6 ms·

While the definition is exact, it’s a pretty narrow one. I understand that people are tired with all the hype and naturally want to counter it somehow. But don

by olouv 8y ago

While the definition is exact, it’s a pretty narrow one. I understand that people are tired with all the hype and naturally want to counter it somehow. But don’t let it blind you, blockchain technologies will deeply change our societies. It’s a trust machine: it creates trust where there is none. Trust being one of the pillar of our civilization, the scope of its applications is wider than you would expect. Edit: thanks for the downvotes... if your confirmation bias can’t handle a contrarian, respectful point of view, i’d seriously question your rationality as a member of this scientific-related community.

zakk 8y ago
In most situations trust between two parties can be obtained by means of a third party they both trust. That’s how the banking system has worked for centuries. The use case for a blockchain is narrower: it can be used to establish trust between two parties in absence of a trustable third party.
- olouv 8y ago
  Exact, and we have seen how well this third-party trust system worked during the last financial crisis just a decade ago.
  - paulgb 8y ago
    Which system failure from that crisis does blockchain technology fix?
    - olouv 8y ago
      Sudden cascading lack of trust?
      - paulgb 8y ago
        Blockchains can reduce counterparty risk in a transaction, but there's no technical solution to the fact that trust is required between, for example, a lender and a borrower. The idea that you can just sprinkle some blockchain dust and avoid financial crises is naive.
        someguydave 8y ago
        >but there's no technical solution to the fact that trust is required between, for example, a lender and a borrower. No, it does not. However, if someone lends bitcoin to a borrower, it does not involve third parties, and therefore cannot "run" like a fractional reserve bank.
        0xCMP 8y ago
        Of course it could. How could anyone who cares to lend individuals or small companies have so much of their own money that they can just do that with their time? They start this thing called a "bank" or "investment group" or "hedge fund" (etc.) and they use other people's money to invest or provide credit and either return an agreed amount over time (interest) or whatever they manage to gain - a fee (ROI - management fees, which is usually % of $ under management or % of profits gained (more rare)). What you're suggesting is we get rid of credit and investing other people's money or, rather, that we use a system which makes that system impossible.
        AlexCoventry 8y ago
        Financial organizations will be able to provide zero-knowledge proofs of their aggregate resource commitments, including distributions of credit score attestations. Organizations can lend to each other on the basis of those.
        spookthesunset 8y ago
        > Financial organizations will be able to provide zero-knowledge proofs of their aggregate resource commitments, including distributions of credit score attestations. Organizations can lend to each other on the basis of those. This is pure meaningless buzzwords. Blockchain doesn’t solve any problem in the financial space besides providing a means to conduct financial fraud.
        Karrot_Kream 8y ago
      - jayd16 8y ago
        Not at all. Blockchains don't protect against poor investments or too much risk in any way. If we had a run on the banks you might have an argument but that didn't happen.
      - 0xCMP 8y ago
        The lack of trust stemmed from complex derivative contracts which allowed people to create bets on thing they did not own with massive upsides. The cascade was in the contracts creating disproportionate problems in the books of banks + the fact that the CDOs themselves were falling apart in value. Something like this could have easily* been created via ETH and automatically cascaded without and brakes and caused a chaotic meltdown that would be TRUELY destroyed the trust, not in ETH, but in the other people which we could lend money to and stop the growth of the economy which credit is built on. * in a world where we used ETH to make these contracts normally as we do today using English and our existing Property/Tax/etc. laws.
    - nivexous 8y ago
      Imagine you woke up one day to discover your bank account has been raided by another country's government. Just like that, $1 in every $16 of your supposedly safe money is gone. If you're wealthy enough to have more savings, it could be $1 in $10. Is it a nightmare? The terms of the Cypriot bailout (and bail-in) are as simple as they are startling. Germany will cough up about $13 billion, and, in exchange, Cyprus will levy a "one-time" tax on bank deposits to raise an additional $7.5 billion. This tax will take 6.75 percent from insured deposits of €100,000 ($129,000) or less, and 9.9 percent from uninsured amounts above €100,000. https://www.theatlantic.com/business/archive/2013/03/everything-you-need-to-know-about-the-cyprus-bank-disaster/274096/ https://www.theatlantic.com/business/archive/2013/03/everyth...
  - zakk 8y ago
    The financial crisis didn’t start in the banking sector, it started in the finance sector. And I cannot really see how a blockchain could have prevented it... I would be interested in hearing ideas about this!
    - jsutton 8y ago
      When you have a public transparent record of the kinds of financial shenanigans that were going on, it can be audited very easily and put a stop to. The financial crisis was not avoided because all of the sketchy activity was hidden from sight.
  - s17n 8y ago
    Some bitcoin advocates think that blockchain-based financial products will somehow provide credit while solving the problem of systemic risk, which doesn't seem possible to me. Others think that credit is just a scam and the main utility of banks is storing money and processing transactions, which is absurd. (In this scenario bitcoin takes over these functions and the financial system is no longer necessary.) Does your view fall into one of these categories?
    - maxnevermind 8y ago
      "Others think that credit is just a scam ... which is absurd" I understand that companies probably can't leave without it but I as an individual never took any loans in my entire life and not planning to get one. I don't like the idea and I see as it can get peoples life miserable, you constantly see people whining about paying the mortgage and credits even here because they basically chose, thanks to loans, the lifestyle they can't afford and because of how the whole thing works they can't easily get out of it.
  - oh-kumudo 8y ago
    What evidence do you have that blockchain based technology will avoid the financial crisis to come? If anything, the blockchain advocates I have seen so far, are just as phony and greedy, if not more, as the bankers out there.
- jayd16 8y ago
  >The use case for a blockchain is narrower: it can be used to establish trust between two parties in absence of a trustable third party. It doesn't though. Now you're requiring a trusted (not a given) block chain that involves at least one third party but most likely many more at a high cost with more waste than traditional means.
  - jsutton 8y ago
    It does, in these hypotheticals we assume a mature blockchain, and the 'third parties' in this case is the network itself. In non-PoW implementations, there is no more waste than traditional means.
- icelancer 8y ago
  >> third party they both trust Ah yes, it's turtles all the way down.
- jsutton 8y ago
  Third party trust has been the best solution in the past to establish trust. Blockchain tech has introduced a new solution that has been proven. As a business, if you have to choose between using a third party for trust or using a distributed trust-less system, and both are comparable in cost, what would you do?
hliyan 8y ago
> Trust being one of the pillar of our civilization Very true. But I would argue that blockchain is a technology that obviates the need for trust between humans (by delegating it to a technology), and therefore erodes civilization.
- eterpstra 8y ago
  I would argue that double-entry accounting is a technology that obviates the need for trust between humans (by delegating it to books and arithmetic), and therefore erodes civilization.
hudon 8y ago
> i’d seriously question your rationality as a member of this scientific-related community. Speaking of science, do you know of any peer reviewed paper that concludes that the blockchain “creates trust where there is none”?
- karlkeefer 8y ago
  Successfully trading value with an anonymous third party over the internet, without fear if them renegging, seems to be all that's required to demonstrate this. Before bitcoin this wasn't possible without trust in a third party, as far as I'm aware. No paper needed.
  - hudon 8y ago
    What makes you think Bitcoin will remain anonymous? At the end of the day, nothing prevents banks from end-to-end encrypting payments and thus making our bank transactions anonymous. The reason they don't is because people don't care, not because "blockchain tech" is needed, whatever that means. On the flip side, if we as a society decide that anonymous online payments is a net negative for the good of society, then making bitcoin mining, trading and acceptance illegal basically kills it. At that point, literally only criminals would use it, and even then its use is debatable because if the speculative use case is dead and the developers are all anonymous or in jail, I don't think bitcoin's value could hold long enough for a criminal to buy it, send it, and then sell it successfully without losing a significant amount of the initial value. Anyway, we're both speculating here. Like I said, if "science" is going to be brought to the table, I'd like to see the science backing your claims. For example, do you have research showing that no trust is required to make bitcoin work? Can the system survive without us trusting the developers, chip manufacturers and miners?
    - Shoue 8y ago
      Bitcoin's privacy isn't very powerful so I wouldn't be worried that some government would rule it illegal based on that. Consider the scenario where you go to a grocery store, your transaction points to your face because of surveillance in the store. Buying something online, your transaction points to your physical address. You'd still have to trust the people you trade with, otherwise you lose anonymity, and your transactions and amounts can be traced. Now they know how much you earn, how much you spend, where you spend, when you spend, etc. It's very hard as an average consumer relying on Bitcoin to avoid being traced without trusting another third-party, e.g. an exchange or similar service that allows you to "cut connecting strings".
spookthesunset 8y ago
There is no rationalizing with people so blinded by the promise of getting rich quick from Satoshi’s glorious bitcoin. People who have drunk the koolaid can’t be reasoned with.
rimliu 8y ago
Interesting. I trust my bank waaay more than I trust any of the cryptocurrencies. So I am not sure your premise about creating trust where there is none holds.
Zaskoda 8y ago
This is largely what I would have said if nobody had posted it yet. That "narrow set of problems" are still extremely influential problems that will have a powerful impact on society.
jmcqk6 8y ago
> It’s a trust machine: it creates trust where there is none. Can you describe to me a situation where blockchain actually does this. Please be as detailed and specific as possible. I keep hearing this claim, but everytime I look into cryptocurrencies, I see a wild west full of scams and snake oil, so I'm not sure I understand what is meant by 'trustless' in this case.

by olouv 8y ago

zakk 8y ago

In most situations trust between two parties can be obtained by means of a third party they both trust. That’s how the banking system has worked for centuries. The use case for a blockchain is narrower: it can be used to establish trust between two parties in absence of a trustable third party.

olouv 8y ago
Exact, and we have seen how well this third-party trust system worked during the last financial crisis just a decade ago.
- paulgb 8y ago
  Which system failure from that crisis does blockchain technology fix?
  - olouv 8y ago
    Sudden cascading lack of trust?
    - paulgb 8y ago
      Blockchains can reduce counterparty risk in a transaction, but there's no technical solution to the fact that trust is required between, for example, a lender and a borrower. The idea that you can just sprinkle some blockchain dust and avoid financial crises is naive.
      - someguydave 8y ago
        >but there's no technical solution to the fact that trust is required between, for example, a lender and a borrower. No, it does not. However, if someone lends bitcoin to a borrower, it does not involve third parties, and therefore cannot "run" like a fractional reserve bank.
        0xCMP 8y ago
        Of course it could. How could anyone who cares to lend individuals or small companies have so much of their own money that they can just do that with their time? They start this thing called a "bank" or "investment group" or "hedge fund" (etc.) and they use other people's money to invest or provide credit and either return an agreed amount over time (interest) or whatever they manage to gain - a fee (ROI - management fees, which is usually % of $ under management or % of profits gained (more rare)). What you're suggesting is we get rid of credit and investing other people's money or, rather, that we use a system which makes that system impossible.
        AlexCoventry 8y ago
        Financial organizations will be able to provide zero-knowledge proofs of their aggregate resource commitments, including distributions of credit score attestations. Organizations can lend to each other on the basis of those.
        spookthesunset 8y ago
        > Financial organizations will be able to provide zero-knowledge proofs of their aggregate resource commitments, including distributions of credit score attestations. Organizations can lend to each other on the basis of those. This is pure meaningless buzzwords. Blockchain doesn’t solve any problem in the financial space besides providing a means to conduct financial fraud.
        Karrot_Kream 8y ago
    - jayd16 8y ago
      Not at all. Blockchains don't protect against poor investments or too much risk in any way. If we had a run on the banks you might have an argument but that didn't happen.
    - 0xCMP 8y ago
      The lack of trust stemmed from complex derivative contracts which allowed people to create bets on thing they did not own with massive upsides. The cascade was in the contracts creating disproportionate problems in the books of banks + the fact that the CDOs themselves were falling apart in value. Something like this could have easily* been created via ETH and automatically cascaded without and brakes and caused a chaotic meltdown that would be TRUELY destroyed the trust, not in ETH, but in the other people which we could lend money to and stop the growth of the economy which credit is built on. * in a world where we used ETH to make these contracts normally as we do today using English and our existing Property/Tax/etc. laws.
  - nivexous 8y ago
    Imagine you woke up one day to discover your bank account has been raided by another country's government. Just like that, $1 in every $16 of your supposedly safe money is gone. If you're wealthy enough to have more savings, it could be $1 in $10. Is it a nightmare? The terms of the Cypriot bailout (and bail-in) are as simple as they are startling. Germany will cough up about $13 billion, and, in exchange, Cyprus will levy a "one-time" tax on bank deposits to raise an additional $7.5 billion. This tax will take 6.75 percent from insured deposits of €100,000 ($129,000) or less, and 9.9 percent from uninsured amounts above €100,000. https://www.theatlantic.com/business/archive/2013/03/everything-you-need-to-know-about-the-cyprus-bank-disaster/274096/ https://www.theatlantic.com/business/archive/2013/03/everyth...
- zakk 8y ago
  The financial crisis didn’t start in the banking sector, it started in the finance sector. And I cannot really see how a blockchain could have prevented it... I would be interested in hearing ideas about this!
  - jsutton 8y ago
    When you have a public transparent record of the kinds of financial shenanigans that were going on, it can be audited very easily and put a stop to. The financial crisis was not avoided because all of the sketchy activity was hidden from sight.
- s17n 8y ago
  Some bitcoin advocates think that blockchain-based financial products will somehow provide credit while solving the problem of systemic risk, which doesn't seem possible to me. Others think that credit is just a scam and the main utility of banks is storing money and processing transactions, which is absurd. (In this scenario bitcoin takes over these functions and the financial system is no longer necessary.) Does your view fall into one of these categories?
  - maxnevermind 8y ago
    "Others think that credit is just a scam ... which is absurd" I understand that companies probably can't leave without it but I as an individual never took any loans in my entire life and not planning to get one. I don't like the idea and I see as it can get peoples life miserable, you constantly see people whining about paying the mortgage and credits even here because they basically chose, thanks to loans, the lifestyle they can't afford and because of how the whole thing works they can't easily get out of it.
- oh-kumudo 8y ago
  What evidence do you have that blockchain based technology will avoid the financial crisis to come? If anything, the blockchain advocates I have seen so far, are just as phony and greedy, if not more, as the bankers out there.
jayd16 8y ago
>The use case for a blockchain is narrower: it can be used to establish trust between two parties in absence of a trustable third party. It doesn't though. Now you're requiring a trusted (not a given) block chain that involves at least one third party but most likely many more at a high cost with more waste than traditional means.
- jsutton 8y ago
  It does, in these hypotheticals we assume a mature blockchain, and the 'third parties' in this case is the network itself. In non-PoW implementations, there is no more waste than traditional means.
icelancer 8y ago
>> third party they both trust Ah yes, it's turtles all the way down.
jsutton 8y ago
Third party trust has been the best solution in the past to establish trust. Blockchain tech has introduced a new solution that has been proven. As a business, if you have to choose between using a third party for trust or using a distributed trust-less system, and both are comparable in cost, what would you do?

hliyan 8y ago

> Trust being one of the pillar of our civilization Very true. But I would argue that blockchain is a technology that obviates the need for trust between humans (by delegating it to a technology), and therefore erodes civilization.

eterpstra 8y ago
I would argue that double-entry accounting is a technology that obviates the need for trust between humans (by delegating it to books and arithmetic), and therefore erodes civilization.

hudon 8y ago

> i’d seriously question your rationality as a member of this scientific-related community. Speaking of science, do you know of any peer reviewed paper that concludes that the blockchain “creates trust where there is none”?

karlkeefer 8y ago
Successfully trading value with an anonymous third party over the internet, without fear if them renegging, seems to be all that's required to demonstrate this. Before bitcoin this wasn't possible without trust in a third party, as far as I'm aware. No paper needed.
- hudon 8y ago
  What makes you think Bitcoin will remain anonymous? At the end of the day, nothing prevents banks from end-to-end encrypting payments and thus making our bank transactions anonymous. The reason they don't is because people don't care, not because "blockchain tech" is needed, whatever that means. On the flip side, if we as a society decide that anonymous online payments is a net negative for the good of society, then making bitcoin mining, trading and acceptance illegal basically kills it. At that point, literally only criminals would use it, and even then its use is debatable because if the speculative use case is dead and the developers are all anonymous or in jail, I don't think bitcoin's value could hold long enough for a criminal to buy it, send it, and then sell it successfully without losing a significant amount of the initial value. Anyway, we're both speculating here. Like I said, if "science" is going to be brought to the table, I'd like to see the science backing your claims. For example, do you have research showing that no trust is required to make bitcoin work? Can the system survive without us trusting the developers, chip manufacturers and miners?
  - Shoue 8y ago
    Bitcoin's privacy isn't very powerful so I wouldn't be worried that some government would rule it illegal based on that. Consider the scenario where you go to a grocery store, your transaction points to your face because of surveillance in the store. Buying something online, your transaction points to your physical address. You'd still have to trust the people you trade with, otherwise you lose anonymity, and your transactions and amounts can be traced. Now they know how much you earn, how much you spend, where you spend, when you spend, etc. It's very hard as an average consumer relying on Bitcoin to avoid being traced without trusting another third-party, e.g. an exchange or similar service that allows you to "cut connecting strings".

spookthesunset 8y ago

There is no rationalizing with people so blinded by the promise of getting rich quick from Satoshi’s glorious bitcoin. People who have drunk the koolaid can’t be reasoned with.

rimliu 8y ago

Interesting. I trust my bank waaay more than I trust any of the cryptocurrencies. So I am not sure your premise about creating trust where there is none holds.

Zaskoda 8y ago

This is largely what I would have said if nobody had posted it yet. That "narrow set of problems" are still extremely influential problems that will have a powerful impact on society.

jmcqk6 8y ago

> It’s a trust machine: it creates trust where there is none. Can you describe to me a situation where blockchain actually does this. Please be as detailed and specific as possible. I keep hearing this claim, but everytime I look into cryptocurrencies, I see a wild west full of scams and snake oil, so I'm not sure I understand what is meant by 'trustless' in this case.