4 ms·

Blockchains exist for situations in which the participants in a transaction or system as a whole do not trust one another. You will always pay a price for that.

Blockchains exist for situations in which the participants in a transaction or system as a whole do not trust one another. You will always pay a price for that. Centralized systems are much more efficient but they depend on trust. In the cases where that trust breaks down or shouldn't have been given in the first place, it tends to create problems that are astronomically more costly than if a trustless system was used in the first place.

save_ferris 6y ago
> In the cases where that trust breaks down or shouldn't have been given in the first place, it tends to create problems that are astronomically more costly than if a trustless system was used in the first place. Is this actually true? My mind immediately goes to credit card fraud as an example, which definitely isn't more costly than if a purely trustless system was introduced. The cost of fraud is baked into using a credit card, and credit card vendors have built ever-improving technology to cut down on fraud on their end. How is that more expensive than a trustless system that would require everyone to move to?
- googthrowaway42 6y ago
  In the example of the credit card system, the misplaced trust I am talking about would be misplaced trust in the payment processing networks themselves (e.g. Visa, Mastercard). This could be fraud (unlikely I think) or pathological behavior such as banning people or organizations from their networks for political reasons (this already happens).
  - save_ferris 6y ago
    So organizations shouldn’t be able to remove people’s access to credit or accounts for any reason? If you take that away, you completely remove the ability to police money laundering and other kinds of financial crime (crypto is already a favorite technology of money launderers). Legislation can (and should be IMO) written to provide users of big software systems more rights, but completely removing authority creates conditions for limitless money laundering, no? How does a government govern a blockchain?
    - JoeAltmaier 6y ago
      Part of the digital currency deal is, that kind of privacy. Legislation may have to adapt? 'Money laundering' is avoiding taxes or hiding income. So change the rules about taxing money. Maybe a 'transfer tax' or some such, to take a (very small) cut on every transaction.
      - save_ferris 6y ago
        If cryptocurrencies are private enough to obfuscate transactions to the point that authorities can’t monitor illegal financial activity, how can the system also be transparent enough to effectively tax users? Isn’t taxation a centralized financial construct, in that a central authority (government) assesses taxes? If the coins built today become the mainstays of crypto transactions and don’t have a concept of a transfer tax, how will one ever be added to the system? The entire system seems to be built from the perspective that it’s “our playground, our rules”, but why governments ever allow that?
    - googthrowaway42 6y ago
      I'm not talking about money laundering and financial crime, I'm talking about removing people's access to the banking and credit system due to their political beliefs.
      - save_ferris 6y ago
        It sounds like your solution to the problem is to take away the ability to remove people from the system altogether, no? If that’s the case, then you open up a whole new set of problems. There are far easier and cheaper ways to guarantee legitimate access to banking than rebuilding and migrating the entire system.
        googthrowaway42 6y ago
        I don't think so. The nature of systems it that they tend to become corrupt if they can be corrupted.
rspeele 6y ago
What caused me to get out of Bitcoin was that in reality, the level of trust Bitcoin required from me was much too high compared to traditional banking. I had a few thousand dollars worth and I became quite paranoid that my coins could be exfiltrated at any time due to: * The Bitcoin client software I downloaded (I didn't build from source, and even if I did, I wouldn't have read the entire source first, and even if I did, I could get Ken Thompson'd) * A computer virus delivered in a game I install, or hardware drivers I update, that would be virtually undetectable until it's too late * A fire that destroys my home / somebody compromising off-site backup of my private key (pick one or the other risk) * An untrustworthy exchange or an exchange that is unfortunately compromised at the moment I choose to transform them into Real Money(tm) -- while I kept my coins in a wallet off an exchange, I would still need to turn them into USD someday since the dream of paying for ordinary things directly with Bitcoin is wheezing on life support Some of those concerns can be mitigated with a hardware wallet, but not all, and you still must have faith in the people who designed the hardware wallet and the manufacturer who actually built it. At least with traditional banking, if my trust is violated I usually have some recourse by which I can recover my money. E.g. if my PC is hacked and the hacker transfers money from my bank account, as long as I see that happen within a few days I can probably have the bank stop it and get my money back. With crypto one false move and you lose your stuff, do not pass go. In short, the "trustlessness" protects me from a pretty low-risk problem -- I would say practically a hypothetical problem at least in the U.S. -- but exposes me to a high-risk problem.
- jdmichal 6y ago
  This right here is IMO the fundamental heart of the argument. Things like reversible transactions and such are features that were built into the banking system, not bugs. It really comes down to a question of which feature set is valued more by an individual. The attempt to frame this in moralistic terms is just typical tech holy wars.
  - rspeele 6y ago
    On a philosophical basis I do like the idea that no one person, nation, or corporation has control over the currency. And the irreversable nature of transactions is something I could accept, if I felt it was possible for me to have complete confidence in the security of my wallet. But just the software-based ways that I could potentially be stolen from are too plausible to ignore. I have never felt that I could say with total certainty that my system is not compromised or vulnerable to compromise. Even a bug written with no malice could be my undoing. Working in the software industry has given me very little faith in the infallibility of software, both open and closed source. Of course many people hold large quantities of crypto and are fine. But a few have it lost or stolen. Even super simple attacks sometimes work, like the malware that would poll the system clipboard waiting for it to contain for a BTC public key, and if found, swap it with one owned by the virus-writer -- so that you inadvertently paste the thief's key in as the destination for the transfer you're about to initiate. When I first heard about that attack, I thought it was clever and had to really think: hmm, would I have fallen for that? Usually I double check, but if they were smart enough to generate a large set of wallet public keys so they could replace the destination with one that starts with the same few characters, I probably could've been duped at some moment of carelessness.

save_ferris 6y ago

> In the cases where that trust breaks down or shouldn't have been given in the first place, it tends to create problems that are astronomically more costly than if a trustless system was used in the first place. Is this actually true? My mind immediately goes to credit card fraud as an example, which definitely isn't more costly than if a purely trustless system was introduced. The cost of fraud is baked into using a credit card, and credit card vendors have built ever-improving technology to cut down on fraud on their end. How is that more expensive than a trustless system that would require everyone to move to?

googthrowaway42 6y ago
In the example of the credit card system, the misplaced trust I am talking about would be misplaced trust in the payment processing networks themselves (e.g. Visa, Mastercard). This could be fraud (unlikely I think) or pathological behavior such as banning people or organizations from their networks for political reasons (this already happens).
- save_ferris 6y ago
  So organizations shouldn’t be able to remove people’s access to credit or accounts for any reason? If you take that away, you completely remove the ability to police money laundering and other kinds of financial crime (crypto is already a favorite technology of money launderers). Legislation can (and should be IMO) written to provide users of big software systems more rights, but completely removing authority creates conditions for limitless money laundering, no? How does a government govern a blockchain?
  - JoeAltmaier 6y ago
    Part of the digital currency deal is, that kind of privacy. Legislation may have to adapt? 'Money laundering' is avoiding taxes or hiding income. So change the rules about taxing money. Maybe a 'transfer tax' or some such, to take a (very small) cut on every transaction.
    - save_ferris 6y ago
      If cryptocurrencies are private enough to obfuscate transactions to the point that authorities can’t monitor illegal financial activity, how can the system also be transparent enough to effectively tax users? Isn’t taxation a centralized financial construct, in that a central authority (government) assesses taxes? If the coins built today become the mainstays of crypto transactions and don’t have a concept of a transfer tax, how will one ever be added to the system? The entire system seems to be built from the perspective that it’s “our playground, our rules”, but why governments ever allow that?
  - googthrowaway42 6y ago
    I'm not talking about money laundering and financial crime, I'm talking about removing people's access to the banking and credit system due to their political beliefs.
    - save_ferris 6y ago
      It sounds like your solution to the problem is to take away the ability to remove people from the system altogether, no? If that’s the case, then you open up a whole new set of problems. There are far easier and cheaper ways to guarantee legitimate access to banking than rebuilding and migrating the entire system.
      - googthrowaway42 6y ago
        I don't think so. The nature of systems it that they tend to become corrupt if they can be corrupted.

rspeele 6y ago

What caused me to get out of Bitcoin was that in reality, the level of trust Bitcoin required from me was much too high compared to traditional banking. I had a few thousand dollars worth and I became quite paranoid that my coins could be exfiltrated at any time due to: * The Bitcoin client software I downloaded (I didn't build from source, and even if I did, I wouldn't have read the entire source first, and even if I did, I could get Ken Thompson'd) * A computer virus delivered in a game I install, or hardware drivers I update, that would be virtually undetectable until it's too late * A fire that destroys my home / somebody compromising off-site backup of my private key (pick one or the other risk) * An untrustworthy exchange or an exchange that is unfortunately compromised at the moment I choose to transform them into Real Money(tm) -- while I kept my coins in a wallet off an exchange, I would still need to turn them into USD someday since the dream of paying for ordinary things directly with Bitcoin is wheezing on life support Some of those concerns can be mitigated with a hardware wallet, but not all, and you still must have faith in the people who designed the hardware wallet and the manufacturer who actually built it. At least with traditional banking, if my trust is violated I usually have some recourse by which I can recover my money. E.g. if my PC is hacked and the hacker transfers money from my bank account, as long as I see that happen within a few days I can probably have the bank stop it and get my money back. With crypto one false move and you lose your stuff, do not pass go. In short, the "trustlessness" protects me from a pretty low-risk problem -- I would say practically a hypothetical problem at least in the U.S. -- but exposes me to a high-risk problem.

jdmichal 6y ago
This right here is IMO the fundamental heart of the argument. Things like reversible transactions and such are features that were built into the banking system, not bugs. It really comes down to a question of which feature set is valued more by an individual. The attempt to frame this in moralistic terms is just typical tech holy wars.
- rspeele 6y ago
  On a philosophical basis I do like the idea that no one person, nation, or corporation has control over the currency. And the irreversable nature of transactions is something I could accept, if I felt it was possible for me to have complete confidence in the security of my wallet. But just the software-based ways that I could potentially be stolen from are too plausible to ignore. I have never felt that I could say with total certainty that my system is not compromised or vulnerable to compromise. Even a bug written with no malice could be my undoing. Working in the software industry has given me very little faith in the infallibility of software, both open and closed source. Of course many people hold large quantities of crypto and are fine. But a few have it lost or stolen. Even super simple attacks sometimes work, like the malware that would poll the system clipboard waiting for it to contain for a BTC public key, and if found, swap it with one owned by the virus-writer -- so that you inadvertently paste the thief's key in as the destination for the transfer you're about to initiate. When I first heard about that attack, I thought it was clever and had to really think: hmm, would I have fallen for that? Usually I double check, but if they were smart enough to generate a large set of wallet public keys so they could replace the destination with one that starts with the same few characters, I probably could've been duped at some moment of carelessness.