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OK, blockchain fans, I’m genuinely confused as usual… Can someone explain what the point is of collecting price data and then putting it on the chain with a sma

by wrs 5y ago

OK, blockchain fans, I’m genuinely confused as usual… Can someone explain what the point is of collecting price data and then putting it on the chain with a smart contract to do calculations on it? If “censorship” is a problem, why not just broadcast/mirror the signed data? If the calculation is untrusted, why not just publish the source code and let people run it on the published data? What is the blockchain accomplishing here?

gruez 5y ago
Probably so it can tie in with some smart contract that's based off the CPI (eg. Treasury Inflation-Protected Securities). As for why that's useful, I'm not sure. At the end you'll still need a trusted oracle for the scraped prices.
- bko 5y ago
  It would be very useful for on-chain financial derivatives based off a more accurate inflation gauge. I don't trust the official CPI numbers and don't see them as accurately reflecting my cost of living increases over the years. Couple in the fact that there are literally trillions in pension benefits tied to CPI, so the incentive to manipulate these numbers is huge. It's already very opaque. If you look at the constituents [0], housing, education and health care make up around 60%, so it makes no sense that inflation has been flat for the last ten years. The prices would ideally come from a large number of sources and some averaging would take place. [0] https://www.advisorperspectives.com/dshort/updates/2021/07/14/inflation-the-components https://www.advisorperspectives.com/dshort/updates/2021/07/1...
  - lend000 5y ago
    The CPI basically measures the median American's budget. So if wealth inequality is unchanging, then it's a decent measure of economy-wide inflation. Otherwise, it measures inflation x delta wealth inequality.
    - paulryanrogers 5y ago
      What if those budgets have significantly less buying power? Especially in critical areas like housing, healthcare, and education?
      - lend000 5y ago
        Then people will tend to buy less of them to fit their budget. Here is the most telling chart: inflation-adjusted wages in the US [0]. They never change, because the CPI uses a survey to determine what the average American is buying, and how much it costs, then they adjust weights based on how much they spend on it (which cancels out the cost because people change their buying preferences based on current prices) and leaves you with the median American's total expenditure. Yeah, that's really how they do it. And that's why CPI is a joke. [0] https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/ https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us...
        paulryanrogers 5y ago
        Is it possible people are buying less by volume, even if amounts spent level off? For example smaller homes, less healthcare, getting less educational value per (adjusted) dollar spent?
        lend000 5y ago
        Yes, that's exactly it. Such changes are not well reflected in the CPI model.
  - gruez 5y ago
    >I don't trust the official CPI numbers and don't see them as accurately reflecting my cost of living increases over the years. What makes you think a NGO would do a better job? On one hand they might not have the same incentive to manipulate the numbers in the same way that the government would, but that would be replaced with an incentive to come up with whatever numbers that their donor base would like to see (see also: media companies adjusting their coverage to retain subscribers). >If you look at the constituents [0], housing, education and health care make up around 60%, so it makes no sense that inflation has been flat for the last ten years. Are you missing a part of your argument here? You just say that a few categories make up 60% of the CPI, then immediately conclude that "it makes no sense that inflation has been flat". >The prices would ideally come from a large number of sources and some averaging would take place. The problem is that you need to do various subjective adjustments (eg. the controversial "hedonistic adjustments") for the numbers to make sense.
    - bko 5y ago
      > What makes you think a NGO would do a better job? Maybe they wouldn't do better, but they wouldn't have a trillion dollar incentive and ideally there'd be competing metrics. > Are you missing a part of your argument here? You just say that a few categories make up 60% of the CPI, then immediately conclude that "it makes no sense that inflation has been flat". In the US, over the last 10 years housing, education and health care have grown by a lot while official inflation has been historically very flat (0 - 2%). Health care: On a per capita basis, health spending has increased over 31-fold in the last four decades, from $353 per person in 1970 to $11,582 in 2019. [0] Housing: Median home price was around ~210k in today's dollars ten years ago and is now ~314k [1] Education: The cost of college increased by more than 25% in the last 10 years [2] > The problem is that you need to do various subjective adjustments Sure, but again, I don't trust the officials to do this given the trillion dollar incentive to fudge the numbers. [0] https://www.healthsystemtracker.org/chart-collection/u-s-spending-healthcare-changed-time/#:~:text=On%20a%20per%20capita%20basis%2C%20health%20spending%20has%20increased%20over,1970%20to%20%2411%2C582%20in%202019 https://www.healthsystemtracker.org/chart-collection/u-s-spe.... [1] https://dqydj.com/historical-home-prices/ https://dqydj.com/historical-home-prices/ [2] https://www.cnbc.com/2019/12/13/cost-of-college-increased-by-more-than-25percent-in-the-last-10-years.html https://www.cnbc.com/2019/12/13/cost-of-college-increased-by...
lottin 5y ago
These are people who think the government wants to censor their prices database... so not exactly geniuses.
- nuclearnice1 5y ago
  Take a look at Argentina 2007-2016 [1,2,3] [1] https://en.m.wikipedia.org/wiki/MIT_Billion_Prices_project https://en.m.wikipedia.org/wiki/MIT_Billion_Prices_project [2] https://www.hbs.edu/faculty/Pages/item.aspx?num=54491 https://www.hbs.edu/faculty/Pages/item.aspx?num=54491 [3] https://en.m.wikipedia.org/wiki/Cristina_Fernández_de_Kirchner https://en.m.wikipedia.org/wiki/Cristina_Fernández_de_Kirchn...
  - lottin 5y ago
    What happened in Argentina 2007-2016 that would suggest censorship-resistance in a prices database is a feature that makes sense?
    - nuclearnice1 5y ago
      The government misreported inflation figures. (According to the people who made the price database)
ashtonkem 5y ago
If all you have is a hammer…
Cantinflas 5y ago
I think you are right, this can be done without a blockchain. Once done, it could be useful to make an oracle with it and put it on ethereum so it can be used by other smart contracts. But not the calculation itself nor the original data points
throwawaygh 5y ago
For about the same reason that you should use blockchain for inventory management.
anythingdude321 5y ago
Including the computation and data on-chain enables other parties to use it trustlessly and verifiably. If you, for example, wanted to make an algorithmic central bank that reacted to inflation numbers you would need on-chain CPI in order to do that. Similarly you may want to index your interest rate to the CPI in some way (like LIBOR). It becomes a lot more useful when on-chain than in a central database
- wrs 5y ago
  It’s not trustless, because you’re trusting the scraping NGO to put the correct price data on the chain. You can verify that it came from the NGO with a simple signature; you don’t need the chain for that.
  - anythingdude321 5y ago
    nah fam that won't likely be the final topology of the network. you can have oracles all the way down and a slashing risk for those that deviate significantly from the consensus prices and CPI numbers. so you're trusting the economic design of the system to appropriately incentivize the participants to give honest data
MaysonL 5y ago
Mining fees?

by wrs 5y ago

gruez 5y ago

Probably so it can tie in with some smart contract that's based off the CPI (eg. Treasury Inflation-Protected Securities). As for why that's useful, I'm not sure. At the end you'll still need a trusted oracle for the scraped prices.

bko 5y ago
It would be very useful for on-chain financial derivatives based off a more accurate inflation gauge. I don't trust the official CPI numbers and don't see them as accurately reflecting my cost of living increases over the years. Couple in the fact that there are literally trillions in pension benefits tied to CPI, so the incentive to manipulate these numbers is huge. It's already very opaque. If you look at the constituents [0], housing, education and health care make up around 60%, so it makes no sense that inflation has been flat for the last ten years. The prices would ideally come from a large number of sources and some averaging would take place. [0] https://www.advisorperspectives.com/dshort/updates/2021/07/14/inflation-the-components https://www.advisorperspectives.com/dshort/updates/2021/07/1...
- lend000 5y ago
  The CPI basically measures the median American's budget. So if wealth inequality is unchanging, then it's a decent measure of economy-wide inflation. Otherwise, it measures inflation x delta wealth inequality.
  - paulryanrogers 5y ago
    What if those budgets have significantly less buying power? Especially in critical areas like housing, healthcare, and education?
    - lend000 5y ago
      Then people will tend to buy less of them to fit their budget. Here is the most telling chart: inflation-adjusted wages in the US [0]. They never change, because the CPI uses a survey to determine what the average American is buying, and how much it costs, then they adjust weights based on how much they spend on it (which cancels out the cost because people change their buying preferences based on current prices) and leaves you with the median American's total expenditure. Yeah, that's really how they do it. And that's why CPI is a joke. [0] https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/ https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us...
      - paulryanrogers 5y ago
        Is it possible people are buying less by volume, even if amounts spent level off? For example smaller homes, less healthcare, getting less educational value per (adjusted) dollar spent?
        lend000 5y ago
        Yes, that's exactly it. Such changes are not well reflected in the CPI model.
- gruez 5y ago
  >I don't trust the official CPI numbers and don't see them as accurately reflecting my cost of living increases over the years. What makes you think a NGO would do a better job? On one hand they might not have the same incentive to manipulate the numbers in the same way that the government would, but that would be replaced with an incentive to come up with whatever numbers that their donor base would like to see (see also: media companies adjusting their coverage to retain subscribers). >If you look at the constituents [0], housing, education and health care make up around 60%, so it makes no sense that inflation has been flat for the last ten years. Are you missing a part of your argument here? You just say that a few categories make up 60% of the CPI, then immediately conclude that "it makes no sense that inflation has been flat". >The prices would ideally come from a large number of sources and some averaging would take place. The problem is that you need to do various subjective adjustments (eg. the controversial "hedonistic adjustments") for the numbers to make sense.
  - bko 5y ago
    > What makes you think a NGO would do a better job? Maybe they wouldn't do better, but they wouldn't have a trillion dollar incentive and ideally there'd be competing metrics. > Are you missing a part of your argument here? You just say that a few categories make up 60% of the CPI, then immediately conclude that "it makes no sense that inflation has been flat". In the US, over the last 10 years housing, education and health care have grown by a lot while official inflation has been historically very flat (0 - 2%). Health care: On a per capita basis, health spending has increased over 31-fold in the last four decades, from $353 per person in 1970 to $11,582 in 2019. [0] Housing: Median home price was around ~210k in today's dollars ten years ago and is now ~314k [1] Education: The cost of college increased by more than 25% in the last 10 years [2] > The problem is that you need to do various subjective adjustments Sure, but again, I don't trust the officials to do this given the trillion dollar incentive to fudge the numbers. [0] https://www.healthsystemtracker.org/chart-collection/u-s-spending-healthcare-changed-time/#:~:text=On%20a%20per%20capita%20basis%2C%20health%20spending%20has%20increased%20over,1970%20to%20%2411%2C582%20in%202019 https://www.healthsystemtracker.org/chart-collection/u-s-spe.... [1] https://dqydj.com/historical-home-prices/ https://dqydj.com/historical-home-prices/ [2] https://www.cnbc.com/2019/12/13/cost-of-college-increased-by-more-than-25percent-in-the-last-10-years.html https://www.cnbc.com/2019/12/13/cost-of-college-increased-by...

lottin 5y ago

These are people who think the government wants to censor their prices database... so not exactly geniuses.

nuclearnice1 5y ago
Take a look at Argentina 2007-2016 [1,2,3] [1] https://en.m.wikipedia.org/wiki/MIT_Billion_Prices_project https://en.m.wikipedia.org/wiki/MIT_Billion_Prices_project [2] https://www.hbs.edu/faculty/Pages/item.aspx?num=54491 https://www.hbs.edu/faculty/Pages/item.aspx?num=54491 [3] https://en.m.wikipedia.org/wiki/Cristina_Fernández_de_Kirchner https://en.m.wikipedia.org/wiki/Cristina_Fernández_de_Kirchn...
- lottin 5y ago
  What happened in Argentina 2007-2016 that would suggest censorship-resistance in a prices database is a feature that makes sense?
  - nuclearnice1 5y ago
    The government misreported inflation figures. (According to the people who made the price database)

ashtonkem 5y ago

If all you have is a hammer…

Cantinflas 5y ago

I think you are right, this can be done without a blockchain. Once done, it could be useful to make an oracle with it and put it on ethereum so it can be used by other smart contracts. But not the calculation itself nor the original data points

throwawaygh 5y ago

For about the same reason that you should use blockchain for inventory management.

anythingdude321 5y ago

Including the computation and data on-chain enables other parties to use it trustlessly and verifiably. If you, for example, wanted to make an algorithmic central bank that reacted to inflation numbers you would need on-chain CPI in order to do that. Similarly you may want to index your interest rate to the CPI in some way (like LIBOR). It becomes a lot more useful when on-chain than in a central database

wrs 5y ago
It’s not trustless, because you’re trusting the scraping NGO to put the correct price data on the chain. You can verify that it came from the NGO with a simple signature; you don’t need the chain for that.
- anythingdude321 5y ago
  nah fam that won't likely be the final topology of the network. you can have oracles all the way down and a slashing risk for those that deviate significantly from the consensus prices and CPI numbers. so you're trusting the economic design of the system to appropriately incentivize the participants to give honest data

MaysonL 5y ago

Mining fees?