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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 con

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?
      - seibelj 8y ago
        > That is exactly the opposite of what most software vendors and similar want. They want more control over the assets they release, not less. Maybe? The ability for something like this didn't exist before, maybe an entrepreneur will come up with something new and valuable around the licensing use-case. I also don't know if such a blanket statement about "most software vendors" can be asserted. > 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. Major companies like Coinbase and Circle are not violating any laws. They have lawyers, licenses, and so on. Just because something is regulated, doesn't mean an entrepreneur can't invent a new and innovative product - they just comply with the laws and regulations. > 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. Time will tell, I agree. > Given the rate of bugs in "smart" contracts, that is not an appealing pitch. Active area of research and development, such as formally verified computation. I would bet that technologists are more likely to solve this issue than not. > 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. Sure, but if the same service can be provided at drastically reduced cost, then it's a win, and blockchain may be able to do this. Middlemen exist for reasons, but that doesn't mean they can't be disrupted. > It's also a fantastic way to lose your shirt. Investing in anything is risky, let alone seed-stage startups on unproven technology, but luckily there is an industry that funds such risky endeavors. > You basically said "anything could happen". If your prediction is basically "anything", why bother prognosticating? You are making the bear-case for crypto and blockchain, while I am an optimist making the bull-case. I'm basically saying that a huge amount of potential is there, and writing it all off as worthless or barely useful at best in October 2018 is very premature.
- sparkie 8y ago
  A better term is "fiatcoin". There is no such thing as a "stablecoin". What mechanisms exist to ensure that the "stablecoin" maintains its peg?
  - village-idiot 8y ago
    Currently, none. If you wanted to do it right, the correct way would be to treat so-called stablecoins like a bank and audit them accordingly, except with a 100% capital requirement. It’s highly entertaining to me how many issues with cryptocurrencies have to be resolved with classical financial instruments and regulatory processes. It’s almosf as if these systems were slowly built over a few centuries and are actually pretty good at what they do, and that you can’t just throw computers at the problem and pretend that you know better.
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'.

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?
    - seibelj 8y ago
      > That is exactly the opposite of what most software vendors and similar want. They want more control over the assets they release, not less. Maybe? The ability for something like this didn't exist before, maybe an entrepreneur will come up with something new and valuable around the licensing use-case. I also don't know if such a blanket statement about "most software vendors" can be asserted. > 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. Major companies like Coinbase and Circle are not violating any laws. They have lawyers, licenses, and so on. Just because something is regulated, doesn't mean an entrepreneur can't invent a new and innovative product - they just comply with the laws and regulations. > 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. Time will tell, I agree. > Given the rate of bugs in "smart" contracts, that is not an appealing pitch. Active area of research and development, such as formally verified computation. I would bet that technologists are more likely to solve this issue than not. > 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. Sure, but if the same service can be provided at drastically reduced cost, then it's a win, and blockchain may be able to do this. Middlemen exist for reasons, but that doesn't mean they can't be disrupted. > It's also a fantastic way to lose your shirt. Investing in anything is risky, let alone seed-stage startups on unproven technology, but luckily there is an industry that funds such risky endeavors. > You basically said "anything could happen". If your prediction is basically "anything", why bother prognosticating? You are making the bear-case for crypto and blockchain, while I am an optimist making the bull-case. I'm basically saying that a huge amount of potential is there, and writing it all off as worthless or barely useful at best in October 2018 is very premature.
sparkie 8y ago
A better term is "fiatcoin". There is no such thing as a "stablecoin". What mechanisms exist to ensure that the "stablecoin" maintains its peg?
- village-idiot 8y ago
  Currently, none. If you wanted to do it right, the correct way would be to treat so-called stablecoins like a bank and audit them accordingly, except with a 100% capital requirement. It’s highly entertaining to me how many issues with cryptocurrencies have to be resolved with classical financial instruments and regulatory processes. It’s almosf as if these systems were slowly built over a few centuries and are actually pretty good at what they do, and that you can’t just throw computers at the problem and pretend that you know better.

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'.