12 ms·

I think the fundamental assumption is that "Satoshi invented a useful solution to decentralized consensus". What people don't realize is that Satoshi's solutio

by hudon 9y ago

I think the fundamental assumption is that "Satoshi invented a useful solution to decentralized consensus". What people don't realize is that Satoshi's solution only works if two assumptions hold true: 1. Mining is decentralized: If mining is centralized than relying on proof-of-work for consensus is waste since the centralized entity controls the blockchain anyway. 2. Consensus rules don't change: If you see the threat of #1 and so take power away from miners (like Bitcoin has done), then you cannot ever change the consensus ruleset because aside from proof-of-work, Satoshi did not give any solution to the problem of choosing between 2 chains that have slightly different consensus rules. If you change the consensus ruleset (ie. make any changes where 2 nodes disagree on if a block is valid or not), then you need an oracle to tell you which chain to choose. We've seen this when Core developers chose the 0.7 Bitcoin chain in 2013 and when Vitalik chose the forked Ethereum chain in 2016. At the end of the day, the blockchain's decentralization is a myth because it relies on false assumptions. Satoshi invented a Rube Goldberg machine that is currently using as much electricity as a medium-sized country (and also enabling things like money laundering, drug trafficking, etc.).

darawk 9y ago
It's pretty clear that neither of those things are actual problems, though. There are plenty of issues with crypto-currencies - those just aren't it.
- deleted 9y ago
  [deleted]
mirekrusin 9y ago
PoW is just one of available consensus algorithms. Blockchain doesn’t imply decentralised consensus, you can run it on paxos, raft, authority round or something else, especially for internal, private or semi-private networks. What you get is trail log with proofs that’s immutable and strongly protected against temper.
- hudon 9y ago
  If your definition of "blockchain" is any distributed database with signed rows and a public read-only API, it's miles away from what Satoshi was talking about... Why don't you just call it a "distributed database with signed entries" or something.
  - dilyevsky 9y ago
    or simply "git"
    - majewsky 9y ago
      When meeting my company's Head of Blockchain (not sure if the pun is intended) a while ago, I asked him if git would qualify as blockchain technology. He replied that "blockchain is not a technology, It's a paradigm shift". Literally. That statement was so absurd I didn't even know what to say, so it worked out well for him.
      - s73v3r_ 9y ago
        That is exactly the kind of thing I would expect to hear from a "Head of Blockchain". Your company made a great hire, and they will clearly push the boundaries of marketing bullshit with regard to blockchain.
      - radicalbyte 9y ago
        This is exactly what's driving my skepticism. The people who I've met who are most vocal about "blockchain" are also the ones who know little to nothing about the algorithm itself (and algorithms in general).
      - dilyevsky 9y ago
        I’m with on that but i feel like the punchline of that story should be “my company has a Head of Blockchain”.
        9y ago
yxhuvud 9y ago
No, the fundamental assumption is that distributed consensus in itself is useful. So far, there are some applications (databases), but for the stuff they are using the blockchain for, not so much.
- KirinDave 9y ago
  If distributed trustless consensus is useful, there are cheaper ways to get it than PoW mining. It's just that most folks don't understand them. The principle value of Bitcoin as a protocol is its incredible (even detrimental, from a technical perspective) simplicity.
  - SkyMarshal 9y ago
    Are there other means of distributed trustless consensus as secure as PoW? Secure being the operative word here. Lots of attempts, but none yet convincingly as or more secure.
    - narrator 9y ago
      People who are not crypto-anarchists don't realize that the only reason for proof of work is so you don't have to trust anyone. If there is trust, a centralized database is better in every way vs. Blockchain.
      - KirinDave 9y ago
        People who do not read modern research don't realize lots of the things they think are true about the state of research are totally false. They also think that it's Proof of Work that provides a lack of trust. While that's involved, what's actually more meaningful is the demand to quickly select a "profitable" branch to mine and re-mine on. That can exist in PoS as well.
    - QML 9y ago
      Nakamoto consensus isn't the only protocol that exists; there's also things like Raft and Paxos with different tradeoffs.
jcoffland 9y ago
> If you change the consensus ruleset...then you need an oracle to tell you which chain to choose. What are you talking about? The rule to choose the correct chain is well defined and simple. The longest chain, i.e. the one with the most work done, is the correct chain.
- hudon 9y ago
  I'm not sure if you've spoken to any Bitcoin developers recently, but they'll tell you you're wrong and that it is the valid chain with the most work, not the chain with the most work. They'll then tell you what valid means. Some developers would agree with you though, like Gavin Andresen [0]. Either way, you end up with either centralized miners deciding the fate of the chain, or centralized developers deciding the fate of the chain. Both outcomes are contrary to what Satoshi envisioned. [0] http://gavinandresen.ninja/a-definition-of-bitcoin http://gavinandresen.ninja/a-definition-of-bitcoin
  - jcoffland 9y ago
    That's the beauty of it. It does not matter what Blockstream says. The longest chain is Bitcoin.
    - spookthesunset 9y ago
      > The longest chain is Bitcoin. Useless pedantry that doesn't even map into real world use. The real world has shown your definition is incorrect. Ethereum forked. Which ethereum fork is the "correct" one? Bitcoin forked. Which one is the correct one? Depends on who you ask...
    - makomk 9y ago
      A sufficiently large miner could, right now, create a block which created a million bitcoins from nowhere and gave those to them and it would - for a while at least - be the longest chain. No other clients would accept it, of course, but by your definition the chain where someone just made themselves a billionaire would be Bitcoin.
  - 9y ago
JumpCrisscross 9y ago
> Mining is decentralized Cryptocurrency mining is as close as one can get to a theoretical free market in the real world. Free markets have known modes of failure [1]. One of these is where first-mover advantage and economies of scale combine to produce a barrier to entry; the result is oligopoly or monopoly. [1] https://en.wikipedia.org/wiki/Market_failure https://en.wikipedia.org/wiki/Market_failure
- deleted 9y ago
  [deleted]
- xapata 9y ago
  And availability of cheap inputs, like cheap electricity.
  - lisper 9y ago
    Actually, it's the exact opposite. The security of a blockchain is fundamentally dependent on mining being expensive. That is the only defense against a 51% attack. Cheap energy just drives up consumption to the point where mining is expensive enough to deter attacks. This is ultimately what I think will sink blockchain as a medium of exchange (not necessarily as a store of value). By its very nature it cannot be cheap, so TTPs will always be able to beat it on price.
    - bunderbunder 9y ago
      I'm not even sure that mining being expensive is a great defense against a 51% attack. If things do end up being an oligopoly, then any one of the members of that oligopoly will only have a relatively small sprint between their current position and a 51% attack. And quite a few options for how to attempt such a sprint.
    - xapata 9y ago
      I meant that the variation in electricity costs harms the reputation of the blockchain. Work needs to be approximately the same difficulty for everyone.
zanny 9y ago
I disagree with 1, because the real controller in any cryptocurrency is the software users of the coin are running. You could have trillions in mining hardware but that doesn't matter a bit if a popular implementation changes the mining algorithm to no longer work on your hardware and the userbase starts using that hard fork. Its the problem that the advocates for larger blocksizes in BTC ran into. So long as the ecosystem itself was predominantly going to stay on the bitcoin core implementation, the advocates for change couldn't force it. Eventually they just hard forked into BCH, while the more popular original chain keeps on going. That also means that nothing is really decentralized unless you can cause sea change amongst all participants in a cryptocurrency - if you disagree with what the most common implementation is doing, you can't do squat about it, and commit access is never decentralized or democratized. Theres always someone with the master key to the repo. And we have seen plenty of evidence that once established unseating a popular implementation of any crypto is nigh-impossible, regardless of what the developers do.
brightball 9y ago
But one of the biggest selling points of Bitcoin itself was mathematically limited supply. A new cryptocurrency appearing every day fundamentally undermines the value proposition. Blockchain may have value as a decentralized ledger in other areas, but “lots of blockchain based currencies” aren’t really one of them since it’s self-sabotaging.
- chrisco255 9y ago
  Not really. Network effects matter. Otherwise we would see social networks and other free services replaced on the regular.
  - paulgb 9y ago
    > Otherwise we would see social networks and other free services replaced on the regular. Don't we? I can think of a dozen or more social networks of one sort or another that I've belonged to in the last decade or so.
    - chrisco255 9y ago
      And how many of those have the market cap of Facebook?
      - k_sh 9y ago
        From 2007: "Will MySpace Ever Lose Its Monopoly?"[1] Past performance does not beget future success. [1]: https://www.theguardian.com/technology/2007/feb/08/business.comment https://www.theguardian.com/technology/2007/feb/08/business....
        varjag 9y ago
        2007 was 11 years ago. That's glacial on tech timescale.
        adventured 9y ago
syshum 9y ago
>and also enabling things like money laundering, drug trafficking, etc. And that is bad?
cgmg 9y ago
> (and also enabling things like money laundering, drug trafficking, etc.). If you're trying to take a dig at blockchain technology for its decentralized nature and ability to circumvent government controls, you should be aware that this is considered a good thing. See https://news.ycombinator.com/item?id=16702684 https://news.ycombinator.com/item?id=16702684, for instance. The recent SESTA/FOSTA debacle is one example of why such decentralized networks are needed.
dozzie 9y ago
> I think the fundamental assumption is that "Satoshi invented a useful solution to decentralized consensus". And this very assumption is so untrue. What Satoshi invented is document timestamping protocol, not consensus protocol.
nickbauman 9y ago
Aside from the fact that proof-of-work on a world scale utterly defies the CAP theorem, there has never been an economic system that can scale to the level of, say, one order of magnitude close to ubiquity where there are no trusted intermediaries. Human civilizations just won't organize this way.
elmar 9y ago
>(and also enabling things like money laundering, drug trafficking, etc.) "Darknet markets are no longer a major use of Bitcoin, accounting for less than 1% of Bitcoin transactions in 2017" https://blog.chainalysis.com/crypto-crime/ https://blog.chainalysis.com/crypto-crime/
- rootusrootus 9y ago
  Mainly because known markets were shut down (maybe some new ones have cropped up which are not in that tracker?) and the dominant use of bitcoin transactions currently is wild speculation.
wpietri 9y ago
> "Satoshi invented a useful solution to decentralized consensus". I think that even if decentralized consensus is workable, it's irrelevant for Wall Street projects because these organizations already have experience creating strong trust relationships and useful governance for collaboration (e.g., traditional contracts).
joering2 9y ago
> and also enabling things like money laundering, drug trafficking, etc. At this point, I don't worry about those; criminals would operate with or without Bitcoin and we have government agencies dealing with those; I'm more concern about suicide rate that will spike due to BTC/altcoins losing 80% of value. I have too many acquaintances on my Twitter that last summer were showing me "this cool blue app that helps make 15% a day" and now they remain silent. I tried to contact two of them via cell and it goes nowhere. Looking at BTC/ETH/altcoins charts, I can only image brain-halt it caused so many people that we putting second/third mortage on their house just to "invest in a blue iphone app" and many cashing out their 401k just to be lest with 5% of their money not even year later.
speedplane 9y ago
There is another, more social, assumption he is making: value that is stored on mathematical concepts (e.g., blockchain) is more appealing as value that is stored on more traditional concepts (e.g., reputation, trust). The social question is the more interesting one. Tech history has suggested that people slowly but surely gravitate to more open systems, but asking folks to hold their life savings in digital currencies that rely on mathamatical promises completly foreign to the average user seems like quite a stretch. It does not exactly help that just about day there is a news article of some new data breach of an online system.

by hudon 9y ago

darawk 9y ago

It's pretty clear that neither of those things are actual problems, though. There are plenty of issues with crypto-currencies - those just aren't it.

deleted 9y ago
[deleted]

mirekrusin 9y ago

PoW is just one of available consensus algorithms. Blockchain doesn’t imply decentralised consensus, you can run it on paxos, raft, authority round or something else, especially for internal, private or semi-private networks. What you get is trail log with proofs that’s immutable and strongly protected against temper.

hudon 9y ago
If your definition of "blockchain" is any distributed database with signed rows and a public read-only API, it's miles away from what Satoshi was talking about... Why don't you just call it a "distributed database with signed entries" or something.
- dilyevsky 9y ago
  or simply "git"
  - majewsky 9y ago
    When meeting my company's Head of Blockchain (not sure if the pun is intended) a while ago, I asked him if git would qualify as blockchain technology. He replied that "blockchain is not a technology, It's a paradigm shift". Literally. That statement was so absurd I didn't even know what to say, so it worked out well for him.
    - s73v3r_ 9y ago
      That is exactly the kind of thing I would expect to hear from a "Head of Blockchain". Your company made a great hire, and they will clearly push the boundaries of marketing bullshit with regard to blockchain.
    - radicalbyte 9y ago
      This is exactly what's driving my skepticism. The people who I've met who are most vocal about "blockchain" are also the ones who know little to nothing about the algorithm itself (and algorithms in general).
    - dilyevsky 9y ago
      I’m with on that but i feel like the punchline of that story should be “my company has a Head of Blockchain”.
      - 9y ago

yxhuvud 9y ago

No, the fundamental assumption is that distributed consensus in itself is useful. So far, there are some applications (databases), but for the stuff they are using the blockchain for, not so much.

KirinDave 9y ago
If distributed trustless consensus is useful, there are cheaper ways to get it than PoW mining. It's just that most folks don't understand them. The principle value of Bitcoin as a protocol is its incredible (even detrimental, from a technical perspective) simplicity.
- SkyMarshal 9y ago
  Are there other means of distributed trustless consensus as secure as PoW? Secure being the operative word here. Lots of attempts, but none yet convincingly as or more secure.
  - narrator 9y ago
    People who are not crypto-anarchists don't realize that the only reason for proof of work is so you don't have to trust anyone. If there is trust, a centralized database is better in every way vs. Blockchain.
    - KirinDave 9y ago
      People who do not read modern research don't realize lots of the things they think are true about the state of research are totally false. They also think that it's Proof of Work that provides a lack of trust. While that's involved, what's actually more meaningful is the demand to quickly select a "profitable" branch to mine and re-mine on. That can exist in PoS as well.
  - QML 9y ago
    Nakamoto consensus isn't the only protocol that exists; there's also things like Raft and Paxos with different tradeoffs.

jcoffland 9y ago

> If you change the consensus ruleset...then you need an oracle to tell you which chain to choose. What are you talking about? The rule to choose the correct chain is well defined and simple. The longest chain, i.e. the one with the most work done, is the correct chain.

hudon 9y ago
I'm not sure if you've spoken to any Bitcoin developers recently, but they'll tell you you're wrong and that it is the valid chain with the most work, not the chain with the most work. They'll then tell you what valid means. Some developers would agree with you though, like Gavin Andresen [0]. Either way, you end up with either centralized miners deciding the fate of the chain, or centralized developers deciding the fate of the chain. Both outcomes are contrary to what Satoshi envisioned. [0] http://gavinandresen.ninja/a-definition-of-bitcoin http://gavinandresen.ninja/a-definition-of-bitcoin
- jcoffland 9y ago
  That's the beauty of it. It does not matter what Blockstream says. The longest chain is Bitcoin.
  - spookthesunset 9y ago
    > The longest chain is Bitcoin. Useless pedantry that doesn't even map into real world use. The real world has shown your definition is incorrect. Ethereum forked. Which ethereum fork is the "correct" one? Bitcoin forked. Which one is the correct one? Depends on who you ask...
  - makomk 9y ago
    A sufficiently large miner could, right now, create a block which created a million bitcoins from nowhere and gave those to them and it would - for a while at least - be the longest chain. No other clients would accept it, of course, but by your definition the chain where someone just made themselves a billionaire would be Bitcoin.
- 9y ago

JumpCrisscross 9y ago

> Mining is decentralized Cryptocurrency mining is as close as one can get to a theoretical free market in the real world. Free markets have known modes of failure [1]. One of these is where first-mover advantage and economies of scale combine to produce a barrier to entry; the result is oligopoly or monopoly. [1] https://en.wikipedia.org/wiki/Market_failure https://en.wikipedia.org/wiki/Market_failure

deleted 9y ago
[deleted]
xapata 9y ago
And availability of cheap inputs, like cheap electricity.
- lisper 9y ago
  Actually, it's the exact opposite. The security of a blockchain is fundamentally dependent on mining being expensive. That is the only defense against a 51% attack. Cheap energy just drives up consumption to the point where mining is expensive enough to deter attacks. This is ultimately what I think will sink blockchain as a medium of exchange (not necessarily as a store of value). By its very nature it cannot be cheap, so TTPs will always be able to beat it on price.
  - bunderbunder 9y ago
    I'm not even sure that mining being expensive is a great defense against a 51% attack. If things do end up being an oligopoly, then any one of the members of that oligopoly will only have a relatively small sprint between their current position and a 51% attack. And quite a few options for how to attempt such a sprint.
  - xapata 9y ago
    I meant that the variation in electricity costs harms the reputation of the blockchain. Work needs to be approximately the same difficulty for everyone.

zanny 9y ago

I disagree with 1, because the real controller in any cryptocurrency is the software users of the coin are running. You could have trillions in mining hardware but that doesn't matter a bit if a popular implementation changes the mining algorithm to no longer work on your hardware and the userbase starts using that hard fork. Its the problem that the advocates for larger blocksizes in BTC ran into. So long as the ecosystem itself was predominantly going to stay on the bitcoin core implementation, the advocates for change couldn't force it. Eventually they just hard forked into BCH, while the more popular original chain keeps on going. That also means that nothing is really decentralized unless you can cause sea change amongst all participants in a cryptocurrency - if you disagree with what the most common implementation is doing, you can't do squat about it, and commit access is never decentralized or democratized. Theres always someone with the master key to the repo. And we have seen plenty of evidence that once established unseating a popular implementation of any crypto is nigh-impossible, regardless of what the developers do.

brightball 9y ago

But one of the biggest selling points of Bitcoin itself was mathematically limited supply. A new cryptocurrency appearing every day fundamentally undermines the value proposition. Blockchain may have value as a decentralized ledger in other areas, but “lots of blockchain based currencies” aren’t really one of them since it’s self-sabotaging.

chrisco255 9y ago
Not really. Network effects matter. Otherwise we would see social networks and other free services replaced on the regular.
- paulgb 9y ago
  > Otherwise we would see social networks and other free services replaced on the regular. Don't we? I can think of a dozen or more social networks of one sort or another that I've belonged to in the last decade or so.
  - chrisco255 9y ago
    And how many of those have the market cap of Facebook?
    - k_sh 9y ago
      From 2007: "Will MySpace Ever Lose Its Monopoly?"[1] Past performance does not beget future success. [1]: https://www.theguardian.com/technology/2007/feb/08/business.comment https://www.theguardian.com/technology/2007/feb/08/business....
      - varjag 9y ago
        2007 was 11 years ago. That's glacial on tech timescale.
      - adventured 9y ago

syshum 9y ago

>and also enabling things like money laundering, drug trafficking, etc. And that is bad?

cgmg 9y ago

> (and also enabling things like money laundering, drug trafficking, etc.). If you're trying to take a dig at blockchain technology for its decentralized nature and ability to circumvent government controls, you should be aware that this is considered a good thing. See https://news.ycombinator.com/item?id=16702684 https://news.ycombinator.com/item?id=16702684, for instance. The recent SESTA/FOSTA debacle is one example of why such decentralized networks are needed.

dozzie 9y ago

> I think the fundamental assumption is that "Satoshi invented a useful solution to decentralized consensus". And this very assumption is so untrue. What Satoshi invented is document timestamping protocol, not consensus protocol.

nickbauman 9y ago

Aside from the fact that proof-of-work on a world scale utterly defies the CAP theorem, there has never been an economic system that can scale to the level of, say, one order of magnitude close to ubiquity where there are no trusted intermediaries. Human civilizations just won't organize this way.

elmar 9y ago

>(and also enabling things like money laundering, drug trafficking, etc.) "Darknet markets are no longer a major use of Bitcoin, accounting for less than 1% of Bitcoin transactions in 2017" https://blog.chainalysis.com/crypto-crime/ https://blog.chainalysis.com/crypto-crime/

rootusrootus 9y ago
Mainly because known markets were shut down (maybe some new ones have cropped up which are not in that tracker?) and the dominant use of bitcoin transactions currently is wild speculation.

wpietri 9y ago

> "Satoshi invented a useful solution to decentralized consensus". I think that even if decentralized consensus is workable, it's irrelevant for Wall Street projects because these organizations already have experience creating strong trust relationships and useful governance for collaboration (e.g., traditional contracts).

joering2 9y ago

> and also enabling things like money laundering, drug trafficking, etc. At this point, I don't worry about those; criminals would operate with or without Bitcoin and we have government agencies dealing with those; I'm more concern about suicide rate that will spike due to BTC/altcoins losing 80% of value. I have too many acquaintances on my Twitter that last summer were showing me "this cool blue app that helps make 15% a day" and now they remain silent. I tried to contact two of them via cell and it goes nowhere. Looking at BTC/ETH/altcoins charts, I can only image brain-halt it caused so many people that we putting second/third mortage on their house just to "invest in a blue iphone app" and many cashing out their 401k just to be lest with 5% of their money not even year later.

speedplane 9y ago

There is another, more social, assumption he is making: value that is stored on mathematical concepts (e.g., blockchain) is more appealing as value that is stored on more traditional concepts (e.g., reputation, trust). The social question is the more interesting one. Tech history has suggested that people slowly but surely gravitate to more open systems, but asking folks to hold their life savings in digital currencies that rely on mathamatical promises completly foreign to the average user seems like quite a stretch. It does not exactly help that just about day there is a news article of some new data breach of an online system.