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And it is fine to build systems with trusted parties on top of a permissionless network. The article cites USDC which does this, it is one of many applications

And it is fine to build systems with trusted parties on top of a permissionless network. The article cites USDC which does this, it is one of many applications users can choose to transact with. Attempting to bake reversibility into the protocol would lead to a tightly permissioned system with only a few trusted authorities. A loose analogy might be the internet, which aims to be a decentralized global protocol that we can then build centralized systems on top of.

adra 4y ago
The internet is built on the 'A' server which is a tightly guarded centralized US tool. Commerce lives because the absolute power brokers of the system have chosen to not exercise strong enforcement. The internet technologies are certainly built in a way that could function in completely autonomous blobs all over the world, but that's certainly not the way it functions today.
lbriner 4y ago
I'm not an expert but I think this is what the original letter authors objected to. If you build these mechanisms on top of a blockchain which is inherently baked in stone, then there is no point in having the blockchain be so strict. In other words, if you allow an organisation to change things like refund you, then they might as well just manage their own leger like they do at the minute.
- randomran01234 4y ago
  The goal of modern crypto like Ethereum is to provide a secure, predictable, open source, and decentralized network that many higher-level applications can flourish on top of and co-exist within. USDC exists with reversibility but not all users in the network are forced to use it. There are other protocols like DAI that have different features and considerations. And in many cases these are open source protocols that can be forked as desired. Probably the closest thing we have like this is the web, which is more or less a decentralized protocol, atop which we have built a lot of centralized platforms.
  - rvz 4y ago
    This probably the likely case of having co-existing protocols like Ethereum, USDC and some Layer 2s. They don't seem to be ready yet but they look somewhat promising.
- pcthrowaway 4y ago
  There's a benefit to building it on the blockchain. I can look at the USDC contracts and see that privileged users have the ability to freeze the USDC in my account. I can look at the DAI contracts and see that they do not. Good luck getting visibility into the back-end processes of web2 applications. Even if they publish the source on github, there's no way to verify what they're running
  - dmitriid 4y ago
    > Good luck getting visibility into the back-end processes of web2 applications "Smart" "contract" are as invisible to the average user as the backends of web2 applications (or any other applications for that matter). The authors of these "contracts" routinely create buggy contracts because the code is complex [1] But sure. You can definitely look at impenetrable code written in an esoteric language for an equally esoteric VM and see exactly what it does. [1] just an example, https://web3isgoinggreat.com/?id=akudreams-earns-34-million-team-will-never-be-able-to-withdraw https://web3isgoinggreat.com/?id=akudreams-earns-34-million-...
    - pcthrowaway 4y ago
      Absolutely, the average user won't be looking at the contracts (and yes there will be exploits). All software is buggy, the open-ness just gives malicious users a path to find exploits (and also bug bounty hunters incentive to responsibly disclose). With traditional software, the attackers are often large actors and we may never hear about all the exploits. But think about where faith is being placed in traditional software vs. decentralized software: with traditional software, you rely on a whistleblower inside the company, or a government agency to expose corruption, malpractice, maliciousness, noncompliance, or incompetence. In a dapp, there are also knowledgeable watchdogs who are incentivized to expose scams/fraud, or report bugs (I'd wager there are more responsible disclosures in crypto than exploits by bad actors). Knowledgable researchers keep casual users informed of developments, and give layperson explanations of how dapp works (and Cunningham's law dictates that they're likely to be called out if their explanation is incorrect). Either way, people are placing their trust somewhere. Traditional applications basically rely a lot on "security by obscurity" which doesn't make them truly secure. And many users enjoy truly transparent applications. The biggest problem with crypto for the average person is that it's incredibly hard to assess risk in order to develop risk-appropriate strategies and expectations for interacting with crypto. And it can also be hard to get a straight answer when discussing risks (good signals are surrounded by lots of noise). That's why I think that rather than writing off the industry as a whole, those of us who have more insight into the technology (and the risks) should be advising less technical participants to be incredibly cautious, not to approach crypto outside of the top two as an investment without incredible diligence etc. (though, like the author, I'm very much opposed to bitcoin due to proof of work)
NoGravitas 4y ago
If you build a system with trusted parties, you no longer need to build it on top of a permissionless network. If permissionless networks were zero-cost and had no downsides, it wouldn't matter. But in fact, they are incredibly expensive and complex compared to conventional systems (like relational databases), and have serious downsides. Once you need a trusted party, there's no way to justify the permissionless network.
- tornato7 4y ago
  Well, I can think of a few reasons: facilitating transactions with other parties on the permissionless network, promoting public verifiability of your system, utilizing the tools and utilities available for public blockchains, requiring your data to be available even after you stop paying your hosting provider, avoiding the hassle of building your own payment on-ramps, etc.

adra 4y ago

The internet is built on the 'A' server which is a tightly guarded centralized US tool. Commerce lives because the absolute power brokers of the system have chosen to not exercise strong enforcement. The internet technologies are certainly built in a way that could function in completely autonomous blobs all over the world, but that's certainly not the way it functions today.

lbriner 4y ago

I'm not an expert but I think this is what the original letter authors objected to. If you build these mechanisms on top of a blockchain which is inherently baked in stone, then there is no point in having the blockchain be so strict. In other words, if you allow an organisation to change things like refund you, then they might as well just manage their own leger like they do at the minute.

randomran01234 4y ago
The goal of modern crypto like Ethereum is to provide a secure, predictable, open source, and decentralized network that many higher-level applications can flourish on top of and co-exist within. USDC exists with reversibility but not all users in the network are forced to use it. There are other protocols like DAI that have different features and considerations. And in many cases these are open source protocols that can be forked as desired. Probably the closest thing we have like this is the web, which is more or less a decentralized protocol, atop which we have built a lot of centralized platforms.
- rvz 4y ago
  This probably the likely case of having co-existing protocols like Ethereum, USDC and some Layer 2s. They don't seem to be ready yet but they look somewhat promising.
pcthrowaway 4y ago
There's a benefit to building it on the blockchain. I can look at the USDC contracts and see that privileged users have the ability to freeze the USDC in my account. I can look at the DAI contracts and see that they do not. Good luck getting visibility into the back-end processes of web2 applications. Even if they publish the source on github, there's no way to verify what they're running
- dmitriid 4y ago
  > Good luck getting visibility into the back-end processes of web2 applications "Smart" "contract" are as invisible to the average user as the backends of web2 applications (or any other applications for that matter). The authors of these "contracts" routinely create buggy contracts because the code is complex [1] But sure. You can definitely look at impenetrable code written in an esoteric language for an equally esoteric VM and see exactly what it does. [1] just an example, https://web3isgoinggreat.com/?id=akudreams-earns-34-million-team-will-never-be-able-to-withdraw https://web3isgoinggreat.com/?id=akudreams-earns-34-million-...
  - pcthrowaway 4y ago
    Absolutely, the average user won't be looking at the contracts (and yes there will be exploits). All software is buggy, the open-ness just gives malicious users a path to find exploits (and also bug bounty hunters incentive to responsibly disclose). With traditional software, the attackers are often large actors and we may never hear about all the exploits. But think about where faith is being placed in traditional software vs. decentralized software: with traditional software, you rely on a whistleblower inside the company, or a government agency to expose corruption, malpractice, maliciousness, noncompliance, or incompetence. In a dapp, there are also knowledgeable watchdogs who are incentivized to expose scams/fraud, or report bugs (I'd wager there are more responsible disclosures in crypto than exploits by bad actors). Knowledgable researchers keep casual users informed of developments, and give layperson explanations of how dapp works (and Cunningham's law dictates that they're likely to be called out if their explanation is incorrect). Either way, people are placing their trust somewhere. Traditional applications basically rely a lot on "security by obscurity" which doesn't make them truly secure. And many users enjoy truly transparent applications. The biggest problem with crypto for the average person is that it's incredibly hard to assess risk in order to develop risk-appropriate strategies and expectations for interacting with crypto. And it can also be hard to get a straight answer when discussing risks (good signals are surrounded by lots of noise). That's why I think that rather than writing off the industry as a whole, those of us who have more insight into the technology (and the risks) should be advising less technical participants to be incredibly cautious, not to approach crypto outside of the top two as an investment without incredible diligence etc. (though, like the author, I'm very much opposed to bitcoin due to proof of work)

NoGravitas 4y ago

If you build a system with trusted parties, you no longer need to build it on top of a permissionless network. If permissionless networks were zero-cost and had no downsides, it wouldn't matter. But in fact, they are incredibly expensive and complex compared to conventional systems (like relational databases), and have serious downsides. Once you need a trusted party, there's no way to justify the permissionless network.

tornato7 4y ago
Well, I can think of a few reasons: facilitating transactions with other parties on the permissionless network, promoting public verifiability of your system, utilizing the tools and utilities available for public blockchains, requiring your data to be available even after you stop paying your hosting provider, avoiding the hassle of building your own payment on-ramps, etc.