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Correct. This adds a point of centralization, which defeats the entire purpose of cryptocurrency. As far as I can tell, cryptocurrency is based on wanting (1)

Correct. This adds a point of centralization, which defeats the entire purpose of cryptocurrency. As far as I can tell, cryptocurrency is based on wanting (1) a shared database that (2) can be updated by anyone within specific rules and (3) doesn't require anybody to trust anybody else. In the same way that low-trust societies have a much bigger overhead as a result of the lack of trust, I do not think cryptocurrencies are feasible while holding to (3) without massive, massive expenditure as a result.

CSSer 5y ago
> without massive, massive expenditure as a result. Could you elaborate on this? The problem I foresee is that having someone you have to trust is not a bad thing because at least you're able to identify that entity's traits and act accordingly. If that entity is, for example, the world's largest military power, I might feel like I have a lot less to worry about than if they're, as another example, a publicly traded company about half the size of the average major U.S. bank. Is this what you're alluding to?
- MereInterest 5y ago
  In general, the more people cooperate, the better the results are overall. The downside is that the more people cooperate, the more they can be taken advantage of by defectors, by bad actors who decide to harm the public good in exchange for personal benefit. I absolutely agree that being able to trust particular actors is a huge benefit. Part of the problem is language. "Trust" isn't just trust in a particular actor's intent, but also in their capabilities to carry through on a promise. In order to trust somebody to carry out a promise, you need to indirectly trust on others not to interfere with that promise. In this case, if you don't trust the US government to handle currency, then you certainly can't trust a publicly traded company that is beholding to work within and has assets that can be seized by the US government. If you assume ill-intent on the part of the government, then there's no reason to assume that a smaller actor wouldn't be influenced by the government. In this case, I trust the US government to manage currency well, because it is in its best interest to do so.
tshaddox 5y ago
> This adds a point of centralization, which defeats the entire purpose of cryptocurrency. I don't think you get to declare what "the entire purpose of cryptocurrency" is! People tend to get confused about what "trustlessness" actually means. It certainly doesn't mean that every single aspect of every transaction involving cryptocurrency must not require any party to place any trust in another party. If you're using cryptocurrency to buy bread you still need to trust that the baker hasn't poisoned your bread, and that need for trust must be addressed by some mechanism unrelated to cryptocurrency (like the baker's reputation, or laws against poisoning people). That doesn't illustrate some absurdity in the idea of cryptocurrency or "defeat the entire purpose of cryptocurrency."
- MereInterest 5y ago
  We're in agreement that trust is needed at some point in the system. Cryptocurrencies can be completely internally consistent, but have no relationship to the real world. The only way for that relationship to be formed is by trust. But, there is not a single thing in cryptocurrencies that make sense if you are willing to allow for centralization. If you have a centralized system, then you have a limited number of actors allowed to make changes to the ledger. You can establish trust out-of-band, whether that means by passing around gpg keys, by investigating previous banking practices, or by establishing common rules for auditing. After that, there's no need for Proof of Work/Stake/Space/etc, because you can trust the updates coming from the rest of the network. The reason I say that the point of cryptocurrency is trustlessness and decentralization is because the only other alternative is that all the implementers of cryptocurrencies are utter fools not to see the simpler solution. I don't think that is the case. I think they have seen the simpler solution of trusted validators, and have dismissed it out of a fundamental difference in priorities from mine, but I don't think they are fools.
  - tshaddox 5y ago
    I’m not sure what you mean. The centralization being discussed here is out of band and thus the trust is also out of band. It’s no different than your local bar opening a tab for you, or using an escrow service for a construction contract.

CSSer 5y ago

> without massive, massive expenditure as a result. Could you elaborate on this? The problem I foresee is that having someone you have to trust is not a bad thing because at least you're able to identify that entity's traits and act accordingly. If that entity is, for example, the world's largest military power, I might feel like I have a lot less to worry about than if they're, as another example, a publicly traded company about half the size of the average major U.S. bank. Is this what you're alluding to?

MereInterest 5y ago
In general, the more people cooperate, the better the results are overall. The downside is that the more people cooperate, the more they can be taken advantage of by defectors, by bad actors who decide to harm the public good in exchange for personal benefit. I absolutely agree that being able to trust particular actors is a huge benefit. Part of the problem is language. "Trust" isn't just trust in a particular actor's intent, but also in their capabilities to carry through on a promise. In order to trust somebody to carry out a promise, you need to indirectly trust on others not to interfere with that promise. In this case, if you don't trust the US government to handle currency, then you certainly can't trust a publicly traded company that is beholding to work within and has assets that can be seized by the US government. If you assume ill-intent on the part of the government, then there's no reason to assume that a smaller actor wouldn't be influenced by the government. In this case, I trust the US government to manage currency well, because it is in its best interest to do so.

tshaddox 5y ago

> This adds a point of centralization, which defeats the entire purpose of cryptocurrency. I don't think you get to declare what "the entire purpose of cryptocurrency" is! People tend to get confused about what "trustlessness" actually means. It certainly doesn't mean that every single aspect of every transaction involving cryptocurrency must not require any party to place any trust in another party. If you're using cryptocurrency to buy bread you still need to trust that the baker hasn't poisoned your bread, and that need for trust must be addressed by some mechanism unrelated to cryptocurrency (like the baker's reputation, or laws against poisoning people). That doesn't illustrate some absurdity in the idea of cryptocurrency or "defeat the entire purpose of cryptocurrency."

MereInterest 5y ago
We're in agreement that trust is needed at some point in the system. Cryptocurrencies can be completely internally consistent, but have no relationship to the real world. The only way for that relationship to be formed is by trust. But, there is not a single thing in cryptocurrencies that make sense if you are willing to allow for centralization. If you have a centralized system, then you have a limited number of actors allowed to make changes to the ledger. You can establish trust out-of-band, whether that means by passing around gpg keys, by investigating previous banking practices, or by establishing common rules for auditing. After that, there's no need for Proof of Work/Stake/Space/etc, because you can trust the updates coming from the rest of the network. The reason I say that the point of cryptocurrency is trustlessness and decentralization is because the only other alternative is that all the implementers of cryptocurrencies are utter fools not to see the simpler solution. I don't think that is the case. I think they have seen the simpler solution of trusted validators, and have dismissed it out of a fundamental difference in priorities from mine, but I don't think they are fools.
- tshaddox 5y ago
  I’m not sure what you mean. The centralization being discussed here is out of band and thus the trust is also out of band. It’s no different than your local bar opening a tab for you, or using an escrow service for a construction contract.