14 ms·

Systems built on trust, norms, and institutions function better than blockchain

303 points by petethomas 9y ago

45h34jh53k4j 9y ago
No coiners. Its fine, we will listen to them protest for years and years, telling us it cant work, it isn't a real solution, etc, while we invent the future. This internet thing will never take off, you need a box that screeches, connected to your phone all day long! I can't even get faxes while im 'online'. Pointless.
- atomical 9y ago
  The early internet was shitty. No one is disputing that. Blockchain is also shitty, but the community doesn't know how to fix the problem.
- nathanaldensr 9y ago
  Your attempt to equivocate the internet (and its impact) and blockchain is laughable.
  - chrisco255 9y ago
    I wouldn't say it's equivalent, after all, blockchain is a layer on the internet. But it is common for people to underestimate the impact of technology in the long term. Just as the dot com bubble left people disillusioned with the internet as a platform for commerce, so too is the current state of blockchain. It will continue to evolve, it will continue to grow, and something will rise up and change commerce in a dramatic way. I'd argue that the industry has already come a long, long way and it still has a long, long way to go.
  - sp527 9y ago
    Don't spoil their fun. They've been riding that false analogy to the bank for over a year now.
- InclinedPlane 9y ago
  The internet was consistently useful year after year, and more so over time. Bitcoin has been around for almost a decade and has pivoted from being a decentralized currency to being a quasi-decentralized store of value amidst a classic speculative investment bubble. It has actually gotten increasingly less useful over time.
  - wk2jkhkjdfglsl 9y ago
    Yet, in general, more valuable, thus increasing in usefulness over time. 1 bitcoin in 2018 is objectively more useful than a 2010 bitcoin, as it has more buying power. So I would argue that any deflationary cryptocurrency will more likely be more useful over time as it has increased buying power. (But not necessarily value!)
    - InclinedPlane 9y ago
      That is such a silly and intellectually dishonest argument. The value of tulips in Feb. 1637 in Amsterdam was also quite high, but that didn't last, neither will bitcoin's valuations.
  - a_tractor 9y ago
    This argument would maybe start to make sense if Bitcoin was the only cryptocurrency, rather than only the first. Even then, it completely falls apart when you realize that "the internet" also was never about a single piece of technology, but an ecosystem of countless separately developed parts. >It has actually gotten increasingly less useful over time. Is just plain false.
- floatboth 9y ago
  https://davidgerard.co.uk/blockchain/2018/04/05/debunking-but-bitcoin-is-like-the-early-internet/ https://davidgerard.co.uk/blockchain/2018/04/05/debunking-bu...
tCfD 9y ago
Blockchain is actually a technological shadow cast by a sociological proposition, which is then you can trust people to voluntarily deprive themselves of leverage for the sake of the greater good. Blockchain is essentially a tool for measuring how much leverage different nodes have in a network system. All of the functional premises of blockchain depend on the assumption that the only leverage that exists in a blockchain network is that which can be represented by the various metrics exposed by the protocol. Obviously this is not the case, networks are often stacked with multiple layers, not all of which are visible to instrumentation, and many are deliberately hidden or informally created as the opportunity arises. Cliques form, whether by design or merely as a consequence of some underlying structure or geometric boundary domain, influence builds around them, and sooner or later someone finds the ideal geometric position from which they can become the center of decentralisation. This is essentially another instance of goodhart's law, which states that the moment any given metric becomes a useful target for optimization, it ceases to be a useful measurement. Or another variation of this same observation, the McNamara fallacy, which can be summed up as the belief that the only factors in a system that count, are those that can be counted.
drb91 9y ago
Shockingly, technology has multiple uses, some better fits than others. I think you’re crazy if you buy crypto unless you’re buying drugs, but this man’s lack of imagination wrt a no-trust public record is absolutely boring. Sure, if you’re blind, the world is dark. But we can always close our eyes to pretend—it’s never been difficult to be cynical about technology.
atomical 9y ago
Blockchain consensus algorithms are slow and use a lot of power. There may be competing technologies, like Hashgraph, that solve speed and power usage issues in the future. As of now all live implementations of blockchain are underwhelming.
- cgopalan 9y ago
  Not all. I think you are specifically talking about Bitcoin (Proof of Work)
  - atomical 9y ago
    What live implementations are using POS (Poof of Stake)? It's all academic and likely to be only marginally faster without a lot of risky optimizations.
    - MaxKK 9y ago
      Lisk, Nxt, Bitshares and dozens of others.
      - atomical 9y ago
        From what I'm reading Lisk only supports 25 transactions per second.
    - zepolen 9y ago
      Nano/Raiblocks. Mainnet has been pushed to 300tx/s - theoretical max is 7000tx/s - Wallets available for all platforms.
    - jholloway7 9y ago
      > Poof of Stake Is that what happens when you accidentally lock yourself out of your crypto wallet forever?
    - jsnider3 9y ago
      Ethereum will be switching soon.
kaolti 9y ago
One thing is sure, if you're hanging on to the past you'll always lose in the end. That's not to say blockchain is the be all and end all, but constantly hunting for arguments why something will never work , is not only terribly boring, but IMO the most counterproductive way to look at anything.
- maneesh 9y ago
  Thank you for saying this. I always try to find the words but you said it eloquently.
- bhouston 9y ago
  > One thing is sure, if you're hanging on to the past you'll always lose in the end. That does not seem to be a truism on the face of it. Some things change and some things stay the same. New or old is not clearly a winner, the world is more complex than that.
  - gethesmane 9y ago
    That does not seem to be a truism on the face of it. Agreed. It's actually quite empty, on the face of it.
  - ChristianGeek 9y ago
    If you don’t at least have a grip on the past, you’re destined to repeat its mistakes.
- toomuchtodo 9y ago
  > That's not to say blockchain is the be all and end all, but constantly hunting for arguments why something will never work , is not only terribly boring, but IMO the most counterproductive way to look at anything. I don't believe this is the same as discrediting solutions looking for problems. Blockchain proponents desire a technical fix to people problems. That is untenable, as people will always override software, whether that's through a courtroom, a government/regulatory body, or a fork based on majority consensus.
ty_a 9y ago
Blockchain is perfect for its original use case, a distributed trustless database. The tradeoffs don't make any sense for a trusted system, i.e. replacing SWIFT or storing titles to property.
- jeremyjh 9y ago
  All the evidence to date suggests that banks are much more capable of providing useful financial services than blockchains. Can you give a counter example of a real world use?
  - aianus 9y ago
    Depend on what you mean by financial services. For example, no bank can beat crypto in price for remitting ~$1k to Southeast Asia within a couple of hours. I spent years as a digital nomad and there was no traditional fiat solution that came close. I couldn't even find a traditional solution that beat crypto for converting ~$10k USD in the US to CAD in Canada (although I did have to write a script to do this via crypto and it sometimes took a few days for the markets to align favourably). On the other hand, I highly doubt blockchain is going to beat banks at their main business of being a middleman between savers and borrowers.
  - slededit 9y ago
    I moved from the US to Canada. Banks wanted to hold my transferred money for a month even though they got the cash within 3 days. with cryptocoins I wouldn't have had to move the money at all.
    - wsy 9y ago
      So why didn't you convert your USD to Bitcoins, move, then convert your Bitcoins back to CAD as you needed CAD?
      - slededit 9y ago
        I kept the money in kind. It was merely transferred from bank to bank. FWIW I kept my BTC in kind as well.
nautilus12 9y ago
Another y-combinator contrarian post of the form "the thing everyone likes is actually crap." Fortunately for the author I happen to agree with this particular thesis.
- taylored 9y ago
  "contrarian"
gtrubetskoy 9y ago
The problem that proof-of-work blockchain solves is widely misunderstood. It uses proof-of-work to establish consensus over points in time which are universally unique. Prior to the publication of Satoshi's paper we did not have a solution to this problem and for that reason it is a significant advance in technology. I wouldn't call it crappy, it's actually quite brilliant. For a detailed description see this: https://grisha.org/blog/2018/01/23/explaining-proof-of-work/ https://grisha.org/blog/2018/01/23/explaining-proof-of-work/
- holtalanm 9y ago
  > Prior to the publication of Satoshi's paper we did not have a solution to this problem what was the problem that this solved, exactly?
  - bllguo 9y ago
    there's literally a link in the comment. Show some effort please..
    - jeremyjh 9y ago
      Imagine a few different personas, such as investment banker, retail store owner, and soccer mom. Then complete the following sentence: I need a decentralized time ordered log so that I can ...
      - slededit 9y ago
        Imagine playing that game in the 1950s about computers. IBM thought there was a market for maybe 5.
      - kaistinchcombe 9y ago
        People say that a lot about the internet – that nobody knew what it would be useful for at the time it was invented. It had MORE uses than originally foreseen (same as computers) but one of the internet pioneers chimed in on the comments thread to the first article saying that actually they did know exactly why they built the internet at the time they built it: they wanted a better way to send messages and share files, so they built one, and the day it was built it was the best way in the world to do that. Same with IBM - scope wasn't foreseen, but those machines were the best in the world for the purposes they were designed for. But the myth that people create amazing technology that has no use (TCP/IP, the computer), and then a decade later people discover what it's useful for, is just that: a myth.
kixiQu 9y ago
Wow--it's both amazing to me and yet deeply unsurprising that the comments here so far seem to ignore the thrust of the article. Well, whatever--I like how it makes explicit the political theses embedded in current discussion of an "apolitical" technology.
tshannon 9y ago
I agree that it'll be hard, if not impossible for bitcoin to work as well as normal systems built on normal trust. However I think we increasingly do need some system of verifiable trust in a world where anonymity is common, since all current forms of trust require it's participants to not be anonymous.
AlexCoventry 9y ago
> I would assert that there is no single person in existence who had a problem they wanted to solve, discovered that an available blockchain solution was the best way to solve it, and therefore became a blockchain enthusiast. He hasn't been paying attention to the space long enough: Many traders in contraband meet that description, and used to talk about it at length in r/darknetmarkets, before it was banned. (BTW, does anyone know where they hang out, now?)
- floatboth 9y ago
  Contraband markets, ransomware authors, and scammers. The world is wasting power on hashing to support that.
  - AlexCoventry 9y ago
    The consensus doesn't have to be based on PoW. Almost all interesting cryptocurrencies (well, interesting to me) use or plan to use proof-of-share mechanisms. Check out Algorand, for instance: https://www.algorand.com/how-it-works/ https://www.algorand.com/how-it-works/
  - m00nfish 9y ago
    Clearly the scions of a new age!
- eridius 9y ago
  Contraband traders don't care about a blockchain. They just want untraceable un-reversable monetary transactions. Of course, it turns out bitcoin isn't exactly untraceable.
EGreg 9y ago
I actually like the way this author deconstructs what a blockchain technically is and how it’s sold. And I agree on many points. However, this is where they go awry: Instead of relying on trust or regulation, in the blockchain world, individuals are on-purpose responsible for their own security precautions. THIS is the revolution. And the revolution will not be centralized :) Blockchains are just one example of it. Kademlia trees and close consensus is another, used by SAFE network. Go look it up. The whole POINT is, it is very hard not just for someone to tamper with a file, but to cut off access to it. Crypto-currencies also have the added requirement of preventing “double-spending”, which is very hard to do. EXAMPLE: Why trust the landlord to have keys to open your apartment instead of an electronic lock that lets you set permissions YOURSELF? Use your phone to authenticate yourself instead of facebook controlling it. “Oh what if I lose the phone?” “Then have a backup.” “What if I lose everything?” “Then have M of N friends plus a key derived from a passphrase you know to restore it.” “Ok what about if I get amnesia and lose my phone?” “This is 0.00001% of the population and even Jason Bourne implanted a chip in his own ass.” This guy doesn’t live in a country where the institutions people rely on have routinely screwed people. The solution is usually “throw more Democracy at it”, which is what can lead to totalitarianism. Ever read “fuck the cloud”? It’s a good read. Why SHOULD I pay someone I don’t know to store all my files, and delete my local copies? http://ascii.textfiles.com/archives/1717 http://ascii.textfiles.com/archives/1717 Have you all seen just recently what Facebook does? Why would I entrust my data, identity and brand to them? Have we seen websites censored or DDOSed? Or just broken links to useful stuff? SAFE network and Freenet etc. are the decentralized future. I agree that Blockchain is only a small part of the future. Blockchains with one writer are, for example Scuttlebutt. Super resilient. I also agree that there is no viable medium of exchange that’s fast and cheap for everyday transactions because the way blockchains currently work, they need a global consensus about every friggin transaction. That doesn’t scale. That’s why we launched intercoin.org If you want to see more about this topic, I just wrote about it: https://qbix.com/blog https://qbix.com/blog
- nmeofthestate 9y ago
  >This guy doesn’t live in a country where the institutions people rely on have routinely screwed people. True, but his argument is that the actual fix (that would work) is to fix such dysfunctional countries so they are functional, rather than downgrading everywhere to a Somalia level of trust with blockchain as the techno solution.
stale2002 9y ago
> I would assert that there is no single person in existence who had a problem they wanted to solve, discovered that an available blockchain solution was the best way to solve it What about Wikileaks? They had all their payments shutdown and then they were able to start accepting payments. The "use case" for Bitcoin was stated up front. It is to allow censorship resistant transactions. And for Wikileaks in 2010, when their financial transactions were being censored, it worked!
- cinquemb 9y ago
  I think skeptics of cryptocurrency get too focused on applying cases where their traditional banking systems serve them well, rather than how such systems do not serve marginal actors very well (or at all, for whatever reasons). Cryptocurrencies don't need to appeal to mass market users who are already happy with what they have. Appeals to legality (without stating jurisdictions or enforcibility), cries of rampant speculation (without acknowledging how much speculation already occurs in many kinds of markets and financial instruments), doesn't really matter to those who are now enabled to do something in a way that they couldn't before. People using cryptocurrencies today to engage in various forms of trade valuable to each other, don't care what people on the sidelines think.
lev99 9y ago
I read the bitcoin whitepaper about 7 years ago. I find it funny when people talk about blockchain like it's new technology, or like it's a vision for future. It's old tech that has been generally increasing in market value.
- xtracto 9y ago
  Exactly, Blockchain is now 10 year old technology, with a lot of implementations and technologies built over it. TCP has its root in 1974 technology [1], and it was not until the early 90's that it started showing its potential. The key to Blockchain technolgoy is the proposal of what it can solve (trusted transactions in a trustless environment). I like to see Blockchain as TCP/IP: It is going to be the foundation of bigger and more "user friendly" protocols and systems. (golem.network, storj, filecoin, eos). At some point we will get the "HTTP" of Blockchain, and over that, we will start having the "Google"s and "Amazon"s spawning as well. But if you think that, it took Amazon 20 years (1994) before TCP was "invented"... then the timing for Blockchain technology is going quite well. [1] https://web.archive.org/web/20160304150203/http://ece.ut.ac.ir/Classpages/F84/PrincipleofNetworkDesign/Papers/CK74.pdf https://web.archive.org/web/20160304150203/http://ece.ut.ac....
localhost3000 9y ago
"Instead of relying on trust or regulation, in the blockchain world, individuals are on-purpose responsible for their own security precautions. And if the software they use is malicious or buggy, they should have read the software more carefully." This is also one of the aspects of "the blockchain" that I struggle with. I don't think normal people want this or should be expected to do this effectively. And once you outsource the security (which most everyone will because it's the rational choice, e.g. Coinbase is better at protecting your crypto than you are, John Q Public.) you're no longer in a "trustless" state. The "trustless" pipe-dream (in the consumer use case) all sort of unravels from there for me.
- tCfD 9y ago
  In Trust we trust!
  - achileas 9y ago
    Trust, LLC, a subsidiary of Koch Industries and Union Carbide
    - webmaven 9y ago
      Seems like it would be useful to have norms and regulations against overly centralized control of such an important enabling technology. If you'll forgive me coining (see what I did there?) a couple of neologisms, we could call this class of regulations "anti-trust" and their enforcement "trust-busting".
- celticninja 9y ago
  I think that putting some responsibility for security on the user is a good idea. All too often users are lax with security and don't realise the impact that has, say when their credentials are used to access a system illegally because they used the password "password", or poor security on their own PC sees it become part of a botnet. If you don't take security seriously when dealing with cryptocurrency then you can be taught a very personal and expensive lesson in no time at all.
- 9y ago
blueprint 9y ago
Why is it that whenever this guy says something's wrong with "blockchain", every example he gives is about something other than a blockchain? Like exchanges and smart contracts. Those are not the same thing as Bitcoin and Monero.
ruduhudi 9y ago
I think he is absolutely right about his dystopian view on smart contracts managing stuff but forgets about that one trusted party we're trying to avoid the most here, that costs us the most money and that we need the least in real life: Banks. That's what we neet the blockchain for.
- Barrin92 9y ago
  I never understood that sentiment. What exactly is bad about banks? Banks are a trusted middle-man that controls, insures and manages my transactions, and in contrast to arcane technological blockchain solutions is actually a legally liable entity. I also don't understand how banks cost me more money than bitcoin. A bank transaction costs me very little to no money, a crypto-currency transaction is extremely expensive.
  - jstarfish 9y ago
    For better or worse, banks are treated like the Ticketmaster of the financial industry. The new-age solution to this seems to be sticking it to them by conducting all your business with scalpers.
mattdemon 9y ago
Relevant article. Replying to why decentralization matters http://muratbuffalo.blogspot.com/2018/03/change-my-mind-about-why.html http://muratbuffalo.blogspot.com/2018/03/change-my-mind-abou...
api 9y ago
I think the author of this article is making an either/or argument about centralized vs. decentralized trust when this can just as easily be a both/and proposition. Cryptocurrencies have not yet eliminated and may never eliminate the need for centralized reputation based systems of trust. Centralized trusted systems are more efficient for reasons that may be fundamental and rooted in physics and math, and they can do things that no current generation decentralized system can do. Complex secure computations that are cheap to perform on a server are massively expensive on a block chain or other distributed system. Yet what cryptocurrencies do offer is a system that levels the playing field between trusted entities and allows a once-trusted but now corrupt entity to be replaced without completely ditching the entire system. That's not true of things like centrally banked fiat currencies. If the current US financial system becomes irredeemably corrupt, this can't really be fixed without risking the destruction of the dollar and all assets and contracts denominated in dollars. A new dark age is a very high price to pay for the replacement of a corrupt or incompetent system. I think an argument can be made that replacement of institutions will always be necessary at some point. As institutions become large their size insulates them from reality, allowing something like "genetic drift" to occur that gradually erodes their competence. Combine this with the fact that psychopaths gravitate toward positions of power and you have a general tendency of large powerful systems toward decay and corruption over time. We saw a very concrete example of this in 2008 when banking institutions that had failed badly due to a mixture of incompetence, hubris, and corruption received a blank-check bailout on the backs of taxpayers and the rest of the non-financial economy. It is no coincidence that cryptocurrency went mainstream right after this, since these events demonstrated the need to start thinking about ways to devolve power away from these systems or at least to reduce the cost of doing so. Side note: I think we've officially entered the cryptocurrency / block chain trough of disillusionment. See: https://en.wikipedia.org/wiki/Hype_cycle https://en.wikipedia.org/wiki/Hype_cycle
cvaidya1986 9y ago
It’s going to be interesting reading these articles ten years from now.
- coldtea 9y ago
  It's already interesting reading articles about how Bitcoin would be dominating already by now written several years ago... Are we going to wait much longer for the Rapture?
  - cvaidya1986 9y ago
    https://www.bloomberg.com/news/articles/2018-04-06/george-soros-prepares-to-trade-cryptocurrencies-as-prices-plunge https://www.bloomberg.com/news/articles/2018-04-06/george-so...
    - coldtea 9y ago
      Yeah, that proves bitcoin's bright future /s
      - cvaidya1986 9y ago
        Wealthy investors trading in the market is an indicator out of several indicators to consider.
phasnox 9y ago
Gotta love how he begins saying he was bashing the tech in December(when the market was on the rise) just so that no one can tell him "everyone bashes bitcoin when it's going down". Venmo is centralized. I cannot use it as I live in a third world county with no access to it. Paypal sucks. It takes 5% from the seller and it has power over your money, they can(AND HAVE IN THE PAST) seize it whenever they want. I had my salary confiscated once over a mistake in the bank. I telecomute, working for a company overseas, and the fees are stupidly high. I find your lack of vision disturbing.
- fhood 9y ago
  You know, paypal may well suck. I have never used it as a developer or a seller, but I really, really, like to have it as an option when I am purchasing something from some rinky dink website that doesn't look like it has been updated int 10 years.
  - phasnox 9y ago
    Yeahp it sucks for the seller mostly.
  - aianus 9y ago
    Sucks for the buyer too. Ever tried to use PayPal (or credit cards for that matter) to buy something from the US with a Canadian shipping address while you're living in Vietnam with a Vietnamese IP address? I did; I got fraud blocked.
    - fhood 9y ago
      Haha, no, I am one of those annoyingly generic users. But honestly I kind of expect them to block that. That seems pretty suspicious at first glance.
      - webmaven 9y ago
        Why suspicious? Simply because it is out of the ordinary? Fraud detection systems basically have most of their feedback mechanisms geared toward reducing - even eliminating - false negatives, and very little attention comparatively given to false positives as long as no individual merchant notices a measurable drop in sales. Meanwhile, a hapless individual might have many of their purchase attempts foiled as false positives, and be left with little to no recourse (well, I suppose their complaint on Twitter may go viral, that does seem to work occasionally with ebay).
he0001 9y ago
This article highlight a really interesting point here: Trust. And even if there are the “proof-of-work” people are going to distrust that “it’s a mathematical proof”. Just look at Trumps alt-facts and “fake news”. You don’t need to go even that far to find people putting money under the mattress because they distrust authorities. And even if math is “universal” people are going to mistrust it because they don’t understand it. I don’t think they will ever trust bitcoin. And I think they are in a majority.
- webmaven 9y ago
  And when the mattresses are being stuffed with fiat currency, the utter lack of cognitive dissonance becomes striking. To a lesser degree, the same goes for "keep the government out of my Medicare".
cowpig 9y ago
> Venmo is a free service to transfer dollars, and bitcoin transfers are not free Venmo is not free. There's a cost, it's just hiding. > Blockchain-based trustworthiness falls apart in practice... The particular brand of trustworthiness the author is arguing against is indeed a myth, but that doesn't mean blockchain is "crappy technology" or "a bad vision for the future" Blockchain adds a new thing to the world: digital property that cannot be reproduced for free. Smart contracts add another new thing to the world: the ability to build immutable software that interacts directly with the financial system. Both of these ideas are very powerful, and almost all of the interesting blockchain projects are still in the R&D phase. The hype around blockchain is ridiculous and absurd, but that doesn't mean the technology isn't exciting or potentially transformative. edit: I actually wrote an article about the "trustlessness" thing: http://cowpig.github.io/bitcoin/ethereum/poker/cryptocurrency/trust/economics/game-theory/2018/01/29/Trustless-Myth/ http://cowpig.github.io/bitcoin/ethereum/poker/cryptocurrenc...
- landryraccoon 9y ago
  > Venmo is not free. There's a cost, it's just hiding. What's that now?
  - gshulegaard 9y ago
    * 3% fee for processing credit cards * Platform play where the first stage is to amass users and then use that audience to sell to businesses (https://www.theatlantic.com/business/archive/2017/07/venmo-makes-money-banks/533946/ https://www.theatlantic.com/business/archive/2017/07/venmo-m...) And I always assumed that the short delay for transferring money out of Venmo allowed them to eek a small margin against the time value of money somewhat similar to Robinhood (https://www.investopedia.com/articles/active-trading/020515/how-robinhood-makes-money.asp https://www.investopedia.com/articles/active-trading/020515/...)...but I don't know for sure.
    - tptacek 9y ago
      It is a lot easier to avoid paying a fee on Venmo than it is to use a cryptocurrency to send money to someone: just don't use a credit card.
deleted 9y ago
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sametmax 9y ago
The TL;DR is: - blockchain systems still need trust; - security is not solved; - blockchains are overhyped and most followers don't want it for the problems serious actors try to use it to solve. - it has many issues (need for infra, require tech knowhow, etc) I agree, but I still don't see how it's crapy tech, nor how it's a bad vision of the future. You have an system that make auditing easier, with one place only for the data to be read and written and yet robust enough because of the duplication. You have transactions logs tided to identities you can fake organised in a timeline in an open format that is not only very well documented, but being actively tested right now on the field. You have hundreds of start up engage in a Darwinism race to find out which use case we can make that's worth it on the long run. And finally, the tech has enough impact to force state actors to create new laws, financial actors to adapt and a huge amount of money to be invested by a lot of people. So on one hand one very interesting concept. On the other hand, pretty much hate for the sake of hate.
Kiro 9y ago
HN seems to have a bipolar relationship with decentralization. It's all love until blockchain is mentioned. Then everyone thinks centralization is superior.
RIMR 9y ago
>In fact, I would assert that there is no single person in existence who had a problem they wanted to solve, discovered that an available blockchain solution was the best way to solve it, and therefore became a blockchain enthusiast. I would say that every person running a darkweb drug market would disagree...
- jstarfish 9y ago
  Blockchain isn't necessary for that. All you need are some shitty PHP pages behind a Tor hidden service and an escrow agent to facilitate transactions. The currency doesn't matter and it certainly doesn't have to be Bitcoin-- prepaid Visa cards work just as well, and are more anonymous than Bitcoin anyway.
yk 9y ago
A few month ago I clicked through quite a few youtube [0] lectures on "system dynamics," the 1960ies hype technology, and the people who did system dynamics back then are entirely reasonable, well aware of its limitations and the applications are very interesting, but their work got completely drowned in bullshit. Very similar to "the Internet" in the late 90ies, "web 2.0" in the early 2000nds and block chain today. So block chain is a really cool algorithm, that under ideal conditions can solve the Byzantine Generals problem, but there is at the moment just so incredible much bullshit surrounding blockchains, that it is sometimes hard to separate the wheat from the chaff. [0] https://www.reddit.com/r/lectures/comments/7jtg5e/dennis_meadows_perspectives_on_the_limits_of/ https://www.reddit.com/r/lectures/comments/7jtg5e/dennis_mea... r/lectures thread, see the videos linked in the comments.
aalleavitch 9y ago
In many ways, blockchain tech is the stupidest thing that has ever existed. It is a colossal monument to the inefficiency of human behavior. You are literally throwing energy and immensely valuable computation time out of a window simply because people can't trust each other. It is a massive sink for the destructively self-interested behavior of mankind. The problems that blockchains are trying to solve are not inherent difficulties involved in the tasks that they're being applied towards, they're problems with us. We can design an astronomically more efficient system for accounting, but it would be have to be one that is not being run by stupid, short-sighted apes. The entire overhead of the blockchain is devoted to dealing with a problem that we shouldn't even have, the whole thing is basically made of market failure. If there's any value in it, it's that we can use it to establish objective metrics for just how much value is destroyed by human irrationality and information deficits. We don't need to fix centralized accounting, centralized accounting works fine. We need to fix human beings. Meanwhile, imagine if every GPU used for mining right now was being used for training neural nets instead. The value in that is nearly unimaginable; we could be making massive leaps in almost every field and industry, because the applications of deep learning to making tasks marginally more efficient are essentially endless.
- mido22 9y ago
  FYI: when you talk about GPU/mining/energy, you are talking about Proof of Work (pow) and not blockchain. You can look up about Proof of Stake among other ways for consensus
  - mido22 9y ago
    While you are at it, you can also read up about "triple ledger accounting"
    - mkirklions 9y ago
      I looked this up, what is your point(if you dont mind)? It seems like a feature with ~0 benefits. Can you explain?
abalone 9y ago
If you love this you should also follow @sarahjeong. Hilariously eviscerates cryptocurrencies for sport.[1] Smart (Cal + Harvard law), unafraid and one of the best up-and-coming tech journalists IMHO. [1] https://twitter.com/sarahjeong/status/953419544516747264 https://twitter.com/sarahjeong/status/953419544516747264
antiffan 9y ago
I'm seeing more of these "anti-blockchain" criticisms circulating lately. This one makes valid points about problems with the present state of the ecosystem, but the author seems to ignore the fact that these problems are addressable. His basic criticism of smart contracts is they can have bugs, and they can be costly since they will often involve moving money. Yes, this is a fact. Many potential solutions are out there, but how about these two ideas for starters: - a crypto-currency where at least accounts for certain transactions can be de-anonymized, so a person can be identified and face consequences when they commit a crime like hacking. - special transactions with settlement periods in which they can be canceled in the event of a hack, which might be identified by voter consensus.
l8again 9y ago
I honestly thought the author was trolling us (until I read the comments). There are so many holes in his example of ebook transaction. Here's just the two points he made that were the most egregious to me: >> and that the book — rather than some other file, or nothing at all — will actually arrive Really? Ever heard of checksums - its used all over the place. And if we weren't able to trust it, I guarantee you that blockchain tech is not the only thing that will break. >> It’s a complicated way to buy a book! It’s not trustless, you’re trusting in the software (and your ability to defend yourself in a software-driven world), instead of trusting other people It's like arguing with my grandma about evolution. "But you are trusting the scientists!!". I don't know where to begin.
- eridius 9y ago
  How are you supposed to checksum the book before you have it? You can't do that without trust, because you need to trust someone to give you the right checksum.
  - webmaven 9y ago
    Not quite that dire: The checksum is typically public, where a large set of diverse stakeholders (most of which have incentives aligned with yours) can publically dispute it's veracity, increasing the costs of fraud. Moreover, some of those stakeholders may already be part of your existing circle of trust (either directly or transitively), which increases uncertainty for fradulent sellers.
    - eridius 9y ago
      Name me a single eBook you've purchased where the checksum for the eBook was public.
deleted 9y ago
[deleted]
ecocentrik 9y ago
Blockchains are accounting mechanisms. In their simplest form, blockchains are just a linked list of linked lists that that fulfill the requirements of an easily immutable, distributed and auditable system of accounts. I'm not sure how the author is attributing so much doom and gloom to cryptographically secured accounting systems, some of which have survived for a decade without a major failure of their primary function (securing digital assets with enforceable contractual conditions and private keys).
jiveturkey 9y ago
stopped reading after the intro. this is a guy who is a self-proclaimed luddite and who likes to hear the sound of his own prophetic voice. i love how he emphasized his own words in a “callout”, immediately after the inline text. magazine style. sensible in magazine format. but in a blog? puh-leez. his opinion is not worth debating, even if there is a kernel of truth there.
lcooper 9y ago
The blockchain is not currently fit for most "real world problems", because the way it achieves consensus and performance, but there are initiatives like the one below to change that: https://github.com/Azure/coco-framework https://github.com/Azure/coco-framework
laktek 9y ago
As someone born and lived in a 3rd world country for a better part of my life, I believe Blockchain solves a very real problem. That's equal participation in internet economy irrespective of someone's geographic location. It was thanks to the internet I realized I can also contribute to the world (by creating something people want & writing about something others want to learn). However, when it came to making a living out of that there weren't many options. One of the prime motives for me to move out of Sri Lanka was it will be way easier for me to accept payments online. PayPal is still not available in Sri Lanka, even after repeated attempts to convince Central Banks and governments [1]. Also, recently Stripe blocked a payment from one of my customers due to high-risk profile. Reason? He used a US issued debit card from Nigeria. I reached out to the person, turns out he was a passionate young entrepreneur who was trying to build a really interesting business. But his geographic location becomes a resistance in a medium it shouldn't. For me, Blockchain( and Cryptocurrencies) is a reframing of the trust model from heuristics such as geographic location to verifiable algorithms. The Internet protocols enabled us to exchange code, art & virtual goods without geographic boundaries. Then why not money? [1] https://www.change.org/p/enable-receiving-money-to-sri-lanka-through-paypal https://www.change.org/p/enable-receiving-money-to-sri-lanka...
tim333 9y ago
The feature of things like bitcoin that they operate largely outside government control may be useful for things like raising investment in ICOs. While many are rubbish there may be some useful stuff in there.

303 points by petethomas 9y ago

No coiners. Its fine, we will listen to them protest for years and years, telling us it cant work, it isn't a real solution, etc, while we invent the future. This internet thing will never take off, you need a box that screeches, connected to your phone all day long! I can't even get faxes while im 'online'. Pointless.

atomical 9y ago
The early internet was shitty. No one is disputing that. Blockchain is also shitty, but the community doesn't know how to fix the problem.
nathanaldensr 9y ago
Your attempt to equivocate the internet (and its impact) and blockchain is laughable.
- chrisco255 9y ago
  I wouldn't say it's equivalent, after all, blockchain is a layer on the internet. But it is common for people to underestimate the impact of technology in the long term. Just as the dot com bubble left people disillusioned with the internet as a platform for commerce, so too is the current state of blockchain. It will continue to evolve, it will continue to grow, and something will rise up and change commerce in a dramatic way. I'd argue that the industry has already come a long, long way and it still has a long, long way to go.
- sp527 9y ago
  Don't spoil their fun. They've been riding that false analogy to the bank for over a year now.
InclinedPlane 9y ago
The internet was consistently useful year after year, and more so over time. Bitcoin has been around for almost a decade and has pivoted from being a decentralized currency to being a quasi-decentralized store of value amidst a classic speculative investment bubble. It has actually gotten increasingly less useful over time.
- wk2jkhkjdfglsl 9y ago
  Yet, in general, more valuable, thus increasing in usefulness over time. 1 bitcoin in 2018 is objectively more useful than a 2010 bitcoin, as it has more buying power. So I would argue that any deflationary cryptocurrency will more likely be more useful over time as it has increased buying power. (But not necessarily value!)
  - InclinedPlane 9y ago
    That is such a silly and intellectually dishonest argument. The value of tulips in Feb. 1637 in Amsterdam was also quite high, but that didn't last, neither will bitcoin's valuations.
- a_tractor 9y ago
  This argument would maybe start to make sense if Bitcoin was the only cryptocurrency, rather than only the first. Even then, it completely falls apart when you realize that "the internet" also was never about a single piece of technology, but an ecosystem of countless separately developed parts. >It has actually gotten increasingly less useful over time. Is just plain false.
floatboth 9y ago
https://davidgerard.co.uk/blockchain/2018/04/05/debunking-but-bitcoin-is-like-the-early-internet/ https://davidgerard.co.uk/blockchain/2018/04/05/debunking-bu...

tCfD 9y ago

Blockchain is actually a technological shadow cast by a sociological proposition, which is then you can trust people to voluntarily deprive themselves of leverage for the sake of the greater good. Blockchain is essentially a tool for measuring how much leverage different nodes have in a network system. All of the functional premises of blockchain depend on the assumption that the only leverage that exists in a blockchain network is that which can be represented by the various metrics exposed by the protocol. Obviously this is not the case, networks are often stacked with multiple layers, not all of which are visible to instrumentation, and many are deliberately hidden or informally created as the opportunity arises. Cliques form, whether by design or merely as a consequence of some underlying structure or geometric boundary domain, influence builds around them, and sooner or later someone finds the ideal geometric position from which they can become the center of decentralisation. This is essentially another instance of goodhart's law, which states that the moment any given metric becomes a useful target for optimization, it ceases to be a useful measurement. Or another variation of this same observation, the McNamara fallacy, which can be summed up as the belief that the only factors in a system that count, are those that can be counted.

drb91 9y ago

Shockingly, technology has multiple uses, some better fits than others. I think you’re crazy if you buy crypto unless you’re buying drugs, but this man’s lack of imagination wrt a no-trust public record is absolutely boring. Sure, if you’re blind, the world is dark. But we can always close our eyes to pretend—it’s never been difficult to be cynical about technology.

atomical 9y ago

Blockchain consensus algorithms are slow and use a lot of power. There may be competing technologies, like Hashgraph, that solve speed and power usage issues in the future. As of now all live implementations of blockchain are underwhelming.

cgopalan 9y ago
Not all. I think you are specifically talking about Bitcoin (Proof of Work)
- atomical 9y ago
  What live implementations are using POS (Poof of Stake)? It's all academic and likely to be only marginally faster without a lot of risky optimizations.
  - MaxKK 9y ago
    Lisk, Nxt, Bitshares and dozens of others.
    - atomical 9y ago
      From what I'm reading Lisk only supports 25 transactions per second.
  - zepolen 9y ago
    Nano/Raiblocks. Mainnet has been pushed to 300tx/s - theoretical max is 7000tx/s - Wallets available for all platforms.
  - jholloway7 9y ago
    > Poof of Stake Is that what happens when you accidentally lock yourself out of your crypto wallet forever?
  - jsnider3 9y ago
    Ethereum will be switching soon.

kaolti 9y ago

One thing is sure, if you're hanging on to the past you'll always lose in the end. That's not to say blockchain is the be all and end all, but constantly hunting for arguments why something will never work , is not only terribly boring, but IMO the most counterproductive way to look at anything.

maneesh 9y ago
Thank you for saying this. I always try to find the words but you said it eloquently.
bhouston 9y ago
> One thing is sure, if you're hanging on to the past you'll always lose in the end. That does not seem to be a truism on the face of it. Some things change and some things stay the same. New or old is not clearly a winner, the world is more complex than that.
- gethesmane 9y ago
  That does not seem to be a truism on the face of it. Agreed. It's actually quite empty, on the face of it.
- ChristianGeek 9y ago
  If you don’t at least have a grip on the past, you’re destined to repeat its mistakes.
toomuchtodo 9y ago
> That's not to say blockchain is the be all and end all, but constantly hunting for arguments why something will never work , is not only terribly boring, but IMO the most counterproductive way to look at anything. I don't believe this is the same as discrediting solutions looking for problems. Blockchain proponents desire a technical fix to people problems. That is untenable, as people will always override software, whether that's through a courtroom, a government/regulatory body, or a fork based on majority consensus.

ty_a 9y ago

Blockchain is perfect for its original use case, a distributed trustless database. The tradeoffs don't make any sense for a trusted system, i.e. replacing SWIFT or storing titles to property.

jeremyjh 9y ago
All the evidence to date suggests that banks are much more capable of providing useful financial services than blockchains. Can you give a counter example of a real world use?
- aianus 9y ago
  Depend on what you mean by financial services. For example, no bank can beat crypto in price for remitting ~$1k to Southeast Asia within a couple of hours. I spent years as a digital nomad and there was no traditional fiat solution that came close. I couldn't even find a traditional solution that beat crypto for converting ~$10k USD in the US to CAD in Canada (although I did have to write a script to do this via crypto and it sometimes took a few days for the markets to align favourably). On the other hand, I highly doubt blockchain is going to beat banks at their main business of being a middleman between savers and borrowers.
- slededit 9y ago
  I moved from the US to Canada. Banks wanted to hold my transferred money for a month even though they got the cash within 3 days. with cryptocoins I wouldn't have had to move the money at all.
  - wsy 9y ago
    So why didn't you convert your USD to Bitcoins, move, then convert your Bitcoins back to CAD as you needed CAD?
    - slededit 9y ago
      I kept the money in kind. It was merely transferred from bank to bank. FWIW I kept my BTC in kind as well.

nautilus12 9y ago

Another y-combinator contrarian post of the form "the thing everyone likes is actually crap." Fortunately for the author I happen to agree with this particular thesis.

taylored 9y ago
"contrarian"

gtrubetskoy 9y ago

The problem that proof-of-work blockchain solves is widely misunderstood. It uses proof-of-work to establish consensus over points in time which are universally unique. Prior to the publication of Satoshi's paper we did not have a solution to this problem and for that reason it is a significant advance in technology. I wouldn't call it crappy, it's actually quite brilliant. For a detailed description see this: https://grisha.org/blog/2018/01/23/explaining-proof-of-work/ https://grisha.org/blog/2018/01/23/explaining-proof-of-work/

holtalanm 9y ago
> Prior to the publication of Satoshi's paper we did not have a solution to this problem what was the problem that this solved, exactly?
- bllguo 9y ago
  there's literally a link in the comment. Show some effort please..
  - jeremyjh 9y ago
    Imagine a few different personas, such as investment banker, retail store owner, and soccer mom. Then complete the following sentence: I need a decentralized time ordered log so that I can ...
    - slededit 9y ago
      Imagine playing that game in the 1950s about computers. IBM thought there was a market for maybe 5.
    - kaistinchcombe 9y ago
      People say that a lot about the internet – that nobody knew what it would be useful for at the time it was invented. It had MORE uses than originally foreseen (same as computers) but one of the internet pioneers chimed in on the comments thread to the first article saying that actually they did know exactly why they built the internet at the time they built it: they wanted a better way to send messages and share files, so they built one, and the day it was built it was the best way in the world to do that. Same with IBM - scope wasn't foreseen, but those machines were the best in the world for the purposes they were designed for. But the myth that people create amazing technology that has no use (TCP/IP, the computer), and then a decade later people discover what it's useful for, is just that: a myth.

kixiQu 9y ago

Wow--it's both amazing to me and yet deeply unsurprising that the comments here so far seem to ignore the thrust of the article. Well, whatever--I like how it makes explicit the political theses embedded in current discussion of an "apolitical" technology.

tshannon 9y ago

I agree that it'll be hard, if not impossible for bitcoin to work as well as normal systems built on normal trust. However I think we increasingly do need some system of verifiable trust in a world where anonymity is common, since all current forms of trust require it's participants to not be anonymous.

AlexCoventry 9y ago

> I would assert that there is no single person in existence who had a problem they wanted to solve, discovered that an available blockchain solution was the best way to solve it, and therefore became a blockchain enthusiast. He hasn't been paying attention to the space long enough: Many traders in contraband meet that description, and used to talk about it at length in r/darknetmarkets, before it was banned. (BTW, does anyone know where they hang out, now?)

floatboth 9y ago
Contraband markets, ransomware authors, and scammers. The world is wasting power on hashing to support that.
- AlexCoventry 9y ago
  The consensus doesn't have to be based on PoW. Almost all interesting cryptocurrencies (well, interesting to me) use or plan to use proof-of-share mechanisms. Check out Algorand, for instance: https://www.algorand.com/how-it-works/ https://www.algorand.com/how-it-works/
- m00nfish 9y ago
  Clearly the scions of a new age!
eridius 9y ago
Contraband traders don't care about a blockchain. They just want untraceable un-reversable monetary transactions. Of course, it turns out bitcoin isn't exactly untraceable.

EGreg 9y ago

I actually like the way this author deconstructs what a blockchain technically is and how it’s sold. And I agree on many points. However, this is where they go awry: Instead of relying on trust or regulation, in the blockchain world, individuals are on-purpose responsible for their own security precautions. THIS is the revolution. And the revolution will not be centralized :) Blockchains are just one example of it. Kademlia trees and close consensus is another, used by SAFE network. Go look it up. The whole POINT is, it is very hard not just for someone to tamper with a file, but to cut off access to it. Crypto-currencies also have the added requirement of preventing “double-spending”, which is very hard to do. EXAMPLE: Why trust the landlord to have keys to open your apartment instead of an electronic lock that lets you set permissions YOURSELF? Use your phone to authenticate yourself instead of facebook controlling it. “Oh what if I lose the phone?” “Then have a backup.” “What if I lose everything?” “Then have M of N friends plus a key derived from a passphrase you know to restore it.” “Ok what about if I get amnesia and lose my phone?” “This is 0.00001% of the population and even Jason Bourne implanted a chip in his own ass.” This guy doesn’t live in a country where the institutions people rely on have routinely screwed people. The solution is usually “throw more Democracy at it”, which is what can lead to totalitarianism. Ever read “fuck the cloud”? It’s a good read. Why SHOULD I pay someone I don’t know to store all my files, and delete my local copies? http://ascii.textfiles.com/archives/1717 http://ascii.textfiles.com/archives/1717 Have you all seen just recently what Facebook does? Why would I entrust my data, identity and brand to them? Have we seen websites censored or DDOSed? Or just broken links to useful stuff? SAFE network and Freenet etc. are the decentralized future. I agree that Blockchain is only a small part of the future. Blockchains with one writer are, for example Scuttlebutt. Super resilient. I also agree that there is no viable medium of exchange that’s fast and cheap for everyday transactions because the way blockchains currently work, they need a global consensus about every friggin transaction. That doesn’t scale. That’s why we launched intercoin.org If you want to see more about this topic, I just wrote about it: https://qbix.com/blog https://qbix.com/blog

nmeofthestate 9y ago
>This guy doesn’t live in a country where the institutions people rely on have routinely screwed people. True, but his argument is that the actual fix (that would work) is to fix such dysfunctional countries so they are functional, rather than downgrading everywhere to a Somalia level of trust with blockchain as the techno solution.

stale2002 9y ago

> I would assert that there is no single person in existence who had a problem they wanted to solve, discovered that an available blockchain solution was the best way to solve it What about Wikileaks? They had all their payments shutdown and then they were able to start accepting payments. The "use case" for Bitcoin was stated up front. It is to allow censorship resistant transactions. And for Wikileaks in 2010, when their financial transactions were being censored, it worked!

cinquemb 9y ago
I think skeptics of cryptocurrency get too focused on applying cases where their traditional banking systems serve them well, rather than how such systems do not serve marginal actors very well (or at all, for whatever reasons). Cryptocurrencies don't need to appeal to mass market users who are already happy with what they have. Appeals to legality (without stating jurisdictions or enforcibility), cries of rampant speculation (without acknowledging how much speculation already occurs in many kinds of markets and financial instruments), doesn't really matter to those who are now enabled to do something in a way that they couldn't before. People using cryptocurrencies today to engage in various forms of trade valuable to each other, don't care what people on the sidelines think.

lev99 9y ago

I read the bitcoin whitepaper about 7 years ago. I find it funny when people talk about blockchain like it's new technology, or like it's a vision for future. It's old tech that has been generally increasing in market value.

xtracto 9y ago
Exactly, Blockchain is now 10 year old technology, with a lot of implementations and technologies built over it. TCP has its root in 1974 technology [1], and it was not until the early 90's that it started showing its potential. The key to Blockchain technolgoy is the proposal of what it can solve (trusted transactions in a trustless environment). I like to see Blockchain as TCP/IP: It is going to be the foundation of bigger and more "user friendly" protocols and systems. (golem.network, storj, filecoin, eos). At some point we will get the "HTTP" of Blockchain, and over that, we will start having the "Google"s and "Amazon"s spawning as well. But if you think that, it took Amazon 20 years (1994) before TCP was "invented"... then the timing for Blockchain technology is going quite well. [1] https://web.archive.org/web/20160304150203/http://ece.ut.ac.ir/Classpages/F84/PrincipleofNetworkDesign/Papers/CK74.pdf https://web.archive.org/web/20160304150203/http://ece.ut.ac....

localhost3000 9y ago

"Instead of relying on trust or regulation, in the blockchain world, individuals are on-purpose responsible for their own security precautions. And if the software they use is malicious or buggy, they should have read the software more carefully." This is also one of the aspects of "the blockchain" that I struggle with. I don't think normal people want this or should be expected to do this effectively. And once you outsource the security (which most everyone will because it's the rational choice, e.g. Coinbase is better at protecting your crypto than you are, John Q Public.) you're no longer in a "trustless" state. The "trustless" pipe-dream (in the consumer use case) all sort of unravels from there for me.

tCfD 9y ago
In Trust we trust!
- achileas 9y ago
  Trust, LLC, a subsidiary of Koch Industries and Union Carbide
  - webmaven 9y ago
    Seems like it would be useful to have norms and regulations against overly centralized control of such an important enabling technology. If you'll forgive me coining (see what I did there?) a couple of neologisms, we could call this class of regulations "anti-trust" and their enforcement "trust-busting".
celticninja 9y ago
I think that putting some responsibility for security on the user is a good idea. All too often users are lax with security and don't realise the impact that has, say when their credentials are used to access a system illegally because they used the password "password", or poor security on their own PC sees it become part of a botnet. If you don't take security seriously when dealing with cryptocurrency then you can be taught a very personal and expensive lesson in no time at all.
9y ago

blueprint 9y ago

Why is it that whenever this guy says something's wrong with "blockchain", every example he gives is about something other than a blockchain? Like exchanges and smart contracts. Those are not the same thing as Bitcoin and Monero.

ruduhudi 9y ago

I think he is absolutely right about his dystopian view on smart contracts managing stuff but forgets about that one trusted party we're trying to avoid the most here, that costs us the most money and that we need the least in real life: Banks. That's what we neet the blockchain for.

Barrin92 9y ago
I never understood that sentiment. What exactly is bad about banks? Banks are a trusted middle-man that controls, insures and manages my transactions, and in contrast to arcane technological blockchain solutions is actually a legally liable entity. I also don't understand how banks cost me more money than bitcoin. A bank transaction costs me very little to no money, a crypto-currency transaction is extremely expensive.
- jstarfish 9y ago
  For better or worse, banks are treated like the Ticketmaster of the financial industry. The new-age solution to this seems to be sticking it to them by conducting all your business with scalpers.

mattdemon 9y ago

Relevant article. Replying to why decentralization matters http://muratbuffalo.blogspot.com/2018/03/change-my-mind-about-why.html http://muratbuffalo.blogspot.com/2018/03/change-my-mind-abou...

api 9y ago

I think the author of this article is making an either/or argument about centralized vs. decentralized trust when this can just as easily be a both/and proposition. Cryptocurrencies have not yet eliminated and may never eliminate the need for centralized reputation based systems of trust. Centralized trusted systems are more efficient for reasons that may be fundamental and rooted in physics and math, and they can do things that no current generation decentralized system can do. Complex secure computations that are cheap to perform on a server are massively expensive on a block chain or other distributed system. Yet what cryptocurrencies do offer is a system that levels the playing field between trusted entities and allows a once-trusted but now corrupt entity to be replaced without completely ditching the entire system. That's not true of things like centrally banked fiat currencies. If the current US financial system becomes irredeemably corrupt, this can't really be fixed without risking the destruction of the dollar and all assets and contracts denominated in dollars. A new dark age is a very high price to pay for the replacement of a corrupt or incompetent system. I think an argument can be made that replacement of institutions will always be necessary at some point. As institutions become large their size insulates them from reality, allowing something like "genetic drift" to occur that gradually erodes their competence. Combine this with the fact that psychopaths gravitate toward positions of power and you have a general tendency of large powerful systems toward decay and corruption over time. We saw a very concrete example of this in 2008 when banking institutions that had failed badly due to a mixture of incompetence, hubris, and corruption received a blank-check bailout on the backs of taxpayers and the rest of the non-financial economy. It is no coincidence that cryptocurrency went mainstream right after this, since these events demonstrated the need to start thinking about ways to devolve power away from these systems or at least to reduce the cost of doing so. Side note: I think we've officially entered the cryptocurrency / block chain trough of disillusionment. See: https://en.wikipedia.org/wiki/Hype_cycle https://en.wikipedia.org/wiki/Hype_cycle

cvaidya1986 9y ago

It’s going to be interesting reading these articles ten years from now.

coldtea 9y ago
It's already interesting reading articles about how Bitcoin would be dominating already by now written several years ago... Are we going to wait much longer for the Rapture?
- cvaidya1986 9y ago
  https://www.bloomberg.com/news/articles/2018-04-06/george-soros-prepares-to-trade-cryptocurrencies-as-prices-plunge https://www.bloomberg.com/news/articles/2018-04-06/george-so...
  - coldtea 9y ago
    Yeah, that proves bitcoin's bright future /s
    - cvaidya1986 9y ago
      Wealthy investors trading in the market is an indicator out of several indicators to consider.

phasnox 9y ago

Gotta love how he begins saying he was bashing the tech in December(when the market was on the rise) just so that no one can tell him "everyone bashes bitcoin when it's going down". Venmo is centralized. I cannot use it as I live in a third world county with no access to it. Paypal sucks. It takes 5% from the seller and it has power over your money, they can(AND HAVE IN THE PAST) seize it whenever they want. I had my salary confiscated once over a mistake in the bank. I telecomute, working for a company overseas, and the fees are stupidly high. I find your lack of vision disturbing.

fhood 9y ago
You know, paypal may well suck. I have never used it as a developer or a seller, but I really, really, like to have it as an option when I am purchasing something from some rinky dink website that doesn't look like it has been updated int 10 years.
- phasnox 9y ago
  Yeahp it sucks for the seller mostly.
- aianus 9y ago
  Sucks for the buyer too. Ever tried to use PayPal (or credit cards for that matter) to buy something from the US with a Canadian shipping address while you're living in Vietnam with a Vietnamese IP address? I did; I got fraud blocked.
  - fhood 9y ago
    Haha, no, I am one of those annoyingly generic users. But honestly I kind of expect them to block that. That seems pretty suspicious at first glance.
    - webmaven 9y ago
      Why suspicious? Simply because it is out of the ordinary? Fraud detection systems basically have most of their feedback mechanisms geared toward reducing - even eliminating - false negatives, and very little attention comparatively given to false positives as long as no individual merchant notices a measurable drop in sales. Meanwhile, a hapless individual might have many of their purchase attempts foiled as false positives, and be left with little to no recourse (well, I suppose their complaint on Twitter may go viral, that does seem to work occasionally with ebay).

he0001 9y ago

This article highlight a really interesting point here: Trust. And even if there are the “proof-of-work” people are going to distrust that “it’s a mathematical proof”. Just look at Trumps alt-facts and “fake news”. You don’t need to go even that far to find people putting money under the mattress because they distrust authorities. And even if math is “universal” people are going to mistrust it because they don’t understand it. I don’t think they will ever trust bitcoin. And I think they are in a majority.

webmaven 9y ago
And when the mattresses are being stuffed with fiat currency, the utter lack of cognitive dissonance becomes striking. To a lesser degree, the same goes for "keep the government out of my Medicare".

cowpig 9y ago

> Venmo is a free service to transfer dollars, and bitcoin transfers are not free Venmo is not free. There's a cost, it's just hiding. > Blockchain-based trustworthiness falls apart in practice... The particular brand of trustworthiness the author is arguing against is indeed a myth, but that doesn't mean blockchain is "crappy technology" or "a bad vision for the future" Blockchain adds a new thing to the world: digital property that cannot be reproduced for free. Smart contracts add another new thing to the world: the ability to build immutable software that interacts directly with the financial system. Both of these ideas are very powerful, and almost all of the interesting blockchain projects are still in the R&D phase. The hype around blockchain is ridiculous and absurd, but that doesn't mean the technology isn't exciting or potentially transformative. edit: I actually wrote an article about the "trustlessness" thing: http://cowpig.github.io/bitcoin/ethereum/poker/cryptocurrency/trust/economics/game-theory/2018/01/29/Trustless-Myth/ http://cowpig.github.io/bitcoin/ethereum/poker/cryptocurrenc...

landryraccoon 9y ago
> Venmo is not free. There's a cost, it's just hiding. What's that now?
- gshulegaard 9y ago
  * 3% fee for processing credit cards * Platform play where the first stage is to amass users and then use that audience to sell to businesses (https://www.theatlantic.com/business/archive/2017/07/venmo-makes-money-banks/533946/ https://www.theatlantic.com/business/archive/2017/07/venmo-m...) And I always assumed that the short delay for transferring money out of Venmo allowed them to eek a small margin against the time value of money somewhat similar to Robinhood (https://www.investopedia.com/articles/active-trading/020515/how-robinhood-makes-money.asp https://www.investopedia.com/articles/active-trading/020515/...)...but I don't know for sure.
  - tptacek 9y ago
    It is a lot easier to avoid paying a fee on Venmo than it is to use a cryptocurrency to send money to someone: just don't use a credit card.

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sametmax 9y ago

The TL;DR is: - blockchain systems still need trust; - security is not solved; - blockchains are overhyped and most followers don't want it for the problems serious actors try to use it to solve. - it has many issues (need for infra, require tech knowhow, etc) I agree, but I still don't see how it's crapy tech, nor how it's a bad vision of the future. You have an system that make auditing easier, with one place only for the data to be read and written and yet robust enough because of the duplication. You have transactions logs tided to identities you can fake organised in a timeline in an open format that is not only very well documented, but being actively tested right now on the field. You have hundreds of start up engage in a Darwinism race to find out which use case we can make that's worth it on the long run. And finally, the tech has enough impact to force state actors to create new laws, financial actors to adapt and a huge amount of money to be invested by a lot of people. So on one hand one very interesting concept. On the other hand, pretty much hate for the sake of hate.

Kiro 9y ago

HN seems to have a bipolar relationship with decentralization. It's all love until blockchain is mentioned. Then everyone thinks centralization is superior.

RIMR 9y ago

>In fact, I would assert that there is no single person in existence who had a problem they wanted to solve, discovered that an available blockchain solution was the best way to solve it, and therefore became a blockchain enthusiast. I would say that every person running a darkweb drug market would disagree...

jstarfish 9y ago
Blockchain isn't necessary for that. All you need are some shitty PHP pages behind a Tor hidden service and an escrow agent to facilitate transactions. The currency doesn't matter and it certainly doesn't have to be Bitcoin-- prepaid Visa cards work just as well, and are more anonymous than Bitcoin anyway.

yk 9y ago

A few month ago I clicked through quite a few youtube [0] lectures on "system dynamics," the 1960ies hype technology, and the people who did system dynamics back then are entirely reasonable, well aware of its limitations and the applications are very interesting, but their work got completely drowned in bullshit. Very similar to "the Internet" in the late 90ies, "web 2.0" in the early 2000nds and block chain today. So block chain is a really cool algorithm, that under ideal conditions can solve the Byzantine Generals problem, but there is at the moment just so incredible much bullshit surrounding blockchains, that it is sometimes hard to separate the wheat from the chaff. [0] https://www.reddit.com/r/lectures/comments/7jtg5e/dennis_meadows_perspectives_on_the_limits_of/ https://www.reddit.com/r/lectures/comments/7jtg5e/dennis_mea... r/lectures thread, see the videos linked in the comments.

aalleavitch 9y ago

In many ways, blockchain tech is the stupidest thing that has ever existed. It is a colossal monument to the inefficiency of human behavior. You are literally throwing energy and immensely valuable computation time out of a window simply because people can't trust each other. It is a massive sink for the destructively self-interested behavior of mankind. The problems that blockchains are trying to solve are not inherent difficulties involved in the tasks that they're being applied towards, they're problems with us. We can design an astronomically more efficient system for accounting, but it would be have to be one that is not being run by stupid, short-sighted apes. The entire overhead of the blockchain is devoted to dealing with a problem that we shouldn't even have, the whole thing is basically made of market failure. If there's any value in it, it's that we can use it to establish objective metrics for just how much value is destroyed by human irrationality and information deficits. We don't need to fix centralized accounting, centralized accounting works fine. We need to fix human beings. Meanwhile, imagine if every GPU used for mining right now was being used for training neural nets instead. The value in that is nearly unimaginable; we could be making massive leaps in almost every field and industry, because the applications of deep learning to making tasks marginally more efficient are essentially endless.

mido22 9y ago
FYI: when you talk about GPU/mining/energy, you are talking about Proof of Work (pow) and not blockchain. You can look up about Proof of Stake among other ways for consensus
- mido22 9y ago
  While you are at it, you can also read up about "triple ledger accounting"
  - mkirklions 9y ago
    I looked this up, what is your point(if you dont mind)? It seems like a feature with ~0 benefits. Can you explain?

abalone 9y ago

If you love this you should also follow @sarahjeong. Hilariously eviscerates cryptocurrencies for sport.[1] Smart (Cal + Harvard law), unafraid and one of the best up-and-coming tech journalists IMHO. [1] https://twitter.com/sarahjeong/status/953419544516747264 https://twitter.com/sarahjeong/status/953419544516747264

antiffan 9y ago

I'm seeing more of these "anti-blockchain" criticisms circulating lately. This one makes valid points about problems with the present state of the ecosystem, but the author seems to ignore the fact that these problems are addressable. His basic criticism of smart contracts is they can have bugs, and they can be costly since they will often involve moving money. Yes, this is a fact. Many potential solutions are out there, but how about these two ideas for starters: - a crypto-currency where at least accounts for certain transactions can be de-anonymized, so a person can be identified and face consequences when they commit a crime like hacking. - special transactions with settlement periods in which they can be canceled in the event of a hack, which might be identified by voter consensus.

l8again 9y ago

I honestly thought the author was trolling us (until I read the comments). There are so many holes in his example of ebook transaction. Here's just the two points he made that were the most egregious to me: >> and that the book — rather than some other file, or nothing at all — will actually arrive Really? Ever heard of checksums - its used all over the place. And if we weren't able to trust it, I guarantee you that blockchain tech is not the only thing that will break. >> It’s a complicated way to buy a book! It’s not trustless, you’re trusting in the software (and your ability to defend yourself in a software-driven world), instead of trusting other people It's like arguing with my grandma about evolution. "But you are trusting the scientists!!". I don't know where to begin.

eridius 9y ago
How are you supposed to checksum the book before you have it? You can't do that without trust, because you need to trust someone to give you the right checksum.
- webmaven 9y ago
  Not quite that dire: The checksum is typically public, where a large set of diverse stakeholders (most of which have incentives aligned with yours) can publically dispute it's veracity, increasing the costs of fraud. Moreover, some of those stakeholders may already be part of your existing circle of trust (either directly or transitively), which increases uncertainty for fradulent sellers.
  - eridius 9y ago
    Name me a single eBook you've purchased where the checksum for the eBook was public.

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ecocentrik 9y ago

Blockchains are accounting mechanisms. In their simplest form, blockchains are just a linked list of linked lists that that fulfill the requirements of an easily immutable, distributed and auditable system of accounts. I'm not sure how the author is attributing so much doom and gloom to cryptographically secured accounting systems, some of which have survived for a decade without a major failure of their primary function (securing digital assets with enforceable contractual conditions and private keys).

jiveturkey 9y ago

stopped reading after the intro. this is a guy who is a self-proclaimed luddite and who likes to hear the sound of his own prophetic voice. i love how he emphasized his own words in a “callout”, immediately after the inline text. magazine style. sensible in magazine format. but in a blog? puh-leez. his opinion is not worth debating, even if there is a kernel of truth there.

lcooper 9y ago

The blockchain is not currently fit for most "real world problems", because the way it achieves consensus and performance, but there are initiatives like the one below to change that: https://github.com/Azure/coco-framework https://github.com/Azure/coco-framework

laktek 9y ago

As someone born and lived in a 3rd world country for a better part of my life, I believe Blockchain solves a very real problem. That's equal participation in internet economy irrespective of someone's geographic location. It was thanks to the internet I realized I can also contribute to the world (by creating something people want & writing about something others want to learn). However, when it came to making a living out of that there weren't many options. One of the prime motives for me to move out of Sri Lanka was it will be way easier for me to accept payments online. PayPal is still not available in Sri Lanka, even after repeated attempts to convince Central Banks and governments [1]. Also, recently Stripe blocked a payment from one of my customers due to high-risk profile. Reason? He used a US issued debit card from Nigeria. I reached out to the person, turns out he was a passionate young entrepreneur who was trying to build a really interesting business. But his geographic location becomes a resistance in a medium it shouldn't. For me, Blockchain( and Cryptocurrencies) is a reframing of the trust model from heuristics such as geographic location to verifiable algorithms. The Internet protocols enabled us to exchange code, art & virtual goods without geographic boundaries. Then why not money? [1] https://www.change.org/p/enable-receiving-money-to-sri-lanka-through-paypal https://www.change.org/p/enable-receiving-money-to-sri-lanka...

tim333 9y ago

The feature of things like bitcoin that they operate largely outside government control may be useful for things like raising investment in ICOs. While many are rubbish there may be some useful stuff in there.