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The main issue with "Web3" is that it moves records of transactions from many private places to one public place. Sure this one place may not be controlled by a

The main issue with "Web3" is that it moves records of transactions from many private places to one public place. Sure this one place may not be controlled by a single entity, but it facilitates tracking at an unprecedented level. Cryptocurrencies are the ultimate example of this and are an absolute boon to tax collectors, forensic accountants and fraudsters. In our current economy financial transactions are recorded in millions of individual ledgers that are kept private, or in the case of cash transactions are often not recorded at all, or are not linked to an individual. There is no central ledger. With crypto currencies however you can not only see all transactions but also trace them back to individual users as long as you can link a wallet to a person. This is a massive increase in centralisation yet discussion of whether this is a good idea seems to be entirely missing. The notion that centralising transactions in one place is somehow an example of decentralisation just seems mad.

ericd 5y ago
I’m not an expert, but my impression is that lightning makes this not so much the case - that payments are routed through a web of peer to peer nodes and they only do periodic net settlement on the public blockchains.
meowtimemania 5y ago
I think of it as centralization in that all transactions will be stored in one “database”, but decentralized in that the database has millions of nodes and anyone can add their hardware as a node
- phoe-krk 5y ago
  That's centralization, just replicated for redundancy.
  - theK 5y ago
    Not completely. The main difference between blockchain and classical banking is that the protocol defines what transaction can be done and the network of block producing nodes manages the evolution of its state. In classical banking you have multiple routes that go around the protocol (law in this case) and you also live in a federated feudal system where your bank reigns supreme in what you own.
    - xchaotic 5y ago
      I call bs on this argument. Protocol on the blockchain still has to abide by the rule of law. And the idea that certain things are not allowed on the blockchain is false - someone will create a new fork, chain or there will be a more elaborate workaround. It’s just a very complicated way to deliver anything.
      - theK 5y ago
        Adoption of forks depends on public adoption. Let's call this common consensus. Classical law is just the public deciding which set of rules leads to a healthy society, these laws are then adpptedby societal structures. Let's call this... Hmm common consensus? You are seeing differences where there aren't any.
lwansbrough 5y ago
Web3 is more of a problem soup, I don't think it's accurate to say there's any one specific "main" problematic aspect of it. The whole ecosystem is one terrible idea built on another in the name of achieving a worse version of what we already have.
chrisco255 5y ago
> are an absolute boon to tax collectors, forensic accountants and fraudsters Weird that it would be a boon for both forensic accountants and fraudsters. How do you reconcile that sentence? The fact that something is done in public does not mean that it is centralized. There is public and decentralized, public and centralized, private and centralized, and private and decentralized. Decentralization itself, is a spectrum and not a binary quality. Just as, I assume, public / private also falls on some sort of spectrum spanning from everyone in the world being able to see to VISA/Mastercard corporate privacy policy to national intelligence agencies to group or individual privacy. It is completely possible to conduct transactions privately on blockchains. Monero and z-cash (using zero knowledge proofs) are the best examples of this. The biggest blockchains choose not to either due to legacy design choices (zero knowledge systems are a recent innovation) or the benefits of openness. For example, public transaction history allows for development of an on-chain reputation for a pseudo-anonymous account. It's also quite useful for managing decentralized organizations, as the treasury and spending records is meant to be public to keep the DAO accountable to its members and prospective members. With the recent introduction of zk rollups on Ethereum, it's now possible to have the best of both worlds, in my opinion (see https://aztec.network/index.html https://aztec.network/index.html). Transactions that need to be private will be conducted on zero-knowledge rollups built for privacy. Mastercard is working on this with Consensys for Ethereum (https://www.coindesk.com/business/2021/12/16/consensys-collaborates-with-mastercard-on-new-ethereum-scaling-solution/ https://www.coindesk.com/business/2021/12/16/consensys-colla...).
- vmception 5y ago
  > Weird that it would be a boon for both forensic accountants and fraudsters. How do you reconcile that sentence? It is very common to track people by the tokens they hold and target them for theft and fraud. One example is to airdrop a backdoored token, and when the user tries to move it they wind up authorizing movement of their other valuable tokens. Or to just use the airdrop to lead a curious user to the airdrop event's website, which is then a phishing campaign that achieves the same result.
  - theK 5y ago
edderly 5y ago
Not sure about the fraudsters necessarily, but it seems like a core irony of the so called web3 is that the concepts involved could have great utility for governance of individuals and companies in an economy where a great deal of effort is spent tracking down tax dodgers. However, the web3 anti-establishment shtick seems to sell better at the moment.
lawn 5y ago
This is not true for Monero, that hides the sender, receiver and amount for all transactions by default.
- vmception 5y ago
  And also Secret Network, which hides smart contract variables, which therefore includes token and wrapped token amounts, along with the current owner. Monero has a trustless-enough bridge over to there.
  - everfree 5y ago
    And also Aztec Network, and Tornado Cash, and Zcash, and soon Starkware, and... I'm surprised so many people on Hacker News apparently still believe that you can "see all transactions" on every blockchain. It really only takes some surface level research to find working, production blockchains/cryptocurrencies that use one of several types of cryptography to hide that data, plus if you're using a pseudonymous blockchain, non-custodial ways to "break the link" between wallets.
    - Lordarminius 5y ago
      > I'm surprised so many people on Hacker News apparently still believe that you can "see all transactions" on every blockchain. Most have no knowledge of the state of the industry. Their opposition is based on knee jerk reactions.
    - input_sh 5y ago
      Okay but like who cares? Are any of those even in the top 30 cryptocurrencies by market cap? Is anyone speaking about them in the context of Web3 or is it all ETH, XRP and maybe two more? From my blissfully uninformed mind, the only time these cryptocurrencies pop up is precisely this: as a counterargument to the popular ones, where you can see all the transactions. They're fringes even among the fringe that is cryptocurrencies.
      - 5y ago
me_me_mu_mu 5y ago
So if I don't trust Big Tech, I'm somehow supposed to trust groups of sketchy people who do things like give up their US citizenship (as an immigrant to the USA - the privilege is real) to move to {insert sketchy country or a known haven for certain activities - its legal there!} so they can now facilitate millions of dollars moving each day outside of any government jurisdiction.
- vmception 5y ago
  I mean, yeah. There is a privilege associated with that. The US is a great starting point, but you can outgrow it, especially when it comes to financial services if you aren't interested in the incumbents. People with money in stable economies aren't clamoring for US citizenship, some are interested in it but its just an option. The whole continent is populated by people that lost consensus wherever they came from. Like 99% of the population has a heritage that was either deemed an extremist in their "motherland" or were simply just outside of the cool kids club and had to fight for scraps, or avoiding the impending reality of both. The other 1% are basically the 1% financially and just here for play while retaining their options to do the same anywhere.
  - deleted 5y ago
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- elevenoh 5y ago
  You seem to label group/people rather than evaluating ideas for what they are.
- Ekaros 5y ago
  US citizenship is also one with most burden from having it. At least compared to many other stable ones. Yes, you can make great money there, but also the taxation is not done by vast majority of other citizenships. So getting rid of it for anything slightly worse makes lot of sense from individual stand point.
Lordarminius 5y ago
> Cryptocurrencies are the ultimate example of this and are an absolute boon to tax collectors, forensic accountants and fraudsters. If it represents a boon to forensic accountants it cannot also be a godsend to fraudsters.
ur-whale 5y ago
> it moves records of transactions from many private places to one public place True for some of its current incarnations, but it is absolutely not a built-in limitation and therefore not a valid criticism of the entire space. As a matter of fact, a number of existing blockchains are already entirely opaque to analysis (zcash, monero, grin, beam, etc...), and in these, the effort required to actually connect participants and transactions is typically orders of magnitude larger than the economic rewards you'd derive from the answer.
- hooande 5y ago
  if it's opaque to analysis, what's the point in using a blockchain? why not just a central database?
  - ur-whale 5y ago
    > why not just a central database? I would have thought this to be obvious, but these chains, while anonymous still have the following attributes: - decentralized - permissionless - does not rely on third-party trust A central database has none of these attributes.
    - ViViDboarder 5y ago
      Really? So I can go onto one of these chains and transfer anything to a new address without a third party blessing my transaction? I was under the impression that nearly the entire thing is based on some form of consensus. Consensus is necessarily by third parties. So if the consensus drives decisions on what gets accepted and what does not, is that not a permission? If there is a single dominant consensus, is that not centralized?
      - che_shirecat 5y ago
        centralized = one party holds all the power. decentralized = many parties, each of which do not hold all the power in isolation, therefore must come to consensus on a case-by-case basis to make decisions. equating decentralized consensus to "oh but that just means they become a centralized single party in aggregate" is an incredibly stupid take. just because I can agree with 4 other parties that one transaction is valid does not that mean that I somehow merge with all 4 of those parties into an entity that has the exact same interests for everything else. can you understand that?
numtel 5y ago
A few issues with this: 1. Not all crypto currencies are public. See monero, haven, secret network. Although that last one depends on some specific features of some Intel processors... I'm of the opinion that the pseudonymous nature of public blockchains is very beneficial to society. I would love it if I could see what companies, governments, and people near me were spending their money on. It would enable me to make better decisions. 2. "Web3" is about decentralization but it doesn't necessarily mean storing data on a blockchain. The most important aspect is that users no longer have to sign up or log in. They submit responses which are signed by a key pair, which is their identity instead of a record in a "users" table.
- xondono 5y ago
  > I'm of the opinion that the pseudonymous nature of public blockchains is very beneficial to society. Have you tried to “steelman” this? Because I don’t think it will pass basic scrutiny. The same companies and governments you want track have more incentives and resources to hide their transactions than any individual, so, either all transactions are public or they’ll be able to hide while most individuals won’t.
  - numtel 5y ago
    Well, except for ransom attacks, nobody is forced to use a public cryptocurrency. For it to be common and being proud of one's economic transaction history would be awesome. In the 90s, experiments in publicity like reality TV and the Truman Show movie gave way to social media in the next decade. We are constantly finding new ways to publicize our lives because there is value in publicity. Privacy shouldn't disappear absolutely but we've got a long ways to go towards greater publicity before reaching the limit of usefulness.
    - neurotrace 5y ago
      > being proud of one's economic transaction history would be awesome. I sincerely doubt we'll ever see that. First off, Venmo has already tried to apply the social media formula to transactions. I don't know of a single person who reads their Venmo feed just for fun. Next, most transactions are boring and not worth sharing. "John bought toilet paper and Q-tips. [Like] [Retweet]". You state that the move to hyper-publicity that we've already seen hasn't reached it's peak for usefulness and yet there are already widespread conversations about the dangers and pain that this hyper-publicity has caused. If we reach a future where people are "proud" of their transactions and are sharing them everywhere then we've made a horrible mistake.
headmelted 5y ago
Imagine paying someone for a sandwich and being obligated to give them access to view your bank account balance (past, present and future) in perpetuity.
elevenoh 5y ago
Are you aware that any level of privacy in crypto transactions already exists? From completely private to completely public.
mattwilsonn888 5y ago
That was true five or ten years ago - today there are legitimate alternatives and work being done on even better alternative to solve the issue you are talking about. Most fall under the domain of Zero Knowledge Proofs which have use cases beyond pure blockchain systems. Apart from that, Web3 isn't simply crypto-currency adoption, its about using the consensus innovation core to crypto-currencies to build platforms regulated autonomously by a public group with certain guarantees for security, openness and control.
jslove 5y ago
with taproot bitcoin lightning transactions can be mostly private, scalable, not using energy, and cheap.
hinkley 5y ago
Private ledgers are also sharded, which means they scale much higher. When cryptocurrencies can handle 10% of Visa’s transaction rate, somebody wake me up and I’ll start paying attention to it. Until then a lot of this stuff is pearl clutching. Visa is only a fraction of total money transactions worldwide. To be a replacement it has to be able to go an order of magnitude higher than Visa, and last I checked it’s still three orders of magnitude below Visa. That’s a lot of orders of magnitude to overcome. Too many by most accounts. People who make those sorts of improvements started out with a prototype that was already 20-50 times faster than the status quo.
bravenous 5y ago
True but you missing the point. This shared database gives the power of decentralisation- you won’t get cancelled - the so called permission less data. Nobody is control yet everybody has some control - true democracy. The public transaction problem is solved by bullet & zero knowledge proofs in currencies like Monero & Zcash. I trust Monero more as it seems Zcash has a on demand back door to unravel specific transactions. Web3 is a panacea but it might take a decade to arrive as the building blocks are in place.

ericd 5y ago

I’m not an expert, but my impression is that lightning makes this not so much the case - that payments are routed through a web of peer to peer nodes and they only do periodic net settlement on the public blockchains.

meowtimemania 5y ago

I think of it as centralization in that all transactions will be stored in one “database”, but decentralized in that the database has millions of nodes and anyone can add their hardware as a node

phoe-krk 5y ago
That's centralization, just replicated for redundancy.
- theK 5y ago
  Not completely. The main difference between blockchain and classical banking is that the protocol defines what transaction can be done and the network of block producing nodes manages the evolution of its state. In classical banking you have multiple routes that go around the protocol (law in this case) and you also live in a federated feudal system where your bank reigns supreme in what you own.
  - xchaotic 5y ago
    I call bs on this argument. Protocol on the blockchain still has to abide by the rule of law. And the idea that certain things are not allowed on the blockchain is false - someone will create a new fork, chain or there will be a more elaborate workaround. It’s just a very complicated way to deliver anything.
    - theK 5y ago
      Adoption of forks depends on public adoption. Let's call this common consensus. Classical law is just the public deciding which set of rules leads to a healthy society, these laws are then adpptedby societal structures. Let's call this... Hmm common consensus? You are seeing differences where there aren't any.

lwansbrough 5y ago

Web3 is more of a problem soup, I don't think it's accurate to say there's any one specific "main" problematic aspect of it. The whole ecosystem is one terrible idea built on another in the name of achieving a worse version of what we already have.

chrisco255 5y ago

> are an absolute boon to tax collectors, forensic accountants and fraudsters Weird that it would be a boon for both forensic accountants and fraudsters. How do you reconcile that sentence? The fact that something is done in public does not mean that it is centralized. There is public and decentralized, public and centralized, private and centralized, and private and decentralized. Decentralization itself, is a spectrum and not a binary quality. Just as, I assume, public / private also falls on some sort of spectrum spanning from everyone in the world being able to see to VISA/Mastercard corporate privacy policy to national intelligence agencies to group or individual privacy. It is completely possible to conduct transactions privately on blockchains. Monero and z-cash (using zero knowledge proofs) are the best examples of this. The biggest blockchains choose not to either due to legacy design choices (zero knowledge systems are a recent innovation) or the benefits of openness. For example, public transaction history allows for development of an on-chain reputation for a pseudo-anonymous account. It's also quite useful for managing decentralized organizations, as the treasury and spending records is meant to be public to keep the DAO accountable to its members and prospective members. With the recent introduction of zk rollups on Ethereum, it's now possible to have the best of both worlds, in my opinion (see https://aztec.network/index.html https://aztec.network/index.html). Transactions that need to be private will be conducted on zero-knowledge rollups built for privacy. Mastercard is working on this with Consensys for Ethereum (https://www.coindesk.com/business/2021/12/16/consensys-collaborates-with-mastercard-on-new-ethereum-scaling-solution/ https://www.coindesk.com/business/2021/12/16/consensys-colla...).

vmception 5y ago
> Weird that it would be a boon for both forensic accountants and fraudsters. How do you reconcile that sentence? It is very common to track people by the tokens they hold and target them for theft and fraud. One example is to airdrop a backdoored token, and when the user tries to move it they wind up authorizing movement of their other valuable tokens. Or to just use the airdrop to lead a curious user to the airdrop event's website, which is then a phishing campaign that achieves the same result.
- theK 5y ago

edderly 5y ago

Not sure about the fraudsters necessarily, but it seems like a core irony of the so called web3 is that the concepts involved could have great utility for governance of individuals and companies in an economy where a great deal of effort is spent tracking down tax dodgers. However, the web3 anti-establishment shtick seems to sell better at the moment.

lawn 5y ago

This is not true for Monero, that hides the sender, receiver and amount for all transactions by default.

vmception 5y ago
And also Secret Network, which hides smart contract variables, which therefore includes token and wrapped token amounts, along with the current owner. Monero has a trustless-enough bridge over to there.
- everfree 5y ago
  And also Aztec Network, and Tornado Cash, and Zcash, and soon Starkware, and... I'm surprised so many people on Hacker News apparently still believe that you can "see all transactions" on every blockchain. It really only takes some surface level research to find working, production blockchains/cryptocurrencies that use one of several types of cryptography to hide that data, plus if you're using a pseudonymous blockchain, non-custodial ways to "break the link" between wallets.
  - Lordarminius 5y ago
    > I'm surprised so many people on Hacker News apparently still believe that you can "see all transactions" on every blockchain. Most have no knowledge of the state of the industry. Their opposition is based on knee jerk reactions.
  - input_sh 5y ago
    Okay but like who cares? Are any of those even in the top 30 cryptocurrencies by market cap? Is anyone speaking about them in the context of Web3 or is it all ETH, XRP and maybe two more? From my blissfully uninformed mind, the only time these cryptocurrencies pop up is precisely this: as a counterargument to the popular ones, where you can see all the transactions. They're fringes even among the fringe that is cryptocurrencies.
    - 5y ago

me_me_mu_mu 5y ago

So if I don't trust Big Tech, I'm somehow supposed to trust groups of sketchy people who do things like give up their US citizenship (as an immigrant to the USA - the privilege is real) to move to {insert sketchy country or a known haven for certain activities - its legal there!} so they can now facilitate millions of dollars moving each day outside of any government jurisdiction.

vmception 5y ago
I mean, yeah. There is a privilege associated with that. The US is a great starting point, but you can outgrow it, especially when it comes to financial services if you aren't interested in the incumbents. People with money in stable economies aren't clamoring for US citizenship, some are interested in it but its just an option. The whole continent is populated by people that lost consensus wherever they came from. Like 99% of the population has a heritage that was either deemed an extremist in their "motherland" or were simply just outside of the cool kids club and had to fight for scraps, or avoiding the impending reality of both. The other 1% are basically the 1% financially and just here for play while retaining their options to do the same anywhere.
- deleted 5y ago
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- deleted 5y ago
  [deleted]
elevenoh 5y ago
You seem to label group/people rather than evaluating ideas for what they are.
Ekaros 5y ago
US citizenship is also one with most burden from having it. At least compared to many other stable ones. Yes, you can make great money there, but also the taxation is not done by vast majority of other citizenships. So getting rid of it for anything slightly worse makes lot of sense from individual stand point.

Lordarminius 5y ago

> Cryptocurrencies are the ultimate example of this and are an absolute boon to tax collectors, forensic accountants and fraudsters. If it represents a boon to forensic accountants it cannot also be a godsend to fraudsters.

ur-whale 5y ago

> it moves records of transactions from many private places to one public place True for some of its current incarnations, but it is absolutely not a built-in limitation and therefore not a valid criticism of the entire space. As a matter of fact, a number of existing blockchains are already entirely opaque to analysis (zcash, monero, grin, beam, etc...), and in these, the effort required to actually connect participants and transactions is typically orders of magnitude larger than the economic rewards you'd derive from the answer.

hooande 5y ago
if it's opaque to analysis, what's the point in using a blockchain? why not just a central database?
- ur-whale 5y ago
  > why not just a central database? I would have thought this to be obvious, but these chains, while anonymous still have the following attributes: - decentralized - permissionless - does not rely on third-party trust A central database has none of these attributes.
  - ViViDboarder 5y ago
    Really? So I can go onto one of these chains and transfer anything to a new address without a third party blessing my transaction? I was under the impression that nearly the entire thing is based on some form of consensus. Consensus is necessarily by third parties. So if the consensus drives decisions on what gets accepted and what does not, is that not a permission? If there is a single dominant consensus, is that not centralized?
    - che_shirecat 5y ago
      centralized = one party holds all the power. decentralized = many parties, each of which do not hold all the power in isolation, therefore must come to consensus on a case-by-case basis to make decisions. equating decentralized consensus to "oh but that just means they become a centralized single party in aggregate" is an incredibly stupid take. just because I can agree with 4 other parties that one transaction is valid does not that mean that I somehow merge with all 4 of those parties into an entity that has the exact same interests for everything else. can you understand that?

numtel 5y ago

A few issues with this: 1. Not all crypto currencies are public. See monero, haven, secret network. Although that last one depends on some specific features of some Intel processors... I'm of the opinion that the pseudonymous nature of public blockchains is very beneficial to society. I would love it if I could see what companies, governments, and people near me were spending their money on. It would enable me to make better decisions. 2. "Web3" is about decentralization but it doesn't necessarily mean storing data on a blockchain. The most important aspect is that users no longer have to sign up or log in. They submit responses which are signed by a key pair, which is their identity instead of a record in a "users" table.

xondono 5y ago
> I'm of the opinion that the pseudonymous nature of public blockchains is very beneficial to society. Have you tried to “steelman” this? Because I don’t think it will pass basic scrutiny. The same companies and governments you want track have more incentives and resources to hide their transactions than any individual, so, either all transactions are public or they’ll be able to hide while most individuals won’t.
- numtel 5y ago
  Well, except for ransom attacks, nobody is forced to use a public cryptocurrency. For it to be common and being proud of one's economic transaction history would be awesome. In the 90s, experiments in publicity like reality TV and the Truman Show movie gave way to social media in the next decade. We are constantly finding new ways to publicize our lives because there is value in publicity. Privacy shouldn't disappear absolutely but we've got a long ways to go towards greater publicity before reaching the limit of usefulness.
  - neurotrace 5y ago
    > being proud of one's economic transaction history would be awesome. I sincerely doubt we'll ever see that. First off, Venmo has already tried to apply the social media formula to transactions. I don't know of a single person who reads their Venmo feed just for fun. Next, most transactions are boring and not worth sharing. "John bought toilet paper and Q-tips. [Like] [Retweet]". You state that the move to hyper-publicity that we've already seen hasn't reached it's peak for usefulness and yet there are already widespread conversations about the dangers and pain that this hyper-publicity has caused. If we reach a future where people are "proud" of their transactions and are sharing them everywhere then we've made a horrible mistake.

headmelted 5y ago

Imagine paying someone for a sandwich and being obligated to give them access to view your bank account balance (past, present and future) in perpetuity.

elevenoh 5y ago

Are you aware that any level of privacy in crypto transactions already exists? From completely private to completely public.

mattwilsonn888 5y ago

That was true five or ten years ago - today there are legitimate alternatives and work being done on even better alternative to solve the issue you are talking about. Most fall under the domain of Zero Knowledge Proofs which have use cases beyond pure blockchain systems. Apart from that, Web3 isn't simply crypto-currency adoption, its about using the consensus innovation core to crypto-currencies to build platforms regulated autonomously by a public group with certain guarantees for security, openness and control.

jslove 5y ago

with taproot bitcoin lightning transactions can be mostly private, scalable, not using energy, and cheap.

hinkley 5y ago

Private ledgers are also sharded, which means they scale much higher. When cryptocurrencies can handle 10% of Visa’s transaction rate, somebody wake me up and I’ll start paying attention to it. Until then a lot of this stuff is pearl clutching. Visa is only a fraction of total money transactions worldwide. To be a replacement it has to be able to go an order of magnitude higher than Visa, and last I checked it’s still three orders of magnitude below Visa. That’s a lot of orders of magnitude to overcome. Too many by most accounts. People who make those sorts of improvements started out with a prototype that was already 20-50 times faster than the status quo.

bravenous 5y ago

True but you missing the point. This shared database gives the power of decentralisation- you won’t get cancelled - the so called permission less data. Nobody is control yet everybody has some control - true democracy. The public transaction problem is solved by bullet & zero knowledge proofs in currencies like Monero & Zcash. I trust Monero more as it seems Zcash has a on demand back door to unravel specific transactions. Web3 is a panacea but it might take a decade to arrive as the building blocks are in place.