26 ms·

Why blockchain is not yet working (2018)

99 points by max_ 6y ago

sillysaurusx 6y ago
4. Consensus Algorithms Are Wack The popular blockchains only don’t offer transaction finality i.e you will never be 100% sure that you have gotten funds. You can only be probabilistically to a high degree (but with zero guarantee) that you have received your funds. This is because in major consensus algorithm called Nakamoto Consensus, the miners elect the chain with the most computational work that are with in the same protocol i.e consensus rules. For instance imagine your bank tells you that you that, “there is a 95% chance that we might have your life savings, however you may also not poses it in 5 years in case we discovered that the chain with the most work does not have your transaction in it” Yes, I don’t think anyone wants to keep their life savings in such a bank. Sure, and the probability that all of your atoms will teleport one foot forward is not zero. But it's sufficiently zero that we say it's zero, and we're rarely proven wrong. It took awhile to become comfortable with probabilistic algorithms, but some (small) familiarity with physics helped. Nature is probabilistic, and seems to work. This isn't a great counterargument, but honestly none of these arguments seem very persuasive. I'm not a blockchain fan, but it's like... "if someone steals your wallet, they'll get all of your money!" Well, duh. Everyone knows this and seems fine with it. 1. Scalability Issues The current bandwidth, i.e the data that can be transmitted through a blockchain with in a given time is simply too bounded for main stream adoption. Ethereum for instance does a maximum of 13 transactions per second. Visa on the other hand can do 24,000 Transaction per second and peak over 40,000 transactions per second. No mention of Lightning network to solve this. I've been out of the crypto game for years and even I know "Lightning is supposedly the solution." Did that ever pan out? 6. Price Volatility Very few people simply don’t have the stomach to hold a financial instrument that drops by over 50% with in a few months. https://i.imgur.com/WWzTlGb.png https://i.imgur.com/WWzTlGb.png
- cesaref 6y ago
  > Nature is probabilistic, and seems to work. I think what you mean is that the currently most successful model of the physical world is probabilistic, but this doesn't mean that nature is.
  - sillysaurusx 6y ago
    Mm. That's an interesting way of looking at it. But the assumptions are laid out by Feynman: https://www.youtube.com/watch?v=QRE0GxT6Zbw&list=PLgRI7D_FXEnrCM8T1czHfJsvbQd4V1jRc&ab_channel=L%27Universitaire https://www.youtube.com/watch?v=QRE0GxT6Zbw&list=PLgRI7D_FXE... Although I'd love to urge everyone to sit through all six hours, I recognize this isn't too practical. So -- with apologies to Feynman -- I'll have to do a poor job of translating: - The scientific method means that we are never certain we're right; we're only certain we're wrong. But (as with Newton's laws) it's pretty incredible we can last so long before we're proven incorrect! - The world seems to obey mathematics. But math != physics. One helps the other; discoveries in math have applied to physics, and vice-versa. - The heart of nature seems to be a purely mathematical construct, from which there is no escape. Many people have tried to model gravity as something other than the gravitational equation, e.g. suppose at every point in time there are particles shooting every direction simultaneously. Then gravity is merely us blocking these particles -- earth with respect to the sun blocks a certain fraction of particles towards the sun, and in fact inversely as the square of the distance. No math necessary! Unfortunately, doesn't quite work -- if it were true, the earth would have slowed in its orbit due to blocking the particles, and it wouldn't have lasted ~billions of years. So that's the end of that theory. - The double slit experiment seems to prove that the world has no other model other than probabilistic (see lecture 6). There is some fundamental limitation preventing us from narrowing down nature further than this threshold. - Every test designed to break this assumption has failed. Therefore, I say that the physical world is probabilistic, and I will wager any sum of money you'd like to bet that it will still be true within, say, 200 years. There is one interesting alternative: if everything in the universe is pre-destined. The complete absence of any kind of free will whatsoever. Every atom, every electron, every single subatomic particle, all predestined from the moment of the big bang til now. That seems to be the only way that it can't be probabilistic.
  - psychoslave 6y ago
    Yes, I completely agree. I think however that the point was that whatever we build out of our best available physical theories ultimately relies on probabilistic grounds. Now on the other hand, we don't use quantum physics for every single human project out there, and for many human scale phenomena, we can act without concious probabilistic representations.
- ketzu 6y ago
  > Everyone knows this and seems fine with it. Are you sure? I believe a lot of people interact with blockchains through services like coinbase, without managing their own wallets.
- davidgerard 6y ago
  >WARNING >Before you proceed, please understand that the Lightning Network is still in the experimental stage. Do not put the money you can't afford to lose. There is a high risk of you losing the money. https://docs.btcpayserver.org/LightningNetwork/ https://docs.btcpayserver.org/LightningNetwork/ and a pile of other places - and particularly when someone points out that LN doesn't work very well, and that money gets lost to bugs way too often to trust. The purpose of the Lightning Network is to serve as an excuse for Bitcoin's dismal performance. It is not a production-ready payment system, even to the degree that Bitcoin is.
  - sillysaurusx 6y ago
    Thanks! I've wondered how the lightning network fared over the years. Judging by the still-experimental state, the answer is "not well."
aylmao 6y ago
To the scalability issues section I'd add the environmental aspect. It has already been reported that by some estimates Bitcoin today consumes more energy than Argentina, and that's with an estimated 1 million active wallets per day. Argentina is home to about 50 million people. This means that in order to have Bitcoin serve as the daily currency for all of Argentina's 50 million people would at least 50-tuple its energy consumption. This is comically absurd. It's thankfully not achievable or economical with the energy resources we currently have available, because pursuing a 4,900% increase in energy consumption would be disastrous. If crypto sees any widespread usage I think it'll be as the backbone of financial systems, for big transactions between institutions. In that space I don't see much incentive for people to adopt it— there's already a good level of trust amongst the parties, various levels of transaction verification, and it's mostly all digital already. [1]: https://www.bbc.com/news/technology-56012952 https://www.bbc.com/news/technology-56012952 [2]: https://www.bitcoinmarketjournal.com/how-many-people-use-bitcoin/ https://www.bitcoinmarketjournal.com/how-many-people-use-bit... [3]: https://en.wikipedia.org/wiki/Argentina https://en.wikipedia.org/wiki/Argentina
- WanderPanda 6y ago
  > This means that in order to have Bitcoin serve as the daily currency for all of Argentina's 50 million people would at least 50-tuple its energy consumption. How do you justify this linear extrapolation?
- waheoo 6y ago
  This is like saying we shouldn't build or invest in computers anymore because they cost so much and take up whole rooms full of space. Bitcoin is version 0.1 of a new way to record and share a common ledger. The cost and energy requirements are simple tradeoffs that are completely configurable to the applications needs. Go look at all the alt coins out there, blockchain tech does not require the same levels of decentralization as Bitcoin, many work off more centrally controlled systems, not all require huge amounts of energy to mine blocks, and many are extremely aware of the need to be an environmentally friendly solution. Like I get it's a very valid criticism to make about Bitcoin. But it's such a contrarian for the sake of being contrarian thing to say and completely ignores ten years of alt coin and defi evolution. Feel free to keep bag holding those "federal" reserve notes, they'll pay off one day I'm sure.
prof-dr-ir 6y ago
The "lack of intuitive private key management" is worth expanding on. Would it not be nice if you could, maybe for a small fee, have some trusted entity store your private key for you? One could perhaps imagine storing a printout of the private key in some kind of physical "safe deposit" box, to be maintained by such an entity? But maybe that is to cumbersome and we can do so entirely digitally? In that case I guess that said entity would need to demonstrate a proven track record of safely keeping a record of your net worth, as well as the various in- and out-going transactions between its different customers. With the obvious possibilities for abuse, it is clear that such an industry would see a fair amount of regulations, and one can foresee never-ending tension between government, the established corporations, and potentially disruptive newcomers....
- rorykoehler 6y ago
  You just recreated consumer banking.
  - gjulianm 6y ago
    I think that's their point. There's a lot of discussion that 'banks will become obsolete with crypto' that forgets that banks are not the currency, they just manage it. If crypto becomes widespread banks will keep on existing, they'll just move to manage cryptocurrencies.
    - rorykoehler 6y ago
      Banks are not just managing money. They are distributors of newly minted money via loans. They are not distributors of crypto and the Fed are not involved (or at least necessary) for the creation of new crypto.
      - logifail 6y ago
        > Banks are not just managing money. They are distributors of newly minted money via loans. They are not distributors of crypto and the Fed are not involved (or at least necessary) for the creation of new crypto. So in the brave new post-Fiat world we're thinking of, how does getting a mortgage work, exactly? The house I'm in was financed by my wife and I purchasing a plot of land, for cash, then offering that land as security to a bank, who then created a loan for a fairly sizable chunk of cash with which we paid a builder to construct the house. In the all-cryptocurrency world, who creates the crypto in the getting-a-mortgage process?
nexthash 6y ago
I think the #1 reason blockchain doesn't work is very simple - the technology is broken beyond fixability. This article is two years old, but the same variations of these excuses always come up when the crypto ideologues are grilled on why their utopiaic vision hasn't come about, for all of blockchain's existence. Blockchain is awful for most things compared to a centralized or distributed database: it is inefficient, untrustworthy due to decentralization, a huge resource hog, and morbidly complex to implement. The only good use cases that come to mind is if there is some particular reason for you to evade the conventional and easier systems of communication and storage. The lesson is: you should evaluate technology on its merits, not its politics. Three classic sources on the blockchain question immediately come to mind: http://doyouneedablockchain.com/ http://doyouneedablockchain.com/ https://imgur.com/a/RlUj9Ed https://imgur.com/a/RlUj9Ed My personal favorite: https://twitter.com/vgcerf/status/1019987651301081089 https://twitter.com/vgcerf/status/1019987651301081089
- lima 6y ago
  > the technology is broken beyond fixability [citation needed] Crypto ideologues are a strawman. Anyone working on the actual tech agrees that blockchains are useful if, and only if, you can't rely on a single party and need a decentralized, trustless append-only database. Otherwise, why bother with the extra complexity? That's the whole point of blockchains, after all. Technology choices are complex set of trade-offs, even within the blockchain space.
  - hobs 6y ago
    Right, the problem is that almost no one needs those features and those are mostly anti-features for modern software.
  - packetlost 6y ago
    Correct. The problem is there's virtually nothing that actually benefits from those things. A strong case case could be made for a truly decentralized global currency and maybe smart-contracts, but not "a store of value" or "revolutionizing supply chain bookkeeping".
tomglynch 6y ago
Unrelated to the content, but I found that blog so visually appealing.
- max_ 6y ago
  Author here. Thanks
lima 6y ago
Here's how things are looking in 2021: (1) Scalability Issues Solved - there's a plethora of high-throughput chains in development, either based on sharding or pipelining/MVCC/optimistic concurrency. Some projects like Solana use GPUs and JIT compilation to achieve well beyond 50k tps in a distributed network. (2) Lack Of Intuitive Private Key Management Little progress. Ledger and other hardware wallets make things easier, but it's still far from intuitive. Non-technical holders typically use centralized custody providers. (3) Contract Security Some progress. Smart contract exploits still happen almost every week, but there's a robust set of best practices, safe-by-default standard libraries, and specialized auditing companies which make it much easier to write bug-free contracts, if you're willing to invest the time and effort. (4) Consensus Algorithms Are Wack Solved very thoroughly. There has been significant progress in byzantine fault-tolerant consensus, like Tendermint consensus[1] used in the Cosmos ecosystem, providing strong consistency and instant finality. (5) Privacy Many developments around zero-knowledge proofs and similar methods, but I don't know how viable those are. (6) Price Volatility There's a number of trustworthy stablecoins like USDC pegged to fiat currencies. Other than that, tokens are still highly volatile and only useful as a high-risk investment. [1]: https://atrium.lib.uoguelph.ca/xmlui/handle/10214/9769 https://atrium.lib.uoguelph.ca/xmlui/handle/10214/9769
- ausbah 6y ago
  is there a good resource that you recommend that goes more in depth over advances like these? I think my opinion on cryptocurrencies and blockchain in general is severely out of date
  - meowkit 6y ago
    Start with a non-Bitcoin crypto and understand its components and how its supposed to work. Most of the core principles carry over to other cryptos. Ethereum.org and the the Ethereum blog would be my suggestions as a primer.
- subaquamille 6y ago
  > 1) Solved: [... it's] in development Wait what ?! Imagine saying this on a daily meeting !
bondarchuk 6y ago
Is this what Gell-Mann amnesia feels like? I happen to be a bit into cryptocurrency, and day after day I see these super basic surface-level takes on blockchain get posted here and even upvoted to the top spot. Are the other popular submissions here, on programming languages, the internet, entrepeneurship and what have you of similar low quality, but I just don't have the experience in those fields to realize it? This is a serious question.
- andreaorru 6y ago
  I'm having your same exact doubts. The quality of the conversation about cryptocurrencies here on HN is abysmal. Misinformation, or outdated information, is rampant. Maybe that's the case for everything else that is discussed here, but I just don't have enough domain knowledge to be able to tell...
  - dschuler 6y ago
    This is ironic, because your posts are part of the problem.
    - deleted 6y ago
      [deleted]
    - deleted 6y ago
      [deleted]
    - andreaorru 6y ago
      Very possible. In that case, joke is on me. :)
- gjulianm 6y ago
  This happens a lot in topics that the HN community is interested in but not very knowledgeable in general. You can usually trust the top voted articles in programming and entrepeneurship because a lot of people here know about that. But, for example, in maths and music (I happen to know something about those) I see a lot of really bad articles and takes being upvoted.
RurouniK 6y ago
Bitcoin has been running non-stop for the past 12 years, used by tens of millions of people,has a market cap of 1 Trillion and all that while protecting the human rights around the world: https://www.reddit.com/r/Bitcoin/comments/ldyy7s/bitcoin_is_protecting_human_rights_around_the/ https://www.reddit.com/r/Bitcoin/comments/ldyy7s/bitcoin_is_... But even if you are clueless enough to think that Bitcoin and blockchain isn't working at least you should appreciate all the breakthroughs in cryptography like Zero Knowledge proofs, networking like libp2p, distributed storage like ipfs etc. that emerged from the evolution of cryptocurrency tech.
- deleted 6y ago
  [deleted]
- floo 6y ago
  Bitcoin has all of the problems listed in the article and is, arguably, not yet providing the social value that blockchain could. Not sure how a high market cap is a counter argument to that.
  - genericacct 6y ago
    Especially considering market cap is a totally made up number and if everybody tried to get out at once they would get a fraction of a fraction of it. (1) But it's pointless to tell this to a cryptofreak because they're so heavily invested in it they make zealots look reasonable. (1) not to mention the fact that as soon as there is volatility exchange sites go down, even the bigger ones.
    - RurouniK 6y ago
      Wait until you find out what happens when people try to take out their money all at once from banks... I remember back in the day when people used to call early internet users internetfreaks and zealots. Now it's the same with Bitcoin. Whatever...
      - janoc 6y ago
rini17 6y ago
As the recent GameStop events have shown, it's uncertain who owns how many shares, settlement is slow and error/bezzle-prone, etc. etc. Plus I venture to guess that HFT algorithms do consume country-level amounts of energy as well. Unlike blockchain, it's not surplus electricity from renewables in faraway places. And all that energy does not even improve the whole ledger security. But hey, unlike the filthy blockchain, it works!/s
- AngrySkillzz 6y ago
  Go read Money Stuff before you spread more misinformation about how the financial system works. There are no counterfeit shares, ownership is obvious except for cases like voting (because a short can pay a negative dividend but can't perform a negative vote), settlement is not error-prone and is slow on purpose (Russia tried real-time settlement and went back to T+2), HFT is literally just a service provider doing inter-temporal mediation between buyers and sellers rather than some evil money-stealing machine. Front-running is not real, naked shorting is super illegal with very few exceptions. If you can't tell me what part of Regulation SHO governs naked shorting, what the bona-fide market maker exception is and when they are required to fulfill a FTD, then you probably shouldn't be talking about this confidently in public.
  - rini17 6y ago
    I am confident we'll know more in few years. Something being merely illegal has never stopped anyone.
EGreg 6y ago
No, blockchains are not the future, they are really the reason why one transaction can happen at a time in the whole world. Even Ethereum 2.0 will have shards which will do away with this anomaly. The only reason flash loans even work with no collateral is because you can be sure nothing else is running on the “world computer” while your transaction runs, so you can roll it back with no risk except gas fees. Vitalik himself acknowledges this, the guy is quite honest and straightforward about its limitations: Vitalik Buterin: Using Ethereum is expensive, and its blockchain is ‘almost full’ He also said blockchain's 'problem' is that every computer verifies every transaction Actually blockchains are a first-generation technology that do global consensus for every block, which literally means all transactions in the world must go through one computer in the world (the miner) although it’s a different one each time. And the situation is actually worse, since you don’t know who would mine the next block in advance, every transaction must be sent to every potential miner! Imagine if BitTorrent had every computer store and seed every movie instead of using DHT. The ability to send or loan arbitrarily large amounts for a fixed fee is a symptom of centralization. In a fully distributed network, transaction fees would have to be proportional to transaction size! Almost every other protocol on the Internet does not have such bottlenecks in its design. No one asks how many emails or websites can be served per second. Blockchain is trying to secure every transaction using the entire network! That is why so much electricity is wasted just to do 7 transactions per second. The next generation of crypto will actually be able to power payments using embarrasingly parallel architecture. Until then, we have blockchain. Ethereum is nicknamed the “world computer” for a reason. Gas fees are super high for small transactions like paying for coffee or voting in a secure election. Just one app KryptoKitties can clog up the entire network. As one example, we built Intercoin apps on top of Ethereum (https://intercoin.org/applications https://intercoin.org/applications) but we are not going to wait around for Ethereum 2.0 - which is blockchain also. Kik Messenger and others have long gotten off. Ripple, MaidSAFE and Solana use different technologies.
- andreaorru 6y ago
  What's your opinion on Layer 2 technologies like ZK and Optimistic Rollups?
  - 6y ago
jokethrowaway 6y ago
Bitcoin is the mongodb of finance: You like its features but in reality most people don't need them. Mongo's scalability sounds great until you find yourself reimplementing a relational database for your 1000 users app. Bitcoin decentralisation sounds great but must people don't need it. You just need a less evil and less corrupt government and better fintech. You're curing the symptoms, not the cause.
- slim 6y ago
  Bitcoin decentralisation sounds great but must people don't need it. You just need a less evil and less corrupt government and better fintech. your second sentence inadvertently convinced me I need bitcoin
  - imtringued 6y ago
    That less corrupt government will provide 1000% gains for everyone. Bitcoin will give that only to those who buy it aka rich people.
    - meowkit 6y ago
      I can’t tell if this comment is disingenuous or just naive. We’ve been trying to create less corrupt governments for hundreds of years.
- shaolinspirit 6y ago
  oh wow, are you straight from Disneyland?
lawn 6y ago
> The popular blockchains only don’t offer transaction finality i.e you will never be 100% sure that you have gotten funds. > You can only be probabilistically to a high degree (but with zero guarantee) that you have received your funds. All cryptography depends on it being probabilistically difficult to guess the secret. This is an exceptionally weak criticism of blockchains.
- me_again 6y ago
  I think the concern here is some group rewriting transaction history via controlling > 50% of the hash rate, not guessing crypto keys.
godelzilla 6y ago
Can someone post an even older, less relevant article?
controlweather 6y ago
Y’all just mad you’re still poor!
DennisP 6y ago
The article mentions Ethereum several times, so here are some Ethereum-specific updates for 2021. It's still a work in progress but some progress has been made. 1) Scalability For now, the big advance is a layer-2 approach called "rollups," several of which are in production already and able to handle several thousand transactions per second. Zkrollups do that without compromising security assumptions at all, but aren't quite to the point of handling arbitrary smart contracts. Optimistic rollups can handle arbitrary contracts but require a delay for funds withdrawal since they rely on fraud proofs. About a year from now, data sharding will multiply rollup capacity by 23X. [1] 2) Key management Vitalik agrees on this point and advocates social recovery wallets, where your friends and/or service providers give you some backup. Two popular wallets already implement this. [2] 3) Contract security This one is near and dear to my heart since I've worked as a contract auditor. It's still a problem but less so if best practices are followed, and projects which did so are holding vast sums without issues. Of the two examples they mentioned, TheDAO happened when Ethereum was less than a year old and nobody had realized the reentrance issue; also it was nasty, convoluted code, and didn't have a thorough public audit. Parity actually had two problems: they changed their wallet, made a simple mistake, and it slipped through because they didn't bother getting a new audit. That enabled several large thefts. Then they made another change to fix that, still didn't get a new audit, made another simple mistake, and that resulted in frozen funds. Both mistakes would probably have been caught by any decent auditor. As usual, keeping the code simple and straightforward helps a lot. 4) Probabilistic consensus The new proof-of-stake chain is probabilistic initially but every six minutes it actually finalizes. At that point transactions cannot be reversed without destroying 2/3 of staked ETH. Currently the staked ETH totals $5 billion. However, so far this is running on the side, with real ETH but not actually running smart contracts or transferring ETH around. It will be about a year before rest of Ethereum migrates to it. 5) Privacy Zksnarks are able to help here and Ethereum is getting better at implementing them efficiently, but privacy is not in wide use yet, partly because of gas costs. EY has done a lot of work on implementing privacy in zkrollups for corporate transactions on the public chain. 6) Price volatility For people unwilling to deal with volatility, there are stablecoins on Ethereum, some implemented as derivatives over ETH. [1] https://vitalik.ca/general/2021/01/05/rollup.html https://vitalik.ca/general/2021/01/05/rollup.html [2] https://vitalik.ca/general/2021/01/11/recovery.html https://vitalik.ca/general/2021/01/11/recovery.html
hahahahe 6y ago
There’s no accountability in blockchain. Proponents of crypto are unwilling to create a currency with specifications they preach without relinquishing the “wealth” they derived from early alpha versions.
mtrycz2 6y ago
Scalability: While it can't do 25k transactions per second, my Raspberry Pi can validate 600tps with still some headroom. (ie 150x current maximum of BTC; it could actually do 2,2k but I wasn't able to reliably generate blocks because of the stochastic nature of it) The barriers described in the article are very real, but there is also real work being done to remove them.
ezoe 6y ago
I think price volatility is the only reason it's not working as a normal currency. Right now, these blockchain currencies are traded just like expensive wine, art or gold bar. It's a speculative money game. We can't use wine or art to buy some food for today. Most people don't even run the full node themselves. They relies on somebody else's node. In good term, they are investing, in other words, they are gambling. It's just sad seeing a lot of resources and some brains are wasted on these gamble. How could this be happened? When bitcoin was announced and it's first implementation was actively developed by someone or some group known as Satoshi Nakamoto, it was just a technically interesting non practical piece of attempt. But now... it's just a mess. Had I mined bitcoin in early days, I could be a billionaire. But the same thing can be said on buying the gold bar. It's not that technically interesting. The first P2P boom invented a lot of practical services. File sharing, web hosting, audio and video streaming, video chat and all. They are all pivoted to central system for efficiency, but some services gained a few years of early head start experience thanks to the P2P. What blockchain achieved so far? Nothing. It just invented another gold bar. Totally useless but some people believes value in it. I really wish people wake up and spend precious time and resources on something that introduce real value to the world. Blockchain? Wake me up if proof of storage space become practical.
- willbudd 6y ago
  You have obviously no idea what you're talking about. Bitcoin's block mining algorithm is excessively deflationary: it encourages hoarding instead of spending while disproportionately rewarding early adopters. That however has absolutely nothing whatsoever todo with the blockchain algorithm, which was/is truly innovative as a decentralized ledger. There is nothing preventing cryptocurrencies from utilizing blockchain technology in combination with inflationary currency generating models, and in fact plenty of them do. They are less well known partially because they were later to the game, and partially because they lack the get-rich-quick pump and dump appeal of bitcoin and co.
- hanniabu 6y ago
  It's a new asset class so it's in a huge growth phase. Over time it's volatility is beginning less and less and will continue to do so as the market matures.
ignoramous 6y ago
I genuinely think HN is subject to what Clay Christensen put as "disruptive innovation" when it comes to Blockchain and friends (strange to say that for a community as opposed to a company). I understand that many on HN think of the many ICOs as Ponzi schemes, and other tech (like identity, DBs, VPNs, apps, or even alternate WWW) built on top as smokes and mirrors; but the industry being built around it is very real even if niche. There's a lot going on (including research) and it seems to me like, one fine day, like how ARM sneaked up on x86, Blockchain is going to take HN by surprise. And then, the disruption would have truly arrived. It isn't like the best sounding tech wins anyways.
- cblconfederate 6y ago
  Would be nice to have a decentralized HN . I m sure it exists
- loceng 6y ago
  That is speculation at the moment, a lovely fantasy to imagine to come to fruition for any technology; a market cap that has reached $1 trillion including price manipulation, I'm unsure it warrants that valuation - and arguably it's not simply that high due to price manipulation. I do believe blockchain could help us solve some fundamental problems - but only if it's tied to real trust and democratic processes. Bitcoin is a blockchain that's been structured to inherently be an MLM, and if you think through to the conclusion - say once 50% of the population has bought into Bitcoin, and now a growing majority require the remaining society to adopt Bitcoin to realize their gains - to unnecessarily, unreasonably transfer wealth from later adopters weighted towards earlier adopters - then you can how conflict will occur when the remaining 50% of society don't want to be left holding the bag, with no one else to then buy more Bitcoin for the last adopters to get wealth transferred to them; and this is why it also mimics a Ponzi scheme - it's just that there isn't a single controller liker Madoff, but instead it's controlled via a global, decentralized system that anyone can participate in.
  - selestify 6y ago
    It’s not a Ponzi scheme any more than any other investment is a Ponzi scheme. Once 50% of society buys gold, who’s going to realize their gains? Except for gold speculators, the point isn’t necessarily to just realize gains, the point is to own an asset whose value is guaranteed not to disappear, even if it fluctuates. Granted, gold has a stronger guarantee than Bitcoin as of now. But that doesn’t make Bitcoin a Ponzi scheme.
Layke1123 6y ago
A big part of why crypto doesn't work in my opinion is that it's hard to trust software and hardware with your money when you don't own the hardware or software or can't modify it freely. Nation-states take great care to ensure that you don't have exclusive rights to the things and therefore your entire life savings could vanish in the blink of an eye without so much as any guarantee of getting your value back. State backed fiat currency is by far still more valuable than crypto and the proof is self evident at this point.
ffggvv 6y ago
ironically the biggest issue with crypto as an actual currency is stability, which could easily be solved via a stable coin or something tethered. but there’s zero excitement about that and all the excitement is around bitcoin, because all people really care about is that it goes up up in price
ianai 6y ago
Has there ever been a good break down applying Greshams law to Bitcoin? It seems like an obvious example of it at work-and that’s if we take the premise of Bitcoin at full face value. Link https://en.wikipedia.org/wiki/Gresham%27s_law https://en.wikipedia.org/wiki/Gresham%27s_law Edit-it also leads me to wonder what the mature characteristics of Bitcoin will be? What happens when all possible bitcoins have been mined? No more transactions?
jonathanaird 6y ago
BSV has solved 1,2 and 5. 3 is on the way and 4 is a non-issue.
llaolleh 6y ago
It seems like most of these problems are technical in nature, which can be solved with better silicon and design schemes. I was very anti-blockchain for a while, but if you zoom out it makes a whole lot of sense. The revolution that happened in finance was double entry bookkeeping. To me, the logical next step is to have everyone keep a immutable tamper proof, copy of the ledger synced, in agreement, all the time.
boh 6y ago
If crypto didn't trade for the amount that it currently does, no one would even attempt to justify what is an obviously irrelevant data structure (for 99.99% of cases).

99 points by max_ 6y ago

4. Consensus Algorithms Are Wack The popular blockchains only don’t offer transaction finality i.e you will never be 100% sure that you have gotten funds. You can only be probabilistically to a high degree (but with zero guarantee) that you have received your funds. This is because in major consensus algorithm called Nakamoto Consensus, the miners elect the chain with the most computational work that are with in the same protocol i.e consensus rules. For instance imagine your bank tells you that you that, “there is a 95% chance that we might have your life savings, however you may also not poses it in 5 years in case we discovered that the chain with the most work does not have your transaction in it” Yes, I don’t think anyone wants to keep their life savings in such a bank. Sure, and the probability that all of your atoms will teleport one foot forward is not zero. But it's sufficiently zero that we say it's zero, and we're rarely proven wrong. It took awhile to become comfortable with probabilistic algorithms, but some (small) familiarity with physics helped. Nature is probabilistic, and seems to work. This isn't a great counterargument, but honestly none of these arguments seem very persuasive. I'm not a blockchain fan, but it's like... "if someone steals your wallet, they'll get all of your money!" Well, duh. Everyone knows this and seems fine with it. 1. Scalability Issues The current bandwidth, i.e the data that can be transmitted through a blockchain with in a given time is simply too bounded for main stream adoption. Ethereum for instance does a maximum of 13 transactions per second. Visa on the other hand can do 24,000 Transaction per second and peak over 40,000 transactions per second. No mention of Lightning network to solve this. I've been out of the crypto game for years and even I know "Lightning is supposedly the solution." Did that ever pan out? 6. Price Volatility Very few people simply don’t have the stomach to hold a financial instrument that drops by over 50% with in a few months. https://i.imgur.com/WWzTlGb.png https://i.imgur.com/WWzTlGb.png

cesaref 6y ago
> Nature is probabilistic, and seems to work. I think what you mean is that the currently most successful model of the physical world is probabilistic, but this doesn't mean that nature is.
- sillysaurusx 6y ago
  Mm. That's an interesting way of looking at it. But the assumptions are laid out by Feynman: https://www.youtube.com/watch?v=QRE0GxT6Zbw&list=PLgRI7D_FXEnrCM8T1czHfJsvbQd4V1jRc&ab_channel=L%27Universitaire https://www.youtube.com/watch?v=QRE0GxT6Zbw&list=PLgRI7D_FXE... Although I'd love to urge everyone to sit through all six hours, I recognize this isn't too practical. So -- with apologies to Feynman -- I'll have to do a poor job of translating: - The scientific method means that we are never certain we're right; we're only certain we're wrong. But (as with Newton's laws) it's pretty incredible we can last so long before we're proven incorrect! - The world seems to obey mathematics. But math != physics. One helps the other; discoveries in math have applied to physics, and vice-versa. - The heart of nature seems to be a purely mathematical construct, from which there is no escape. Many people have tried to model gravity as something other than the gravitational equation, e.g. suppose at every point in time there are particles shooting every direction simultaneously. Then gravity is merely us blocking these particles -- earth with respect to the sun blocks a certain fraction of particles towards the sun, and in fact inversely as the square of the distance. No math necessary! Unfortunately, doesn't quite work -- if it were true, the earth would have slowed in its orbit due to blocking the particles, and it wouldn't have lasted ~billions of years. So that's the end of that theory. - The double slit experiment seems to prove that the world has no other model other than probabilistic (see lecture 6). There is some fundamental limitation preventing us from narrowing down nature further than this threshold. - Every test designed to break this assumption has failed. Therefore, I say that the physical world is probabilistic, and I will wager any sum of money you'd like to bet that it will still be true within, say, 200 years. There is one interesting alternative: if everything in the universe is pre-destined. The complete absence of any kind of free will whatsoever. Every atom, every electron, every single subatomic particle, all predestined from the moment of the big bang til now. That seems to be the only way that it can't be probabilistic.
- psychoslave 6y ago
  Yes, I completely agree. I think however that the point was that whatever we build out of our best available physical theories ultimately relies on probabilistic grounds. Now on the other hand, we don't use quantum physics for every single human project out there, and for many human scale phenomena, we can act without concious probabilistic representations.
ketzu 6y ago
> Everyone knows this and seems fine with it. Are you sure? I believe a lot of people interact with blockchains through services like coinbase, without managing their own wallets.
davidgerard 6y ago
>WARNING >Before you proceed, please understand that the Lightning Network is still in the experimental stage. Do not put the money you can't afford to lose. There is a high risk of you losing the money. https://docs.btcpayserver.org/LightningNetwork/ https://docs.btcpayserver.org/LightningNetwork/ and a pile of other places - and particularly when someone points out that LN doesn't work very well, and that money gets lost to bugs way too often to trust. The purpose of the Lightning Network is to serve as an excuse for Bitcoin's dismal performance. It is not a production-ready payment system, even to the degree that Bitcoin is.
- sillysaurusx 6y ago
  Thanks! I've wondered how the lightning network fared over the years. Judging by the still-experimental state, the answer is "not well."

aylmao 6y ago

To the scalability issues section I'd add the environmental aspect. It has already been reported that by some estimates Bitcoin today consumes more energy than Argentina, and that's with an estimated 1 million active wallets per day. Argentina is home to about 50 million people. This means that in order to have Bitcoin serve as the daily currency for all of Argentina's 50 million people would at least 50-tuple its energy consumption. This is comically absurd. It's thankfully not achievable or economical with the energy resources we currently have available, because pursuing a 4,900% increase in energy consumption would be disastrous. If crypto sees any widespread usage I think it'll be as the backbone of financial systems, for big transactions between institutions. In that space I don't see much incentive for people to adopt it— there's already a good level of trust amongst the parties, various levels of transaction verification, and it's mostly all digital already. [1]: https://www.bbc.com/news/technology-56012952 https://www.bbc.com/news/technology-56012952 [2]: https://www.bitcoinmarketjournal.com/how-many-people-use-bitcoin/ https://www.bitcoinmarketjournal.com/how-many-people-use-bit... [3]: https://en.wikipedia.org/wiki/Argentina https://en.wikipedia.org/wiki/Argentina

WanderPanda 6y ago
> This means that in order to have Bitcoin serve as the daily currency for all of Argentina's 50 million people would at least 50-tuple its energy consumption. How do you justify this linear extrapolation?
waheoo 6y ago
This is like saying we shouldn't build or invest in computers anymore because they cost so much and take up whole rooms full of space. Bitcoin is version 0.1 of a new way to record and share a common ledger. The cost and energy requirements are simple tradeoffs that are completely configurable to the applications needs. Go look at all the alt coins out there, blockchain tech does not require the same levels of decentralization as Bitcoin, many work off more centrally controlled systems, not all require huge amounts of energy to mine blocks, and many are extremely aware of the need to be an environmentally friendly solution. Like I get it's a very valid criticism to make about Bitcoin. But it's such a contrarian for the sake of being contrarian thing to say and completely ignores ten years of alt coin and defi evolution. Feel free to keep bag holding those "federal" reserve notes, they'll pay off one day I'm sure.

prof-dr-ir 6y ago

The "lack of intuitive private key management" is worth expanding on. Would it not be nice if you could, maybe for a small fee, have some trusted entity store your private key for you? One could perhaps imagine storing a printout of the private key in some kind of physical "safe deposit" box, to be maintained by such an entity? But maybe that is to cumbersome and we can do so entirely digitally? In that case I guess that said entity would need to demonstrate a proven track record of safely keeping a record of your net worth, as well as the various in- and out-going transactions between its different customers. With the obvious possibilities for abuse, it is clear that such an industry would see a fair amount of regulations, and one can foresee never-ending tension between government, the established corporations, and potentially disruptive newcomers....

rorykoehler 6y ago
You just recreated consumer banking.
- gjulianm 6y ago
  I think that's their point. There's a lot of discussion that 'banks will become obsolete with crypto' that forgets that banks are not the currency, they just manage it. If crypto becomes widespread banks will keep on existing, they'll just move to manage cryptocurrencies.
  - rorykoehler 6y ago
    Banks are not just managing money. They are distributors of newly minted money via loans. They are not distributors of crypto and the Fed are not involved (or at least necessary) for the creation of new crypto.
    - logifail 6y ago
      > Banks are not just managing money. They are distributors of newly minted money via loans. They are not distributors of crypto and the Fed are not involved (or at least necessary) for the creation of new crypto. So in the brave new post-Fiat world we're thinking of, how does getting a mortgage work, exactly? The house I'm in was financed by my wife and I purchasing a plot of land, for cash, then offering that land as security to a bank, who then created a loan for a fairly sizable chunk of cash with which we paid a builder to construct the house. In the all-cryptocurrency world, who creates the crypto in the getting-a-mortgage process?

nexthash 6y ago

I think the #1 reason blockchain doesn't work is very simple - the technology is broken beyond fixability. This article is two years old, but the same variations of these excuses always come up when the crypto ideologues are grilled on why their utopiaic vision hasn't come about, for all of blockchain's existence. Blockchain is awful for most things compared to a centralized or distributed database: it is inefficient, untrustworthy due to decentralization, a huge resource hog, and morbidly complex to implement. The only good use cases that come to mind is if there is some particular reason for you to evade the conventional and easier systems of communication and storage. The lesson is: you should evaluate technology on its merits, not its politics. Three classic sources on the blockchain question immediately come to mind: http://doyouneedablockchain.com/ http://doyouneedablockchain.com/ https://imgur.com/a/RlUj9Ed https://imgur.com/a/RlUj9Ed My personal favorite: https://twitter.com/vgcerf/status/1019987651301081089 https://twitter.com/vgcerf/status/1019987651301081089

lima 6y ago
> the technology is broken beyond fixability [citation needed] Crypto ideologues are a strawman. Anyone working on the actual tech agrees that blockchains are useful if, and only if, you can't rely on a single party and need a decentralized, trustless append-only database. Otherwise, why bother with the extra complexity? That's the whole point of blockchains, after all. Technology choices are complex set of trade-offs, even within the blockchain space.
- hobs 6y ago
  Right, the problem is that almost no one needs those features and those are mostly anti-features for modern software.
- packetlost 6y ago
  Correct. The problem is there's virtually nothing that actually benefits from those things. A strong case case could be made for a truly decentralized global currency and maybe smart-contracts, but not "a store of value" or "revolutionizing supply chain bookkeeping".

tomglynch 6y ago

Unrelated to the content, but I found that blog so visually appealing.

max_ 6y ago
Author here. Thanks

lima 6y ago

Here's how things are looking in 2021: (1) Scalability Issues Solved - there's a plethora of high-throughput chains in development, either based on sharding or pipelining/MVCC/optimistic concurrency. Some projects like Solana use GPUs and JIT compilation to achieve well beyond 50k tps in a distributed network. (2) Lack Of Intuitive Private Key Management Little progress. Ledger and other hardware wallets make things easier, but it's still far from intuitive. Non-technical holders typically use centralized custody providers. (3) Contract Security Some progress. Smart contract exploits still happen almost every week, but there's a robust set of best practices, safe-by-default standard libraries, and specialized auditing companies which make it much easier to write bug-free contracts, if you're willing to invest the time and effort. (4) Consensus Algorithms Are Wack Solved very thoroughly. There has been significant progress in byzantine fault-tolerant consensus, like Tendermint consensus[1] used in the Cosmos ecosystem, providing strong consistency and instant finality. (5) Privacy Many developments around zero-knowledge proofs and similar methods, but I don't know how viable those are. (6) Price Volatility There's a number of trustworthy stablecoins like USDC pegged to fiat currencies. Other than that, tokens are still highly volatile and only useful as a high-risk investment. [1]: https://atrium.lib.uoguelph.ca/xmlui/handle/10214/9769 https://atrium.lib.uoguelph.ca/xmlui/handle/10214/9769

ausbah 6y ago
is there a good resource that you recommend that goes more in depth over advances like these? I think my opinion on cryptocurrencies and blockchain in general is severely out of date
- meowkit 6y ago
  Start with a non-Bitcoin crypto and understand its components and how its supposed to work. Most of the core principles carry over to other cryptos. Ethereum.org and the the Ethereum blog would be my suggestions as a primer.
subaquamille 6y ago
> 1) Solved: [... it's] in development Wait what ?! Imagine saying this on a daily meeting !

bondarchuk 6y ago

Is this what Gell-Mann amnesia feels like? I happen to be a bit into cryptocurrency, and day after day I see these super basic surface-level takes on blockchain get posted here and even upvoted to the top spot. Are the other popular submissions here, on programming languages, the internet, entrepeneurship and what have you of similar low quality, but I just don't have the experience in those fields to realize it? This is a serious question.

andreaorru 6y ago
I'm having your same exact doubts. The quality of the conversation about cryptocurrencies here on HN is abysmal. Misinformation, or outdated information, is rampant. Maybe that's the case for everything else that is discussed here, but I just don't have enough domain knowledge to be able to tell...
- dschuler 6y ago
  This is ironic, because your posts are part of the problem.
  - deleted 6y ago
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  - deleted 6y ago
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  - andreaorru 6y ago
    Very possible. In that case, joke is on me. :)
gjulianm 6y ago
This happens a lot in topics that the HN community is interested in but not very knowledgeable in general. You can usually trust the top voted articles in programming and entrepeneurship because a lot of people here know about that. But, for example, in maths and music (I happen to know something about those) I see a lot of really bad articles and takes being upvoted.

RurouniK 6y ago

Bitcoin has been running non-stop for the past 12 years, used by tens of millions of people,has a market cap of 1 Trillion and all that while protecting the human rights around the world: https://www.reddit.com/r/Bitcoin/comments/ldyy7s/bitcoin_is_protecting_human_rights_around_the/ https://www.reddit.com/r/Bitcoin/comments/ldyy7s/bitcoin_is_... But even if you are clueless enough to think that Bitcoin and blockchain isn't working at least you should appreciate all the breakthroughs in cryptography like Zero Knowledge proofs, networking like libp2p, distributed storage like ipfs etc. that emerged from the evolution of cryptocurrency tech.

deleted 6y ago
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floo 6y ago
Bitcoin has all of the problems listed in the article and is, arguably, not yet providing the social value that blockchain could. Not sure how a high market cap is a counter argument to that.
- genericacct 6y ago
  Especially considering market cap is a totally made up number and if everybody tried to get out at once they would get a fraction of a fraction of it. (1) But it's pointless to tell this to a cryptofreak because they're so heavily invested in it they make zealots look reasonable. (1) not to mention the fact that as soon as there is volatility exchange sites go down, even the bigger ones.
  - RurouniK 6y ago
    Wait until you find out what happens when people try to take out their money all at once from banks... I remember back in the day when people used to call early internet users internetfreaks and zealots. Now it's the same with Bitcoin. Whatever...
    - janoc 6y ago

rini17 6y ago

As the recent GameStop events have shown, it's uncertain who owns how many shares, settlement is slow and error/bezzle-prone, etc. etc. Plus I venture to guess that HFT algorithms do consume country-level amounts of energy as well. Unlike blockchain, it's not surplus electricity from renewables in faraway places. And all that energy does not even improve the whole ledger security. But hey, unlike the filthy blockchain, it works!/s

AngrySkillzz 6y ago
Go read Money Stuff before you spread more misinformation about how the financial system works. There are no counterfeit shares, ownership is obvious except for cases like voting (because a short can pay a negative dividend but can't perform a negative vote), settlement is not error-prone and is slow on purpose (Russia tried real-time settlement and went back to T+2), HFT is literally just a service provider doing inter-temporal mediation between buyers and sellers rather than some evil money-stealing machine. Front-running is not real, naked shorting is super illegal with very few exceptions. If you can't tell me what part of Regulation SHO governs naked shorting, what the bona-fide market maker exception is and when they are required to fulfill a FTD, then you probably shouldn't be talking about this confidently in public.
- rini17 6y ago
  I am confident we'll know more in few years. Something being merely illegal has never stopped anyone.

EGreg 6y ago

No, blockchains are not the future, they are really the reason why one transaction can happen at a time in the whole world. Even Ethereum 2.0 will have shards which will do away with this anomaly. The only reason flash loans even work with no collateral is because you can be sure nothing else is running on the “world computer” while your transaction runs, so you can roll it back with no risk except gas fees. Vitalik himself acknowledges this, the guy is quite honest and straightforward about its limitations: Vitalik Buterin: Using Ethereum is expensive, and its blockchain is ‘almost full’ He also said blockchain's 'problem' is that every computer verifies every transaction Actually blockchains are a first-generation technology that do global consensus for every block, which literally means all transactions in the world must go through one computer in the world (the miner) although it’s a different one each time. And the situation is actually worse, since you don’t know who would mine the next block in advance, every transaction must be sent to every potential miner! Imagine if BitTorrent had every computer store and seed every movie instead of using DHT. The ability to send or loan arbitrarily large amounts for a fixed fee is a symptom of centralization. In a fully distributed network, transaction fees would have to be proportional to transaction size! Almost every other protocol on the Internet does not have such bottlenecks in its design. No one asks how many emails or websites can be served per second. Blockchain is trying to secure every transaction using the entire network! That is why so much electricity is wasted just to do 7 transactions per second. The next generation of crypto will actually be able to power payments using embarrasingly parallel architecture. Until then, we have blockchain. Ethereum is nicknamed the “world computer” for a reason. Gas fees are super high for small transactions like paying for coffee or voting in a secure election. Just one app KryptoKitties can clog up the entire network. As one example, we built Intercoin apps on top of Ethereum (https://intercoin.org/applications https://intercoin.org/applications) but we are not going to wait around for Ethereum 2.0 - which is blockchain also. Kik Messenger and others have long gotten off. Ripple, MaidSAFE and Solana use different technologies.

andreaorru 6y ago
What's your opinion on Layer 2 technologies like ZK and Optimistic Rollups?
- 6y ago

jokethrowaway 6y ago

Bitcoin is the mongodb of finance: You like its features but in reality most people don't need them. Mongo's scalability sounds great until you find yourself reimplementing a relational database for your 1000 users app. Bitcoin decentralisation sounds great but must people don't need it. You just need a less evil and less corrupt government and better fintech. You're curing the symptoms, not the cause.

slim 6y ago
Bitcoin decentralisation sounds great but must people don't need it. You just need a less evil and less corrupt government and better fintech. your second sentence inadvertently convinced me I need bitcoin
- imtringued 6y ago
  That less corrupt government will provide 1000% gains for everyone. Bitcoin will give that only to those who buy it aka rich people.
  - meowkit 6y ago
    I can’t tell if this comment is disingenuous or just naive. We’ve been trying to create less corrupt governments for hundreds of years.
shaolinspirit 6y ago
oh wow, are you straight from Disneyland?

lawn 6y ago

> The popular blockchains only don’t offer transaction finality i.e you will never be 100% sure that you have gotten funds. > You can only be probabilistically to a high degree (but with zero guarantee) that you have received your funds. All cryptography depends on it being probabilistically difficult to guess the secret. This is an exceptionally weak criticism of blockchains.

me_again 6y ago
I think the concern here is some group rewriting transaction history via controlling > 50% of the hash rate, not guessing crypto keys.

godelzilla 6y ago

Can someone post an even older, less relevant article?

controlweather 6y ago

Y’all just mad you’re still poor!

DennisP 6y ago

The article mentions Ethereum several times, so here are some Ethereum-specific updates for 2021. It's still a work in progress but some progress has been made. 1) Scalability For now, the big advance is a layer-2 approach called "rollups," several of which are in production already and able to handle several thousand transactions per second. Zkrollups do that without compromising security assumptions at all, but aren't quite to the point of handling arbitrary smart contracts. Optimistic rollups can handle arbitrary contracts but require a delay for funds withdrawal since they rely on fraud proofs. About a year from now, data sharding will multiply rollup capacity by 23X. [1] 2) Key management Vitalik agrees on this point and advocates social recovery wallets, where your friends and/or service providers give you some backup. Two popular wallets already implement this. [2] 3) Contract security This one is near and dear to my heart since I've worked as a contract auditor. It's still a problem but less so if best practices are followed, and projects which did so are holding vast sums without issues. Of the two examples they mentioned, TheDAO happened when Ethereum was less than a year old and nobody had realized the reentrance issue; also it was nasty, convoluted code, and didn't have a thorough public audit. Parity actually had two problems: they changed their wallet, made a simple mistake, and it slipped through because they didn't bother getting a new audit. That enabled several large thefts. Then they made another change to fix that, still didn't get a new audit, made another simple mistake, and that resulted in frozen funds. Both mistakes would probably have been caught by any decent auditor. As usual, keeping the code simple and straightforward helps a lot. 4) Probabilistic consensus The new proof-of-stake chain is probabilistic initially but every six minutes it actually finalizes. At that point transactions cannot be reversed without destroying 2/3 of staked ETH. Currently the staked ETH totals $5 billion. However, so far this is running on the side, with real ETH but not actually running smart contracts or transferring ETH around. It will be about a year before rest of Ethereum migrates to it. 5) Privacy Zksnarks are able to help here and Ethereum is getting better at implementing them efficiently, but privacy is not in wide use yet, partly because of gas costs. EY has done a lot of work on implementing privacy in zkrollups for corporate transactions on the public chain. 6) Price volatility For people unwilling to deal with volatility, there are stablecoins on Ethereum, some implemented as derivatives over ETH. [1] https://vitalik.ca/general/2021/01/05/rollup.html https://vitalik.ca/general/2021/01/05/rollup.html [2] https://vitalik.ca/general/2021/01/11/recovery.html https://vitalik.ca/general/2021/01/11/recovery.html

hahahahe 6y ago

There’s no accountability in blockchain. Proponents of crypto are unwilling to create a currency with specifications they preach without relinquishing the “wealth” they derived from early alpha versions.

mtrycz2 6y ago

Scalability: While it can't do 25k transactions per second, my Raspberry Pi can validate 600tps with still some headroom. (ie 150x current maximum of BTC; it could actually do 2,2k but I wasn't able to reliably generate blocks because of the stochastic nature of it) The barriers described in the article are very real, but there is also real work being done to remove them.

ezoe 6y ago

I think price volatility is the only reason it's not working as a normal currency. Right now, these blockchain currencies are traded just like expensive wine, art or gold bar. It's a speculative money game. We can't use wine or art to buy some food for today. Most people don't even run the full node themselves. They relies on somebody else's node. In good term, they are investing, in other words, they are gambling. It's just sad seeing a lot of resources and some brains are wasted on these gamble. How could this be happened? When bitcoin was announced and it's first implementation was actively developed by someone or some group known as Satoshi Nakamoto, it was just a technically interesting non practical piece of attempt. But now... it's just a mess. Had I mined bitcoin in early days, I could be a billionaire. But the same thing can be said on buying the gold bar. It's not that technically interesting. The first P2P boom invented a lot of practical services. File sharing, web hosting, audio and video streaming, video chat and all. They are all pivoted to central system for efficiency, but some services gained a few years of early head start experience thanks to the P2P. What blockchain achieved so far? Nothing. It just invented another gold bar. Totally useless but some people believes value in it. I really wish people wake up and spend precious time and resources on something that introduce real value to the world. Blockchain? Wake me up if proof of storage space become practical.

willbudd 6y ago
You have obviously no idea what you're talking about. Bitcoin's block mining algorithm is excessively deflationary: it encourages hoarding instead of spending while disproportionately rewarding early adopters. That however has absolutely nothing whatsoever todo with the blockchain algorithm, which was/is truly innovative as a decentralized ledger. There is nothing preventing cryptocurrencies from utilizing blockchain technology in combination with inflationary currency generating models, and in fact plenty of them do. They are less well known partially because they were later to the game, and partially because they lack the get-rich-quick pump and dump appeal of bitcoin and co.
hanniabu 6y ago
It's a new asset class so it's in a huge growth phase. Over time it's volatility is beginning less and less and will continue to do so as the market matures.

ignoramous 6y ago

I genuinely think HN is subject to what Clay Christensen put as "disruptive innovation" when it comes to Blockchain and friends (strange to say that for a community as opposed to a company). I understand that many on HN think of the many ICOs as Ponzi schemes, and other tech (like identity, DBs, VPNs, apps, or even alternate WWW) built on top as smokes and mirrors; but the industry being built around it is very real even if niche. There's a lot going on (including research) and it seems to me like, one fine day, like how ARM sneaked up on x86, Blockchain is going to take HN by surprise. And then, the disruption would have truly arrived. It isn't like the best sounding tech wins anyways.

cblconfederate 6y ago
Would be nice to have a decentralized HN . I m sure it exists
loceng 6y ago
That is speculation at the moment, a lovely fantasy to imagine to come to fruition for any technology; a market cap that has reached $1 trillion including price manipulation, I'm unsure it warrants that valuation - and arguably it's not simply that high due to price manipulation. I do believe blockchain could help us solve some fundamental problems - but only if it's tied to real trust and democratic processes. Bitcoin is a blockchain that's been structured to inherently be an MLM, and if you think through to the conclusion - say once 50% of the population has bought into Bitcoin, and now a growing majority require the remaining society to adopt Bitcoin to realize their gains - to unnecessarily, unreasonably transfer wealth from later adopters weighted towards earlier adopters - then you can how conflict will occur when the remaining 50% of society don't want to be left holding the bag, with no one else to then buy more Bitcoin for the last adopters to get wealth transferred to them; and this is why it also mimics a Ponzi scheme - it's just that there isn't a single controller liker Madoff, but instead it's controlled via a global, decentralized system that anyone can participate in.
- selestify 6y ago
  It’s not a Ponzi scheme any more than any other investment is a Ponzi scheme. Once 50% of society buys gold, who’s going to realize their gains? Except for gold speculators, the point isn’t necessarily to just realize gains, the point is to own an asset whose value is guaranteed not to disappear, even if it fluctuates. Granted, gold has a stronger guarantee than Bitcoin as of now. But that doesn’t make Bitcoin a Ponzi scheme.

Layke1123 6y ago

A big part of why crypto doesn't work in my opinion is that it's hard to trust software and hardware with your money when you don't own the hardware or software or can't modify it freely. Nation-states take great care to ensure that you don't have exclusive rights to the things and therefore your entire life savings could vanish in the blink of an eye without so much as any guarantee of getting your value back. State backed fiat currency is by far still more valuable than crypto and the proof is self evident at this point.

ffggvv 6y ago

ironically the biggest issue with crypto as an actual currency is stability, which could easily be solved via a stable coin or something tethered. but there’s zero excitement about that and all the excitement is around bitcoin, because all people really care about is that it goes up up in price

ianai 6y ago

Has there ever been a good break down applying Greshams law to Bitcoin? It seems like an obvious example of it at work-and that’s if we take the premise of Bitcoin at full face value. Link https://en.wikipedia.org/wiki/Gresham%27s_law https://en.wikipedia.org/wiki/Gresham%27s_law Edit-it also leads me to wonder what the mature characteristics of Bitcoin will be? What happens when all possible bitcoins have been mined? No more transactions?

jonathanaird 6y ago

BSV has solved 1,2 and 5. 3 is on the way and 4 is a non-issue.

llaolleh 6y ago

It seems like most of these problems are technical in nature, which can be solved with better silicon and design schemes. I was very anti-blockchain for a while, but if you zoom out it makes a whole lot of sense. The revolution that happened in finance was double entry bookkeeping. To me, the logical next step is to have everyone keep a immutable tamper proof, copy of the ledger synced, in agreement, all the time.

boh 6y ago

If crypto didn't trade for the amount that it currently does, no one would even attempt to justify what is an obviously irrelevant data structure (for 99.99% of cases).