10 ms·

Blockchain and Trust

116 points by bb88 8y ago

2019ideas 8y ago
I like Bitcoin, I don't see a use for any other coin. Decentralized verification seems to be valuable in Currency only. Timestamps and voting do not seem to be valuable, this was the craze over alt coins.
dboreham 8y ago
>but centralized (as in there's only one) I think that should be "global", especially since "centralized" means something significantly different in blockchain circles (and bs goes on to use it in that sense later in the article).
- Legogris 8y ago
  Logically centralized but physically decentralized would be a specification, but his statement is correct. "Centralized" does not have a different meaning in blockchain circles, however it (and especially the inverse "decentralized) has become a weasel word that people use frivolously.
  - bitxbitxbitcoin 8y ago
    I've definitely seen, and been guilty of, using "centralization" as a weasel word in blockchain circles. Agreed this should change. Usually what's meant is "potential for corruption or abuse."
  - michaelscott 8y ago
    "Centralised" is usually used in the blockchain space with the systems theory definition as applied to graphs. Ditto for "decentralised" and "distributed"
legionof7 8y ago
This article uses the common criticism of there already being existing institutions and security systems for money transfer. However, this may be true in well developed countries but it's not true at all in developing countries. IMO, this is a common oversight by critics.
- ssivark 8y ago
  In what world do people have the technological and social infrastructure for Bitcoin (end user devices, networks, miners, etc) but bad infrastructure for money transfer? How do you think they would be buying their phones/devices and paying to connect to the network?
  - lawn 8y ago
    You act like only people in rich and peaceful countries can have phones and access to internet. All you need is a smart phone or a laptop with a very poor internet connection to use it. Everyone doesn't have to be a miner. Yet there are many miners in Venezuela, a country where Bitcoin can have a very large impact for people. Venezuela have very bad infrastructure for money transfer... Since it's all blocked. Except for Bitcoin.
  - legionof7 8y ago
    Venezuela for one.
    - XorNot 8y ago
      How? There's always a flavour of the moment failing state inserted as a reference here. But if you can't transfer Venezuelaean currency out of the country, how are you buying bitcoins with it? How are you getting the money to that person?
      - legionof7 8y ago
        Check out LocalBitcoins
- equalunique 8y ago
  Don't worry. If there is a developing country where those institutions don't exist, then you can trust the CIA will forcibly install such institutions, and every public mouthpiece from Wall Street to Capitol Hill will tell you why that's a Good Thing.
- 8y ago
dragontamer 8y ago
This is technically a repost from the Wired article. https://news.ycombinator.com/item?id=19097613 https://news.ycombinator.com/item?id=19097613
equalunique 8y ago
When that trust turns out to be misplaced, there is no recourse. If your bitcoin exchange gets hacked, you lose all of your money. If your bitcoin wallet gets hacked, you lose all of your money. If you forget your login credentials, you lose all of your money. If there's a bug in the code of your smart contract, you lose all of your money. If someone successfully hacks the blockchain security, you lose all of your money. In many ways, trusting technology is harder than trusting people. Would you rather trust a human legal system or the details of some computer code you don't have the expertise to audit? In making the case for human systems over bitcoin, Bruce Schneider echoes the same arguments that eventually led to FDR stealing every US citizen's gold in 1933 to bail out the federal reserve. To me it seems deplorable for someone to advocate placating dishonest institutions founded on a legacy of screwing over people.
- sparkie 8y ago
  Not only 1933, they've been stealing money ever since through a monetary policy of constant inflation. Deliberate inflation is theft of a small percentage of the money of all savers.
  - hannasanarion 8y ago
    You do realize that non-inflation was one of the main causes of the great depression, right? Are you telling me that you would spend your money on consumer products and employing people if you knew that it would be worth more if you left it sitting in your bank?
    - sparkie 8y ago
      Whether you think inflation is justified or not does not negate the argument. It is still theft. If savers did not have money, economists would not have anything to inflate. The inflation benefits the money printer, because they spend it at the market rate at the time of printing, but by the time it works its way through the economy, the effect is reduced purchasing power for the saver or consumer. Yes, inflation is a deterrent on saving, pushing people to instead invest their money. Whether it is a good thing that people blow all of their money on junk consumer goods is another question. What if some people just want to save, and not take risks? Well, it's their own choice, and now they are able to make such choice because there are no economists controlling the monetary policy of Bitcoin. What you think was justified previously, might no longer be possible. If we slip into depression due to deflation again, we might have to come up with some other solution, which isn't just kicking the can down the road.
OhHeyItsE 8y ago
Pffft just another shill for the big banks. Proof: just look at that gray beard. This is good for bitcoin. /s (if it wasn't obvious)
deweller 8y ago
> Bitcoin might theoretically be based on distributed trust, but in practice, that's just not true. I'll grant that Bitcoin is not perfectly centralized. But I challenge you to find a more decentralized digital currency on the planet. A digital currency doesn't need to be 100% decentralized to be very useful as a digital medium of exchange.
- walterstucco 8y ago
  What's the advantage? None
- notahacker 8y ago
  It depends on your definition of "useful". It doesn't need to be 100% decentralised to allow exchange to take place without a single technical point of failure existing, but it probably does need to be substantially more decentralised than it actually is to not actually have bigger trust issues than traditional currency (at least for people trying to carry out legal transactions in a developed world financial system).
keymone 8y ago
> It can also be extremely expensive, both in data storage and in the energy required to maintain it. Bitcoin has the most expensive consensus algorithm the world has ever seen, by far. When Bruce complains that Bitcoin's consensus is expensive he really compliments Bitcoin's security and resistance to attacks on immutability. He's spot on that private blockchains and most public blockchains are nothing but hype, that opinion is not news though.
xorcist 8y ago
> Honestly, cryptocurrencies are useless. It's always strange when people are overly specific. Is it private money that will never find any use anymore, or is it just that they can never be digital? The first is not an unreasonable opinion to have, given modern history and the relative success of fiscal policy (at least in the latter half of the 20th century), the second I find harder to justify. > Would you rather trust a human legal system The real world is far from that clear cut. Users of other private currencies, such as eGold, might be tempted to disagree. Hacks (in any and every sense) of those systems were even more devastating. If you only ever consider every currency an alternative to the dollar, and limit yourself to that use case, you might as well ask yourself why any other currency exist at all.
- creeble 8y ago
  I do think he contradicts that sentence in the following one: > ...and criminals who want a black-market way to exchange money. So not "useless" but of questionable value. But I believe bitcoin will probably never go away for this reason alone.
  - stale2002 8y ago
    One mans "criminal" is another's political activist living under a dictatorship. I'd argue that a majority of the world's population currently live under what could be described as an authoritarian regime.
  - extra88 8y ago
    There will probably never be an economy or society that exists without a black market but that doesn't mean aiding such markets is a feature, not a bug.
    - sparkie 8y ago
      It's a feature. The black market economy is part of the overall economy, and at least a double digit percentage of it. Elimination of black markets means a massive overall economic loss for a country. No government wants to completely eliminate all black markets. They just want to control them enough that they're taking their slice of the pie, and prevent certain markets which involve things like violent crimes which have bigger societal effects. "Crime" without victims is wasting law enforcement resources. Tax money should be spent fighting real problems and not the virtual problems made up to have a perceived moral high ground. Government over-regulation, or over-enforcement of regulation leads to economic stagnation and has the opposite intention of pushing people towards black-markets. It's a delicate balance.
FreeCrypto 8y ago
Of course trust is still involved. The whitepaper specifically puts "trust" in the context of trusted third parties ("financial institutions serving as trusted third parties to process electronic payments"), and proposes a solution to the double-spend problem when they are not relied upon. It is a very unique solution that could be useful in solving some very specific use cases. There are a wide number of risks that could cause bitcoin to crumble - Core Dev Matt Corralo often says he gives bitcoin a 5% chance of success. The wide-sweeping conclusion is that blockchain is useless, though I would agree in almost all cases, it disregards the successful instances where trust minimization provides substantial benefit.
KasianFranks 8y ago
This person is unfamiliar with what it means to run a public trading vehicle along with the value that comes with that. Public trading vehicles are designed to exercise capital from the capital markets. This is what enables public companies to grow. Crypto another form of a public trading vehicle in a new global capital marketplace and it helps legitimate companies grow.
lawn 8y ago
Cryptocurrencies doesn't remove all trust. It's about removing trust in third parties to send and receive transactions. That's it. And that's a big deal. > Honestly, cryptocurrencies are useless. Honestly, he makes some good points but this is ignorant. For example: * Uncensorable donations to wikileaks * Avoid having PayPal or other payment processors freeze your merchant account for X months, on a whim * Avoid the risk of charge back fraud for online payments * Ability for weed shops and porn sites to accept digital payments * Fleeing Venezuela with your wealth intact * Send money to and from countries where no banks or western union operate. * Financial privacy for everyone not just the ultra rich (lookup Monero before commenting) Cryptocurrencies have some very good features. There are issues of course, but how can you claim all these are useless? > For bitcoin, that's the cost of the additional bitcoin mined No, that's the cost of securing the network to prevent double spends.
- schmichael 8y ago
  > Cryptocurrencies doesn't remove all trust. It's about removing trust in third parties to send and receive transactions. That's it. And that's a big deal. You still need to trust a wallet, nodes, and miners to perform a transaction. While attacks on nodes and miners have been rare so far, wallets have been a weak link in the trust chain. Some are malware, some have vulnerabilities, some are targeted by malware, some just have such terrible UX it's difficult to perform your intended transaction correctly. Even if the transaction is performed on the blockchain correctly, unless it's a donation or governed purely by a smart contract, you need to trust the other party to perform the appropriate action based on your transaction (eg mail you goods)
  - yarrel 8y ago
    These are problems rather than mysteries in comparison to the intrusion of "trusted third parties" as intermediaries in transactions. Which is to say they are nice problems to be able to have.
- Zaskoda 8y ago
  > Honestly, cryptocurrencies are useless. Cryptocurrencies are essential. I don't see this mentioned often enough: We've had distributed systems for a long while before Bitcoin showed up. One of the most significant problems with any distributed system is incentivizing people to run nodes. Cryptocurrency solved this by providing a way to give value back to people who support the network.
ForHackernews 8y ago
If blockchain is so great, where are all the killer apps for this fantastic new technology? C'mon, we're 10 years into the cryptocurrency revolution, and we're still arguing about hypothetical use cases.
- sparkie 8y ago
  "Blockchain" is over-hyped. Bitcoin is the real innovation. The use-case has been clear since its inception: It is censorship resistant digital money with no externally-decided monetary policy. There are a lot of people who want it to be something else, or who want to sell you some snake oil because they missed out on the opportunity to accumulate a lot of Bitcoin early on when it was cheap, and think that they'll be able to repeat the process with them at the forefront. It is all utter nonsense. Each project which prints its own token undermines whatever technology they think they've invented, because the fixed monetary supply was one of the key innovations of Bitcoin. Removing that innovation from your own project only makes your project inferior to Bitcoin by design, but bitcoin still remains immutable to changes in its monetary policy. Every "blockchain" idea can actually be implemented as a pegged sidechain to Bitcoin, and avoid the need to print its own currency. This is the simple litmus test of whether or not it is snake oil.
  - ForHackernews 8y ago
    To me, Bitcoin seems like an ecological crime that abets other crimes.
    - dane-pgp 8y ago
      To me, the internal combustion engine seems like an ecological crime that abets other crimes.
      - ForHackernews 8y ago
        Yes, ICEs also needs to be eliminated as soon as possible. Switching off bitcoin is likely the easier of those two transitions.
davesque 8y ago
He has a number of good points. He's applied his model of trust in society, which includes four major incarnations of trust (morals, reputation, institutions, and security systems), to the topic of blockchain. This is a useful way of analyzing the utility of blockchain. However, the article doesn't touch at all on the historical situations in which people decide to reformulate the different aspects of that model. For example, why did the French people decide in the late 1700s to rise up and recast the existing institutions of trust (i.e. the monarchy)? Because they weren't working. Similarly, the bitcoin whitepaper appeared in many ways as a response to the 2008 financial crisis. During that period, it was very clearly demonstrated that existing trust institutions weren't working and that they also wouldn't be held properly accountable. Blockchain tech does not eliminate the need for trust. Smart people working and living in the blockchain space already understand this. In a sense, it's more appropriate to look at blockchain as a next generation trust institution (and I mean institution in a broader sense e.g. the "institution of marriage") which is more autonomous than what has existed previously. Just because the average modern day human doesn't understand and, therefore, trust blockchain technology doesn't mean that there aren't people who do both trust and understand the technology.
coinward 8y ago
Regressive author can't understand the Theory of Conservation of Mass. Gives us the environmental waste straw man and follows it up with an appeal to power. Fails to understand that the real innovation in trust is the stable horizontal structure that makes top down governance obsolete. Enjoyed reading anyway
- antocv 8y ago
  > is the stable horizontal structure that makes top down governance obsolete lol, how can bitcoiners still believe this? SegWit was introduced top-down, The DAO was top-down governance. Everthing about bitcoin, the mining, the software, the majority owners of all bitcoins ever mined, is ruled and in the hands of less than 12 people.
  - lukifer 8y ago
    The counterpoint that those n<12 people are supported by, and theoretically accountable to, the vast ecosystem of miners, investors, and developers. ...and the counter-counterpoint: for all the shortcomings of modern democracy, the same is at least somewhat true of the board members of the Federal Reserve, and the elected congress-critters who occupy the relevant regulatory committees.
  - coinward 8y ago
    what do you mean by ruled? there is no ruler. thats the point
- jonnydubowsky 8y ago
  Spot on analysis of the logical fallacies this author relies on to make their point. It's too bad, because his analysis and summary of many of the features of blockchain and cryptocurrencies is quite good. This analysis makes for a great checklist for auditing projects to find the rare handful that have identified these same problems and are working to resolve these issues. I don't understand why critics with this level of understanding insist on binary assessments of performance or use the "10 years is a long time" argument. The bubble bursting has been effective at clearing out the scams and garbage. There's a long way to go, but bathwater is easier to drain these days too.
yarrel 8y ago
The trust Nakamoto refers to is explicitly and obviously the trust demanded by "trusted third parties" that intrude into transactions. Removing this intrusion allows increased trust between members of society.
VarFarYonder 8y ago
> In fact, a system where you can lose your life savings if you forget your key or download a piece of malware is not particularly trustworthy. No amount of explaining how SHA-256 works to prevent double-spending will fix that. A second-layer solution, built on top of bitcoin, that would allow transactions to be reversed by a central authority, if a person decided to place their trust in that authority, could fix that, though. This is the problem with the article: it doesn't take into account bitcoin's ability to change. It's like Schneier is saying the internet will never work because dial-up modems are slow and hog your phone line. He's assuming no further innovation will occur. And like the early internet, it's practically impossible to predict what cryptocurrencies will look like in a few decades.
apo 8y ago
When that trust turns out to be misplaced, there is no recourse. If your bitcoin exchange gets hacked, you lose all of your money. If your bitcoin wallet gets hacked, you lose all of your money. If you forget your login credentials, you lose all of your money. If there's a bug in the code of your smart contract, you lose all of your money. If someone successfully hacks the blockchain security, you lose all of your money. In many ways, trusting technology is harder than trusting people. Would you rather trust a human legal system or the details of some computer code you don't have the expertise to audit? Most of these things have nothing to do with "blockchain" or Bitcoin. Exchanges are outside the scope - entirely. They are merely one kind of merchant. "Wallets" are also outside the scope, because the protocol only knows about scripts. Login credentials play no role whatsoever in Bitcoin - that's an add-on provided by third parties. Bugs in contract code are a problem. That's why you don't trust it. You verify it - just like you read any contract you sign. "Hacking blockchain security" is another matter. What Schneier is referring to is the Ethereum Classic majority hash rate attack. That's a well-known limitation of all block chains. Satoshi's white paper deals with it extensively and quantitatively. It's not like Schneier has stumbled onto something novel here. These four elements work together to enable trust. Take banking, for example. Financial institutions, merchants, and individuals are all concerned with their reputations, which prevents theft and fraud. The laws and regulations surrounding every aspect of banking keep everyone in line, including backstops that limit risks in the case of fraud. And there are lots of security systems in place, from anti-counterfeiting technologies to internet-security technologies. The nativity here beggars belief. Does this man not remember 2008? Does he not remember HSBC? Does he not know that the individuals responsible for the most egregious bank fraud have never been punished in a criminal sense? Does he not remember the vast amounts of sensitive, personal information leaked by these institutions? Has he never heard of the massive, unconstitutional civil asset forfeiture problem in the US? The best you can say about the banking system is that laws/regulations may inhibit, to some degree, some forms of theft and fraud.
- tim333 8y ago
  The loses as a percentage of funds have been vastly less in conventional banking and similar than in cryptocurrency.
arisAlexis 8y ago
almost all the comments are negative about the article but many people upvoted. I like the dynamics of HN
- Zaskoda 8y ago
  Increasingly I have noticed that people who can see the future have given up on engaging those that can not.

116 points by bb88 8y ago

2019ideas 8y ago

I like Bitcoin, I don't see a use for any other coin. Decentralized verification seems to be valuable in Currency only. Timestamps and voting do not seem to be valuable, this was the craze over alt coins.

dboreham 8y ago

>but centralized (as in there's only one) I think that should be "global", especially since "centralized" means something significantly different in blockchain circles (and bs goes on to use it in that sense later in the article).

Legogris 8y ago
Logically centralized but physically decentralized would be a specification, but his statement is correct. "Centralized" does not have a different meaning in blockchain circles, however it (and especially the inverse "decentralized) has become a weasel word that people use frivolously.
- bitxbitxbitcoin 8y ago
  I've definitely seen, and been guilty of, using "centralization" as a weasel word in blockchain circles. Agreed this should change. Usually what's meant is "potential for corruption or abuse."
- michaelscott 8y ago
  "Centralised" is usually used in the blockchain space with the systems theory definition as applied to graphs. Ditto for "decentralised" and "distributed"

legionof7 8y ago

This article uses the common criticism of there already being existing institutions and security systems for money transfer. However, this may be true in well developed countries but it's not true at all in developing countries. IMO, this is a common oversight by critics.

ssivark 8y ago
In what world do people have the technological and social infrastructure for Bitcoin (end user devices, networks, miners, etc) but bad infrastructure for money transfer? How do you think they would be buying their phones/devices and paying to connect to the network?
- lawn 8y ago
  You act like only people in rich and peaceful countries can have phones and access to internet. All you need is a smart phone or a laptop with a very poor internet connection to use it. Everyone doesn't have to be a miner. Yet there are many miners in Venezuela, a country where Bitcoin can have a very large impact for people. Venezuela have very bad infrastructure for money transfer... Since it's all blocked. Except for Bitcoin.
- legionof7 8y ago
  Venezuela for one.
  - XorNot 8y ago
    How? There's always a flavour of the moment failing state inserted as a reference here. But if you can't transfer Venezuelaean currency out of the country, how are you buying bitcoins with it? How are you getting the money to that person?
    - legionof7 8y ago
      Check out LocalBitcoins
equalunique 8y ago
Don't worry. If there is a developing country where those institutions don't exist, then you can trust the CIA will forcibly install such institutions, and every public mouthpiece from Wall Street to Capitol Hill will tell you why that's a Good Thing.
8y ago

dragontamer 8y ago

This is technically a repost from the Wired article. https://news.ycombinator.com/item?id=19097613 https://news.ycombinator.com/item?id=19097613

equalunique 8y ago

sparkie 8y ago
Not only 1933, they've been stealing money ever since through a monetary policy of constant inflation. Deliberate inflation is theft of a small percentage of the money of all savers.
- hannasanarion 8y ago
  You do realize that non-inflation was one of the main causes of the great depression, right? Are you telling me that you would spend your money on consumer products and employing people if you knew that it would be worth more if you left it sitting in your bank?
  - sparkie 8y ago
    Whether you think inflation is justified or not does not negate the argument. It is still theft. If savers did not have money, economists would not have anything to inflate. The inflation benefits the money printer, because they spend it at the market rate at the time of printing, but by the time it works its way through the economy, the effect is reduced purchasing power for the saver or consumer. Yes, inflation is a deterrent on saving, pushing people to instead invest their money. Whether it is a good thing that people blow all of their money on junk consumer goods is another question. What if some people just want to save, and not take risks? Well, it's their own choice, and now they are able to make such choice because there are no economists controlling the monetary policy of Bitcoin. What you think was justified previously, might no longer be possible. If we slip into depression due to deflation again, we might have to come up with some other solution, which isn't just kicking the can down the road.

OhHeyItsE 8y ago

Pffft just another shill for the big banks. Proof: just look at that gray beard. This is good for bitcoin. /s (if it wasn't obvious)

deweller 8y ago

> Bitcoin might theoretically be based on distributed trust, but in practice, that's just not true. I'll grant that Bitcoin is not perfectly centralized. But I challenge you to find a more decentralized digital currency on the planet. A digital currency doesn't need to be 100% decentralized to be very useful as a digital medium of exchange.

walterstucco 8y ago
What's the advantage? None
notahacker 8y ago
It depends on your definition of "useful". It doesn't need to be 100% decentralised to allow exchange to take place without a single technical point of failure existing, but it probably does need to be substantially more decentralised than it actually is to not actually have bigger trust issues than traditional currency (at least for people trying to carry out legal transactions in a developed world financial system).

keymone 8y ago

> It can also be extremely expensive, both in data storage and in the energy required to maintain it. Bitcoin has the most expensive consensus algorithm the world has ever seen, by far. When Bruce complains that Bitcoin's consensus is expensive he really compliments Bitcoin's security and resistance to attacks on immutability. He's spot on that private blockchains and most public blockchains are nothing but hype, that opinion is not news though.

xorcist 8y ago

> Honestly, cryptocurrencies are useless. It's always strange when people are overly specific. Is it private money that will never find any use anymore, or is it just that they can never be digital? The first is not an unreasonable opinion to have, given modern history and the relative success of fiscal policy (at least in the latter half of the 20th century), the second I find harder to justify. > Would you rather trust a human legal system The real world is far from that clear cut. Users of other private currencies, such as eGold, might be tempted to disagree. Hacks (in any and every sense) of those systems were even more devastating. If you only ever consider every currency an alternative to the dollar, and limit yourself to that use case, you might as well ask yourself why any other currency exist at all.

creeble 8y ago
I do think he contradicts that sentence in the following one: > ...and criminals who want a black-market way to exchange money. So not "useless" but of questionable value. But I believe bitcoin will probably never go away for this reason alone.
- stale2002 8y ago
  One mans "criminal" is another's political activist living under a dictatorship. I'd argue that a majority of the world's population currently live under what could be described as an authoritarian regime.
- extra88 8y ago
  There will probably never be an economy or society that exists without a black market but that doesn't mean aiding such markets is a feature, not a bug.
  - sparkie 8y ago
    It's a feature. The black market economy is part of the overall economy, and at least a double digit percentage of it. Elimination of black markets means a massive overall economic loss for a country. No government wants to completely eliminate all black markets. They just want to control them enough that they're taking their slice of the pie, and prevent certain markets which involve things like violent crimes which have bigger societal effects. "Crime" without victims is wasting law enforcement resources. Tax money should be spent fighting real problems and not the virtual problems made up to have a perceived moral high ground. Government over-regulation, or over-enforcement of regulation leads to economic stagnation and has the opposite intention of pushing people towards black-markets. It's a delicate balance.

FreeCrypto 8y ago

Of course trust is still involved. The whitepaper specifically puts "trust" in the context of trusted third parties ("financial institutions serving as trusted third parties to process electronic payments"), and proposes a solution to the double-spend problem when they are not relied upon. It is a very unique solution that could be useful in solving some very specific use cases. There are a wide number of risks that could cause bitcoin to crumble - Core Dev Matt Corralo often says he gives bitcoin a 5% chance of success. The wide-sweeping conclusion is that blockchain is useless, though I would agree in almost all cases, it disregards the successful instances where trust minimization provides substantial benefit.

KasianFranks 8y ago

This person is unfamiliar with what it means to run a public trading vehicle along with the value that comes with that. Public trading vehicles are designed to exercise capital from the capital markets. This is what enables public companies to grow. Crypto another form of a public trading vehicle in a new global capital marketplace and it helps legitimate companies grow.

lawn 8y ago

Cryptocurrencies doesn't remove all trust. It's about removing trust in third parties to send and receive transactions. That's it. And that's a big deal. > Honestly, cryptocurrencies are useless. Honestly, he makes some good points but this is ignorant. For example: * Uncensorable donations to wikileaks * Avoid having PayPal or other payment processors freeze your merchant account for X months, on a whim * Avoid the risk of charge back fraud for online payments * Ability for weed shops and porn sites to accept digital payments * Fleeing Venezuela with your wealth intact * Send money to and from countries where no banks or western union operate. * Financial privacy for everyone not just the ultra rich (lookup Monero before commenting) Cryptocurrencies have some very good features. There are issues of course, but how can you claim all these are useless? > For bitcoin, that's the cost of the additional bitcoin mined No, that's the cost of securing the network to prevent double spends.

schmichael 8y ago
> Cryptocurrencies doesn't remove all trust. It's about removing trust in third parties to send and receive transactions. That's it. And that's a big deal. You still need to trust a wallet, nodes, and miners to perform a transaction. While attacks on nodes and miners have been rare so far, wallets have been a weak link in the trust chain. Some are malware, some have vulnerabilities, some are targeted by malware, some just have such terrible UX it's difficult to perform your intended transaction correctly. Even if the transaction is performed on the blockchain correctly, unless it's a donation or governed purely by a smart contract, you need to trust the other party to perform the appropriate action based on your transaction (eg mail you goods)
- yarrel 8y ago
  These are problems rather than mysteries in comparison to the intrusion of "trusted third parties" as intermediaries in transactions. Which is to say they are nice problems to be able to have.
Zaskoda 8y ago
> Honestly, cryptocurrencies are useless. Cryptocurrencies are essential. I don't see this mentioned often enough: We've had distributed systems for a long while before Bitcoin showed up. One of the most significant problems with any distributed system is incentivizing people to run nodes. Cryptocurrency solved this by providing a way to give value back to people who support the network.

ForHackernews 8y ago

If blockchain is so great, where are all the killer apps for this fantastic new technology? C'mon, we're 10 years into the cryptocurrency revolution, and we're still arguing about hypothetical use cases.

sparkie 8y ago
"Blockchain" is over-hyped. Bitcoin is the real innovation. The use-case has been clear since its inception: It is censorship resistant digital money with no externally-decided monetary policy. There are a lot of people who want it to be something else, or who want to sell you some snake oil because they missed out on the opportunity to accumulate a lot of Bitcoin early on when it was cheap, and think that they'll be able to repeat the process with them at the forefront. It is all utter nonsense. Each project which prints its own token undermines whatever technology they think they've invented, because the fixed monetary supply was one of the key innovations of Bitcoin. Removing that innovation from your own project only makes your project inferior to Bitcoin by design, but bitcoin still remains immutable to changes in its monetary policy. Every "blockchain" idea can actually be implemented as a pegged sidechain to Bitcoin, and avoid the need to print its own currency. This is the simple litmus test of whether or not it is snake oil.
- ForHackernews 8y ago
  To me, Bitcoin seems like an ecological crime that abets other crimes.
  - dane-pgp 8y ago
    To me, the internal combustion engine seems like an ecological crime that abets other crimes.
    - ForHackernews 8y ago
      Yes, ICEs also needs to be eliminated as soon as possible. Switching off bitcoin is likely the easier of those two transitions.

davesque 8y ago

He has a number of good points. He's applied his model of trust in society, which includes four major incarnations of trust (morals, reputation, institutions, and security systems), to the topic of blockchain. This is a useful way of analyzing the utility of blockchain. However, the article doesn't touch at all on the historical situations in which people decide to reformulate the different aspects of that model. For example, why did the French people decide in the late 1700s to rise up and recast the existing institutions of trust (i.e. the monarchy)? Because they weren't working. Similarly, the bitcoin whitepaper appeared in many ways as a response to the 2008 financial crisis. During that period, it was very clearly demonstrated that existing trust institutions weren't working and that they also wouldn't be held properly accountable. Blockchain tech does not eliminate the need for trust. Smart people working and living in the blockchain space already understand this. In a sense, it's more appropriate to look at blockchain as a next generation trust institution (and I mean institution in a broader sense e.g. the "institution of marriage") which is more autonomous than what has existed previously. Just because the average modern day human doesn't understand and, therefore, trust blockchain technology doesn't mean that there aren't people who do both trust and understand the technology.

coinward 8y ago

Regressive author can't understand the Theory of Conservation of Mass. Gives us the environmental waste straw man and follows it up with an appeal to power. Fails to understand that the real innovation in trust is the stable horizontal structure that makes top down governance obsolete. Enjoyed reading anyway

antocv 8y ago
> is the stable horizontal structure that makes top down governance obsolete lol, how can bitcoiners still believe this? SegWit was introduced top-down, The DAO was top-down governance. Everthing about bitcoin, the mining, the software, the majority owners of all bitcoins ever mined, is ruled and in the hands of less than 12 people.
- lukifer 8y ago
  The counterpoint that those n<12 people are supported by, and theoretically accountable to, the vast ecosystem of miners, investors, and developers. ...and the counter-counterpoint: for all the shortcomings of modern democracy, the same is at least somewhat true of the board members of the Federal Reserve, and the elected congress-critters who occupy the relevant regulatory committees.
- coinward 8y ago
  what do you mean by ruled? there is no ruler. thats the point
jonnydubowsky 8y ago
Spot on analysis of the logical fallacies this author relies on to make their point. It's too bad, because his analysis and summary of many of the features of blockchain and cryptocurrencies is quite good. This analysis makes for a great checklist for auditing projects to find the rare handful that have identified these same problems and are working to resolve these issues. I don't understand why critics with this level of understanding insist on binary assessments of performance or use the "10 years is a long time" argument. The bubble bursting has been effective at clearing out the scams and garbage. There's a long way to go, but bathwater is easier to drain these days too.

yarrel 8y ago

The trust Nakamoto refers to is explicitly and obviously the trust demanded by "trusted third parties" that intrude into transactions. Removing this intrusion allows increased trust between members of society.

VarFarYonder 8y ago

> In fact, a system where you can lose your life savings if you forget your key or download a piece of malware is not particularly trustworthy. No amount of explaining how SHA-256 works to prevent double-spending will fix that. A second-layer solution, built on top of bitcoin, that would allow transactions to be reversed by a central authority, if a person decided to place their trust in that authority, could fix that, though. This is the problem with the article: it doesn't take into account bitcoin's ability to change. It's like Schneier is saying the internet will never work because dial-up modems are slow and hog your phone line. He's assuming no further innovation will occur. And like the early internet, it's practically impossible to predict what cryptocurrencies will look like in a few decades.

apo 8y ago

When that trust turns out to be misplaced, there is no recourse. If your bitcoin exchange gets hacked, you lose all of your money. If your bitcoin wallet gets hacked, you lose all of your money. If you forget your login credentials, you lose all of your money. If there's a bug in the code of your smart contract, you lose all of your money. If someone successfully hacks the blockchain security, you lose all of your money. In many ways, trusting technology is harder than trusting people. Would you rather trust a human legal system or the details of some computer code you don't have the expertise to audit? Most of these things have nothing to do with "blockchain" or Bitcoin. Exchanges are outside the scope - entirely. They are merely one kind of merchant. "Wallets" are also outside the scope, because the protocol only knows about scripts. Login credentials play no role whatsoever in Bitcoin - that's an add-on provided by third parties. Bugs in contract code are a problem. That's why you don't trust it. You verify it - just like you read any contract you sign. "Hacking blockchain security" is another matter. What Schneier is referring to is the Ethereum Classic majority hash rate attack. That's a well-known limitation of all block chains. Satoshi's white paper deals with it extensively and quantitatively. It's not like Schneier has stumbled onto something novel here. These four elements work together to enable trust. Take banking, for example. Financial institutions, merchants, and individuals are all concerned with their reputations, which prevents theft and fraud. The laws and regulations surrounding every aspect of banking keep everyone in line, including backstops that limit risks in the case of fraud. And there are lots of security systems in place, from anti-counterfeiting technologies to internet-security technologies. The nativity here beggars belief. Does this man not remember 2008? Does he not remember HSBC? Does he not know that the individuals responsible for the most egregious bank fraud have never been punished in a criminal sense? Does he not remember the vast amounts of sensitive, personal information leaked by these institutions? Has he never heard of the massive, unconstitutional civil asset forfeiture problem in the US? The best you can say about the banking system is that laws/regulations may inhibit, to some degree, some forms of theft and fraud.

tim333 8y ago
The loses as a percentage of funds have been vastly less in conventional banking and similar than in cryptocurrency.

arisAlexis 8y ago

almost all the comments are negative about the article but many people upvoted. I like the dynamics of HN

Zaskoda 8y ago
Increasingly I have noticed that people who can see the future have given up on engaging those that can not.