5 ms·

Blockchains aren’t new, they’re over a decade old at this point. And in what applications are blockchains superior to centralized applications?

seibelj 8y ago
Keeping track of an asset without a centralized authority? That’s the point of a blockchain - a sliding scale where increasing decentralization causes a decrease in efficiency, where the trade off makes sense.
- tigershark 8y ago
  Bitcoin for sure doesn’t fulfill this requirement given that it is de facto controlled by China.
- village-idiot 8y ago
  So, who signs the transactions? When an asset changes hands the transaction needs to be signed, how are those keys managed? How are blockchain transactions confirmed to match the real world? You have to make sure that physical assets or financial instruments are properly cleared. Not everything can live on the blockchain. Miners spend a ton of money on electricity, and this is necessary to protect the network from a 50% attack. What systems are in place to incentivize miners to spend the electricity to verify blocks?
  - seibelj 8y ago
    At a fundamental level, it tracks digital assets with certainty. This can be bitcoins, software licenses, whatever can be 100% digital. The link between the real world and the blockchain is an area of active research and innovation. Stablecoins backed by audited bank accounts are an area getting a lot of interest lately. Also, your previous criticism of blockchain being worthless because “it’s 10 years old” is meaningless. The first email was sent in the 1970’s. Technology takes time.
    - village-idiot 8y ago
      Why would a software vendor want that? Why would anyone else participate in that chain? There are a ton of existing systems to cover these needs, and there has to be a compelling reason to shift over to the blockchain. I’m not sure I’d go with stablecoins, since the main one appears to be a massive fraud. It’s still unclear why you would want a “decentralized” stablecoin that’s actually managed by a central trusted authority that, pinky swear, has the backing cash. The assertion was made that blockchains are new, and I pointed out that’s nonsense. I never said that old=worthless, you made that up.
      - seibelj 8y ago
        The innovation is that assets can be tracked and traded without any third party saying it’s OK. Essentially we now have programmable money with no middlemen. What comes from this innovation is anyone’s guess, but if you are an entrepreneur, this is a very intriguing technology in which to start new ventures. It may remain niche, or it may fundamentally alter the financial industry (currencies, securities, payments...) and perhaps many others. Time will tell!
        village-idiot 8y ago
        > The innovation is that assets can be tracked and traded without any third party saying it’s OK. That is exactly the opposite of what most software vendors and similar want. They want more control over the assets they release, not less. If the asset is financial in nature, this is basically illegal. KYC and AML laws still apply, even to crypto, as do other related securities law. If the asset is physical, you have to solve the issue of making the blockchain match reality. I know you said there's a ton of work being done in that space, but I have yet to see a lot of solutions. > Essentially we now have programmable money with no middlemen. Given the rate of bugs in "smart" contracts, that is not an appealing pitch. I also find that the people angriest at the middlemen often know the least about why the middlemen exist. Hint: they often provide a service to match their fees. > What comes from this innovation is anyone’s guess, but if you are an entrepreneur, this is a very intriguing technology in which to start new ventures. It's also a fantastic way to lose your shirt. > It may remain niche, or it may fundamentally alter the financial industry (currencies, securities, payments...) and perhaps many others. You basically said "anything could happen". If your prediction is basically "anything", why bother prognosticating?
  - roymurdock 8y ago
    Public blockchains like Bitcoin where anyone can download the software, the previous transaction history, and start participating as a node are very different than the private blockchains you are asking about. Check out this blog post for a few ways companies are trying to solve private validation - http://sammantics.com/blog/2016/3/6/how-transactions-are-validated-on-a-shared-ledger http://sammantics.com/blog/2016/3/6/how-transactions-are-val...
  - Theodores 8y ago
    Getting back to the article, this is best seen as a variant of 'Banking 1.0'. Remember how in the old days banks would have gold that your paper money could be converted into? Well, with these new investments you can buy into the Bitcoin goodness much like how our forefathers could have their wealth backed by gold. With a bank backed by gold the actual gold does not leave the vault very often. It was theoretical that you could go to the bank and get your paper notes changed for actual gold. In this brave new world of Bitcoin backed investments your transactions to and from the fund do not involve anything being added or removed from the blockchain. There is just a wallet there, in the bank cold storage with however many bitcoins on it. The bank does not have one wallet for its bitcoins it has thousands of the things, so the account is sharded this way. The difference is that rather than gold being the real backing it is a Bitcoin wallet. If you get out of the fund then the bank won't be selling the contents of that wallet on Coinbase, it will just sit there in the fund ready for the next punter to buy into. An investment fund that has gold as the backing store of wealth is able to track the value of the gold, same with Bitcoin. If Bitcoin goes up then your investment is worth more, the fund takes its percentage and it all works fine. This is what Bitcoin has come to, if you strip away all the 'fintech' mumbo-jumbo buzzword legalese this is all it is, a variant on 'Banking 1.0'.
- beefield 8y ago
  > Keeping track of an asset without a centralized authority? Question was: "And in what applications are blockchains superior to centralized applications?" You really did not answer the question. What is the application where it is superior to track the asset without central authority? (I come up with criminal money transfers. I hope someone comes up with something else because I do not think that is too solid a foundation to build a sustainable technology...)
  - seibelj 8y ago
    No fees to middlemen, enabling micro-payments at scale (obviously need to drastically reduce blockchain fees, but that is an area of active development). Elimination of charge-backs and a huge amount of fraud, especially in industries that have an abnormally high level of fraud. Borderless payments. The highest density of wealth storage ever invented. Completely different threat model for theft with its own pros and cons. Everyone immediately jumps to the criminal aspects. The existing financial system has absolutely no problem handling all the crime, the blockchain did not invent money laundering.[0] [0] https://www.theguardian.com/business/2018/sep/19/danske-bank-chief-resigns-over-money-laundering-scandal https://www.theguardian.com/business/2018/sep/19/danske-bank...
    - tigershark 8y ago
      1) you pay fees to middleman to make a transaction. 2) micropayments are ridiculously slow and low volume compared to any other payment system. 3) We have all seen that chargeback are possible and already occurred, with the small side effect that also all the other legitimate transactions were rollbacked, as with the dao huge fuckup. 4) There are plenty of frauds involving bitcoins. 5) borderless payments have been possible for ages, and are not dependent on a Chinese network of miners.
      - icelancer 8y ago
        1) They are pretty small for most cryptocurrencies. 2) This is false if you understand that Visa/MC do not settle instantly, rather 24-48 hours down the line and their instantaneous consumer network is not identical to that settlement layer. Similar to BTC's blockchain + Lightning network. 3) This is not really a thing outside of Ethereum, but yes, it was a very bad decision. 4) There are plenty of frauds using USD. Way more than BTC. Like, a lot. 5) I'm not sure what this random bit of racism against China has anything to do with anything, but the network's locations of nodes doesn't have much to do with nationality preference.

seibelj 8y ago

Keeping track of an asset without a centralized authority? That’s the point of a blockchain - a sliding scale where increasing decentralization causes a decrease in efficiency, where the trade off makes sense.

tigershark 8y ago
Bitcoin for sure doesn’t fulfill this requirement given that it is de facto controlled by China.
village-idiot 8y ago
So, who signs the transactions? When an asset changes hands the transaction needs to be signed, how are those keys managed? How are blockchain transactions confirmed to match the real world? You have to make sure that physical assets or financial instruments are properly cleared. Not everything can live on the blockchain. Miners spend a ton of money on electricity, and this is necessary to protect the network from a 50% attack. What systems are in place to incentivize miners to spend the electricity to verify blocks?
- seibelj 8y ago
  At a fundamental level, it tracks digital assets with certainty. This can be bitcoins, software licenses, whatever can be 100% digital. The link between the real world and the blockchain is an area of active research and innovation. Stablecoins backed by audited bank accounts are an area getting a lot of interest lately. Also, your previous criticism of blockchain being worthless because “it’s 10 years old” is meaningless. The first email was sent in the 1970’s. Technology takes time.
  - village-idiot 8y ago
    Why would a software vendor want that? Why would anyone else participate in that chain? There are a ton of existing systems to cover these needs, and there has to be a compelling reason to shift over to the blockchain. I’m not sure I’d go with stablecoins, since the main one appears to be a massive fraud. It’s still unclear why you would want a “decentralized” stablecoin that’s actually managed by a central trusted authority that, pinky swear, has the backing cash. The assertion was made that blockchains are new, and I pointed out that’s nonsense. I never said that old=worthless, you made that up.
    - seibelj 8y ago
      The innovation is that assets can be tracked and traded without any third party saying it’s OK. Essentially we now have programmable money with no middlemen. What comes from this innovation is anyone’s guess, but if you are an entrepreneur, this is a very intriguing technology in which to start new ventures. It may remain niche, or it may fundamentally alter the financial industry (currencies, securities, payments...) and perhaps many others. Time will tell!
      - village-idiot 8y ago
        > The innovation is that assets can be tracked and traded without any third party saying it’s OK. That is exactly the opposite of what most software vendors and similar want. They want more control over the assets they release, not less. If the asset is financial in nature, this is basically illegal. KYC and AML laws still apply, even to crypto, as do other related securities law. If the asset is physical, you have to solve the issue of making the blockchain match reality. I know you said there's a ton of work being done in that space, but I have yet to see a lot of solutions. > Essentially we now have programmable money with no middlemen. Given the rate of bugs in "smart" contracts, that is not an appealing pitch. I also find that the people angriest at the middlemen often know the least about why the middlemen exist. Hint: they often provide a service to match their fees. > What comes from this innovation is anyone’s guess, but if you are an entrepreneur, this is a very intriguing technology in which to start new ventures. It's also a fantastic way to lose your shirt. > It may remain niche, or it may fundamentally alter the financial industry (currencies, securities, payments...) and perhaps many others. You basically said "anything could happen". If your prediction is basically "anything", why bother prognosticating?
- roymurdock 8y ago
  Public blockchains like Bitcoin where anyone can download the software, the previous transaction history, and start participating as a node are very different than the private blockchains you are asking about. Check out this blog post for a few ways companies are trying to solve private validation - http://sammantics.com/blog/2016/3/6/how-transactions-are-validated-on-a-shared-ledger http://sammantics.com/blog/2016/3/6/how-transactions-are-val...
- Theodores 8y ago
  Getting back to the article, this is best seen as a variant of 'Banking 1.0'. Remember how in the old days banks would have gold that your paper money could be converted into? Well, with these new investments you can buy into the Bitcoin goodness much like how our forefathers could have their wealth backed by gold. With a bank backed by gold the actual gold does not leave the vault very often. It was theoretical that you could go to the bank and get your paper notes changed for actual gold. In this brave new world of Bitcoin backed investments your transactions to and from the fund do not involve anything being added or removed from the blockchain. There is just a wallet there, in the bank cold storage with however many bitcoins on it. The bank does not have one wallet for its bitcoins it has thousands of the things, so the account is sharded this way. The difference is that rather than gold being the real backing it is a Bitcoin wallet. If you get out of the fund then the bank won't be selling the contents of that wallet on Coinbase, it will just sit there in the fund ready for the next punter to buy into. An investment fund that has gold as the backing store of wealth is able to track the value of the gold, same with Bitcoin. If Bitcoin goes up then your investment is worth more, the fund takes its percentage and it all works fine. This is what Bitcoin has come to, if you strip away all the 'fintech' mumbo-jumbo buzzword legalese this is all it is, a variant on 'Banking 1.0'.
beefield 8y ago
> Keeping track of an asset without a centralized authority? Question was: "And in what applications are blockchains superior to centralized applications?" You really did not answer the question. What is the application where it is superior to track the asset without central authority? (I come up with criminal money transfers. I hope someone comes up with something else because I do not think that is too solid a foundation to build a sustainable technology...)
- seibelj 8y ago
  No fees to middlemen, enabling micro-payments at scale (obviously need to drastically reduce blockchain fees, but that is an area of active development). Elimination of charge-backs and a huge amount of fraud, especially in industries that have an abnormally high level of fraud. Borderless payments. The highest density of wealth storage ever invented. Completely different threat model for theft with its own pros and cons. Everyone immediately jumps to the criminal aspects. The existing financial system has absolutely no problem handling all the crime, the blockchain did not invent money laundering.[0] [0] https://www.theguardian.com/business/2018/sep/19/danske-bank-chief-resigns-over-money-laundering-scandal https://www.theguardian.com/business/2018/sep/19/danske-bank...
  - tigershark 8y ago
    1) you pay fees to middleman to make a transaction. 2) micropayments are ridiculously slow and low volume compared to any other payment system. 3) We have all seen that chargeback are possible and already occurred, with the small side effect that also all the other legitimate transactions were rollbacked, as with the dao huge fuckup. 4) There are plenty of frauds involving bitcoins. 5) borderless payments have been possible for ages, and are not dependent on a Chinese network of miners.
    - icelancer 8y ago
      1) They are pretty small for most cryptocurrencies. 2) This is false if you understand that Visa/MC do not settle instantly, rather 24-48 hours down the line and their instantaneous consumer network is not identical to that settlement layer. Similar to BTC's blockchain + Lightning network. 3) This is not really a thing outside of Ethereum, but yes, it was a very bad decision. 4) There are plenty of frauds using USD. Way more than BTC. Like, a lot. 5) I'm not sure what this random bit of racism against China has anything to do with anything, but the network's locations of nodes doesn't have much to do with nationality preference.