16 ms·

“In 2018 the blockchain/decentralization story fell apart”

307 points by randomwalker 8y ago

qwerty456127 8y ago
Success rate of blockchain project is not 0%. Many people have became rich this way. Many people use cryptocurrencies actively.
- acdha 8y ago
  Many people have become rich from violating the law or selling to other speculators. It’s much harder to come up with an example of someone who has built a viable business with good long-term potential – it’s like the dotcom bubble with only etoy and cement.com but no Amazon or eBay.
- duskwuff 8y ago
  > Many people have became rich this way. Some people have made money through speculating on cryptocurrencies or tokens. A similar, if not larger, number of people have also lost money this way. More importantly, the "success" of these traders has nothing to do with the underlying technology -- they could have been similarly successful in trading any other financial instrument. > Many people use cryptocurrencies actively. Like who? And for what? Mainstream merchants have generally been moving away from accepting cryptocurrencies, often due to price volatility or long transaction times. Some people still use cryptocurrencies to make illegal transactions online, but certainly not "many people", and in any case I'm not sure that's a success...
  - qwerty456127 8y ago
    > Some people still use cryptocurrencies to make illegal transactions Illegal ≠ evil. Some countries introduce and enforce ridiculous laws that only benefit the ruling regime and their oligarchy and not the people. AFAIK in countries with crazy governments like Russia and Venezuela cryptocurrencies are considered a relatively reliable (and accessible) investment instrument letting people to save their money when the government does some bullshit to ruin the national currency rate. There also are legitimate things (e.g. porn sites subscriptions) that people don't want to show up in their official credit card statements as that would be a shame in the context of their society's dominant culture. It also feels kind of hypocritical to consider whoever smokes weed in e.g. Canada a normal person but whoever does this in Korea (where it's outlawed) a wicked one.
bitxbitxbitcoin 8y ago
The irrational blockchain/decentralization hype story fell apart and good riddance! The technology trudges along, a lot slower than the hype beasts would like you to believe.
- wpietri 8y ago
  For me, when technology trudges along it's in response to some sort of use. E.g. solid-state data storage started out being used in exotic situations like flight recorders. Later came camera usage. It evolved over the decades to become dominant in phone and laptop storage; perhaps eventually it will drive spinning-rust storage out of existence. What are the equivalent real-world use cases for blockchain tech that are a) delivering economic value not achievable by other technologies, and b) are paying for sustained innovation?
  - dhh2106 8y ago
    There isn't currently a huge demand for public crypto currencies but I see a lot of demand from enterprises (particularly in financial services and supply chains) for blockchain. The tech is iterating to solve for these needs. I don't think that means public crypto has failed or will go away. It just needs time to mature as a technology. Fwiw, I find it interesting that OP says public crypto failed because of both fundamental misunderstandings and immature tech (internet trying to compete with newspapers in the 80s). Eventually, the internet was able to compete with newspapers and I think eventually public blockchain will compete with centralized companies. Networks can benefit from economies of scale without the rent seeking bottlenecks.
    - wpietri 8y ago
      > I see a lot of demand from enterprises (particularly in financial services and supply chains) for blockchain. Sorry if I wasn't clear. I understand that's the claim. What I'm asking for is not general areas, but specific examples of where a blockchain is actually in use and delivering value. As far as I've seen, all of the examples in those areas are at best pilot projects. Actual utility seems to be somewhere close to zero. E.g.: https://www.theregister.co.uk/2018/11/30/blockchain_study_finds_0_per_cent_success_rate/ https://www.theregister.co.uk/2018/11/30/blockchain_study_fi...
dexwiz 8y ago
Would blockchain have evolved differently if it’s first major implementation was not Bitcoin? BTC generated a huge amount of wealth from nowhere, and it seems like most blockchain ideas where just trying to duplicate it’s success. To the general public blockchain and BTC are synonymous.
- samastur 8y ago
  It didn't generate it. It moved it from elsewhere.
  - erikpukinskis 8y ago
    Can you explain what you mean? If the blockchain issues 1000 BTC to various miners who sell them to 1000 people for USD$1 each, and then some time later 100 of those people are able to sell their coins for USD$100, then the total amount of money that's been moved out of other investments is USD$11,000, but the total market cap of Bitcoin is USD$100,000 so can't I say that USD$89,000 was "generated"? Although really none of that USD ever disappeared, it's ostensibly still going into USD denominated assets, so... well I don't know what to say about any of this.
    - Tesl 8y ago
      Crypto is not even zero sum, it's negative sum, because whilst the value is set by people trading to each other, real USD has to come out of the system every day to pay for the electricity to support it. The reason it hasn't "generated" wealth and has merely "moved" it, is because it doesn't allow everyone to succeed. Say in your case, person A bought at $1 and sold at $100, so he is up $99. But someone else had to buy the bitcoin he sold, so that person is currently sitting at -$100. For one person to profit, another necessarily has to lose. The price of bitcoin could increase almost indefinitely, since the whole "hodl" meme is about reducing the supply and reducing the float, which allows it to continue to pump upwards and for people to get rich on paper. But it will never be possible for all of them to actually cash out, there isn't enough real USD in the crypto economy to allow that.
    - 8y ago
wpietri 8y ago
The part I found especially compelling: "Blockchain proponents have a vision of _society_ in which centralized entities are weakened/eliminated. But blockchain tech is a way to build _software_ without centralized servers. Why would the latter enable the former? It’s a leap of logic that’s left unexplained."
- lawn 8y ago
  How so? Cryptocurrencies is about divorcing money and state. Seems pretty clear to me.
  - samastur 8y ago
    Not really. It's a difference between necessary and sufficient. Decentralization might be necessary component, but what is lacking is proof or argument that it is also sufficient for this change to happen.
    - ghayes 8y ago
      The original statement: “Why would the latter enable the former” sounds like it’s arguing against necessary as well. If the original post contained “imply” instead of “enable,” this line of reasoning would be sound.
  - acdha 8y ago
    Because proponents have never demonstrated a viable path to linking those. It always comes back to depending on the state (e.g. courts, police) or reinventing banks, with huge hand-waves about how the details could possibly work for a non-trivial scale.
  - lojack 8y ago
    > Cryptocurrencies is about divorcing money and state. Is it though? I used to think that, but over the past couple years I've seen plenty of politics around governance of the future of cryptocurrency. Seems like everyone tried divorcing the two and ended up just creating a new state.
  - 8y ago
pjc50 8y ago
This is an extreme "we told you so" moment, isn't it? But then successful completion of the project was never the goal, just selling blockchain tech to enterprises to generate BTC price rises.
- topmonk 8y ago
  Actually this happened 5 or 6 times already and crypto rebounded within a couple years every single time. So, there was no “told you so” moment for me at least. If you're apt to invest in new technologies and don't invest in crypto soon, there will be a big “I told you so” moment for yourself I think. (imo people being forced to admit they were wrong and missed a golden opportunity is part of the reason for the extreme hatred of cryptocurrencies. As a counterexample, there isn't any hatred of Linux, for not conquering the desktop, which is a technology which also failed to meet expectations. The funny part of it is, is that the negative feelings towards themselves for not investing get projected onto the technology itself, meaning they are blind to the positive sides of it. This manifests as the boom/crash cycle as we see it, since most people are blind to the progress of the technology until it is in their face. Then everyone rushes in, and due to the rapid increase in price, the “buy because it's going up, fast” mentality springs up, recreating the same bubble for the 8th time, the same crash, the same outwardly projected self hatred and the same cycle repeats, yet again. And people never see their own role in it... It amazes me how this human trait manifests itself and plainly laid out for everybody and yet no one is able to see it.)
TagAsDelusion 8y ago
sure
amriksohata 8y ago
Nothing fell apart, its all part of the process, just like the dot com bubble and bust, crypto/decentralisation is not going away. Economics always wins. Someone will make a better, regulated version, that works.
- minimaxir 8y ago
  > Economics always wins. Yep, supply and demand. Currently there's no demand for crypto/blockchain as appropriate substitutes already exist.
  - wallacoloo 8y ago
    > no demand “No demand”. Isn’t Bitcoin still trading for several thousand dollars? Maybe you, and maybe most people, don’t have any want for cryptocurrency, but don’t let that make you think that nobody has demand for it.
    - bduerst 8y ago
      Most of the increase in transactions you see now are from HFTs speculating, who generate demand on any high-risk instruments if they think it has a return somewhere. Demand for Bitcoin as an asset isn't that different from any other commodity, but demand for Bitcoin as a currency is not there as many competitive substitutes exist. https://www.bloomberg.com/news/articles/2017-01-16/high-speed-traders-are-taking-over-bitcoin-as-easy-money-beckons https://www.bloomberg.com/news/articles/2017-01-16/high-spee...
      - duskwuff 8y ago
        And that's when the transactions are even real. There's significant evidence that >80% of volume is wash trades used to drive traffic to fraudulent exchanges. https://www.blockchaintransparency.org/ https://www.blockchaintransparency.org/
  - pushtheenvelope 8y ago
    not sure I understand. cryptocurrencies in aggregate still have a market cap in the billions, which points to some demand.
Legogris 8y ago
I wouldn't read too much into this. The authors don't want to release neither the report or even which the 43 use cases are: http://merltech.org/blockchain-for-international-development-using-a-learning-agenda-to-address-knowledge-gaps/#comment-155 http://merltech.org/blockchain-for-international-development... > The purpose of this blog was NOT to address the use of blockchain, or any DLT, for digital crypto-currency or even financial applications, nor was it to disparage, debunk, or dispel ANYTHING. We were, and remain, technology neutral. If anything, we would say that more testing is warranted, but would advocate that the results of those tests be publicly and fully available. > There is no report. The only product that resulted from our research process is this blog, as Linda Raftree correctly pointed out. > A “use-case” is very different from a “case-study”, the former being more conceptual and the latter requiring significant data for research purposes. > Regarding sharing the list of the 43 use cases, Linda was also correct that the purpose of the this blog was not to “name and shame” and doing so risks distracting from the work we felt has achieved its goal, to motivate conversation around these issues. Two projects are linked from the blog post: https://exonum.com/napr https://exonum.com/napr http://www.amply.tech/ http://www.amply.tech/ I have not heard of either before. This tells us nothing. Basically they have randomly picked 43 out of thousands of projects and won't even publicize which these projects are, or the methodology they used.
geraldbauer 8y ago
FYI: I've collected the best of tweets from two top crypto / blockchain critics. See Best of Bitcoin Maximalist - Scammers, Morons, Clowns, Shills & BagHODLers - Inside The New New Crypto Ponzi Economics [1] by Trolly McTrollface and Crypto Facts - Decentralize Payments - Efficient, Low Cost, Fair, Clean - True or False? [2] by Nouriel Roubini [1]: https://bitsblocks.github.io/bitcoin-maximalist https://bitsblocks.github.io/bitcoin-maximalist [2]: https://bitsblocks.github.io/crypto-facts https://bitsblocks.github.io/crypto-facts
reilly3000 8y ago
I've taken a step back from crypto-startup news in 2018. Are there any bright spots? Interesting projects to follow?
- zhoujianfu 8y ago
  Maybe mlbcryptobaseball.com? Baseball cards do seem like one of the few things it would be cool to “tokenize”, and they’ve made a deal with the MLB to do it.
wrycoder 8y ago
Blockchain tech and decentralization are orthogonal.
- CharlesW 8y ago
  A blockchain running on a single node is uninteresting. Decentralized/distributed consensus is part and parcel of why one would use a blockchain.
  - hannasanarion 8y ago
    You assume that there is a problem that requires distributed consensus. They aren't common. Bitcoin had to invent a whole new distributed consensus problem so that it could solve it.
  - wrycoder 8y ago
    I am thinking of a non-public blockchain, say used to clear bank transactions. It might or might not be externally visible, but only authorized entities could add to it. So, not distributed like Bitcoin.
randomwalker 8y ago
OP here. A small clarification: there are some legitimate criticisms of the Register piece that I cited in the first tweet, but I merely cited it as an example of why I think the hype is calming down. The arguments I make are independent of that piece; the limitations I point out have always been there, rather than something new that happened in 2018. I also wanted to add a couple of points that I didn't get to in the Twitter thread. Economics. Blockchain technologists seem to overestimate the extent to which new insights in economics are needed to understand cryptocurrencies and blockchains, as opposed to applying basic principles from economics and game theory. For example, a recent paper shows that thinking about miners and attackers in terms of stock and flow exposes important limitations of the security of Proof of Work. [1] I learnt of many other such examples at a recent conference on the economics of blockchains. [2] So I think a lot of the "cryptoeconomics" hype is misplaced. Privacy. It's often taken for granted that decentralized architectures will improve privacy. This seems obvious given everything we've learnt about Facebook, but a better way to think about it is that decentralized systems exchange one set of privacy problems with another. I coauthored a paper a few years ago skeptical of the "decentralization ==> privacy" story in the context of social networks [3], but I think many of the arguments in that paper apply to blockchain/dApps that are being built today. [1] http://faculty.chicagobooth.edu/eric.budish/research/Economic-Limits-Bitcoin-Blockchain.pdf http://faculty.chicagobooth.edu/eric.budish/research/Economi... [2] https://bfi.uchicago.edu/events/cryptocurrencies-and-blockchains https://bfi.uchicago.edu/events/cryptocurrencies-and-blockch... [3] http://randomwalker.info/publications/critical-look-at-decentralization-v1.pdf http://randomwalker.info/publications/critical-look-at-decen...
- AndrewKemendo 8y ago
  As I mentioned in the Twitter thread, my chief criticism of cryptocurrency since the beginning is it's naivete of the history and politics of money. The discussions about economics applied here focus too much on microeconomic rather than macroeconomic arguments. So they end up missing the point entirely which is this: Money isn't a neutral instrument and it's not something that can be decoupled from societal/political concepts and structures. You can evaluate it as though it is neutral, but it has not ever been and will never be a neutral instrument because of the historical tendency for resources to pool and therefore become power centers, among other things. Therefore if you view cryptocurrency as having the primary intention to de-couple commerce from coercive power structures [1], then you'll see immediately the historical problem. Namely, history doesn't favor distributed power, especially not when it can easily be co-opted by the powerful systems in which they rely. In the best case scenario for crypto-utopians, millions of people transact and do commerce on a decentralized currency. In that case, whatever sovereign is most impacted, will then either outlaw commerce by crypto by force or require parity with the sovereign currency and control of the crypto currency through tax payments. This has happened multiple times over the centuries with alt-currencies and they are killed off by the most powerful (see: Most powerful economy/military) organization. Politically, there is nothing different about Bitcoin than there was with the confederate states dollar for example. [1] From the original whitepaper: "What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party." https://bitcoin.org/bitcoin.pdf https://bitcoin.org/bitcoin.pdf
boramalper 8y ago
His points about blockchain are compelling but I disagree with “blockchain/decentralisation” part. Blockchain is a decentralised ideal, but so is BitTorrent, so is Tor, and so on, to some significant extent. To say that decentralisation failed because blockchain failed ignores all the other technologies which are serving people well. I think the distinction between “decentralised” (i.e. federated) and “distributed” is important (as decentralised is often used as an umbrella term to cover both).[0] There are tons of federated projects out there from Matrix to Mastodon, and there are initiatives to make federated networks more decentralised (such as the integration of Kademlia DHT in BitTorrent). No need for pessimism I think. :) [0]: https://www.researchgate.net/profile/Jason_Hoelscher/publication/260480880/figure/download/fig1/AS:297257619476480@1447883147178/Centralized-decentralized-and-distributed-network-models-by-Paul-Baran-1964-part-of-a.png https://www.researchgate.net/profile/Jason_Hoelscher/publica...
- arkh 8y ago
  > Blockchain is a decentralised ideal, but so is BitTorrent, so is Tor, and so on, to some significant extent. So is internet. Most people use centralized services but no one prevents you from setting up your DNS servers, with your own domains, servers, website etc.
  - zik 8y ago
    DNS is probably a bad example here. While DNS does have federated servers in the end the entire system is controlled by whoever controls the root name servers. It's pretty much the definition of centralized control.
    - prepend 8y ago
      It’s possible to set up your own servers different than root. The ability to have multiple roots and how they swap info is really decentralized. It’s like saying bitcoin is centralized because there’s only a single blockchain. Sure there’s a single DNS root, but not all countries and network follow it. And the assignment of names is not centralized.
api 8y ago
I think we are entering a cryptocurrency winter for much the same reason the first AI winter happened: too much promised too fast, and hand waving away really massive unsolved problems.
drenvuk 8y ago
It's a mistake to conflate "decentralization" with "blockchain". One is not necessary for the other and decentralization has not fallen apart. I'm not even talking talking about mastodon either. I don't use it. The many to many relationship that torrenting is the epitome of decentralization, is very effective and has been around for nearly two decades at this point. I'm just a random guy on the internet but who is this guy to talk about these subjects in such broad terms? Lay off the misused hyped up tech, please.
- schoen 8y ago
  > I'm just a random guy on the internet but who is this guy to talk about these subjects in such broad terms? Lay off the misused hyped up tech, please. He's a Princeton professor who's written a book about blockchain technology and taught several university courses about it. And he's been studying decentralization issues for a long time. I don't think that Prof. Narayanan means to say here that decentralization requires blockchains, but rather than the optimism that blockchains provide a comprehensive solution to incentive, coordination, and scalability problems in decentralized systems has run up against very serious problems and counterexamples. If you want to see some of his broader concerns about the tradeoffs of decentralization in other contexts, you should ask him, since he's reading this HN thread. :-) (edit: and he posted it himself)
wslh 8y ago
There is a very basic argument, not against decentralization per se but about its real power: even imagining a future where you can decentralized social networks like Facebook, at the end people interacts with the service through an application and this application dictates what the user sees beyond the protocol. For example, OpenBazaar is a decentralized marketplace but if people search for products in the GoogleBazaar site, GoogleBazaar can sort or hide the items as they wish not matter how perfect the decentralization protocol is.
sonnyblarney 8y ago
The 'blockchain decentralization' story is hurting, but the 'decentralization' itself, as a concept, is still gaining momentum, though it has few real vectors of enablement, i.e. few vanguard products.
CM30 8y ago
The blockchain hype fell apart. Which is good, given that it bears no resemblance to reality, and came less from practical applications of the idea and more the one that blockchain tech was 'magic' and was going to magically fix every industry in existence. Companies sprung up based on blockchains and crypotcurrencies and what not that didn't need them in the slightest, and where their only reason for existence was 'get VCs to invest/hype up gulliable people on Reddit'. But blockchains have their uses, and those where they do work well will hopefully be done better without the lunacy. Decentralisation isn't dead/falling apart either, and in that sense... well I think its time is still coming. After all, privacy is a hot topic now. Facebook and Google are getting lots of bad press. Mastodon is (somewhat slowly) taking off. The ingredients are there for change, and at the end of the day, it's really just UI + network effect holding it back now. If someone made a good decentralised Facebook/Reddit/YouTube alternative, I definitely feel it could capture the market. Anger is building up with these sites, and the more they force ideologies/censor/shut down people and groups for corporations the more popular an alternative will be. Heck, I feel the time may be right for a decentralised Patreon competitor right now. Imagine a way to support creators which VISA/Mastercard have no easy way to stop, which makes PayPal and co irrelevant and cannot be shut down by angry Twitter posts. That may come up in a few years or so. But yeah, blockchain hype fell apart, some decentralisation hype fell apart, but blockchain as a concept still has its uses and decentralisation could still have its time to shine.
tCfD 8y ago
Cryptocurrency is just alchemy for the internet age. Same failures, same etiology, same promise of unexpected insights in another, future form
- LowLevelHacker 8y ago
  I am amazed at your stupidity.
- man-and-laptop 8y ago
  This looks like trolling. Blockchain was the first serious attempt at solving the problem of distributed concensus without centralisation. One application of this outside of cryptocurrency is to DNS (see Namecoin). Cryptocurrencies at the very least make black market trading more efficient. See Silk Road. Also, the analogy to alchemy needs a lot more explaining. I don't see any connections.
  - tCfD 8y ago
    Alchemy gave birth to science, this is not trolling.
  - Nasrudith 8y ago
    Well there are several from the 'get rich quick scheme' aspect vs lead into gold aspects to the fact it is trying to get what they want by properties of analogy. That they can turn processing power into the new gold. Then there is the literal magical thinking like the sun and gold must be connected because of the same color therefor if we create a scarce currency it will be a useful commodity and gold shares properties of the sun, also the sun's rays created gold. Alchemists pursue the same goal obsessively trying to get what they want despite the mechanism for it just plain /not being there/. Similarly Cryptocurrency even if it perfect in security and privacy would run into interchange issues. You would need teleportation to bring commerce beyond government control. Gold is a very apt comparison given the gold-bug rhetoric they were in pushing deflationary currency despite its history of failures resulting in fiat currency. The gold standard resulted in /many/ wars for the sake of gold just so that they wouldn't have their economy size capped by lack of currency - leading to considerable loss of /real/ value and massive suffering. Ironically having too much gold also created inflation issue. Having currency that can inflate with the economy instead of something else arbitrary is what the strength of fiat currency is.
phoe-krk 8y ago
The Fediverse is a successful case of decentralization. You can't say that decentralization as a whole is a failure or, worse, that blockchain is synonymous to decentralization; saying so would be an insult to e.g. the original World Wide Web.
staltz 8y ago
OP used an argument I see too often: that the (current) market success of centralization is evidence of centralization's superiority with consumers. For instance: > Open platforms can’t win by directly appealing to users on philosophical grounds, or even cost (see Linux on the desktop). Mainstream users have no good reason to directly interact with blockchain technology—or any piece of code—without intermediaries involved. Openness and decentralization matter to _developers_. I think both centralization and decentralization can appealing to consumers, depending on the case and on zeitgeist. For instance, personal computers were decentralization of computing power, back in the days when the Mainframe (centralization) was dominating. Apple is a decentralized computing company. Often decentralization can become businesses through products, read more https://staltz.com/layers-of-the-internet-economy.html https://staltz.com/layers-of-the-internet-economy.html There are also other "stealth" success examples of decentralized software and protocols that are directly appealing to consumers, such as the Camera and Gallery apps on smartphones and the use of JPEG (open standard) and Bluetooth (open protocol) to create (offline-first) and socially share pictures. The problem with "decentralization" in 2018 is that it was a buzzword related mostly to blockchain technologies, and software built with those were often shadowing and imitating the recent success that tech giants have accumulated. But decentralization goes way back and its success cases are so ubiquitous that we take them for granted and leave them out of the discussion.
- zbentley 8y ago
  > personal computers were decentralization of computing power, back in the days when the Mainframe (centralization) was dominating This "decentralized" computing power as an accidental side effect. Personal computers (and open protocols) caught on because they were thought, by consumers, to fulfill a need. The number of people for whom that need was "decentralize $x" is a rounding error.
  - staltz 8y ago
    One very basic value proposition of decentralization for consumers in the context of the internet is offline usage. When you're in an airplane, that's when the need to have the capability at the end device becomes most obvious, and decentralization directly fulfills that need.
matchagaucho 8y ago
There must be some law or corollary to the effect of "In any decentralized network, 20% of the nodes will control 80% of the transaction value (Pareto Principle)." Critical mass adoption of blockchain will just trigger major capital investments by existing centralized agencies.
danra 8y ago
I'm not at all convinced by the argument about centralization happening because that's what people want. In Israel, for example, there is, in fact, a conspiracy. Though not a hidden one at all - just one which is very hard to defeat. Israel has a very centralized market controlled by just a handful of oligarch families. The same guys control the insurance companies, pension, the fuel supply, the banks, etc. The prices are too high and the service isn't great not because that's what people want, but because competition is stifled, in cooperation with the politicians, who need the oligarchs to keep funding them. I don't think a decentralized currency would be a magic trick which would instantly solve this larger problem of economic centralization, which people most certainly do not want - but it could certainly help break the existing cycle by taking away power from the politicians.
- Theodores 8y ago
  That is just capitalism, Marx wrote about this a long, long time ago. Lenin came along with a solution to this a century ago however that revolution resulted in a different type of centralisation with the 'workers of the world' not uniting into the cooperatives that could have prevented the surpluses of capitalism ending up in the hands of the few. Instead there was dubious central planning with party officials calling the shots rather than these mythical worker heroes. Socialism and communism was an existential threat to international finance capital nonetheless, hence the Cold War. The cryptocurrency boom was greed driven with the fig leaf of 'smash the Fed and fiat currency'. The people that got into it were not that smart, a case of 'fools rush in'. Nowhere in the cryptocurrency discussion was there any appreciation of the history of capitalism, which requires considerable study to get any meaningful knowledge of. If you are studying graphs of alt-coin fluctuations all day and gambling on these things then you aren't going to take time to read all the required texts (or even the 'white papers' on how these silly coins are supposed to work). There are ways to address the evils of capitalism, for instance we haven't heard of the 'Tobin Tax' in a long, long time and discussion of how much capital banks should have in reserve hasn't happened even though the crash of 2008 revealed problems in that area. Despite everyone working so hard for this money stuff we, as a society, are remarkably unconcerned with figuring out how it all works and how we can build a currency system that works for everyone with liquidity to make money work for us instead of us working for money. I would be very interested in further reading on how the economy of Israel works, if you have any links then do share. I am detecting more antisemitism going on in the world at the moment with the polarised views that have not served us well historically. People muttering about international finance being a Jewish conspiracy tend to have no idea about Jewish history or how we got here. Hence I would quite like to know more about the story of the rich getting richer in modern day Israel.
raverbashing 8y ago
This is a very sane and down to earth rebuttal of crypto ActualMoney sucks for a lot of reasons, crypto is addressing very few of them and adding several problems on top of it
chvid 8y ago
Sure it is true - the "business cases" for blockchain are all rubbish. But it is not for the reasons listed; there are no parallels to airlines or gold mining and so on. Decentralization for cryptocurrency is about making them resistant to legislation: With properly decentralized cc you can pay your druglord, terrorist, launder money, gamble, insider trade, hype pump and dump a scam ... and the government can't shut it down or prove that you own any. That is the killer use case. And the only one.
revskill 8y ago
It failed because i couldn't buy 20k BTC with 1 pizza now.
sgentle 8y ago
Joel "Nostradamus" Spolsky in 2001: > Your typical architecture astronaut will take a fact like “Napster is a peer-to-peer service for downloading music” and ignore everything but the architecture, thinking it’s interesting because it’s peer to peer, completely missing the point that it’s interesting because you can type the name of a song and listen to it right away. > All they’ll talk about is peer-to-peer this, that, and the other thing. Suddenly you have peer-to-peer conferences, peer-to-peer venture capital funds, and even peer-to-peer backlash with the imbecile business journalists dripping with glee as they copy each other’s stories: “Peer To Peer: Dead!” > The Architecture Astronauts will say things like: “Can you imagine a program like Napster where you can download anything, not just songs?” Then they’ll build applications like Groove that they think are more general than Napster, but which seem to have neglected that wee little feature that lets you type the name of a song and then listen to it — the feature we wanted in the first place. Talk about missing the point. If Napster wasn’t peer-to-peer but it did let you type the name of a song and then listen to it, it would have been just as popular. I've thought about that essay a lot in the past couple of years. For all of the merits of ＢＬＯＣＫＣＨＡＩＮ I never found it very useful for conducting transactions. Sure, that's the machinations of the federal deep state lizard illuminati, but also it always felt like architecture and ideology were the point, and serving an actual need was an afterthought.
- wslh 8y ago
  Thanks, link: https://www.joelonsoftware.com/2001/04/21/dont-let-architecture-astronauts-scare-you/ https://www.joelonsoftware.com/2001/04/21/dont-let-architect...
- leppr 8y ago
  Today's most popular blockchain application is centralized exchanges. The main use case is to send fiat, play with the markets and then hopefully withdraw more fiat than you put in. The improvement over traditional online gambling is minimal. The Silk Road, which kickstarted Bitcoin adoption, brought a much more interesting improvement over the status-quo. Suddenly, acquiring illegal drugs was easy and safe(r). That was the Napster of blockchain. We will talk about blockchain again when a similarly disruptive use case is found/created. We're missing a couple of crucial pieces of infrastructure before the "people's money" use case can even be put to the test (decentralized fiat on ramps, convenient wallets, scalable price stability, fast confirmations).
jchanimal 8y ago
I still have trouble understanding how a system designed to facilitate global consensus can be considered decentralized. Sure maybe the hardware is decentralized but the resulting data structure is just like the centralized systems it aims to replace. Call me when your cryptocurrency is offline first.
wrs 8y ago
If blog posts published as Twitter threads make you as impotently outraged as they do me, try this: https://threadreaderapp.com/thread/1079759096272818178.html https://threadreaderapp.com/thread/1079759096272818178.html
paraschopra 8y ago
One way to look at the decentralisation is to look at what happened to Internet’s first decentralised platforms such as Youtube. It started as anybody can have a channel but what ended up happening is organisations and full time youtubers ended up garnering most attention on the platform. Centralisation is an inevitable outcome of human groups. I wrote more on this on my blog https://invertedpassion.com/decentralization-continuum/ https://invertedpassion.com/decentralization-continuum/

307 points by randomwalker 8y ago

Success rate of blockchain project is not 0%. Many people have became rich this way. Many people use cryptocurrencies actively.

acdha 8y ago
Many people have become rich from violating the law or selling to other speculators. It’s much harder to come up with an example of someone who has built a viable business with good long-term potential – it’s like the dotcom bubble with only etoy and cement.com but no Amazon or eBay.
duskwuff 8y ago
> Many people have became rich this way. Some people have made money through speculating on cryptocurrencies or tokens. A similar, if not larger, number of people have also lost money this way. More importantly, the "success" of these traders has nothing to do with the underlying technology -- they could have been similarly successful in trading any other financial instrument. > Many people use cryptocurrencies actively. Like who? And for what? Mainstream merchants have generally been moving away from accepting cryptocurrencies, often due to price volatility or long transaction times. Some people still use cryptocurrencies to make illegal transactions online, but certainly not "many people", and in any case I'm not sure that's a success...
- qwerty456127 8y ago
  > Some people still use cryptocurrencies to make illegal transactions Illegal ≠ evil. Some countries introduce and enforce ridiculous laws that only benefit the ruling regime and their oligarchy and not the people. AFAIK in countries with crazy governments like Russia and Venezuela cryptocurrencies are considered a relatively reliable (and accessible) investment instrument letting people to save their money when the government does some bullshit to ruin the national currency rate. There also are legitimate things (e.g. porn sites subscriptions) that people don't want to show up in their official credit card statements as that would be a shame in the context of their society's dominant culture. It also feels kind of hypocritical to consider whoever smokes weed in e.g. Canada a normal person but whoever does this in Korea (where it's outlawed) a wicked one.

bitxbitxbitcoin 8y ago

The irrational blockchain/decentralization hype story fell apart and good riddance! The technology trudges along, a lot slower than the hype beasts would like you to believe.

wpietri 8y ago
For me, when technology trudges along it's in response to some sort of use. E.g. solid-state data storage started out being used in exotic situations like flight recorders. Later came camera usage. It evolved over the decades to become dominant in phone and laptop storage; perhaps eventually it will drive spinning-rust storage out of existence. What are the equivalent real-world use cases for blockchain tech that are a) delivering economic value not achievable by other technologies, and b) are paying for sustained innovation?
- dhh2106 8y ago
  There isn't currently a huge demand for public crypto currencies but I see a lot of demand from enterprises (particularly in financial services and supply chains) for blockchain. The tech is iterating to solve for these needs. I don't think that means public crypto has failed or will go away. It just needs time to mature as a technology. Fwiw, I find it interesting that OP says public crypto failed because of both fundamental misunderstandings and immature tech (internet trying to compete with newspapers in the 80s). Eventually, the internet was able to compete with newspapers and I think eventually public blockchain will compete with centralized companies. Networks can benefit from economies of scale without the rent seeking bottlenecks.
  - wpietri 8y ago
    > I see a lot of demand from enterprises (particularly in financial services and supply chains) for blockchain. Sorry if I wasn't clear. I understand that's the claim. What I'm asking for is not general areas, but specific examples of where a blockchain is actually in use and delivering value. As far as I've seen, all of the examples in those areas are at best pilot projects. Actual utility seems to be somewhere close to zero. E.g.: https://www.theregister.co.uk/2018/11/30/blockchain_study_finds_0_per_cent_success_rate/ https://www.theregister.co.uk/2018/11/30/blockchain_study_fi...

dexwiz 8y ago

Would blockchain have evolved differently if it’s first major implementation was not Bitcoin? BTC generated a huge amount of wealth from nowhere, and it seems like most blockchain ideas where just trying to duplicate it’s success. To the general public blockchain and BTC are synonymous.

samastur 8y ago
It didn't generate it. It moved it from elsewhere.
- erikpukinskis 8y ago
  Can you explain what you mean? If the blockchain issues 1000 BTC to various miners who sell them to 1000 people for USD$1 each, and then some time later 100 of those people are able to sell their coins for USD$100, then the total amount of money that's been moved out of other investments is USD$11,000, but the total market cap of Bitcoin is USD$100,000 so can't I say that USD$89,000 was "generated"? Although really none of that USD ever disappeared, it's ostensibly still going into USD denominated assets, so... well I don't know what to say about any of this.
  - Tesl 8y ago
    Crypto is not even zero sum, it's negative sum, because whilst the value is set by people trading to each other, real USD has to come out of the system every day to pay for the electricity to support it. The reason it hasn't "generated" wealth and has merely "moved" it, is because it doesn't allow everyone to succeed. Say in your case, person A bought at $1 and sold at $100, so he is up $99. But someone else had to buy the bitcoin he sold, so that person is currently sitting at -$100. For one person to profit, another necessarily has to lose. The price of bitcoin could increase almost indefinitely, since the whole "hodl" meme is about reducing the supply and reducing the float, which allows it to continue to pump upwards and for people to get rich on paper. But it will never be possible for all of them to actually cash out, there isn't enough real USD in the crypto economy to allow that.
  - 8y ago

wpietri 8y ago

The part I found especially compelling: "Blockchain proponents have a vision of _society_ in which centralized entities are weakened/eliminated. But blockchain tech is a way to build _software_ without centralized servers. Why would the latter enable the former? It’s a leap of logic that’s left unexplained."

lawn 8y ago
How so? Cryptocurrencies is about divorcing money and state. Seems pretty clear to me.
- samastur 8y ago
  Not really. It's a difference between necessary and sufficient. Decentralization might be necessary component, but what is lacking is proof or argument that it is also sufficient for this change to happen.
  - ghayes 8y ago
    The original statement: “Why would the latter enable the former” sounds like it’s arguing against necessary as well. If the original post contained “imply” instead of “enable,” this line of reasoning would be sound.
- acdha 8y ago
  Because proponents have never demonstrated a viable path to linking those. It always comes back to depending on the state (e.g. courts, police) or reinventing banks, with huge hand-waves about how the details could possibly work for a non-trivial scale.
- lojack 8y ago
  > Cryptocurrencies is about divorcing money and state. Is it though? I used to think that, but over the past couple years I've seen plenty of politics around governance of the future of cryptocurrency. Seems like everyone tried divorcing the two and ended up just creating a new state.
- 8y ago

pjc50 8y ago

This is an extreme "we told you so" moment, isn't it? But then successful completion of the project was never the goal, just selling blockchain tech to enterprises to generate BTC price rises.

topmonk 8y ago
Actually this happened 5 or 6 times already and crypto rebounded within a couple years every single time. So, there was no “told you so” moment for me at least. If you're apt to invest in new technologies and don't invest in crypto soon, there will be a big “I told you so” moment for yourself I think. (imo people being forced to admit they were wrong and missed a golden opportunity is part of the reason for the extreme hatred of cryptocurrencies. As a counterexample, there isn't any hatred of Linux, for not conquering the desktop, which is a technology which also failed to meet expectations. The funny part of it is, is that the negative feelings towards themselves for not investing get projected onto the technology itself, meaning they are blind to the positive sides of it. This manifests as the boom/crash cycle as we see it, since most people are blind to the progress of the technology until it is in their face. Then everyone rushes in, and due to the rapid increase in price, the “buy because it's going up, fast” mentality springs up, recreating the same bubble for the 8th time, the same crash, the same outwardly projected self hatred and the same cycle repeats, yet again. And people never see their own role in it... It amazes me how this human trait manifests itself and plainly laid out for everybody and yet no one is able to see it.)

TagAsDelusion 8y ago

sure

amriksohata 8y ago

Nothing fell apart, its all part of the process, just like the dot com bubble and bust, crypto/decentralisation is not going away. Economics always wins. Someone will make a better, regulated version, that works.

minimaxir 8y ago
> Economics always wins. Yep, supply and demand. Currently there's no demand for crypto/blockchain as appropriate substitutes already exist.
- wallacoloo 8y ago
  > no demand “No demand”. Isn’t Bitcoin still trading for several thousand dollars? Maybe you, and maybe most people, don’t have any want for cryptocurrency, but don’t let that make you think that nobody has demand for it.
  - bduerst 8y ago
    Most of the increase in transactions you see now are from HFTs speculating, who generate demand on any high-risk instruments if they think it has a return somewhere. Demand for Bitcoin as an asset isn't that different from any other commodity, but demand for Bitcoin as a currency is not there as many competitive substitutes exist. https://www.bloomberg.com/news/articles/2017-01-16/high-speed-traders-are-taking-over-bitcoin-as-easy-money-beckons https://www.bloomberg.com/news/articles/2017-01-16/high-spee...
    - duskwuff 8y ago
      And that's when the transactions are even real. There's significant evidence that >80% of volume is wash trades used to drive traffic to fraudulent exchanges. https://www.blockchaintransparency.org/ https://www.blockchaintransparency.org/
- pushtheenvelope 8y ago
  not sure I understand. cryptocurrencies in aggregate still have a market cap in the billions, which points to some demand.

Legogris 8y ago

I wouldn't read too much into this. The authors don't want to release neither the report or even which the 43 use cases are: http://merltech.org/blockchain-for-international-development-using-a-learning-agenda-to-address-knowledge-gaps/#comment-155 http://merltech.org/blockchain-for-international-development... > The purpose of this blog was NOT to address the use of blockchain, or any DLT, for digital crypto-currency or even financial applications, nor was it to disparage, debunk, or dispel ANYTHING. We were, and remain, technology neutral. If anything, we would say that more testing is warranted, but would advocate that the results of those tests be publicly and fully available. > There is no report. The only product that resulted from our research process is this blog, as Linda Raftree correctly pointed out. > A “use-case” is very different from a “case-study”, the former being more conceptual and the latter requiring significant data for research purposes. > Regarding sharing the list of the 43 use cases, Linda was also correct that the purpose of the this blog was not to “name and shame” and doing so risks distracting from the work we felt has achieved its goal, to motivate conversation around these issues. Two projects are linked from the blog post: https://exonum.com/napr https://exonum.com/napr http://www.amply.tech/ http://www.amply.tech/ I have not heard of either before. This tells us nothing. Basically they have randomly picked 43 out of thousands of projects and won't even publicize which these projects are, or the methodology they used.

geraldbauer 8y ago

FYI: I've collected the best of tweets from two top crypto / blockchain critics. See Best of Bitcoin Maximalist - Scammers, Morons, Clowns, Shills & BagHODLers - Inside The New New Crypto Ponzi Economics [1] by Trolly McTrollface and Crypto Facts - Decentralize Payments - Efficient, Low Cost, Fair, Clean - True or False? [2] by Nouriel Roubini [1]: https://bitsblocks.github.io/bitcoin-maximalist https://bitsblocks.github.io/bitcoin-maximalist [2]: https://bitsblocks.github.io/crypto-facts https://bitsblocks.github.io/crypto-facts

reilly3000 8y ago

I've taken a step back from crypto-startup news in 2018. Are there any bright spots? Interesting projects to follow?

zhoujianfu 8y ago
Maybe mlbcryptobaseball.com? Baseball cards do seem like one of the few things it would be cool to “tokenize”, and they’ve made a deal with the MLB to do it.

wrycoder 8y ago

Blockchain tech and decentralization are orthogonal.

CharlesW 8y ago
A blockchain running on a single node is uninteresting. Decentralized/distributed consensus is part and parcel of why one would use a blockchain.
- hannasanarion 8y ago
  You assume that there is a problem that requires distributed consensus. They aren't common. Bitcoin had to invent a whole new distributed consensus problem so that it could solve it.
- wrycoder 8y ago
  I am thinking of a non-public blockchain, say used to clear bank transactions. It might or might not be externally visible, but only authorized entities could add to it. So, not distributed like Bitcoin.

randomwalker 8y ago

OP here. A small clarification: there are some legitimate criticisms of the Register piece that I cited in the first tweet, but I merely cited it as an example of why I think the hype is calming down. The arguments I make are independent of that piece; the limitations I point out have always been there, rather than something new that happened in 2018. I also wanted to add a couple of points that I didn't get to in the Twitter thread. Economics. Blockchain technologists seem to overestimate the extent to which new insights in economics are needed to understand cryptocurrencies and blockchains, as opposed to applying basic principles from economics and game theory. For example, a recent paper shows that thinking about miners and attackers in terms of stock and flow exposes important limitations of the security of Proof of Work. [1] I learnt of many other such examples at a recent conference on the economics of blockchains. [2] So I think a lot of the "cryptoeconomics" hype is misplaced. Privacy. It's often taken for granted that decentralized architectures will improve privacy. This seems obvious given everything we've learnt about Facebook, but a better way to think about it is that decentralized systems exchange one set of privacy problems with another. I coauthored a paper a few years ago skeptical of the "decentralization ==> privacy" story in the context of social networks [3], but I think many of the arguments in that paper apply to blockchain/dApps that are being built today. [1] http://faculty.chicagobooth.edu/eric.budish/research/Economic-Limits-Bitcoin-Blockchain.pdf http://faculty.chicagobooth.edu/eric.budish/research/Economi... [2] https://bfi.uchicago.edu/events/cryptocurrencies-and-blockchains https://bfi.uchicago.edu/events/cryptocurrencies-and-blockch... [3] http://randomwalker.info/publications/critical-look-at-decentralization-v1.pdf http://randomwalker.info/publications/critical-look-at-decen...

AndrewKemendo 8y ago
As I mentioned in the Twitter thread, my chief criticism of cryptocurrency since the beginning is it's naivete of the history and politics of money. The discussions about economics applied here focus too much on microeconomic rather than macroeconomic arguments. So they end up missing the point entirely which is this: Money isn't a neutral instrument and it's not something that can be decoupled from societal/political concepts and structures. You can evaluate it as though it is neutral, but it has not ever been and will never be a neutral instrument because of the historical tendency for resources to pool and therefore become power centers, among other things. Therefore if you view cryptocurrency as having the primary intention to de-couple commerce from coercive power structures [1], then you'll see immediately the historical problem. Namely, history doesn't favor distributed power, especially not when it can easily be co-opted by the powerful systems in which they rely. In the best case scenario for crypto-utopians, millions of people transact and do commerce on a decentralized currency. In that case, whatever sovereign is most impacted, will then either outlaw commerce by crypto by force or require parity with the sovereign currency and control of the crypto currency through tax payments. This has happened multiple times over the centuries with alt-currencies and they are killed off by the most powerful (see: Most powerful economy/military) organization. Politically, there is nothing different about Bitcoin than there was with the confederate states dollar for example. [1] From the original whitepaper: "What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party." https://bitcoin.org/bitcoin.pdf https://bitcoin.org/bitcoin.pdf

boramalper 8y ago

His points about blockchain are compelling but I disagree with “blockchain/decentralisation” part. Blockchain is a decentralised ideal, but so is BitTorrent, so is Tor, and so on, to some significant extent. To say that decentralisation failed because blockchain failed ignores all the other technologies which are serving people well. I think the distinction between “decentralised” (i.e. federated) and “distributed” is important (as decentralised is often used as an umbrella term to cover both).[0] There are tons of federated projects out there from Matrix to Mastodon, and there are initiatives to make federated networks more decentralised (such as the integration of Kademlia DHT in BitTorrent). No need for pessimism I think. :) [0]: https://www.researchgate.net/profile/Jason_Hoelscher/publication/260480880/figure/download/fig1/AS:297257619476480@1447883147178/Centralized-decentralized-and-distributed-network-models-by-Paul-Baran-1964-part-of-a.png https://www.researchgate.net/profile/Jason_Hoelscher/publica...

arkh 8y ago
> Blockchain is a decentralised ideal, but so is BitTorrent, so is Tor, and so on, to some significant extent. So is internet. Most people use centralized services but no one prevents you from setting up your DNS servers, with your own domains, servers, website etc.
- zik 8y ago
  DNS is probably a bad example here. While DNS does have federated servers in the end the entire system is controlled by whoever controls the root name servers. It's pretty much the definition of centralized control.
  - prepend 8y ago
    It’s possible to set up your own servers different than root. The ability to have multiple roots and how they swap info is really decentralized. It’s like saying bitcoin is centralized because there’s only a single blockchain. Sure there’s a single DNS root, but not all countries and network follow it. And the assignment of names is not centralized.

api 8y ago

I think we are entering a cryptocurrency winter for much the same reason the first AI winter happened: too much promised too fast, and hand waving away really massive unsolved problems.

drenvuk 8y ago

It's a mistake to conflate "decentralization" with "blockchain". One is not necessary for the other and decentralization has not fallen apart. I'm not even talking talking about mastodon either. I don't use it. The many to many relationship that torrenting is the epitome of decentralization, is very effective and has been around for nearly two decades at this point. I'm just a random guy on the internet but who is this guy to talk about these subjects in such broad terms? Lay off the misused hyped up tech, please.

schoen 8y ago
> I'm just a random guy on the internet but who is this guy to talk about these subjects in such broad terms? Lay off the misused hyped up tech, please. He's a Princeton professor who's written a book about blockchain technology and taught several university courses about it. And he's been studying decentralization issues for a long time. I don't think that Prof. Narayanan means to say here that decentralization requires blockchains, but rather than the optimism that blockchains provide a comprehensive solution to incentive, coordination, and scalability problems in decentralized systems has run up against very serious problems and counterexamples. If you want to see some of his broader concerns about the tradeoffs of decentralization in other contexts, you should ask him, since he's reading this HN thread. :-) (edit: and he posted it himself)

wslh 8y ago

There is a very basic argument, not against decentralization per se but about its real power: even imagining a future where you can decentralized social networks like Facebook, at the end people interacts with the service through an application and this application dictates what the user sees beyond the protocol. For example, OpenBazaar is a decentralized marketplace but if people search for products in the GoogleBazaar site, GoogleBazaar can sort or hide the items as they wish not matter how perfect the decentralization protocol is.

sonnyblarney 8y ago

The 'blockchain decentralization' story is hurting, but the 'decentralization' itself, as a concept, is still gaining momentum, though it has few real vectors of enablement, i.e. few vanguard products.

CM30 8y ago

The blockchain hype fell apart. Which is good, given that it bears no resemblance to reality, and came less from practical applications of the idea and more the one that blockchain tech was 'magic' and was going to magically fix every industry in existence. Companies sprung up based on blockchains and crypotcurrencies and what not that didn't need them in the slightest, and where their only reason for existence was 'get VCs to invest/hype up gulliable people on Reddit'. But blockchains have their uses, and those where they do work well will hopefully be done better without the lunacy. Decentralisation isn't dead/falling apart either, and in that sense... well I think its time is still coming. After all, privacy is a hot topic now. Facebook and Google are getting lots of bad press. Mastodon is (somewhat slowly) taking off. The ingredients are there for change, and at the end of the day, it's really just UI + network effect holding it back now. If someone made a good decentralised Facebook/Reddit/YouTube alternative, I definitely feel it could capture the market. Anger is building up with these sites, and the more they force ideologies/censor/shut down people and groups for corporations the more popular an alternative will be. Heck, I feel the time may be right for a decentralised Patreon competitor right now. Imagine a way to support creators which VISA/Mastercard have no easy way to stop, which makes PayPal and co irrelevant and cannot be shut down by angry Twitter posts. That may come up in a few years or so. But yeah, blockchain hype fell apart, some decentralisation hype fell apart, but blockchain as a concept still has its uses and decentralisation could still have its time to shine.

tCfD 8y ago

Cryptocurrency is just alchemy for the internet age. Same failures, same etiology, same promise of unexpected insights in another, future form

LowLevelHacker 8y ago
I am amazed at your stupidity.
man-and-laptop 8y ago
This looks like trolling. Blockchain was the first serious attempt at solving the problem of distributed concensus without centralisation. One application of this outside of cryptocurrency is to DNS (see Namecoin). Cryptocurrencies at the very least make black market trading more efficient. See Silk Road. Also, the analogy to alchemy needs a lot more explaining. I don't see any connections.
- tCfD 8y ago
  Alchemy gave birth to science, this is not trolling.
- Nasrudith 8y ago
  Well there are several from the 'get rich quick scheme' aspect vs lead into gold aspects to the fact it is trying to get what they want by properties of analogy. That they can turn processing power into the new gold. Then there is the literal magical thinking like the sun and gold must be connected because of the same color therefor if we create a scarce currency it will be a useful commodity and gold shares properties of the sun, also the sun's rays created gold. Alchemists pursue the same goal obsessively trying to get what they want despite the mechanism for it just plain /not being there/. Similarly Cryptocurrency even if it perfect in security and privacy would run into interchange issues. You would need teleportation to bring commerce beyond government control. Gold is a very apt comparison given the gold-bug rhetoric they were in pushing deflationary currency despite its history of failures resulting in fiat currency. The gold standard resulted in /many/ wars for the sake of gold just so that they wouldn't have their economy size capped by lack of currency - leading to considerable loss of /real/ value and massive suffering. Ironically having too much gold also created inflation issue. Having currency that can inflate with the economy instead of something else arbitrary is what the strength of fiat currency is.

phoe-krk 8y ago

The Fediverse is a successful case of decentralization. You can't say that decentralization as a whole is a failure or, worse, that blockchain is synonymous to decentralization; saying so would be an insult to e.g. the original World Wide Web.

staltz 8y ago

OP used an argument I see too often: that the (current) market success of centralization is evidence of centralization's superiority with consumers. For instance: > Open platforms can’t win by directly appealing to users on philosophical grounds, or even cost (see Linux on the desktop). Mainstream users have no good reason to directly interact with blockchain technology—or any piece of code—without intermediaries involved. Openness and decentralization matter to _developers_. I think both centralization and decentralization can appealing to consumers, depending on the case and on zeitgeist. For instance, personal computers were decentralization of computing power, back in the days when the Mainframe (centralization) was dominating. Apple is a decentralized computing company. Often decentralization can become businesses through products, read more https://staltz.com/layers-of-the-internet-economy.html https://staltz.com/layers-of-the-internet-economy.html There are also other "stealth" success examples of decentralized software and protocols that are directly appealing to consumers, such as the Camera and Gallery apps on smartphones and the use of JPEG (open standard) and Bluetooth (open protocol) to create (offline-first) and socially share pictures. The problem with "decentralization" in 2018 is that it was a buzzword related mostly to blockchain technologies, and software built with those were often shadowing and imitating the recent success that tech giants have accumulated. But decentralization goes way back and its success cases are so ubiquitous that we take them for granted and leave them out of the discussion.

zbentley 8y ago
> personal computers were decentralization of computing power, back in the days when the Mainframe (centralization) was dominating This "decentralized" computing power as an accidental side effect. Personal computers (and open protocols) caught on because they were thought, by consumers, to fulfill a need. The number of people for whom that need was "decentralize $x" is a rounding error.
- staltz 8y ago
  One very basic value proposition of decentralization for consumers in the context of the internet is offline usage. When you're in an airplane, that's when the need to have the capability at the end device becomes most obvious, and decentralization directly fulfills that need.

matchagaucho 8y ago

There must be some law or corollary to the effect of "In any decentralized network, 20% of the nodes will control 80% of the transaction value (Pareto Principle)." Critical mass adoption of blockchain will just trigger major capital investments by existing centralized agencies.

danra 8y ago

I'm not at all convinced by the argument about centralization happening because that's what people want. In Israel, for example, there is, in fact, a conspiracy. Though not a hidden one at all - just one which is very hard to defeat. Israel has a very centralized market controlled by just a handful of oligarch families. The same guys control the insurance companies, pension, the fuel supply, the banks, etc. The prices are too high and the service isn't great not because that's what people want, but because competition is stifled, in cooperation with the politicians, who need the oligarchs to keep funding them. I don't think a decentralized currency would be a magic trick which would instantly solve this larger problem of economic centralization, which people most certainly do not want - but it could certainly help break the existing cycle by taking away power from the politicians.

Theodores 8y ago
That is just capitalism, Marx wrote about this a long, long time ago. Lenin came along with a solution to this a century ago however that revolution resulted in a different type of centralisation with the 'workers of the world' not uniting into the cooperatives that could have prevented the surpluses of capitalism ending up in the hands of the few. Instead there was dubious central planning with party officials calling the shots rather than these mythical worker heroes. Socialism and communism was an existential threat to international finance capital nonetheless, hence the Cold War. The cryptocurrency boom was greed driven with the fig leaf of 'smash the Fed and fiat currency'. The people that got into it were not that smart, a case of 'fools rush in'. Nowhere in the cryptocurrency discussion was there any appreciation of the history of capitalism, which requires considerable study to get any meaningful knowledge of. If you are studying graphs of alt-coin fluctuations all day and gambling on these things then you aren't going to take time to read all the required texts (or even the 'white papers' on how these silly coins are supposed to work). There are ways to address the evils of capitalism, for instance we haven't heard of the 'Tobin Tax' in a long, long time and discussion of how much capital banks should have in reserve hasn't happened even though the crash of 2008 revealed problems in that area. Despite everyone working so hard for this money stuff we, as a society, are remarkably unconcerned with figuring out how it all works and how we can build a currency system that works for everyone with liquidity to make money work for us instead of us working for money. I would be very interested in further reading on how the economy of Israel works, if you have any links then do share. I am detecting more antisemitism going on in the world at the moment with the polarised views that have not served us well historically. People muttering about international finance being a Jewish conspiracy tend to have no idea about Jewish history or how we got here. Hence I would quite like to know more about the story of the rich getting richer in modern day Israel.

raverbashing 8y ago

This is a very sane and down to earth rebuttal of crypto ActualMoney sucks for a lot of reasons, crypto is addressing very few of them and adding several problems on top of it

chvid 8y ago

Sure it is true - the "business cases" for blockchain are all rubbish. But it is not for the reasons listed; there are no parallels to airlines or gold mining and so on. Decentralization for cryptocurrency is about making them resistant to legislation: With properly decentralized cc you can pay your druglord, terrorist, launder money, gamble, insider trade, hype pump and dump a scam ... and the government can't shut it down or prove that you own any. That is the killer use case. And the only one.

revskill 8y ago

It failed because i couldn't buy 20k BTC with 1 pizza now.

sgentle 8y ago

Joel "Nostradamus" Spolsky in 2001: > Your typical architecture astronaut will take a fact like “Napster is a peer-to-peer service for downloading music” and ignore everything but the architecture, thinking it’s interesting because it’s peer to peer, completely missing the point that it’s interesting because you can type the name of a song and listen to it right away. > All they’ll talk about is peer-to-peer this, that, and the other thing. Suddenly you have peer-to-peer conferences, peer-to-peer venture capital funds, and even peer-to-peer backlash with the imbecile business journalists dripping with glee as they copy each other’s stories: “Peer To Peer: Dead!” > The Architecture Astronauts will say things like: “Can you imagine a program like Napster where you can download anything, not just songs?” Then they’ll build applications like Groove that they think are more general than Napster, but which seem to have neglected that wee little feature that lets you type the name of a song and then listen to it — the feature we wanted in the first place. Talk about missing the point. If Napster wasn’t peer-to-peer but it did let you type the name of a song and then listen to it, it would have been just as popular. I've thought about that essay a lot in the past couple of years. For all of the merits of ＢＬＯＣＫＣＨＡＩＮ I never found it very useful for conducting transactions. Sure, that's the machinations of the federal deep state lizard illuminati, but also it always felt like architecture and ideology were the point, and serving an actual need was an afterthought.

wslh 8y ago
Thanks, link: https://www.joelonsoftware.com/2001/04/21/dont-let-architecture-astronauts-scare-you/ https://www.joelonsoftware.com/2001/04/21/dont-let-architect...
leppr 8y ago
Today's most popular blockchain application is centralized exchanges. The main use case is to send fiat, play with the markets and then hopefully withdraw more fiat than you put in. The improvement over traditional online gambling is minimal. The Silk Road, which kickstarted Bitcoin adoption, brought a much more interesting improvement over the status-quo. Suddenly, acquiring illegal drugs was easy and safe(r). That was the Napster of blockchain. We will talk about blockchain again when a similarly disruptive use case is found/created. We're missing a couple of crucial pieces of infrastructure before the "people's money" use case can even be put to the test (decentralized fiat on ramps, convenient wallets, scalable price stability, fast confirmations).

jchanimal 8y ago

I still have trouble understanding how a system designed to facilitate global consensus can be considered decentralized. Sure maybe the hardware is decentralized but the resulting data structure is just like the centralized systems it aims to replace. Call me when your cryptocurrency is offline first.

wrs 8y ago

If blog posts published as Twitter threads make you as impotently outraged as they do me, try this: https://threadreaderapp.com/thread/1079759096272818178.html https://threadreaderapp.com/thread/1079759096272818178.html

paraschopra 8y ago

One way to look at the decentralisation is to look at what happened to Internet’s first decentralised platforms such as Youtube. It started as anybody can have a channel but what ended up happening is organisations and full time youtubers ended up garnering most attention on the platform. Centralisation is an inevitable outcome of human groups. I wrote more on this on my blog https://invertedpassion.com/decentralization-continuum/ https://invertedpassion.com/decentralization-continuum/