18 ms·

The Decentralized Future

195 points by rrecuero 9y ago

rrecuero 9y ago
Happy to answer any follow-up questions here
- elmar 9y ago
  Great article! Bringing financial inclusion to the billions of unbaked it's the biggest unfulfilled promise of cryptocurrencies. For it to work it must be engineered on the protocol level for this use case, I think Cardano is trying to solve this problem. The store of value and savings part it's more or less easy to solve, the big problem is the lending without a stable coin it will be very difficult to implement, big Fiat currencies like the Dollar and the Euro have the powerful backing of a central bank and ultimately the collateralization of all the taxpayers as a protection against high volatility and black swan events, this will be very difficult to implement in crypto, MakerDAO is tring to do it but I don't see it working on a big scale.
- ilaksh 9y ago
  It's not quite a complete discussion without mentioning the transaction rate/scaling limitations and also Ethereum's sharding approach to this.
  - rrecuero 9y ago
    I tried to mention that scalability is a moving target. As you mentioned Plasma, Raiden and sharding are different approaches to solve it
    - freejulian 9y ago
      Raiden is a poor and incomplete implementation of Lightning. Bitcoin has 3 independent implementations and a developing ecosystem of software around it. Proof of stake is a pipe dream. Such a system can’t reliably achieve consensus due to the nothing-at-stake problem. Additionally, randomly selecting a winner in a distributed yet unpredictable way continues to be an unsolved problem. Sharding has the cost of weakening security. Bitcoin is addressing scaling better than any other blockchain. It’s making transactions more efficient through technologies like Segwit and Schnorr. It’s adding robust smart contracts and instant payments using second layer sidechains like rootstock and lightning. Ethereum is already imploding under its own weight — it’s impossible to even sync a full node on basic hardware. In a few years it’ll be dead.
      - CryptoPunk 9y ago
        >>Raiden is a poor and incomplete implementation of Lightning. Raiden is a comprehensive implementation that includes Lightning Networks for ERC20 tokens, something that Bitcoin doesn't even have. >>Proof of stake is a pipe dream. Your information is incorrect. Ethereum's proof of stake is close to complete conceptually and the first version, a hybrid PoW/PoS protocol called Casper the Friendly Finality Gadget, is currently under development and will be implemented in Ethereum soon. >>Such a system can’t reliably achieve consensus due to the nothing-at-stake problem. Your criticism is long out of date. Vitalik Buterin addressed how the Nothing at Stake problem can be solved in 2014: https://blog.ethereum.org/2014/11/25/proof-stake-learned-love-weak-subjectivity/ https://blog.ethereum.org/2014/11/25/proof-stake-learned-lov... >>Bitcoin is addressing scaling better than any other blockchain. It’s making transactions more efficient through technologies like Segwit and Schnorr. It’s adding robust smart contracts and instant payments using second layer sidechains like rootstock and lightning. Bitcoin's lack of Turing Completeness at the base layer is a critical weakness that limits the range of second layer solutions that are possible. Ethereum has far more sophisticated and numerous scaling solutions in development as a result. >>Sharding has the cost of weakening security. That is not certain to be true. There are a lot security impacting variables at play that sharding affects, and some of them positively. Even if security were reduced, it wouldn't mean the trade off for more scalability wouldn't be worth it. Sharding enables massive scaling while preserving the ability for consumer grade nodes to contribute to validation. That seems like a good trade off. >>Ethereum is already imploding under its own weight — it’s impossible to even sync a full node on basic hardware. That is highly misleading. SSDs have been syncing fine. HDDs have been having syncing problems, but that was solved in the most recent Geth release. >>In a few years it’ll be dead. Disingenuous FUD. Ethereum is the primary Dapp platform, with 30X more developers working on it than the next most active platform. It has a multipronged scaling strategy that is in an advanced state of development and dwarfs that of any other blockchain. It is now the most widely used blockchain in the world, processing 3X more transactions per day than #2 Bitcoin. And in all of these categories, its momentum is growing.
        freejulian 9y ago
        > Raiden is a comprehensive implementation Is the lone implementation which is still on testnet and no ecosystem surrounding it. > ERC20 tokens, something that Bitcoin doesn't even have. Bitcoin has no interest in implementing an equivalent as a layer-1 feature. This should be a surprise to no one. Off-chain scaling is the official direction of the Bitcoin community. There's no interest in adding bloat to the layer 1 protocol. Ethereum is the "everything including the kitchen sink" approach. Anyways, saying Bitcoin does'nt have ERC20 is factually incorrect: Rootstock implements ERC20 tokens as a second layer network. > Your information is incorrect. Ethereum's proof of stake is close to complete conceptually and the first version It's not any where near complete, which is why the difficulty bomb was rolled back (which in and of itself is hilarious -- Ethereum only pretends to be decentralized). > Vitalik Buterin addressed how the Nothing at Stake problem can be solved in 2014 He described how to solve it 4 years ago, yet they still can't release even a hybrid PoS solution. Slasher does not solve the nothing at stake problem, it merely obfuscates it. Long range attacks are still possible. I noticed you completely glossed over how PoS systems will agree on randomness. Good luck. I'm sure it's just another 4 years away. > Bitcoin's lack of Turing Completeness at the base layer is a critical weakness that limits the range of second layer solutions that are possible. Lack of Turing Completeness is a feature and intentional. If you want a general purpose distributed computer use rootstock. Which, by the way, is 100% compatible with the Eth VM. > Sharding enables massive scaling while preserving the ability for consumer grade nodes to contribute to validation. That's cute. Ethereum doesn't even have any "consumer grade" nodes today. Anyways, sounds like you're taking the long way around to agreeing with me: Sharding sacrifices security. > That is highly misleading. SSDs have been syncing fine. HDDs have been having syncing problems, Again, taking the long way around to agreeing with me. A full archive node currently requires a 400GB SSD! You're only option is to run a light node, which further contributes to your networks centralization. > Disingenuous FUD. Eh, you'll see. The monolithic approach of Ethereum is very naive. > with 30X more developers working on it than the next most active platform Easily proved false, anyone reading can take a look at the respective github repos. Bitcoin currently has over 550 contributors, Ethereum only has 200. Bitcoin has over 16k commits. Ethereum has only 9k. This doesn't even take into account the larger ecosystem of software Bitcoin has. > Ethereum is the primary Dapp platform, A little early to make any of these claims...the only popular Dapp in recent memory is cryptokitties and it brought the Ethereum network to its knees. Anyways, like I've said, Bitcoin has a fully compatible Ethereum VM running as a layer 2 network. > It has a multipronged scaling strategy that is in an advanced state of development I wouldn't call it multipronged -- Vitalik has it all hinging on PoS and that has been officially delayed until late 2018 at best. > dwarfs that of any other blockchain. Well, until you look at actual commit and contributor count. Then it's clear Bitcoin has far more development happening. > It is now the most widely used blockchain in the world, processing 3X more transactions per day than #2 Bitcoin I mean, bitcoin is operating at capacity. I'm sure Ethereum has more spam transactions though, I agree. Saying Ethereum is the most widely used blockchain in the world his hilarious. People know Bitcoin. A small fraction of those people know Ethereum. > And in all of these categories, its momentum is growing. As its network continues to crumble. Best of luck. We'll reconvene when Casper finally launches...hopefully while we're still young.
  - elmar 9y ago
    sharding is in the same boat as proof-of-stake, nobody knows if a system can be built that preserves the level of security of current monolithic and proof-of-work systems, it is being studied on an academic an implementation level by several teams including Cardano, ethereum and ethereum classic. On the scalability issue if you sacrifice the decentralization is theoretically possible for Bitcoin to process on-chain, Visa level of transactions and with current energy consumption levels or even less. You would probably get 3 to 6 physical data center locations probably on the same continent connected with high-speed links with 1 Terabyte 10min blocks.
    - rrdharan 9y ago
      Proof of steak sounds delicious and would be enough to tempt me off the sidelines into investing.
      - elmar 9y ago
        >Proof of steak sounds delicious and would be enough to tempt me off the sidelines into investing. LOL Proof of steak https://youtu.be/U3OEk2dNYcU?t=44 https://youtu.be/U3OEk2dNYcU?t=44
- cvaidya1986 9y ago
  Are ICOs illegal in the USA?
  - rrecuero 9y ago
    It is illegal to sell securities to non-accredited investors
    - cvaidya1986 9y ago
      Do tokens fall under that category ?
      - aboodman 9y ago
        It depends on how they are used, but frequently, yes. Even so, you can sell to accredited investors totally legally. A few ICOs have worked this way.
        cvaidya1986 9y ago
        Is a cryptokitty illegal for non accredited investors to buy? Or is it just a “normal” good.
        zeperoni 9y ago
        Cryotpkitty is under the current existing Ethereum network. Like how you can still buy bitcoin. ICO are initial coin offerings, so it's an investment before the actual coin is released and on the market.
        whb07 9y ago
        No it’s just as trivial as a Pokémon card
      - whb07 9y ago
        I just recently saw the SEC secretary say that ico’s are not illegal if they were to be done roughly behind closed doors, so to speak. Meaning, don’t spam to the world your ico address and be diligent as to who you’re talking to about potential investments. The SEC secretary wants a fine line distinction between a “private” and “public” raising of money. He’s right to point that all icos (besides filecoin) are trying to be considered as “private” while publicly share their address and don’t discern who sends in funds. Here’s a recent SEC release: https://www.sec.gov/news/public-statement/statement-clayton-2017-12-11 https://www.sec.gov/news/public-statement/statement-clayton-...
- gervase 9y ago
  I am really looking forward to "The Future of Organizations". I think decentralized governance and consensus is one of the most exciting aspects of these technologies, but are being totally drowned out by the fintech applications in the meantime. Hopefully this article will address some of these possibilities.
  - rrecuero 9y ago
    It will. One of the great companies in the space will write it. I also recommend this article from Fred Ehrsam https://medium.com/@FEhrsam/blockchain-governance-programming-our-future-c3bfe30f2d74 https://medium.com/@FEhrsam/blockchain-governance-programmin...
- mlinksva 9y ago
  > It’s not a coincidence that the whitepaper was published after the 2008 subprime mortgage crisis. Is there any evidence for this? Perhaps a statement from Satoshi that they were motivated to publish by the crisis?
  - rrecuero 9y ago
    In the Genesis Block he explicitly references the post financial crisis bailouts.
    - sk221 9y ago
      Yep. He noted a headline in that day's paper "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks" Source: https://en.bitcoin.it/wiki/Genesis_block https://en.bitcoin.it/wiki/Genesis_block (or you can verify on the blockchain as well)
- tramGG 9y ago
  Have you looked into things like Synapse.ai ? They are building exactly what you're talking about in terms of data/AI/ML/currency/ownership. Here is their founder giving a presentation about it at the Decentralized AI Summit: https://www.youtube.com/watch?v=9QMgVsbHu98 https://www.youtube.com/watch?v=9QMgVsbHu98 It ties together things like the "Who owns the future" book by Jaron Lanier and AI/Bots/APIs for new economies.
  - rrecuero 9y ago
    Thanks for sharing. Reminds me a bit of Numerai
    - tramGG 9y ago
      Yeah numerai is great, they were one of the first ones in the financial/trading space.
- v64 9y ago
  Thanks for this writeup! You've done a great job at organizing many of the points that were discussed in this Bitcoin thread[1] from last month. I'll be using this as a starting point for discussion with friends that are interested in cryptocurrency. [1] https://news.ycombinator.com/item?id=16158463 https://news.ycombinator.com/item?id=16158463
  - rrecuero 9y ago
    Thank you. That was the intention, to provide a primer for discussion.
te_chris 9y ago
I’ve reacently read the Burnskie book about crypto assets in the hope that I might come away more enlightened about the market and how to assess it. The opposite was the case. After reading the book and looking into it more, it’s very hard to see these things as assets at the moment, or to see much utility in the technology. Don’t get me wrong, there certainly is some and it is certainly ‘cool’, but right now blockhain feels like a solution looking for a problem.
- curuinor 9y ago
  "Attack of the Fifty Foot Blockchain" and the associated blog is worth a read
  - tonyjstark 9y ago
    It was an eye opener for me. Since then I approach the whole field with more caution and skepticism.
  - cocktailpeanuts 9y ago
    I read that book too, and while it does provide some good insights, it's too much biased the other way around to the point that I couldn't stand the amount of snark. I think it's good to take a look at both sides of the story but the only way to find the truth is going deeper and learning the protocol yourself and form your own "sovereign" opinion, which is what I did after getting frustrated with tons of conflicting opinions online, which by the way turned out to be mostly propaganda to preserve their own crypto-wealth as I started learning more about the landscape.
- eosophos 9y ago
  How is trustless digital programmable peer-to-peer monetary transaction not a great solution to the antiquated, corrupt status quo?
  - te_chris 9y ago
    Just because you put the words antiquated and corrupt in the question doesn’t make those two things true. Based on my somewhat brief experience as a crypto investor it hasn’t given me great hope of it solving corruption...
pavlov 9y ago
> I think the same is true with Bitcoin: traditional banking that takes days and charges high fees can be easily implemented on Bitcoin, but the opposite is not true. "Easily" here seems like major exaggeration. If that were true, projects like Lightning wouldn't exist.
- rrecuero 9y ago
  This was true at different moments in time. Now, as you mentioned you would need to use lightning. You could do it with LTC right now
  - xkarga00 9y ago
    Once LN is established, I expect that this is going to be opaque for an end user. Example: Today, you don't need to specify http:// http:// in order to use it in a browser.
erikb 9y ago
The nature of single things is decentralized. Therefore every new era starts with decentralization. The internet started off quite decentralized, for instance. But do we really have a new era here? I'm not sure if with 32 years of age I'm already too old to recognize the New and grog it. I don't feel it. I feel there's a lot of buzz around blockchain, sure. But it looks like it would be all. Bitcoin is just as centralized as banks are, for instance. And here is where the other stuff starts. When single things start systems these systems tend to be quite centralized. That is the natural order of systems. E.g., people could manage their own bitcoins on their laptop, but they choose to have an Exchange take that effort of their hands. Seeing centralization take a foothold and not seeing anything real besides buzz, I'd argue the bet is still against. On the other hand I'm seeing Amazong completely automating logistics in more and more areas of life. Shouldn't that be something to look into?
- darawk 9y ago
  > Bitcoin is just as centralized as banks are, for instance. That's a rather odd statement. Can you justify that?
  - hoosieree 9y ago
    https://www.bloomberg.com/news/articles/2017-12-08/the-bitcoin-whales-1-000-people-who-own-40-percent-of-the-market https://www.bloomberg.com/news/articles/2017-12-08/the-bitco... A handful of actors with a controlling stake isn't exactly the same thing as "centralized" but it's close.
    - lambdadmitry 9y ago
      It's also inherently "centralised throughout liquidity". Because it's both deflationary and risky, the amount of liquidity available at any given moment is small, so a willing actor with some money at hand can affect the market disproportionately. Look at the way Tether manipulated the price.
    - darawk 9y ago
      Not really. They're pretty different things.
jedberg 9y ago
> traditional banking that takes days and charges high fees Only in the USA. And that is hopefully changing in the next month or two with the upgrade in the ACH system.
- tim333 9y ago
  I just checked transferwise for £1000 to about us$1400. The cost compared with google's estimate of the interbank rate was $6 and they said it would take one day. I've also recently done £ to Thai baht and most currencies are there. It's quite quick and cheap such that it would be hard for crypto transfers to compete for most stuff.
  - zodiac 9y ago
    > It's quite quick Really? I use it often and it always takes a few days end-to-end
marknadal 9y ago
> However, right now you need to install browser extensions like Metamask to interact with websites that enable “crypto functionality”. They are still really clunky and the average user does not know they even exist. This is not true, you can already build (and people are) dApps that run in the browser (no extension) using the latest native Web Crypto API that we've made easy to use: https://hackernoon.com/so-you-want-to-build-a-p2p-twitter-with-e2e-encryption-f90505b2ff8 https://hackernoon.com/so-you-want-to-build-a-p2p-twitter-wi... Dominic Tarr and the Beaker Browser guys with SSB also have even webasembly-ified libsodium which is highly rated ( #4 ranked on GitHub https://github.com/topics/cryptography https://github.com/topics/cryptography ). It is just that a lot of investors are caught up in hyped-up vaporware scams, rather than real technology that already exists and works and is available for developers to use today.
- glitch003 9y ago
  By "crypto functionality" the author means talking to a blockchain, not doing cryptographic operations. Metamask, the example given, is a browser extension that provides access to the Ethereum blockchain by injecting a JS object into the web page. It provides a wallet and transaction signing and broadcasting. Web crypto API's are quite different.
  - marknadal 9y ago
    Both are possible, if you read through more.
zapita 9y ago
> When Satoshi Nakamoto released the Bitcoin Whitepaper he defined it as a peer to peer electronic cash system. How do we know Satoshi is a he?
- nokcha 9y ago
  Of course we don't know for sure whether Satoshi is really a man, a woman, or a group of people. But for ease of conversation, people use the gender and number of the pseudonym (masculine, singular).
  - zapita 9y ago
    That is an embarrassingly obvious answer, thank you. Someone had told me Satoshi was a made-up name without a clear gender, and I had never bothered to check that fact.
- deleted 9y ago
  [deleted]
- CryptoPunk 9y ago
  He put his gender as male on his p2pfoundation profile.
- pluto9 9y ago
  Because it's a (typically) masculine Japanese name. If the chosen pseudonym was "Steve", would it be unreasonable to assume it's a male?
get 9y ago
"nobody can destroy or seize your coins" "keeping your investment safe is not simple" Hmm...
- nokcha 9y ago
  I think this means: - nobody can destroy or seize your coins unless they have your private keys - keeping your private keys safe is not simple
- spookthesunset 9y ago
  One of the great ironies of Bitcoin is that it was marketed as "the internet of money".... except one of the best way to secure it is to avoid exposing it to the internet and by printing its keys out on sheets of paper.
- tim333 9y ago
  Compare with the Business Insider headline "People are making a fortune buying government-seized bitcoins" http://www.businessinsider.com/bitcoin-price-government-auction-winners-2017-5 http://www.businessinsider.com/bitcoin-price-government-auct...
  - rrecuero 9y ago
    A government or entity can only seize your coins if they have or find the private keys
iMuzz 9y ago
Source 5 is a broken link. It should be: https://www.barrons.com/articles/the-bitcoin-consensus-yes-its-a-bubble-buy-it-anyway-1511909599 https://www.barrons.com/articles/the-bitcoin-consensus-yes-i...
- rrecuero 9y ago
  Thanks. Fixed
Buetol 9y ago
Or it's like all the other services we have, it evolves from decentralized to centralized: email, search, forums,...The case could be made even for governments. The only limit was technical, now you can control the cabs in all the cities from one place. The future is definitely more and more centralized, just look at the money distribution. My guess is that we're having our geeky dreams without thinking what's the reality happening around us. It's very comfortable to be utopist when thinking of bitcoin, instead of seeing that it's still the same winner-takes-it-all scheme.
- slovette 9y ago
  This is just an example of technical change aligning itself with real world human want. People will ALWAYS put convenience first. Even those that say they won’t, it’s typically an isolated action (like, email is harder when not using google apps, but it’s worth not being spied on. Walk in their house, Echos and smart devices everywhere). The hope for Blockchain is we can now, finally, begin building true decentralized things without sacrificing this innate human want for convenience. It’s technology advancing towards multiple mutual goals (a technical one and a human one).
  - Rhapso 9y ago
    Lightning networks to handle scaling limitations are the first step on the slow re-centralization of bitcoin. Eventually an overwhelming majority mining will be controlled by a centralized/federated oligopoly. Be prepared to rebel and re-re-decentralize in 20 years.
    - slovette 9y ago
      I think I’d probably agree with you. But Blockchain technology (the backbone of a decentralized movement) is the parent to bitcoin. I’m speaking on Blockchain, not bitcoin.
      - Rhapso 9y ago
        Even viewing it more generically, the same scaling issues apply, and the same inevitable re-decentralization awaits it. Centralized systems trade robustness for efficiency. The drive to lower costs will always result in re-centralization.
deleted 9y ago
[deleted]
tardygrad 9y ago
> Chris Burniske and Jack Tatar suggest that crypto assets have low/negative correlation with traditional asset classes The DJIA and Bitcoin charts seem well correlated, at least over the past month: DJIA: https://www.marketwatch.com/investing/index/djia https://www.marketwatch.com/investing/index/djia Bitcoin:https://bitcoincharts.com/charts/bitstampUSD#rg30ztgCzm1g10zm2g25zvzcv https://bitcoincharts.com/charts/bitstampUSD#rg30ztgCzm1g10z... In my opinion people treat it as they would any speculative asset.
- freejulian 9y ago
  Huh? You can’t cherry pick your data and claim something is “well correlated”. Well researched data shows bitcoin has no correlation to any exising asset class which is why it’s a great risk reducer to add to a portfolio.
  - acjohnson55 9y ago
    Your retort would be more convincing if you linked to some sources.
    - freejulian 9y ago
      https://www.signalplot.com/what-is-bitcoins-correlation-with-other-financial-assets/ https://www.signalplot.com/what-is-bitcoins-correlation-with...
staunch 9y ago
The phenomenon of decentralization won't slow until the wildly inefficient businesses of Washington, Hollywood, New York, and Silicon Valley have been broken into thousands of pieces. Bitcoin and the rest are coming for New York/Silicon Valley money managers, which only exist for gatekeeping and rent seeking. The finance industry will be eliminated by new exchanges and equity crowdfunding.
skywhopper 9y ago
I don’t see any actual practical use cases described here that make mainstream adoption of blockchain tech make any sense. Or any concrete arguments about how it improves current systems. And the weaknesses of blockchain are glossed over or ignored. And “it’s never been hacked” is the frankly pretty toothless argument in favor of its security. Basically this is a weak article for Y Combinator to be publishing. If this is the best they can come up with, then blockchain has worse prospects than I thought.
- EGreg 9y ago
  Blockchains boil down to one thing: Where before you had to trust one server, now you can have many. Multiple writers, multiple readers. That's all. They are a drop-in replacement for having to trust admins. On the other hand, backups and replicas could prevent other things, such as: https://www.youtube.com/watch?v=E1d5VvCa8Fo https://www.youtube.com/watch?v=E1d5VvCa8Fo
  - mrep 9y ago
    > Where before you had to trust one server, now you can have many. Multiple writers, multiple readers. That's all. Those multiple writers, multiple readers are not free. They waste billions in server/electricity costs over traditional architecture designs. The most prominent blockchain bitcoin costs 2.5 billion dollars a year [0] to process a miniscule fraction of what Visa can handle. [0]: https://digiconomist.net/bitcoin-energy-consumption https://digiconomist.net/bitcoin-energy-consumption
    - hobofan 9y ago
      YES, we know! If there truly isn't an alternative to PoW, yes then we are pretty much fucked. Quite a few more efficient alternatives are currently being tested (and I guess a lot more are to come), and it looks very promising.
      - tim333 9y ago
        Of the top 8 coins on coinmarketcap I think four don't use proof of work - ripple, cardano, stellar and neo. So there seem to be alternatives.
grizzles 9y ago
It's not a new asset class. Most cryptocurrencies are junk bonds. Those have been around for ages. If the coiners (what do you call this tribe?) accomplish "Permissionless Innovation" though, they will have did something great.
- tim333 9y ago
  It's sort of an new asset class - there wasn't anyone transferring crypto in Shakespeare's day. They don't have an iffy promise to pay you money like junk bonds. In traditional terms they are a bit more like assets that can cost something to mine. Whether they end up valued like gold or like sea water we shall see.
a_d 9y ago
PG/YC started a revolution: They suggested a way through which programmers came into money. Now, with Bitcoin and Cryptocurrencies: Programmers are creating money itself. This article makes a bull-case very articulately, with sprinklings of realism. I am looking forward to this series. Being a blockchain cynic is the norm these days, and I appreciate when someone takes the trouble to lay down a well-reasoned and well-researched argument - great job rrecuero. Clearly, there is irrational optimism/scams abound, but we can often forget that the mass-irrationality can be decoupled with the 'actual' promise of the idea. And the fundamental promise of the idea (Bitcoin, Cryptocurrencies, Blockchain etc) is for us to rethink 'how things work the way they work and why' and attempt to improve it. The Bitcoin paper should atleast get us to think about what is money. It matters less whether these "blockchain things" ultimately succeed or fail -- the fact that something NEW is being attempted, has to be applauded (Ofcourse, it would be great to figure out a way to do this without harming people using their credit cards to buy shit coins). I love reading about blockchain ideas/projects. Like many, I too am jaded by the scams - but I think it is worth maintaining some optimism through this. This article doesn't even touch upon some very important use-cases like: moving money across borders and money being seizure resistant etc. I think there is was, and has always been a market for a product that allows us to store value in a way that is cross-border, govt resistant and anonymous (whether it is a $500B market or $5B market is less interesting than appreciating that a product was invented to fulfil this use case). There are plenty of interesting use-cases to explore here. In the section on Tokens, the article says: "contributors can transfer their assets instantly and easily to other people (pending regulation)" while referring to securities. IF this becomes a reality, it would be huge. I see a lot of upside if even a fraction of the promise of this tech is realized.
- rrecuero 9y ago
  Thank you for your kind words. My goal was exactly that; to show that there is something beyond the irrational optimism, extreme cynicism, scams and bubble talks that dominate conversations. As you mentioned, asset tokenization (securitization) is one of the biggest markets. If companies like Harbor achieve their vision, it would be huge.
  - 9y ago
skybrian 9y ago
re: "The question is not whether [databases] are going to be hacked or not, the question is when. These are natural honeypots for hackers." This is not a good argument for cryptocurrency. Just like a regular wallet attracts pickpockets, a Bitcoin wallet is a natural honeypot for hackers. Just like a bank attracts bank robbers, a crypto exchange is a natural honeypot for hackers. Really, the issue here is money. Money attracts thieves. The money is the honey, and the computer is the pot. So far there's no evidence that cryptocurrency reduces theft, and quite a lot of evidence that it encourages theft.
- freech 9y ago
  The difference here is that if I fail to secure my wallet only I loose my money, but if the bank fails to secure their database, all its customers loose their money.
  - skybrian 9y ago
    Do you know an example of a bank that lost its customers' money due to being hacked? On the other hand, plenty of crypto exchanges have been hacked.
    - rrecuero 9y ago
      A centralized crypto exchange is as centralized as a bank. Both have the same security risks. What cannot get hacked in the same way are decentralized exchanges like RadarRelay
      - skybrian 9y ago
        I guess, but looking at RadarRelay, apparently you can't trade anything except Ethereum-based tokens, so that's barely an exchange.
        CryptoPunk 9y ago
        92 of the top 100 tokens and something like 40 of the top 100 crypto assets (tokens and coins), by market capitalization, are Ethereum-based tokens, so that is a substantial potential market.
Felz 9y ago
I feel like proof of work blockchains don't actually solve the problem of "who to trust". Nodes just automatically assign trust to whoever mined the best hash that they know of, which turns out to be whoever holds the most mining power. But not even that: If you're in China and the original blockchain is censored and all your node will ever see is the StateChain, you have misplaced your trust.
- phlip9 9y ago
  In a proof-of-work chain, the fundamental trust assumption is that no malicious mining collusion holds more than 50% of the hash power. If you can make this assumption, your security holds as long as you manage to obtain the most recent block with some frequency (usually at least every 6 blocks ~ 1 hour). Of course, if someone manages to MITM attack you, they can mine blocks and feed them to you in order to double spend on you, for example. One way to accomplish this would be to engineer an Eclipse attack [1]. However, as long as you have any source for the most recent block that the MITM does not control, they cannot trick you into following a shorter chain. In other words, as long as any side-channel (malicious or otherwise) posts blocks, you can always follow the longest chain. The Blockstream Satellite [2] was created for this reason -- so that nodes always have a reliable side-channel separate from the bitcoin protocol to verify blocks coming from the bitcoin network. Alternatively, some nodes check Tor mirrors, which should be difficult for adversaries to control. [1] https://eprint.iacr.org/2015/263.pdf https://eprint.iacr.org/2015/263.pdf [2] https://blockstream.com/satellite/ https://blockstream.com/satellite/
EGreg 9y ago
Wow. This blog post literally parallels what my colleagues and I have been writing and working on for the past 6 months at Intercoin. I mean, look at the video right here: https://intercoin.org/ https://intercoin.org/ It even uses the same terms, such as "Power to the People". https://qbix.com/blog/index.php/2017/12/power-to-the-people/ https://qbix.com/blog/index.php/2017/12/power-to-the-people/ I am glad that these challenges in crypto are finally being recognized and publicly written about at YC. Perhaps we should apply!
jokoon 9y ago
Blockchain is a real innovation, sure, but I don't think it will bring evolution to how money is used. There are many other uses. Not surprising that an investor is seeing it as the future. Investing is regulated and libertarians often see bitcoin as a good thing. The reality is that bitcoin is volatile, and nobody wants an economy that is built on instability.
intended 9y ago
As others have commented, this sounds like more power to central authorities, with higher levels of fidelity than ever before. The first and second point are inherently at odds with each other. The first point concludes that we need simpler gatekeepers/service providers to make it easier for normal people to use the Asset class The second point concludes that bitcoin makes it easier to be decentralized. But I think these sections are the light weight part of the article. I think the other points raised are more material and impactful.

195 points by rrecuero 9y ago

rrecuero 9y ago

Happy to answer any follow-up questions here

elmar 9y ago
Great article! Bringing financial inclusion to the billions of unbaked it's the biggest unfulfilled promise of cryptocurrencies. For it to work it must be engineered on the protocol level for this use case, I think Cardano is trying to solve this problem. The store of value and savings part it's more or less easy to solve, the big problem is the lending without a stable coin it will be very difficult to implement, big Fiat currencies like the Dollar and the Euro have the powerful backing of a central bank and ultimately the collateralization of all the taxpayers as a protection against high volatility and black swan events, this will be very difficult to implement in crypto, MakerDAO is tring to do it but I don't see it working on a big scale.
ilaksh 9y ago
It's not quite a complete discussion without mentioning the transaction rate/scaling limitations and also Ethereum's sharding approach to this.
- rrecuero 9y ago
  I tried to mention that scalability is a moving target. As you mentioned Plasma, Raiden and sharding are different approaches to solve it
  - freejulian 9y ago
    Raiden is a poor and incomplete implementation of Lightning. Bitcoin has 3 independent implementations and a developing ecosystem of software around it. Proof of stake is a pipe dream. Such a system can’t reliably achieve consensus due to the nothing-at-stake problem. Additionally, randomly selecting a winner in a distributed yet unpredictable way continues to be an unsolved problem. Sharding has the cost of weakening security. Bitcoin is addressing scaling better than any other blockchain. It’s making transactions more efficient through technologies like Segwit and Schnorr. It’s adding robust smart contracts and instant payments using second layer sidechains like rootstock and lightning. Ethereum is already imploding under its own weight — it’s impossible to even sync a full node on basic hardware. In a few years it’ll be dead.
    - CryptoPunk 9y ago
      >>Raiden is a poor and incomplete implementation of Lightning. Raiden is a comprehensive implementation that includes Lightning Networks for ERC20 tokens, something that Bitcoin doesn't even have. >>Proof of stake is a pipe dream. Your information is incorrect. Ethereum's proof of stake is close to complete conceptually and the first version, a hybrid PoW/PoS protocol called Casper the Friendly Finality Gadget, is currently under development and will be implemented in Ethereum soon. >>Such a system can’t reliably achieve consensus due to the nothing-at-stake problem. Your criticism is long out of date. Vitalik Buterin addressed how the Nothing at Stake problem can be solved in 2014: https://blog.ethereum.org/2014/11/25/proof-stake-learned-love-weak-subjectivity/ https://blog.ethereum.org/2014/11/25/proof-stake-learned-lov... >>Bitcoin is addressing scaling better than any other blockchain. It’s making transactions more efficient through technologies like Segwit and Schnorr. It’s adding robust smart contracts and instant payments using second layer sidechains like rootstock and lightning. Bitcoin's lack of Turing Completeness at the base layer is a critical weakness that limits the range of second layer solutions that are possible. Ethereum has far more sophisticated and numerous scaling solutions in development as a result. >>Sharding has the cost of weakening security. That is not certain to be true. There are a lot security impacting variables at play that sharding affects, and some of them positively. Even if security were reduced, it wouldn't mean the trade off for more scalability wouldn't be worth it. Sharding enables massive scaling while preserving the ability for consumer grade nodes to contribute to validation. That seems like a good trade off. >>Ethereum is already imploding under its own weight — it’s impossible to even sync a full node on basic hardware. That is highly misleading. SSDs have been syncing fine. HDDs have been having syncing problems, but that was solved in the most recent Geth release. >>In a few years it’ll be dead. Disingenuous FUD. Ethereum is the primary Dapp platform, with 30X more developers working on it than the next most active platform. It has a multipronged scaling strategy that is in an advanced state of development and dwarfs that of any other blockchain. It is now the most widely used blockchain in the world, processing 3X more transactions per day than #2 Bitcoin. And in all of these categories, its momentum is growing.
      - freejulian 9y ago
        > Raiden is a comprehensive implementation Is the lone implementation which is still on testnet and no ecosystem surrounding it. > ERC20 tokens, something that Bitcoin doesn't even have. Bitcoin has no interest in implementing an equivalent as a layer-1 feature. This should be a surprise to no one. Off-chain scaling is the official direction of the Bitcoin community. There's no interest in adding bloat to the layer 1 protocol. Ethereum is the "everything including the kitchen sink" approach. Anyways, saying Bitcoin does'nt have ERC20 is factually incorrect: Rootstock implements ERC20 tokens as a second layer network. > Your information is incorrect. Ethereum's proof of stake is close to complete conceptually and the first version It's not any where near complete, which is why the difficulty bomb was rolled back (which in and of itself is hilarious -- Ethereum only pretends to be decentralized). > Vitalik Buterin addressed how the Nothing at Stake problem can be solved in 2014 He described how to solve it 4 years ago, yet they still can't release even a hybrid PoS solution. Slasher does not solve the nothing at stake problem, it merely obfuscates it. Long range attacks are still possible. I noticed you completely glossed over how PoS systems will agree on randomness. Good luck. I'm sure it's just another 4 years away. > Bitcoin's lack of Turing Completeness at the base layer is a critical weakness that limits the range of second layer solutions that are possible. Lack of Turing Completeness is a feature and intentional. If you want a general purpose distributed computer use rootstock. Which, by the way, is 100% compatible with the Eth VM. > Sharding enables massive scaling while preserving the ability for consumer grade nodes to contribute to validation. That's cute. Ethereum doesn't even have any "consumer grade" nodes today. Anyways, sounds like you're taking the long way around to agreeing with me: Sharding sacrifices security. > That is highly misleading. SSDs have been syncing fine. HDDs have been having syncing problems, Again, taking the long way around to agreeing with me. A full archive node currently requires a 400GB SSD! You're only option is to run a light node, which further contributes to your networks centralization. > Disingenuous FUD. Eh, you'll see. The monolithic approach of Ethereum is very naive. > with 30X more developers working on it than the next most active platform Easily proved false, anyone reading can take a look at the respective github repos. Bitcoin currently has over 550 contributors, Ethereum only has 200. Bitcoin has over 16k commits. Ethereum has only 9k. This doesn't even take into account the larger ecosystem of software Bitcoin has. > Ethereum is the primary Dapp platform, A little early to make any of these claims...the only popular Dapp in recent memory is cryptokitties and it brought the Ethereum network to its knees. Anyways, like I've said, Bitcoin has a fully compatible Ethereum VM running as a layer 2 network. > It has a multipronged scaling strategy that is in an advanced state of development I wouldn't call it multipronged -- Vitalik has it all hinging on PoS and that has been officially delayed until late 2018 at best. > dwarfs that of any other blockchain. Well, until you look at actual commit and contributor count. Then it's clear Bitcoin has far more development happening. > It is now the most widely used blockchain in the world, processing 3X more transactions per day than #2 Bitcoin I mean, bitcoin is operating at capacity. I'm sure Ethereum has more spam transactions though, I agree. Saying Ethereum is the most widely used blockchain in the world his hilarious. People know Bitcoin. A small fraction of those people know Ethereum. > And in all of these categories, its momentum is growing. As its network continues to crumble. Best of luck. We'll reconvene when Casper finally launches...hopefully while we're still young.
- elmar 9y ago
  sharding is in the same boat as proof-of-stake, nobody knows if a system can be built that preserves the level of security of current monolithic and proof-of-work systems, it is being studied on an academic an implementation level by several teams including Cardano, ethereum and ethereum classic. On the scalability issue if you sacrifice the decentralization is theoretically possible for Bitcoin to process on-chain, Visa level of transactions and with current energy consumption levels or even less. You would probably get 3 to 6 physical data center locations probably on the same continent connected with high-speed links with 1 Terabyte 10min blocks.
  - rrdharan 9y ago
    Proof of steak sounds delicious and would be enough to tempt me off the sidelines into investing.
    - elmar 9y ago
      >Proof of steak sounds delicious and would be enough to tempt me off the sidelines into investing. LOL Proof of steak https://youtu.be/U3OEk2dNYcU?t=44 https://youtu.be/U3OEk2dNYcU?t=44
cvaidya1986 9y ago
Are ICOs illegal in the USA?
- rrecuero 9y ago
  It is illegal to sell securities to non-accredited investors
  - cvaidya1986 9y ago
    Do tokens fall under that category ?
    - aboodman 9y ago
      It depends on how they are used, but frequently, yes. Even so, you can sell to accredited investors totally legally. A few ICOs have worked this way.
      - cvaidya1986 9y ago
        Is a cryptokitty illegal for non accredited investors to buy? Or is it just a “normal” good.
        zeperoni 9y ago
        Cryotpkitty is under the current existing Ethereum network. Like how you can still buy bitcoin. ICO are initial coin offerings, so it's an investment before the actual coin is released and on the market.
        whb07 9y ago
        No it’s just as trivial as a Pokémon card
    - whb07 9y ago
      I just recently saw the SEC secretary say that ico’s are not illegal if they were to be done roughly behind closed doors, so to speak. Meaning, don’t spam to the world your ico address and be diligent as to who you’re talking to about potential investments. The SEC secretary wants a fine line distinction between a “private” and “public” raising of money. He’s right to point that all icos (besides filecoin) are trying to be considered as “private” while publicly share their address and don’t discern who sends in funds. Here’s a recent SEC release: https://www.sec.gov/news/public-statement/statement-clayton-2017-12-11 https://www.sec.gov/news/public-statement/statement-clayton-...
gervase 9y ago
I am really looking forward to "The Future of Organizations". I think decentralized governance and consensus is one of the most exciting aspects of these technologies, but are being totally drowned out by the fintech applications in the meantime. Hopefully this article will address some of these possibilities.
- rrecuero 9y ago
  It will. One of the great companies in the space will write it. I also recommend this article from Fred Ehrsam https://medium.com/@FEhrsam/blockchain-governance-programming-our-future-c3bfe30f2d74 https://medium.com/@FEhrsam/blockchain-governance-programmin...
mlinksva 9y ago
> It’s not a coincidence that the whitepaper was published after the 2008 subprime mortgage crisis. Is there any evidence for this? Perhaps a statement from Satoshi that they were motivated to publish by the crisis?
- rrecuero 9y ago
  In the Genesis Block he explicitly references the post financial crisis bailouts.
  - sk221 9y ago
    Yep. He noted a headline in that day's paper "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks" Source: https://en.bitcoin.it/wiki/Genesis_block https://en.bitcoin.it/wiki/Genesis_block (or you can verify on the blockchain as well)
tramGG 9y ago
Have you looked into things like Synapse.ai ? They are building exactly what you're talking about in terms of data/AI/ML/currency/ownership. Here is their founder giving a presentation about it at the Decentralized AI Summit: https://www.youtube.com/watch?v=9QMgVsbHu98 https://www.youtube.com/watch?v=9QMgVsbHu98 It ties together things like the "Who owns the future" book by Jaron Lanier and AI/Bots/APIs for new economies.
- rrecuero 9y ago
  Thanks for sharing. Reminds me a bit of Numerai
  - tramGG 9y ago
    Yeah numerai is great, they were one of the first ones in the financial/trading space.
v64 9y ago
Thanks for this writeup! You've done a great job at organizing many of the points that were discussed in this Bitcoin thread[1] from last month. I'll be using this as a starting point for discussion with friends that are interested in cryptocurrency. [1] https://news.ycombinator.com/item?id=16158463 https://news.ycombinator.com/item?id=16158463
- rrecuero 9y ago
  Thank you. That was the intention, to provide a primer for discussion.

te_chris 9y ago

I’ve reacently read the Burnskie book about crypto assets in the hope that I might come away more enlightened about the market and how to assess it. The opposite was the case. After reading the book and looking into it more, it’s very hard to see these things as assets at the moment, or to see much utility in the technology. Don’t get me wrong, there certainly is some and it is certainly ‘cool’, but right now blockhain feels like a solution looking for a problem.

curuinor 9y ago
"Attack of the Fifty Foot Blockchain" and the associated blog is worth a read
- tonyjstark 9y ago
  It was an eye opener for me. Since then I approach the whole field with more caution and skepticism.
- cocktailpeanuts 9y ago
  I read that book too, and while it does provide some good insights, it's too much biased the other way around to the point that I couldn't stand the amount of snark. I think it's good to take a look at both sides of the story but the only way to find the truth is going deeper and learning the protocol yourself and form your own "sovereign" opinion, which is what I did after getting frustrated with tons of conflicting opinions online, which by the way turned out to be mostly propaganda to preserve their own crypto-wealth as I started learning more about the landscape.
eosophos 9y ago
How is trustless digital programmable peer-to-peer monetary transaction not a great solution to the antiquated, corrupt status quo?
- te_chris 9y ago
  Just because you put the words antiquated and corrupt in the question doesn’t make those two things true. Based on my somewhat brief experience as a crypto investor it hasn’t given me great hope of it solving corruption...

pavlov 9y ago

> I think the same is true with Bitcoin: traditional banking that takes days and charges high fees can be easily implemented on Bitcoin, but the opposite is not true. "Easily" here seems like major exaggeration. If that were true, projects like Lightning wouldn't exist.

rrecuero 9y ago
This was true at different moments in time. Now, as you mentioned you would need to use lightning. You could do it with LTC right now
- xkarga00 9y ago
  Once LN is established, I expect that this is going to be opaque for an end user. Example: Today, you don't need to specify http:// http:// in order to use it in a browser.

erikb 9y ago

The nature of single things is decentralized. Therefore every new era starts with decentralization. The internet started off quite decentralized, for instance. But do we really have a new era here? I'm not sure if with 32 years of age I'm already too old to recognize the New and grog it. I don't feel it. I feel there's a lot of buzz around blockchain, sure. But it looks like it would be all. Bitcoin is just as centralized as banks are, for instance. And here is where the other stuff starts. When single things start systems these systems tend to be quite centralized. That is the natural order of systems. E.g., people could manage their own bitcoins on their laptop, but they choose to have an Exchange take that effort of their hands. Seeing centralization take a foothold and not seeing anything real besides buzz, I'd argue the bet is still against. On the other hand I'm seeing Amazong completely automating logistics in more and more areas of life. Shouldn't that be something to look into?

darawk 9y ago
> Bitcoin is just as centralized as banks are, for instance. That's a rather odd statement. Can you justify that?
- hoosieree 9y ago
  https://www.bloomberg.com/news/articles/2017-12-08/the-bitcoin-whales-1-000-people-who-own-40-percent-of-the-market https://www.bloomberg.com/news/articles/2017-12-08/the-bitco... A handful of actors with a controlling stake isn't exactly the same thing as "centralized" but it's close.
  - lambdadmitry 9y ago
    It's also inherently "centralised throughout liquidity". Because it's both deflationary and risky, the amount of liquidity available at any given moment is small, so a willing actor with some money at hand can affect the market disproportionately. Look at the way Tether manipulated the price.
  - darawk 9y ago
    Not really. They're pretty different things.

jedberg 9y ago

> traditional banking that takes days and charges high fees Only in the USA. And that is hopefully changing in the next month or two with the upgrade in the ACH system.

tim333 9y ago
I just checked transferwise for £1000 to about us$1400. The cost compared with google's estimate of the interbank rate was $6 and they said it would take one day. I've also recently done £ to Thai baht and most currencies are there. It's quite quick and cheap such that it would be hard for crypto transfers to compete for most stuff.
- zodiac 9y ago
  > It's quite quick Really? I use it often and it always takes a few days end-to-end

marknadal 9y ago

> However, right now you need to install browser extensions like Metamask to interact with websites that enable “crypto functionality”. They are still really clunky and the average user does not know they even exist. This is not true, you can already build (and people are) dApps that run in the browser (no extension) using the latest native Web Crypto API that we've made easy to use: https://hackernoon.com/so-you-want-to-build-a-p2p-twitter-with-e2e-encryption-f90505b2ff8 https://hackernoon.com/so-you-want-to-build-a-p2p-twitter-wi... Dominic Tarr and the Beaker Browser guys with SSB also have even webasembly-ified libsodium which is highly rated ( #4 ranked on GitHub https://github.com/topics/cryptography https://github.com/topics/cryptography ). It is just that a lot of investors are caught up in hyped-up vaporware scams, rather than real technology that already exists and works and is available for developers to use today.

glitch003 9y ago
By "crypto functionality" the author means talking to a blockchain, not doing cryptographic operations. Metamask, the example given, is a browser extension that provides access to the Ethereum blockchain by injecting a JS object into the web page. It provides a wallet and transaction signing and broadcasting. Web crypto API's are quite different.
- marknadal 9y ago
  Both are possible, if you read through more.

zapita 9y ago

> When Satoshi Nakamoto released the Bitcoin Whitepaper he defined it as a peer to peer electronic cash system. How do we know Satoshi is a he?

nokcha 9y ago
Of course we don't know for sure whether Satoshi is really a man, a woman, or a group of people. But for ease of conversation, people use the gender and number of the pseudonym (masculine, singular).
- zapita 9y ago
  That is an embarrassingly obvious answer, thank you. Someone had told me Satoshi was a made-up name without a clear gender, and I had never bothered to check that fact.
deleted 9y ago
[deleted]
CryptoPunk 9y ago
He put his gender as male on his p2pfoundation profile.
pluto9 9y ago
Because it's a (typically) masculine Japanese name. If the chosen pseudonym was "Steve", would it be unreasonable to assume it's a male?

get 9y ago

"nobody can destroy or seize your coins" "keeping your investment safe is not simple" Hmm...

nokcha 9y ago
I think this means: - nobody can destroy or seize your coins unless they have your private keys - keeping your private keys safe is not simple
spookthesunset 9y ago
One of the great ironies of Bitcoin is that it was marketed as "the internet of money".... except one of the best way to secure it is to avoid exposing it to the internet and by printing its keys out on sheets of paper.
tim333 9y ago
Compare with the Business Insider headline "People are making a fortune buying government-seized bitcoins" http://www.businessinsider.com/bitcoin-price-government-auction-winners-2017-5 http://www.businessinsider.com/bitcoin-price-government-auct...
- rrecuero 9y ago
  A government or entity can only seize your coins if they have or find the private keys

iMuzz 9y ago

Source 5 is a broken link. It should be: https://www.barrons.com/articles/the-bitcoin-consensus-yes-its-a-bubble-buy-it-anyway-1511909599 https://www.barrons.com/articles/the-bitcoin-consensus-yes-i...

rrecuero 9y ago
Thanks. Fixed

Buetol 9y ago

Or it's like all the other services we have, it evolves from decentralized to centralized: email, search, forums,...The case could be made even for governments. The only limit was technical, now you can control the cabs in all the cities from one place. The future is definitely more and more centralized, just look at the money distribution. My guess is that we're having our geeky dreams without thinking what's the reality happening around us. It's very comfortable to be utopist when thinking of bitcoin, instead of seeing that it's still the same winner-takes-it-all scheme.

slovette 9y ago
This is just an example of technical change aligning itself with real world human want. People will ALWAYS put convenience first. Even those that say they won’t, it’s typically an isolated action (like, email is harder when not using google apps, but it’s worth not being spied on. Walk in their house, Echos and smart devices everywhere). The hope for Blockchain is we can now, finally, begin building true decentralized things without sacrificing this innate human want for convenience. It’s technology advancing towards multiple mutual goals (a technical one and a human one).
- Rhapso 9y ago
  Lightning networks to handle scaling limitations are the first step on the slow re-centralization of bitcoin. Eventually an overwhelming majority mining will be controlled by a centralized/federated oligopoly. Be prepared to rebel and re-re-decentralize in 20 years.
  - slovette 9y ago
    I think I’d probably agree with you. But Blockchain technology (the backbone of a decentralized movement) is the parent to bitcoin. I’m speaking on Blockchain, not bitcoin.
    - Rhapso 9y ago
      Even viewing it more generically, the same scaling issues apply, and the same inevitable re-decentralization awaits it. Centralized systems trade robustness for efficiency. The drive to lower costs will always result in re-centralization.

deleted 9y ago

[deleted]

tardygrad 9y ago

> Chris Burniske and Jack Tatar suggest that crypto assets have low/negative correlation with traditional asset classes The DJIA and Bitcoin charts seem well correlated, at least over the past month: DJIA: https://www.marketwatch.com/investing/index/djia https://www.marketwatch.com/investing/index/djia Bitcoin:https://bitcoincharts.com/charts/bitstampUSD#rg30ztgCzm1g10zm2g25zvzcv https://bitcoincharts.com/charts/bitstampUSD#rg30ztgCzm1g10z... In my opinion people treat it as they would any speculative asset.

freejulian 9y ago
Huh? You can’t cherry pick your data and claim something is “well correlated”. Well researched data shows bitcoin has no correlation to any exising asset class which is why it’s a great risk reducer to add to a portfolio.
- acjohnson55 9y ago
  Your retort would be more convincing if you linked to some sources.
  - freejulian 9y ago
    https://www.signalplot.com/what-is-bitcoins-correlation-with-other-financial-assets/ https://www.signalplot.com/what-is-bitcoins-correlation-with...

staunch 9y ago

The phenomenon of decentralization won't slow until the wildly inefficient businesses of Washington, Hollywood, New York, and Silicon Valley have been broken into thousands of pieces. Bitcoin and the rest are coming for New York/Silicon Valley money managers, which only exist for gatekeeping and rent seeking. The finance industry will be eliminated by new exchanges and equity crowdfunding.

skywhopper 9y ago

I don’t see any actual practical use cases described here that make mainstream adoption of blockchain tech make any sense. Or any concrete arguments about how it improves current systems. And the weaknesses of blockchain are glossed over or ignored. And “it’s never been hacked” is the frankly pretty toothless argument in favor of its security. Basically this is a weak article for Y Combinator to be publishing. If this is the best they can come up with, then blockchain has worse prospects than I thought.

EGreg 9y ago
Blockchains boil down to one thing: Where before you had to trust one server, now you can have many. Multiple writers, multiple readers. That's all. They are a drop-in replacement for having to trust admins. On the other hand, backups and replicas could prevent other things, such as: https://www.youtube.com/watch?v=E1d5VvCa8Fo https://www.youtube.com/watch?v=E1d5VvCa8Fo
- mrep 9y ago
  > Where before you had to trust one server, now you can have many. Multiple writers, multiple readers. That's all. Those multiple writers, multiple readers are not free. They waste billions in server/electricity costs over traditional architecture designs. The most prominent blockchain bitcoin costs 2.5 billion dollars a year [0] to process a miniscule fraction of what Visa can handle. [0]: https://digiconomist.net/bitcoin-energy-consumption https://digiconomist.net/bitcoin-energy-consumption
  - hobofan 9y ago
    YES, we know! If there truly isn't an alternative to PoW, yes then we are pretty much fucked. Quite a few more efficient alternatives are currently being tested (and I guess a lot more are to come), and it looks very promising.
    - tim333 9y ago
      Of the top 8 coins on coinmarketcap I think four don't use proof of work - ripple, cardano, stellar and neo. So there seem to be alternatives.

grizzles 9y ago

It's not a new asset class. Most cryptocurrencies are junk bonds. Those have been around for ages. If the coiners (what do you call this tribe?) accomplish "Permissionless Innovation" though, they will have did something great.

tim333 9y ago
It's sort of an new asset class - there wasn't anyone transferring crypto in Shakespeare's day. They don't have an iffy promise to pay you money like junk bonds. In traditional terms they are a bit more like assets that can cost something to mine. Whether they end up valued like gold or like sea water we shall see.

a_d 9y ago

PG/YC started a revolution: They suggested a way through which programmers came into money. Now, with Bitcoin and Cryptocurrencies: Programmers are creating money itself. This article makes a bull-case very articulately, with sprinklings of realism. I am looking forward to this series. Being a blockchain cynic is the norm these days, and I appreciate when someone takes the trouble to lay down a well-reasoned and well-researched argument - great job rrecuero. Clearly, there is irrational optimism/scams abound, but we can often forget that the mass-irrationality can be decoupled with the 'actual' promise of the idea. And the fundamental promise of the idea (Bitcoin, Cryptocurrencies, Blockchain etc) is for us to rethink 'how things work the way they work and why' and attempt to improve it. The Bitcoin paper should atleast get us to think about what is money. It matters less whether these "blockchain things" ultimately succeed or fail -- the fact that something NEW is being attempted, has to be applauded (Ofcourse, it would be great to figure out a way to do this without harming people using their credit cards to buy shit coins). I love reading about blockchain ideas/projects. Like many, I too am jaded by the scams - but I think it is worth maintaining some optimism through this. This article doesn't even touch upon some very important use-cases like: moving money across borders and money being seizure resistant etc. I think there is was, and has always been a market for a product that allows us to store value in a way that is cross-border, govt resistant and anonymous (whether it is a $500B market or $5B market is less interesting than appreciating that a product was invented to fulfil this use case). There are plenty of interesting use-cases to explore here. In the section on Tokens, the article says: "contributors can transfer their assets instantly and easily to other people (pending regulation)" while referring to securities. IF this becomes a reality, it would be huge. I see a lot of upside if even a fraction of the promise of this tech is realized.

rrecuero 9y ago
Thank you for your kind words. My goal was exactly that; to show that there is something beyond the irrational optimism, extreme cynicism, scams and bubble talks that dominate conversations. As you mentioned, asset tokenization (securitization) is one of the biggest markets. If companies like Harbor achieve their vision, it would be huge.
- 9y ago

skybrian 9y ago

re: "The question is not whether [databases] are going to be hacked or not, the question is when. These are natural honeypots for hackers." This is not a good argument for cryptocurrency. Just like a regular wallet attracts pickpockets, a Bitcoin wallet is a natural honeypot for hackers. Just like a bank attracts bank robbers, a crypto exchange is a natural honeypot for hackers. Really, the issue here is money. Money attracts thieves. The money is the honey, and the computer is the pot. So far there's no evidence that cryptocurrency reduces theft, and quite a lot of evidence that it encourages theft.

freech 9y ago
The difference here is that if I fail to secure my wallet only I loose my money, but if the bank fails to secure their database, all its customers loose their money.
- skybrian 9y ago
  Do you know an example of a bank that lost its customers' money due to being hacked? On the other hand, plenty of crypto exchanges have been hacked.
  - rrecuero 9y ago
    A centralized crypto exchange is as centralized as a bank. Both have the same security risks. What cannot get hacked in the same way are decentralized exchanges like RadarRelay
    - skybrian 9y ago
      I guess, but looking at RadarRelay, apparently you can't trade anything except Ethereum-based tokens, so that's barely an exchange.
      - CryptoPunk 9y ago
        92 of the top 100 tokens and something like 40 of the top 100 crypto assets (tokens and coins), by market capitalization, are Ethereum-based tokens, so that is a substantial potential market.

Felz 9y ago

I feel like proof of work blockchains don't actually solve the problem of "who to trust". Nodes just automatically assign trust to whoever mined the best hash that they know of, which turns out to be whoever holds the most mining power. But not even that: If you're in China and the original blockchain is censored and all your node will ever see is the StateChain, you have misplaced your trust.

phlip9 9y ago
In a proof-of-work chain, the fundamental trust assumption is that no malicious mining collusion holds more than 50% of the hash power. If you can make this assumption, your security holds as long as you manage to obtain the most recent block with some frequency (usually at least every 6 blocks ~ 1 hour). Of course, if someone manages to MITM attack you, they can mine blocks and feed them to you in order to double spend on you, for example. One way to accomplish this would be to engineer an Eclipse attack [1]. However, as long as you have any source for the most recent block that the MITM does not control, they cannot trick you into following a shorter chain. In other words, as long as any side-channel (malicious or otherwise) posts blocks, you can always follow the longest chain. The Blockstream Satellite [2] was created for this reason -- so that nodes always have a reliable side-channel separate from the bitcoin protocol to verify blocks coming from the bitcoin network. Alternatively, some nodes check Tor mirrors, which should be difficult for adversaries to control. [1] https://eprint.iacr.org/2015/263.pdf https://eprint.iacr.org/2015/263.pdf [2] https://blockstream.com/satellite/ https://blockstream.com/satellite/

EGreg 9y ago

Wow. This blog post literally parallels what my colleagues and I have been writing and working on for the past 6 months at Intercoin. I mean, look at the video right here: https://intercoin.org/ https://intercoin.org/ It even uses the same terms, such as "Power to the People". https://qbix.com/blog/index.php/2017/12/power-to-the-people/ https://qbix.com/blog/index.php/2017/12/power-to-the-people/ I am glad that these challenges in crypto are finally being recognized and publicly written about at YC. Perhaps we should apply!

jokoon 9y ago

Blockchain is a real innovation, sure, but I don't think it will bring evolution to how money is used. There are many other uses. Not surprising that an investor is seeing it as the future. Investing is regulated and libertarians often see bitcoin as a good thing. The reality is that bitcoin is volatile, and nobody wants an economy that is built on instability.

intended 9y ago

As others have commented, this sounds like more power to central authorities, with higher levels of fidelity than ever before. The first and second point are inherently at odds with each other. The first point concludes that we need simpler gatekeepers/service providers to make it easier for normal people to use the Asset class The second point concludes that bitcoin makes it easier to be decentralized. But I think these sections are the light weight part of the article. I think the other points raised are more material and impactful.