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I'm the CTO of a blockchain data analytics company. (I don't like appeals-to-authority, but I think it's necessary context for what I'm about to say.) I feel l

by derefr 4y ago

I'm the CTO of a blockchain data analytics company. (I don't like appeals-to-authority, but I think it's necessary context for what I'm about to say.) I feel like I'm almost alone in seeing no real purpose in the existence of cryptocurrencies per se; but nevertheless believing that there's value in the technology ecosystem of crypto/DeFi (e.g. in smart contracts as a substrate for security tokens; in NFTs as legal deeds; etc.) entirely independent of the existence of cryptocurrencies. If Bitcoin and other "just a currency" ledger-platforms ceased to exist overnight; and the value of Ether and other "distributed-computer eStamp" currencies went to near-zero; and only stablecoins backed by governments continued to exist as representations of "stored value" on these platforms — these distributed-computer platforms would still be useful substrates for fin-tech innovation. They'd just be free of speculation + Ponzi schemes.

dubswithus 4y ago
> value in the technology ecosystem of crypto/DeFi (e.g. in smart contracts as a substrate for security tokens; in NFTs as legal deeds; etc.) Security tokens would need to follow the same securities laws as centralized solutions but I can see an advantage in having liquid shares. Price discovery would be pretty powerful. Although the founders might not like what happens to their valuation.
- Sargos 4y ago
  > Security tokens would need to follow the same securities laws as centralized solutions Which securities laws? I'm imagining you are talking about the US as this site is very Silicon Valley centric but not every company is based in the US and there are over a hundred different jurisdictions in the world. US laws aren't the end all be all and the way things are going they might be even less relevant in the future. We are living in an incredibly global society and there is currently no global governance layer that covers global public goods and digital-only projects. We'll likely develop something in the future but today there are entrepreneurs creating applications and projects at the species level that have no defined state owner and it wouldn't make sense to assign them one.
  - dubswithus 4y ago
    Are there countries that don’t have securities laws?
TedDoesntTalk 4y ago
This begs the question: then what is the “killer app” for blockchain and smart contract technologies? Has it simply not surfaced yet?
- bfuller 4y ago
  I'd put my money on it. How long did it take for us to go from DARPA experiments to iPhone and 80 year olds on facebook?
  - igorkraw 4y ago
    The difference is that the arpanet and later the internet were amazingly useful from day 1. In a sense we can applaud the cryptobros for funding basic research in cryptography and distributed systems, but as an investment or innovation, they are failures.
- fullshark 4y ago
  Killer app = illegal transactions, that's the only reason someone would want to avoid banks / contracts / lawyers.
  - sschueller 4y ago
    You mean like a cash transfer?
  - topranks 4y ago
    Yeah and it’s not a “killer app” like Lotus 123 was an improvement on paper accounts. It’s a shitty way to do it. No criminal would ever use crypto if <insert legal payment frameworks> were accessible to them.
- Kinrany 4y ago
  Bitcoin transfers are faster and cheaper than SWIFT. Of course you also need to go through p2p on both sides and the volatility is a problem, but both of these are tolerable depending on circumstances.
323 4y ago
A very interesting argument I've read is that the value of bitcoin is it's volatility. Meaning that you can trade billions on it's ups and downs, and make profit this way. Anything that can generate profit is valuable. Notice how the big exchanges, Binance, FTX are worth tens of billions of dollars, and their owners are deca-billionaires, thus kind of proving this thesis, because exchanges are first in the line to extract profit from volatility through transaction commissions. TL;DR: bitcoin is backed by it's crazy volatility
- johnsimer 4y ago
  No different than saying casinos are valuable IMO
topranks 4y ago
Nah. The whole Eth blockchain has as much compute power as 1/5,000th of a raspberry pi. It’s an insanely inefficient non-scalable tech. To sacrifice many orders of magnitude of performance, while pumping a whole countries worth of C02 into the atmosphere, just to have a system that is “decentralised” makes no sense. None of the applications can be properly decentralised. Your house deed stuff needs to be enshrined in law, enforced by police etc., your NFT tickets need the venue to validate. Just stop it. It’s junk. The planets future is perilous enough already.
- derefr 4y ago
  > inefficient ... pumping a whole countries worth of C02 Proof-of-Work blockchains are a strawman. Nobody in or out of the ecosystem thinks they should exist. They're a legacy technology sticking around on inertia; the mainframes to Proof-of-Stake's microcomputers. > None of the applications can be properly decentralised. Your house deed stuff needs to be enshrined in law, enforced by police etc. So? I didn't say anything about decentralization. I believe that these distributed-compute platforms that use signed append-only ledgers as shared storage ("blockchains") are a better way to do regular old centralized fin-tech. (Like I said above: security tokens. Those are embedded in a specific nation's regulatory environment!) (See also: https://www.bankofcanada.ca/research/digital-currencies-and-fintech/projects/central-bank-digital-currency/ https://www.bankofcanada.ca/research/digital-currencies-and-...) However, there is a very specific case that blockchains enable that traditional finance doesn't — and that's "multilateral agreement with no shared legal framework." E.g. a person in the US making a contract with a citizen of North Korea. If these two people get into a dispute, there's nothing their governments will do to arbitrate that agreement. But they can at least rely on technological mechanisms to enforce certain rules about what they can and cannot do to screw one-another over (e.g. requiring 2-of-3 multi-signature validation to remove value from an escrow holding account.) > your NFT tickets need the venue to validate They need a venue to validate. If one supplier is willing to take another supplier's "tickets", so to speak, then you now have an economy. Let's say these NFTs are game licenses — if the Epic Games Store went under, Steam could say "we'll accept Epic Game Store licenses to download+activate games on Steam" as a PR move. Do that a couple of times, and now you have an economy of transferrable game licenses, maybe with an industry body that governs their issuance acceptance. I'm not saying that this happens by default; but rather that this end-state is the point of the technology; and anything else people do with it is basically noise.
lxgr 4y ago
> only stablecoins backed by governments continued to exist as representations of "stored value" on these platforms What would be the advantage over the government just running the databases for that as well? If there is a central trusted issuer, there is no need for a blockchain.
- derefr 4y ago
  You say "the" government like there's only one. These platforms enable multilateral interoperation by default. In the fiat world, each government currency exists in its own central-bank database. In a crypto world, the US-gov-backed USD stablecoin and the EU-backed Euro stablecoin would exist on the same blockchain. Also, you seem to be thinking like currencies (whether fiat securities, or decentralized autonomous securities) are the central point — or only point — of blockchains. This is true of "ledger-only" blockchains like Bitcoin — which is why I say those would be mostly irrelevant. But in decentralized-computation platforms like Ethereum, there are lots of other things going on; and I'm not suggesting to limit any of that stuff to only fiat/regulated use-cases. My argument is against cryptocurrencies (decentralized autonomous securities) specifically; not against utility tokens, governance tokens, DAOs, virtual pets, or anything else people do with blockchains. All that stuff is inherently global — and it would make no sense to have to "shard" the state of any of it onto into separate ledgers per legal regime. The legal regimes can come to the distributed computer, not the other way around.
  - lxgr 4y ago
    > Also, you seem to be thinking like currencies (whether fiat securities, or decentralized autonomous securities) are the central point — or only point — of blockchains. [...] > But in decentralized-computation platforms like Ethereum, there are lots of other things going on What are they? Please name one successful, trustless Ethereum use case beyond DeFi. The blockchain isn't connected to anything; most importantly, it's not connected to a legal system capable of interpreting and adjudicating contracts and reliably passing judgement on real-world properties that are the subject of those contracts. Yes, it would be absolutely great to have an "API for the legal system" (and by extension the financial one), but I doubt that blockchain brings anything of significance to the table here. (Distributed consensus might well be a component of such a system, but arguably not the most important one by a long shot.)

by derefr 4y ago

dubswithus 4y ago

> value in the technology ecosystem of crypto/DeFi (e.g. in smart contracts as a substrate for security tokens; in NFTs as legal deeds; etc.) Security tokens would need to follow the same securities laws as centralized solutions but I can see an advantage in having liquid shares. Price discovery would be pretty powerful. Although the founders might not like what happens to their valuation.

Sargos 4y ago
> Security tokens would need to follow the same securities laws as centralized solutions Which securities laws? I'm imagining you are talking about the US as this site is very Silicon Valley centric but not every company is based in the US and there are over a hundred different jurisdictions in the world. US laws aren't the end all be all and the way things are going they might be even less relevant in the future. We are living in an incredibly global society and there is currently no global governance layer that covers global public goods and digital-only projects. We'll likely develop something in the future but today there are entrepreneurs creating applications and projects at the species level that have no defined state owner and it wouldn't make sense to assign them one.
- dubswithus 4y ago
  Are there countries that don’t have securities laws?

TedDoesntTalk 4y ago

This begs the question: then what is the “killer app” for blockchain and smart contract technologies? Has it simply not surfaced yet?

bfuller 4y ago
I'd put my money on it. How long did it take for us to go from DARPA experiments to iPhone and 80 year olds on facebook?
- igorkraw 4y ago
  The difference is that the arpanet and later the internet were amazingly useful from day 1. In a sense we can applaud the cryptobros for funding basic research in cryptography and distributed systems, but as an investment or innovation, they are failures.
fullshark 4y ago
Killer app = illegal transactions, that's the only reason someone would want to avoid banks / contracts / lawyers.
- sschueller 4y ago
  You mean like a cash transfer?
- topranks 4y ago
  Yeah and it’s not a “killer app” like Lotus 123 was an improvement on paper accounts. It’s a shitty way to do it. No criminal would ever use crypto if <insert legal payment frameworks> were accessible to them.
Kinrany 4y ago
Bitcoin transfers are faster and cheaper than SWIFT. Of course you also need to go through p2p on both sides and the volatility is a problem, but both of these are tolerable depending on circumstances.

323 4y ago

A very interesting argument I've read is that the value of bitcoin is it's volatility. Meaning that you can trade billions on it's ups and downs, and make profit this way. Anything that can generate profit is valuable. Notice how the big exchanges, Binance, FTX are worth tens of billions of dollars, and their owners are deca-billionaires, thus kind of proving this thesis, because exchanges are first in the line to extract profit from volatility through transaction commissions. TL;DR: bitcoin is backed by it's crazy volatility

johnsimer 4y ago
No different than saying casinos are valuable IMO

topranks 4y ago

Nah. The whole Eth blockchain has as much compute power as 1/5,000th of a raspberry pi. It’s an insanely inefficient non-scalable tech. To sacrifice many orders of magnitude of performance, while pumping a whole countries worth of C02 into the atmosphere, just to have a system that is “decentralised” makes no sense. None of the applications can be properly decentralised. Your house deed stuff needs to be enshrined in law, enforced by police etc., your NFT tickets need the venue to validate. Just stop it. It’s junk. The planets future is perilous enough already.

derefr 4y ago
> inefficient ... pumping a whole countries worth of C02 Proof-of-Work blockchains are a strawman. Nobody in or out of the ecosystem thinks they should exist. They're a legacy technology sticking around on inertia; the mainframes to Proof-of-Stake's microcomputers. > None of the applications can be properly decentralised. Your house deed stuff needs to be enshrined in law, enforced by police etc. So? I didn't say anything about decentralization. I believe that these distributed-compute platforms that use signed append-only ledgers as shared storage ("blockchains") are a better way to do regular old centralized fin-tech. (Like I said above: security tokens. Those are embedded in a specific nation's regulatory environment!) (See also: https://www.bankofcanada.ca/research/digital-currencies-and-fintech/projects/central-bank-digital-currency/ https://www.bankofcanada.ca/research/digital-currencies-and-...) However, there is a very specific case that blockchains enable that traditional finance doesn't — and that's "multilateral agreement with no shared legal framework." E.g. a person in the US making a contract with a citizen of North Korea. If these two people get into a dispute, there's nothing their governments will do to arbitrate that agreement. But they can at least rely on technological mechanisms to enforce certain rules about what they can and cannot do to screw one-another over (e.g. requiring 2-of-3 multi-signature validation to remove value from an escrow holding account.) > your NFT tickets need the venue to validate They need a venue to validate. If one supplier is willing to take another supplier's "tickets", so to speak, then you now have an economy. Let's say these NFTs are game licenses — if the Epic Games Store went under, Steam could say "we'll accept Epic Game Store licenses to download+activate games on Steam" as a PR move. Do that a couple of times, and now you have an economy of transferrable game licenses, maybe with an industry body that governs their issuance acceptance. I'm not saying that this happens by default; but rather that this end-state is the point of the technology; and anything else people do with it is basically noise.

lxgr 4y ago

> only stablecoins backed by governments continued to exist as representations of "stored value" on these platforms What would be the advantage over the government just running the databases for that as well? If there is a central trusted issuer, there is no need for a blockchain.

derefr 4y ago
You say "the" government like there's only one. These platforms enable multilateral interoperation by default. In the fiat world, each government currency exists in its own central-bank database. In a crypto world, the US-gov-backed USD stablecoin and the EU-backed Euro stablecoin would exist on the same blockchain. Also, you seem to be thinking like currencies (whether fiat securities, or decentralized autonomous securities) are the central point — or only point — of blockchains. This is true of "ledger-only" blockchains like Bitcoin — which is why I say those would be mostly irrelevant. But in decentralized-computation platforms like Ethereum, there are lots of other things going on; and I'm not suggesting to limit any of that stuff to only fiat/regulated use-cases. My argument is against cryptocurrencies (decentralized autonomous securities) specifically; not against utility tokens, governance tokens, DAOs, virtual pets, or anything else people do with blockchains. All that stuff is inherently global — and it would make no sense to have to "shard" the state of any of it onto into separate ledgers per legal regime. The legal regimes can come to the distributed computer, not the other way around.
- lxgr 4y ago
  > Also, you seem to be thinking like currencies (whether fiat securities, or decentralized autonomous securities) are the central point — or only point — of blockchains. [...] > But in decentralized-computation platforms like Ethereum, there are lots of other things going on What are they? Please name one successful, trustless Ethereum use case beyond DeFi. The blockchain isn't connected to anything; most importantly, it's not connected to a legal system capable of interpreting and adjudicating contracts and reliably passing judgement on real-world properties that are the subject of those contracts. Yes, it would be absolutely great to have an "API for the legal system" (and by extension the financial one), but I doubt that blockchain brings anything of significance to the table here. (Distributed consensus might well be a component of such a system, but arguably not the most important one by a long shot.)