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The environment described in this article is horrifying and definitely sounds worse than our current financial system. That person just lost $12k to fraud and h

by dimmke 6y ago

The environment described in this article is horrifying and definitely sounds worse than our current financial system. That person just lost $12k to fraud and has no recourse at all. I agree with the other comments on here. Blockchain/crypto has always made me uncomfortable. I think it's a mix of the slimy get rich quick aspect of it that draws a lot of people and the cyberpunk/dystopian rhetoric around it. I also think it's telling that even though Blockchain has been this hyped thing for 6+ years at this point, we haven't really seen it actually be used for anything outside of cryptocurrency, which in and of itself isn't used for much outside of speculation. On the other hand, machine learning is used in everything now and makes a lot of stuff better. It definitely sounds like there's an additional major innovation that needs to happen with this stuff before it's really usable.

xur17 6y ago
> The environment described in this article is horrifying and definitely sounds worse than our current financial system. It's a different system with a different set of tradeoffs. I don't think it's accurate to just call it "worse".
Taek 6y ago
> I also think it's telling that even though Blockchain has been this hyped thing for 6+ years at this point, we haven't really seen it actually be used for anything outside of cryptocurrency, which in and of itself isn't used for much outside of speculation. On the other hand, machine learning is used in everything now and makes a lot of stuff better. Did you know that the Neural Network has been around since 1958 [1]? Machine learning is not a technology that is just 6 years old. The latest AI trend is also not the first or second time that AI has been through a massive hype cycle. The problem with the cryptocurrency space is that it's financial innovation. And just like financial innovation on Wall Street, this tends to draw out the slimiest people in society, because if you get someone to believe in your product they may well leverage their mortgage and throw their life savings at you. It's crushing to see people do this, especially because pretty much only the malicious projects get hyped up that much. But that doesn't mean that there isn't any truly groundbreaking innovation out there. Cryptocurrency changes the fundamental scalability of society. A key bottleneck for human society is trust - at some point a system gets large and corrupt, and it becomes difficult to keep bad actors from imparting a large amount of negative influence. But cryptocurrency allows us to design systems that don't require any trust at all. They _cant'_ be corrupted, because a combination of incentives and cryptography keep everyone safe. As this blog post shows, there are still a lot of rough edges out there, but the technology is innovating rapidly. I do think the hype is probably 5-10 years ahead of the technology, but in the grand scheme of technology (think of how long it too Arpanet to mature, or Neural Networks to mature) that is not much time at all! [1]: https://www.computerworld.com/article/2591759/artificial-neural-networks.html https://www.computerworld.com/article/2591759/artificial-neu...
- dimmke 6y ago
  This is a reasonable response - I definitely think blockchain is interesting but like I said, it's in need of some major additional refinement before it becomes practical. >But cryptocurrency allows us to design systems that don't require any trust at all. They _cant'_ be corrupted, because a combination of incentives and cryptography keep everyone safe. This article definitely doesn't describe a system that lives up to that ideal at all. Which is why it's so scary - when you remove manual oversight you're essentially saying "Hey, if you can hack this, you win!"
- schoen 6y ago
  > They _cant'_ be corrupted, because a combination of incentives and cryptography keep everyone safe. I would like this to be right but then I ran into https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3197300 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3197300 which discusses economic limitations to the incentives for blockchain mining. (One part is that if a cryptocurrency gets too valuable, the value of a double-spend attack could exceed some models of the reward for honest mining. Another part is that if you have unregulated derivatives, you can own a negative amount of cryptocurrency, which means that your financial incentive can be to actively damage the cryptocurrency rather than helping it. Satoshi's paper seems to assume that you can only own a positive or zero amount of bitcoin rather than a negative amount, when arguing why miners are incentivized to be honest.) (This is also true for the ability to short, or insure, any asset -- you can be financially incentivized to damage it -- but elsewhere this incentive is partly countered by law enforcement investigations of some trades and insurance claims where people profited significantly from accidents, disasters, or scandals. Smart contracts on blockchains let us build insurance and derivatives markets where you can bet against things without identifying yourself. In fact the whole underlying discussion here is about how the person who claimed this particular asset in Ethereum is anonymous and probably can't be punished for doing so, even if we believed that the claimant wasn't entitled to make this claim. That could be equally true if the person were collecting an insurance contract payout. That's potentially fine if contracts can't create new incentives to cause harm, but maybe not so awesome if they can.)
  - iSnow 6y ago
bondarchuk 6y ago
>That person just lost $12k to fraud and has no recourse at all. The original person lost $12k by a mistake of their own, namely sending it to the wrong place. I wouldn't call that fraud. That this money is then in a weird unintended limbo and can be picked up by anyone who noticed, and someone tried to whitehat get it and give it back, and they failed, does still not make it fraud IMO.
- deleted 6y ago
  [deleted]
rsync 6y ago
"That person just lost $12k to fraud and has no recourse at all." Did they ? Why is it fraud ? If you kill my orc in WoW and steal my gold, is that ... what ? Theft ? Fraud ? Are liquidity bots fighting over broken ethereum contracts more or less abstracted from reality than WoW gold ?
biolurker1 6y ago
A car breaking down in the middle of the street sounded worse than horses at some point
Joeri 6y ago
I used to think the same way about blockchain, but I then saw a presentation about self-sovereign identity and I think it could be blockchain’s killer app. This is being spearheaded through the UN and the ID2020 alliance.
- anaxag0ras 6y ago
  Is that presentation about self-sovereign identity available online?
Shorel 6y ago
Yes but actually no. The problems described in the article are very particular to the Ethereum cryptocurrency and its implementation of smart contracts. So, you "feel uncomfortable". I too, felt bad about the described situation, and that's a reason not to use Ethereum's smart contracts. But cryptocurrencies are already useful outside smart contracts, and IMO it is a mistake to confuse both.

by dimmke 6y ago

xur17 6y ago

> The environment described in this article is horrifying and definitely sounds worse than our current financial system. It's a different system with a different set of tradeoffs. I don't think it's accurate to just call it "worse".

Taek 6y ago

> I also think it's telling that even though Blockchain has been this hyped thing for 6+ years at this point, we haven't really seen it actually be used for anything outside of cryptocurrency, which in and of itself isn't used for much outside of speculation. On the other hand, machine learning is used in everything now and makes a lot of stuff better. Did you know that the Neural Network has been around since 1958 [1]? Machine learning is not a technology that is just 6 years old. The latest AI trend is also not the first or second time that AI has been through a massive hype cycle. The problem with the cryptocurrency space is that it's financial innovation. And just like financial innovation on Wall Street, this tends to draw out the slimiest people in society, because if you get someone to believe in your product they may well leverage their mortgage and throw their life savings at you. It's crushing to see people do this, especially because pretty much only the malicious projects get hyped up that much. But that doesn't mean that there isn't any truly groundbreaking innovation out there. Cryptocurrency changes the fundamental scalability of society. A key bottleneck for human society is trust - at some point a system gets large and corrupt, and it becomes difficult to keep bad actors from imparting a large amount of negative influence. But cryptocurrency allows us to design systems that don't require any trust at all. They _cant'_ be corrupted, because a combination of incentives and cryptography keep everyone safe. As this blog post shows, there are still a lot of rough edges out there, but the technology is innovating rapidly. I do think the hype is probably 5-10 years ahead of the technology, but in the grand scheme of technology (think of how long it too Arpanet to mature, or Neural Networks to mature) that is not much time at all! [1]: https://www.computerworld.com/article/2591759/artificial-neural-networks.html https://www.computerworld.com/article/2591759/artificial-neu...

dimmke 6y ago
This is a reasonable response - I definitely think blockchain is interesting but like I said, it's in need of some major additional refinement before it becomes practical. >But cryptocurrency allows us to design systems that don't require any trust at all. They _cant'_ be corrupted, because a combination of incentives and cryptography keep everyone safe. This article definitely doesn't describe a system that lives up to that ideal at all. Which is why it's so scary - when you remove manual oversight you're essentially saying "Hey, if you can hack this, you win!"
schoen 6y ago
> They _cant'_ be corrupted, because a combination of incentives and cryptography keep everyone safe. I would like this to be right but then I ran into https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3197300 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3197300 which discusses economic limitations to the incentives for blockchain mining. (One part is that if a cryptocurrency gets too valuable, the value of a double-spend attack could exceed some models of the reward for honest mining. Another part is that if you have unregulated derivatives, you can own a negative amount of cryptocurrency, which means that your financial incentive can be to actively damage the cryptocurrency rather than helping it. Satoshi's paper seems to assume that you can only own a positive or zero amount of bitcoin rather than a negative amount, when arguing why miners are incentivized to be honest.) (This is also true for the ability to short, or insure, any asset -- you can be financially incentivized to damage it -- but elsewhere this incentive is partly countered by law enforcement investigations of some trades and insurance claims where people profited significantly from accidents, disasters, or scandals. Smart contracts on blockchains let us build insurance and derivatives markets where you can bet against things without identifying yourself. In fact the whole underlying discussion here is about how the person who claimed this particular asset in Ethereum is anonymous and probably can't be punished for doing so, even if we believed that the claimant wasn't entitled to make this claim. That could be equally true if the person were collecting an insurance contract payout. That's potentially fine if contracts can't create new incentives to cause harm, but maybe not so awesome if they can.)
- iSnow 6y ago

bondarchuk 6y ago

>That person just lost $12k to fraud and has no recourse at all. The original person lost $12k by a mistake of their own, namely sending it to the wrong place. I wouldn't call that fraud. That this money is then in a weird unintended limbo and can be picked up by anyone who noticed, and someone tried to whitehat get it and give it back, and they failed, does still not make it fraud IMO.

deleted 6y ago
[deleted]

rsync 6y ago

"That person just lost $12k to fraud and has no recourse at all." Did they ? Why is it fraud ? If you kill my orc in WoW and steal my gold, is that ... what ? Theft ? Fraud ? Are liquidity bots fighting over broken ethereum contracts more or less abstracted from reality than WoW gold ?

biolurker1 6y ago

A car breaking down in the middle of the street sounded worse than horses at some point

Joeri 6y ago

I used to think the same way about blockchain, but I then saw a presentation about self-sovereign identity and I think it could be blockchain’s killer app. This is being spearheaded through the UN and the ID2020 alliance.

anaxag0ras 6y ago
Is that presentation about self-sovereign identity available online?

Shorel 6y ago

Yes but actually no. The problems described in the article are very particular to the Ethereum cryptocurrency and its implementation of smart contracts. So, you "feel uncomfortable". I too, felt bad about the described situation, and that's a reason not to use Ethereum's smart contracts. But cryptocurrencies are already useful outside smart contracts, and IMO it is a mistake to confuse both.