockchain to justify collecting rent while preserving the decentralized trustless nature of the vision. But why though? If your goals are to centralize money in your pocket, using a decentralized structure and keeping it decentralized is like using a screwdriver to catch butterflies. It's the wrong tool for the job. It's using a decentralized, untrusted structure to achieve a centralized, trusted goal. All the existing models I know of for making money off developing a blockchain involve some form of centralization. Either centralized mining (premining, ICOs) or breaking decentralization entirely (SegWit, Ripple).
- philipodonnell 9y ago
  > But why though? Because that's generally what really drives adoption, investors willing to fund innovation that adds value. > All the existing models I know of for making money off developing a blockchain involve some form of centralization. Lets be creative! Build a 'siphon' into the blockchain to capture small bits of each transaction and re-sell that to generate income? Or treat it as a traditional open source project and position yourself as the best implementation because you designed it. There are also different types of centralization that don't necessarily involve interfering with the blockchain. You can decentralize the ledger but centralize the transaction entry. Or centralize the reporting (anyone can make entries but only the authority can verify them, subject to auditing).