6 ms·

> cryptocurrencies seek to anchor trust in technology. So long as they are transparent.....Still, I am not entirely convinced. Proper regulation of these entiti

> cryptocurrencies seek to anchor trust in technology. So long as they are transparent.....Still, I am not entirely convinced. Proper regulation of these entities will remain a pillar of trust. I don't think they understand that the purpose of cryptocurrencies is to remove the need for trust. Trust in the math, not the banker. AKA the economy should be built off the monetary system rather than the monetary system being built off the economy.

PeterisP 8y ago
You can't remove the need for trust - that need is inherently beyond the reach of math. If I want to use money to pay for some goods, I need trust that I can get that money back if the goods won't arrive. Math alone can't provide that, it needs something extra, e.g. a trusted escrow service in the case of crypto. If I want to use money as a store of value, I need trust that the value is going to stay stable and maintain liquidity in the long term. Math alone can't provide that, that trust is inherently social. I also need reasonable trust that the money isn't likely to get stolen - math isn't sufficient for that, and our current experience shows that crypto assets are more vulnerable in practice than e.g. bank deposits, maintaining appropriate "opsec" is tricky and people fail in that too frequently. And for your other point, the economy existed before a monetary system and currently works off of many monetary systems - however, for a monetary system the only criteria that matters is if it's good for what the economy needs; if some system does not fit these needs, then it won't get used much and is not particularly relevant.
- SuddsMcDuff 8y ago
  This is the elephant in the room, and the key component of cryptocurrencies which is yet to be solved. Cryptocurrencies can trustlessly manage intangible tokens which were themselves issued on the blockchain. But when you want to interact with real world, tangible assets, blockchains can only manage proxies of the real asset. There has not yet been a trustless way to ensure the link between the tangible asset and the blockchain proxy.
- walterbell 8y ago
  Yes, just as internet messaging and videoconferencing have made travel for F2F meetings more important, "trustless" cryptocurrency increases the value of "mathless" trust mechanisms.
- randaouser 8y ago
  >If I want to use money to pay for some goods, I need trust that I can get that money back if the goods won't arrive. Math alone can't provide that, it needs something extra, e.g. a trusted escrow service in the case of crypto. No need for extras, you can do this today on Ethereum with Hashed Time Lock Contracts
  - emiliobumachar 8y ago
    Could you please expand on how does the Ethereum blockchain get to know whether the goods arrived if the buyer and seller are saying conflicting things and no third parties are involved?
    - hkt 8y ago
      Of course he can't.
    - AnthonyMouse 8y ago
      > Could you please expand on how does the Ethereum blockchain get to know whether the goods arrived if the buyer and seller are saying conflicting things and no third parties are involved? It's possible to have some mutually assured destruction here, e.g. the contract is for $100 so the buyer puts in $150 and the seller puts in $100. Then when the buyer releases the money, they get $50 of their money back and the seller gets $200 ($100 from the buyer and their original $100). If the buyer doesn't release the money, nobody gets anything. It gives the buyer a way to punish the seller for non-delivery, but without receiving any personal benefit (and in fact at a personal cost) for using it.
      - DoctorOetker 8y ago
        there's an endless supply of replies to comments like yours that go like "it will never be possible to fix every problem so the safest move is no move", and I don't wish to be that kind of commenter, i.e. I think it is good to at least try and propose mechanisms -even flawed ones- so that at least the discussion of the problems continue and hopefully the mechanisms can be improved. it is in this mindset that I am asking if we can adress the following issue: suppose the government or its postal system selectively withholds the goods payed for through cryptographic protocols, then buyer and seller lose. again, I'm not trying to be destructive, just wondering out loud if we can generalize the kind of protocol you describe to include the transporter as an attacker in the attack model. I think we could split up in 2 cases: transporters that are paid on the same cryptographic protocol/platform, and transporters that are paid outside. I believe it will be easier to solve the problem by restricting to transporters who get paid by the same contract/platform, since we could have the transporter deposit an insurance of same or higher value as the good to be transported, and upon arrival his pre-agreed transport cost and deposit are released? Obviously the traditional postal system can not be forced to be paid through this platform, so this hole in the market would effectively create demand for crypto postage and hence create jobs. I would like to see a more rigorous breakdown of such a protocol, and a censor-ship free listing of issues remaining with the protocol, so that the discussion on improvement can continue. Also it seems like the first transporter does not need to be the same person as the last transporter, i.e. intermediary packet handoff could also be handled by the protocol such that the first transporter gets paid back his deposit after doing "his part" of the packet journey...
- nobody271 8y ago
  Well there are smart contracts which can act as an escrow service. I don't know how that works in reality, though. If smart contracts have to be deterministic how can they be used to guarantee that, say, a delivery was made? I want to belieber.
  - PeterisP 8y ago
    The way how that's usually done within smart contracts relies on a trusted (the key word here) "oracle" that is considered to hold the truth about reality. E.g. you may have a smart contract that's conditional on the price of some stocks in the future or on the result of some sports game. It'll get the information about the price of these stocks from some place which is assumed to tell the truth, that's the oracle - for example, it could be some NASDAQ service or the sports league website. However, it's obviously not guaranteed to tell the truth about the reality, you need to trust it, because if it lies, there's no recourse afterwards. If I make a "real" bet on the superbowl results and bribe the superbowl website admin to publish a wrong result on the official site for 5 minutes at the right time while my bet is settled, then the bet will be revoked afterwards by the courts; however, if it's a smart contract looking at that site, then once I've cheated the escrow service, then I've won because it was falsely trusted.
    - nobody271 8y ago
      What if the oracle stops working or gives inconsistent results? Do you think having to rely on oracles is a major flaw in that they will become trust authorities?
      - hanniabu 8y ago
        This is where consensus comes in. Projects like Blocknet have the ability where you can request an answer from N amount of nodes and the response will be that of the majority.
- rstuart4133 8y ago
  > You can't remove the need for trust - that need is inherently beyond the reach of math. That hides more than it reveals. Yes, trust is beyond math. Measuring value is also beyond math. However there are ways of measuring value that aren't amenable to math (eg, how much you like a diamond) and ways of measuring value that are amenable to math (how much you are willing to pay for the diamond). The first worked method fine in a subsistence economy. The second way is how our current economy works. We are not completely and utterly dependent on being able to measure and transfer value with math. If we could not do it capitalism would not exist, nor would our society or way of life. And so it is with trust. You can trust a banker not to embezzle your money because he has a reputation, mouths to feed, or he's your brother, or he will be perused by government agents armed with big guns, or any number of the other reasons we do now - none of which are easily quantified. Or you can trust him because he can't undo his decisions without corrupting a while pile of others and do to that he had to expend the net energy output of New Zealand for days. One is amenable to being manipulated with math, and one isn't. Because the trust provided by crypto currencies can be quantified and manipulated with math we have smart contracts. Smart contracts mean the example you gave about trusting someone to deliver the goods means a computer can be the escrow agent and it is all done automatically the 99 times in 100 there is no dispute. Yes, the OP was wrong in that crypto currencies allow us to replace trust with math. But only a little wrong. Crypto currencies allow us to manipulate and transfer trust with math, which is not so different.
- jrruethe 8y ago
  An alternative solution to requiring a 3rd party escrow is to use the concept of "mutually assured destruction". The general idea is that each party deposits twice the value into a shared 2-of-2 multisig wallet. Then, two transactions are generated: 1 for completing the purchase, and one for completing a refund. Both parties need to sign one of the transactions, or all their funds remain locked up, so there is an incentive to cooperate and come to an agreement without needing a 3rd party involved. It isn't perfect, because there are other drawbacks such as needing a large amount of money up front, but it is a trustless alternative. This page explains it better: http://nashx.com/HowItWorks http://nashx.com/HowItWorks
_nalply 8y ago
There is still the need for trust... in the implementation of software! Even if you read the source code carefully and ocmpile the software yourself, you trust the compiler and the operating system to do the right thing.
- randaouser 8y ago
  No, you dont need to trust the software per say; there is a need to understand how software works in order to participate. That knowledge gap for most people will result in them trusting a 3rd party auditing of the software. You do much the same when you allowed your bank to share information with equifax... what happened there? One of many issues with trusting corps to do the right thing [EDIT: spelling]
TeMPOraL 8y ago
> the purpose of cryptocurrencies is to remove the need for trust. Trust in the math, not the banker By exchanging trust for energy. Cryptocurrencies are the best example of trust being a tangible thing - it can be quite literally converted to Kilowatt hours. This shows how incredible trust is as an energy use optimization device. We should be finding ways to be able to safely depend more on trust, not less.

PeterisP 8y ago

You can't remove the need for trust - that need is inherently beyond the reach of math. If I want to use money to pay for some goods, I need trust that I can get that money back if the goods won't arrive. Math alone can't provide that, it needs something extra, e.g. a trusted escrow service in the case of crypto. If I want to use money as a store of value, I need trust that the value is going to stay stable and maintain liquidity in the long term. Math alone can't provide that, that trust is inherently social. I also need reasonable trust that the money isn't likely to get stolen - math isn't sufficient for that, and our current experience shows that crypto assets are more vulnerable in practice than e.g. bank deposits, maintaining appropriate "opsec" is tricky and people fail in that too frequently. And for your other point, the economy existed before a monetary system and currently works off of many monetary systems - however, for a monetary system the only criteria that matters is if it's good for what the economy needs; if some system does not fit these needs, then it won't get used much and is not particularly relevant.

SuddsMcDuff 8y ago
This is the elephant in the room, and the key component of cryptocurrencies which is yet to be solved. Cryptocurrencies can trustlessly manage intangible tokens which were themselves issued on the blockchain. But when you want to interact with real world, tangible assets, blockchains can only manage proxies of the real asset. There has not yet been a trustless way to ensure the link between the tangible asset and the blockchain proxy.
walterbell 8y ago
Yes, just as internet messaging and videoconferencing have made travel for F2F meetings more important, "trustless" cryptocurrency increases the value of "mathless" trust mechanisms.
randaouser 8y ago
>If I want to use money to pay for some goods, I need trust that I can get that money back if the goods won't arrive. Math alone can't provide that, it needs something extra, e.g. a trusted escrow service in the case of crypto. No need for extras, you can do this today on Ethereum with Hashed Time Lock Contracts
- emiliobumachar 8y ago
  Could you please expand on how does the Ethereum blockchain get to know whether the goods arrived if the buyer and seller are saying conflicting things and no third parties are involved?
  - hkt 8y ago
    Of course he can't.
  - AnthonyMouse 8y ago
    > Could you please expand on how does the Ethereum blockchain get to know whether the goods arrived if the buyer and seller are saying conflicting things and no third parties are involved? It's possible to have some mutually assured destruction here, e.g. the contract is for $100 so the buyer puts in $150 and the seller puts in $100. Then when the buyer releases the money, they get $50 of their money back and the seller gets $200 ($100 from the buyer and their original $100). If the buyer doesn't release the money, nobody gets anything. It gives the buyer a way to punish the seller for non-delivery, but without receiving any personal benefit (and in fact at a personal cost) for using it.
    - DoctorOetker 8y ago
      there's an endless supply of replies to comments like yours that go like "it will never be possible to fix every problem so the safest move is no move", and I don't wish to be that kind of commenter, i.e. I think it is good to at least try and propose mechanisms -even flawed ones- so that at least the discussion of the problems continue and hopefully the mechanisms can be improved. it is in this mindset that I am asking if we can adress the following issue: suppose the government or its postal system selectively withholds the goods payed for through cryptographic protocols, then buyer and seller lose. again, I'm not trying to be destructive, just wondering out loud if we can generalize the kind of protocol you describe to include the transporter as an attacker in the attack model. I think we could split up in 2 cases: transporters that are paid on the same cryptographic protocol/platform, and transporters that are paid outside. I believe it will be easier to solve the problem by restricting to transporters who get paid by the same contract/platform, since we could have the transporter deposit an insurance of same or higher value as the good to be transported, and upon arrival his pre-agreed transport cost and deposit are released? Obviously the traditional postal system can not be forced to be paid through this platform, so this hole in the market would effectively create demand for crypto postage and hence create jobs. I would like to see a more rigorous breakdown of such a protocol, and a censor-ship free listing of issues remaining with the protocol, so that the discussion on improvement can continue. Also it seems like the first transporter does not need to be the same person as the last transporter, i.e. intermediary packet handoff could also be handled by the protocol such that the first transporter gets paid back his deposit after doing "his part" of the packet journey...
nobody271 8y ago
Well there are smart contracts which can act as an escrow service. I don't know how that works in reality, though. If smart contracts have to be deterministic how can they be used to guarantee that, say, a delivery was made? I want to belieber.
- PeterisP 8y ago
  The way how that's usually done within smart contracts relies on a trusted (the key word here) "oracle" that is considered to hold the truth about reality. E.g. you may have a smart contract that's conditional on the price of some stocks in the future or on the result of some sports game. It'll get the information about the price of these stocks from some place which is assumed to tell the truth, that's the oracle - for example, it could be some NASDAQ service or the sports league website. However, it's obviously not guaranteed to tell the truth about the reality, you need to trust it, because if it lies, there's no recourse afterwards. If I make a "real" bet on the superbowl results and bribe the superbowl website admin to publish a wrong result on the official site for 5 minutes at the right time while my bet is settled, then the bet will be revoked afterwards by the courts; however, if it's a smart contract looking at that site, then once I've cheated the escrow service, then I've won because it was falsely trusted.
  - nobody271 8y ago
    What if the oracle stops working or gives inconsistent results? Do you think having to rely on oracles is a major flaw in that they will become trust authorities?
    - hanniabu 8y ago
      This is where consensus comes in. Projects like Blocknet have the ability where you can request an answer from N amount of nodes and the response will be that of the majority.
rstuart4133 8y ago
> You can't remove the need for trust - that need is inherently beyond the reach of math. That hides more than it reveals. Yes, trust is beyond math. Measuring value is also beyond math. However there are ways of measuring value that aren't amenable to math (eg, how much you like a diamond) and ways of measuring value that are amenable to math (how much you are willing to pay for the diamond). The first worked method fine in a subsistence economy. The second way is how our current economy works. We are not completely and utterly dependent on being able to measure and transfer value with math. If we could not do it capitalism would not exist, nor would our society or way of life. And so it is with trust. You can trust a banker not to embezzle your money because he has a reputation, mouths to feed, or he's your brother, or he will be perused by government agents armed with big guns, or any number of the other reasons we do now - none of which are easily quantified. Or you can trust him because he can't undo his decisions without corrupting a while pile of others and do to that he had to expend the net energy output of New Zealand for days. One is amenable to being manipulated with math, and one isn't. Because the trust provided by crypto currencies can be quantified and manipulated with math we have smart contracts. Smart contracts mean the example you gave about trusting someone to deliver the goods means a computer can be the escrow agent and it is all done automatically the 99 times in 100 there is no dispute. Yes, the OP was wrong in that crypto currencies allow us to replace trust with math. But only a little wrong. Crypto currencies allow us to manipulate and transfer trust with math, which is not so different.
jrruethe 8y ago
An alternative solution to requiring a 3rd party escrow is to use the concept of "mutually assured destruction". The general idea is that each party deposits twice the value into a shared 2-of-2 multisig wallet. Then, two transactions are generated: 1 for completing the purchase, and one for completing a refund. Both parties need to sign one of the transactions, or all their funds remain locked up, so there is an incentive to cooperate and come to an agreement without needing a 3rd party involved. It isn't perfect, because there are other drawbacks such as needing a large amount of money up front, but it is a trustless alternative. This page explains it better: http://nashx.com/HowItWorks http://nashx.com/HowItWorks

_nalply 8y ago

There is still the need for trust... in the implementation of software! Even if you read the source code carefully and ocmpile the software yourself, you trust the compiler and the operating system to do the right thing.

randaouser 8y ago
No, you dont need to trust the software per say; there is a need to understand how software works in order to participate. That knowledge gap for most people will result in them trusting a 3rd party auditing of the software. You do much the same when you allowed your bank to share information with equifax... what happened there? One of many issues with trusting corps to do the right thing [EDIT: spelling]

TeMPOraL 8y ago

> the purpose of cryptocurrencies is to remove the need for trust. Trust in the math, not the banker By exchanging trust for energy. Cryptocurrencies are the best example of trust being a tangible thing - it can be quite literally converted to Kilowatt hours. This shows how incredible trust is as an energy use optimization device. We should be finding ways to be able to safely depend more on trust, not less.