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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

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.
    - DINKDINK 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 method of sending bits to other academic computers across the country so that I can ...
      - gizmo686 9y ago
        I can easily imagine a persona who could complete that sentence: scientists who wanted to share data across the country. The internet was built because it satisfied an actual need at the time, and grew organically. It is even in the name. The "Internet" was not some monolithic project. It was a way of connecting the many different networks that had already been built.
        scabarott 9y ago
        The internet as we use it today is far beyond what anyone originally envisioned. No one thought we would be using it for e-commerce or social networks or in fact anything other than for a few geeky scientists to occasionally collaborate
    - miles 9y ago
      https://www.laphamsquarterly.org/revolutions/miscellany/paul-krugmans-poor-prediction https://www.laphamsquarterly.org/revolutions/miscellany/paul... > A winner of the Nobel Prize in Economics, Paul Krugman wrote in 1998, “The growth of the Internet will slow drastically, as the flaw in ‘Metcalfe’s law’—which states that the number of potential connections in a network is proportional to the square of the number of participants—becomes apparent: most people have nothing to say to each other! By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s.”
      - jeremyjh 9y ago
        This is a complete non-sequitor. The usefulness of blockchain is not assured because people have been skeptical of useful technology in the past. You must actually propose and defend an application of this technology. Otherwise you are offering my skepticism as evidence itself that blockchain will be useful. If that had merit we can go into business together: you propose a technology and patent it, and then I express skepticism and then - profits!
    - specialist 9y ago
      I know this Gucci handbang is not counterfeit. My prescriptions are the real deal. As a better escrow for exchanging goods, services. I can verify if the trog on Fox News is just making shit up. (Verified sources, citations are baked into all content.)
      - spookthesunset 9y ago
        > I know this Gucci handbang is not counterfeit. > My prescriptions are the real deal. How does the blockchain solve any of this? You still need a human to say "this Gucci handbag is not counterfeit". A human still needs to type in "yup, this prescription is real".
        specialist 9y ago
        How are anti-counterfeiting efforts done today? Accounting. For this use case, think of blockchains as a shared ledger.
        wsy 9y ago
        If you already trust the accountant, he can set up a conventional database, and you can look stuff up there. Much simpler and cheaper. A blockchain-based shared ledger is only useful in case the participants don't trust each other. In which case you cannot do anything with it to help detecting counterfeits.
        specialist 9y ago
        Or when you have a supply chain composed of various participants.
        eridius 9y ago
        And now you're trusting each participant to enter their portion of the ledger accurately. The original articles goes into this very problem. What's to stop your mango provider from spraying pesticides all over their mangoes and then entering "organic" into the ledger?
    - scabarott 9y ago
      I can think of at least 2 promising areas: 1.Micropayments- currently it's very hard to charge for anything on the internet so we get ads, which everyone hates or paywalls which people hate even more. Internet money doesn't need to be decentralized but then who will issue or build it -google, facebook? So far this is the most promising. 2. Data privacy - everyone's complaining about Facebook now. So far public decentralized blockchains have offered the most promising way to build truly decentralized apps (while still providing an incentive/payment to developers). I'm pretty sure even more uses we can't think of now will open up as the technology matures
- badloginagain 9y ago
  To "establish consensus over points in time which are universally unique"
monochromatic 9y ago
It’s very interesting as a matter of pure technology. I’m just not sure it’s that useful as a banking system.
- C14L 9y ago
  Have to try it to find out. That's what we are doing right now.
- ghthor 9y ago
  It doesn't have to be either or, the banking system of the future can be a mix of different technologies. Personally I see bitcoin(and friends) as the higher layers of a hierarchy used by humans to securely trade value. The 3rd record of account doesn't have to contain 100% of all transactions taken by it's holders, but when the transaction is big enough, or the values held by 2 parties is questionable because the time since either of them updated the 3rd record has been too long, then write to the blockchain. Most other transactions can be taken care of between the 2 parties without involving the chain at all, as long as in the future someone squashes all their transactions and writes to the public ledger, to prove they haven't cheated or made a mistake.
- specialist 9y ago
  IMHO, banking & finance are its least interesting potential use cases. --- Medical Records Mid aughts, I was trying to figure out how to use tamper evident logs (rolling hashes) for our electronic medical records infrastructure. To answer questions like "what did you know and when did you know it?" and "where did this bad data come from?" Coupled with the notions for Translucent Databases (all data at rest is encrypted) to protect privacy. We hadn't even gotten to the consensus and trust issues. --- Authenticity I'm now most interested in verification of sources. Where did this cotton or wheat or cobalt come from? Are these pills authentic? Is the data cited by this paper legit? Verify copyrights, perhaps even a realization of Ted Nelson Xanadu's notions of transcopyrights. (Disney's DragonChain and others have floated those use cases.) Is this news report real or agitprop? Is this quote actually legit? Did someone(s) silently update some published information? Etc, etc. --- Tursted Rules & Constraints Satisfaction Since seeing a presentation on using ethereum style smart contracts for medical claims processing, I've been reading up. I can barely wrap my head around this stuff. Computability, Turing complete, N vs NP, etc. But the domain experts I heard told a great narrative, so now I'm interested too.
dragontamer 9y ago
> It uses proof-of-work to establish consensus over points in time which are universally unique. Did we really? BTC vs BCH, Ethereum vs Ethereum Classic. Sigwitx2. These hardforks technically break established consensus and rely upon social means (hey everyone: switch algorithms right now!!) to stay in order. At the end of the day, it seems to me that the "blockchain" is only as strong as the community's resolve to work together. As far as I can tell, Bitcoin is turning into a governance structure. The current power players are the devs, who most people trust (and I see no reason not to trust them). And the social structure is organized on Github and forums.
- dorgo 9y ago
  Laws change (get broken) when establishd consensus shifts (hey everyone: women should also have the right to vote!!). Crypto/Blockchain doesn't going to change how consensus works (nor is it supposed to). It's just the digitalisation of laws/currency etc. Edit: But Crypto/Blockchain allows you to opt out of laws/currency without physically leaving the country.
  - dragontamer 9y ago
    > But Crypto/Blockchain allows you to opt out of laws/currency without physically leaving the country. As do clubs, corporations, and "Roberts Rules". People have been making secret societies and private laws since the mid 1850s. That's a long solved problem. Chuck-E-Cheese tokens, Disney Resort Meal Points, and hell, even credit card money is "made up money" to some extent. For example of all the above: https://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op https://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op The thing is, people need to understand the laws for them to be useful. You can't just "outsource" the rules to the blockchain. My point is that the currently established social structure behind these cryptocommunities is horribly defined right now. Its pretty much structured around trusting a few developers. The key for success is a true governance body. Blockchain doesn't solve the hard problem at all. (Case in point: should Ethereum hardfork right now, or wait for Proof of Stake? GPU miners want a hardfork ASAP due to the ASIC miners incomming, but the rest of the community doesn't want unnecessary hardforks. Finally, the ASIC-investors definitely don't want a hard fork.) Someone needs to make a decision, and a group of people will lose out. Probably the ASIC guys / Bitmain based on the current political environment. But then it all begs the question: if everyone is centralizing trust in the developers, then what the hell is the point of the blockchain? Its no different than trusting the rules of the Capitol Hill Babysitting Co-op and their fake monopoly money (erm... babysitting "scrip")
simias 9y ago
> I wouldn't call it crappy, it's actually quite brilliant. I agree with you, I always thought that the Bitcoin algorithm was very clever and "mind opening" in a way. It's one of these things I'd never have thought about but almost seems obvious in hindsight. What's even more interesting is that basically all of it is pre-existing technology: HashCash, ECC, Merkle trees etc... Just combined together in a clever way to create something that's more than the sum of their parts. Now where I become a naysayer is when we switch from the realm of intellectual curiosity and into the world of cryptocurrencies today. Being clever and innovative doesn't necessarily mean useful or valuable. We have plenty of clever ideas out there that don't have much of a practical use (or used to have one but are now obsolete). Duff's Device, sleep sort, the fast inverse square root, one instruction set computers, code golf and 4KB demos ... I think I do understand the technological value of Bitcoin's PoW blockchain, I just think that its only practical use is for a tiny niche. It's the Prolog of consensus algorithms, I'm sure it'll be useful to some but I doubt it's going to be the new C++. You say that "It uses proof-of-work to establish consensus over points in time which are universally unique" and it's true but how useful or valuable is that? Is it such a huge problem in our modern society to agree on a sequence of events? Do you often program something and think "man, I wish that there was a way to establish a consensus over points in time which are universally unique" and 1/ there's no other simpler solution to achieve that and 2/ a blockchain could actually solve it? There's only a tiny gap between these two propositions. But I think at this point talk is cheap and all that needs to be said about the blockchain has been said long ago and multiple times. How many billion of dollars has been poured into "blockchain" technology these past few years, in the form of pre-mined coins or ICOs? How many hundreds of engineers are working on those killer blockchain applications? How many high profile companies have boldly announced blockchain-related tech investments lately? So.... where are the results? How long do we wait for them until we decide that maybe it's not that revolutionary?
- gtrubetskoy 9y ago
  > HashCash, ECC, Merkle trees etc... Just combined together in a clever way to create something that's more than the sum of their parts. No, not really. The way proof-of-work is used is nothing like in HashCash (more generally known as a time lock puzzle), the solution to a decentralized clock is the one piece that is new. In the paper it is referred to as "Timestamp Server". Everything else is previously known tech, but the clock piece is an invention, the invention that made it all possible.
411mrc 9y ago
I think the designer's own words are a better summary of the problem solved: http://satoshi.nakamotoinstitute.org/emails/cryptography/11/ http://satoshi.nakamotoinstitute.org/emails/cryptography/11/ The magical thing is that you can actually know that the distributed system is consistent by how much work was performed.
pron 9y ago
> I wouldn't call it crappy, it's actually quite brilliant. The New Oxford American Dictionary defines technology as "the application of scientific knowledge for practical purposes". If the application does not fulfill the purpose, the technology is crappy, regardless of how brilliant the science behind it is. The author is not saying that the science is crappy but that the technology -- i.e. the application for the practical purpose -- is.

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.
  - DINKDINK 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 method of sending bits to other academic computers across the country so that I can ...
    - gizmo686 9y ago
      I can easily imagine a persona who could complete that sentence: scientists who wanted to share data across the country. The internet was built because it satisfied an actual need at the time, and grew organically. It is even in the name. The "Internet" was not some monolithic project. It was a way of connecting the many different networks that had already been built.
      - scabarott 9y ago
        The internet as we use it today is far beyond what anyone originally envisioned. No one thought we would be using it for e-commerce or social networks or in fact anything other than for a few geeky scientists to occasionally collaborate
  - miles 9y ago
    https://www.laphamsquarterly.org/revolutions/miscellany/paul-krugmans-poor-prediction https://www.laphamsquarterly.org/revolutions/miscellany/paul... > A winner of the Nobel Prize in Economics, Paul Krugman wrote in 1998, “The growth of the Internet will slow drastically, as the flaw in ‘Metcalfe’s law’—which states that the number of potential connections in a network is proportional to the square of the number of participants—becomes apparent: most people have nothing to say to each other! By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s.”
    - jeremyjh 9y ago
      This is a complete non-sequitor. The usefulness of blockchain is not assured because people have been skeptical of useful technology in the past. You must actually propose and defend an application of this technology. Otherwise you are offering my skepticism as evidence itself that blockchain will be useful. If that had merit we can go into business together: you propose a technology and patent it, and then I express skepticism and then - profits!
  - specialist 9y ago
    I know this Gucci handbang is not counterfeit. My prescriptions are the real deal. As a better escrow for exchanging goods, services. I can verify if the trog on Fox News is just making shit up. (Verified sources, citations are baked into all content.)
    - spookthesunset 9y ago
      > I know this Gucci handbang is not counterfeit. > My prescriptions are the real deal. How does the blockchain solve any of this? You still need a human to say "this Gucci handbag is not counterfeit". A human still needs to type in "yup, this prescription is real".
      - specialist 9y ago
        How are anti-counterfeiting efforts done today? Accounting. For this use case, think of blockchains as a shared ledger.
        wsy 9y ago
        If you already trust the accountant, he can set up a conventional database, and you can look stuff up there. Much simpler and cheaper. A blockchain-based shared ledger is only useful in case the participants don't trust each other. In which case you cannot do anything with it to help detecting counterfeits.
        specialist 9y ago
        Or when you have a supply chain composed of various participants.
        eridius 9y ago
        And now you're trusting each participant to enter their portion of the ledger accurately. The original articles goes into this very problem. What's to stop your mango provider from spraying pesticides all over their mangoes and then entering "organic" into the ledger?
  - scabarott 9y ago
    I can think of at least 2 promising areas: 1.Micropayments- currently it's very hard to charge for anything on the internet so we get ads, which everyone hates or paywalls which people hate even more. Internet money doesn't need to be decentralized but then who will issue or build it -google, facebook? So far this is the most promising. 2. Data privacy - everyone's complaining about Facebook now. So far public decentralized blockchains have offered the most promising way to build truly decentralized apps (while still providing an incentive/payment to developers). I'm pretty sure even more uses we can't think of now will open up as the technology matures
badloginagain 9y ago
To "establish consensus over points in time which are universally unique"

monochromatic 9y ago

It’s very interesting as a matter of pure technology. I’m just not sure it’s that useful as a banking system.

C14L 9y ago
Have to try it to find out. That's what we are doing right now.
ghthor 9y ago
It doesn't have to be either or, the banking system of the future can be a mix of different technologies. Personally I see bitcoin(and friends) as the higher layers of a hierarchy used by humans to securely trade value. The 3rd record of account doesn't have to contain 100% of all transactions taken by it's holders, but when the transaction is big enough, or the values held by 2 parties is questionable because the time since either of them updated the 3rd record has been too long, then write to the blockchain. Most other transactions can be taken care of between the 2 parties without involving the chain at all, as long as in the future someone squashes all their transactions and writes to the public ledger, to prove they haven't cheated or made a mistake.
specialist 9y ago
IMHO, banking & finance are its least interesting potential use cases. --- Medical Records Mid aughts, I was trying to figure out how to use tamper evident logs (rolling hashes) for our electronic medical records infrastructure. To answer questions like "what did you know and when did you know it?" and "where did this bad data come from?" Coupled with the notions for Translucent Databases (all data at rest is encrypted) to protect privacy. We hadn't even gotten to the consensus and trust issues. --- Authenticity I'm now most interested in verification of sources. Where did this cotton or wheat or cobalt come from? Are these pills authentic? Is the data cited by this paper legit? Verify copyrights, perhaps even a realization of Ted Nelson Xanadu's notions of transcopyrights. (Disney's DragonChain and others have floated those use cases.) Is this news report real or agitprop? Is this quote actually legit? Did someone(s) silently update some published information? Etc, etc. --- Tursted Rules & Constraints Satisfaction Since seeing a presentation on using ethereum style smart contracts for medical claims processing, I've been reading up. I can barely wrap my head around this stuff. Computability, Turing complete, N vs NP, etc. But the domain experts I heard told a great narrative, so now I'm interested too.

dragontamer 9y ago

> It uses proof-of-work to establish consensus over points in time which are universally unique. Did we really? BTC vs BCH, Ethereum vs Ethereum Classic. Sigwitx2. These hardforks technically break established consensus and rely upon social means (hey everyone: switch algorithms right now!!) to stay in order. At the end of the day, it seems to me that the "blockchain" is only as strong as the community's resolve to work together. As far as I can tell, Bitcoin is turning into a governance structure. The current power players are the devs, who most people trust (and I see no reason not to trust them). And the social structure is organized on Github and forums.

dorgo 9y ago
Laws change (get broken) when establishd consensus shifts (hey everyone: women should also have the right to vote!!). Crypto/Blockchain doesn't going to change how consensus works (nor is it supposed to). It's just the digitalisation of laws/currency etc. Edit: But Crypto/Blockchain allows you to opt out of laws/currency without physically leaving the country.
- dragontamer 9y ago
  > But Crypto/Blockchain allows you to opt out of laws/currency without physically leaving the country. As do clubs, corporations, and "Roberts Rules". People have been making secret societies and private laws since the mid 1850s. That's a long solved problem. Chuck-E-Cheese tokens, Disney Resort Meal Points, and hell, even credit card money is "made up money" to some extent. For example of all the above: https://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op https://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op The thing is, people need to understand the laws for them to be useful. You can't just "outsource" the rules to the blockchain. My point is that the currently established social structure behind these cryptocommunities is horribly defined right now. Its pretty much structured around trusting a few developers. The key for success is a true governance body. Blockchain doesn't solve the hard problem at all. (Case in point: should Ethereum hardfork right now, or wait for Proof of Stake? GPU miners want a hardfork ASAP due to the ASIC miners incomming, but the rest of the community doesn't want unnecessary hardforks. Finally, the ASIC-investors definitely don't want a hard fork.) Someone needs to make a decision, and a group of people will lose out. Probably the ASIC guys / Bitmain based on the current political environment. But then it all begs the question: if everyone is centralizing trust in the developers, then what the hell is the point of the blockchain? Its no different than trusting the rules of the Capitol Hill Babysitting Co-op and their fake monopoly money (erm... babysitting "scrip")

simias 9y ago

> I wouldn't call it crappy, it's actually quite brilliant. I agree with you, I always thought that the Bitcoin algorithm was very clever and "mind opening" in a way. It's one of these things I'd never have thought about but almost seems obvious in hindsight. What's even more interesting is that basically all of it is pre-existing technology: HashCash, ECC, Merkle trees etc... Just combined together in a clever way to create something that's more than the sum of their parts. Now where I become a naysayer is when we switch from the realm of intellectual curiosity and into the world of cryptocurrencies today. Being clever and innovative doesn't necessarily mean useful or valuable. We have plenty of clever ideas out there that don't have much of a practical use (or used to have one but are now obsolete). Duff's Device, sleep sort, the fast inverse square root, one instruction set computers, code golf and 4KB demos ... I think I do understand the technological value of Bitcoin's PoW blockchain, I just think that its only practical use is for a tiny niche. It's the Prolog of consensus algorithms, I'm sure it'll be useful to some but I doubt it's going to be the new C++. You say that "It uses proof-of-work to establish consensus over points in time which are universally unique" and it's true but how useful or valuable is that? Is it such a huge problem in our modern society to agree on a sequence of events? Do you often program something and think "man, I wish that there was a way to establish a consensus over points in time which are universally unique" and 1/ there's no other simpler solution to achieve that and 2/ a blockchain could actually solve it? There's only a tiny gap between these two propositions. But I think at this point talk is cheap and all that needs to be said about the blockchain has been said long ago and multiple times. How many billion of dollars has been poured into "blockchain" technology these past few years, in the form of pre-mined coins or ICOs? How many hundreds of engineers are working on those killer blockchain applications? How many high profile companies have boldly announced blockchain-related tech investments lately? So.... where are the results? How long do we wait for them until we decide that maybe it's not that revolutionary?

gtrubetskoy 9y ago
> HashCash, ECC, Merkle trees etc... Just combined together in a clever way to create something that's more than the sum of their parts. No, not really. The way proof-of-work is used is nothing like in HashCash (more generally known as a time lock puzzle), the solution to a decentralized clock is the one piece that is new. In the paper it is referred to as "Timestamp Server". Everything else is previously known tech, but the clock piece is an invention, the invention that made it all possible.

411mrc 9y ago

I think the designer's own words are a better summary of the problem solved: http://satoshi.nakamotoinstitute.org/emails/cryptography/11/ http://satoshi.nakamotoinstitute.org/emails/cryptography/11/ The magical thing is that you can actually know that the distributed system is consistent by how much work was performed.

pron 9y ago

> I wouldn't call it crappy, it's actually quite brilliant. The New Oxford American Dictionary defines technology as "the application of scientific knowledge for practical purposes". If the application does not fulfill the purpose, the technology is crappy, regardless of how brilliant the science behind it is. The author is not saying that the science is crappy but that the technology -- i.e. the application for the practical purpose -- is.