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The author falls into the same trap as many others who write about blockchains: “people will build centralized apps on top of the decentralized protocol, so the

The author falls into the same trap as many others who write about blockchains: “people will build centralized apps on top of the decentralized protocol, so there is no need for the decentralized protocol in the first place!” A better way to understand blockchains is as a base settlement layer: they are a shared, permissionless and open source protocol that is resistant to takeover by a single entity. What this means is that a company, like Meta or Coinbase or even a US bank, can build a centralized platform that lets users manage their crypto assets. But as long as users can still withdraw into a non custodial address, they have the option to escape to that neutral base layer. This is a different design than what we see currently in the web and banking sector. You can hold ETH or an ENS domain with nothing but a private key. But with a .com domain, if you want to withdraw from GoDaddy, you will be forced to transfer that into another centralized service like Namecheap that will also extract rent. There is no “neutral base layer” with traditional digital assets.

adament 4y ago
Assuming you are allowed to transfer into the base layer. Most currencies and finance have a similar decentralized base layer: Cash. However in many jurisdictions your ability to transfer into that base layer is severely restricted due to money laundering, anti-terror-financing and / or currency-control regulation.
- derefr 4y ago
  This is not guaranteed as a general property of blockchain systems, but can be guaranteed on a case-by-case basis by the immutable nature of smart-contract systems. I.e., if a centralized system sets up a lockup contract such that value can be forcibly unlocked by making a request on the blockchain side, and the centralized system just has to observe the event and deal with that — then for the company running the centralized system, that contract becomes an immutable part of "the way things are"; they can't decide to later renege on it, keeping people's funds locked up, because nothing can change the working of the [non-upgradable] contract once deployed — it just "is what it is." By deploying such an immutable contract to be the custodian of customer funds, such an entity is essentially making a hard/inescapable precommitment to doing for users, whatever the contract happens to do. In a sense, the central entity's owner is not the true custodian of people's locked funds; rather, the contract itself is, and the contract can be independently audited by anyone who cares, before anyone begins using it, to prove that it will only ever be able to act in the public interest, rather than in the corporation's interest.
  - cryvate1284 4y ago
    Why can't they renege on it? What if a judge orders them renege?
    - derefr 4y ago
      They technologically cannot. The central entity has no power to decide to keep user funds, nor can anyone compel them to do so, because they don't truly have the user funds in their possession; rather, the contract has control of the funds, and they don't control the contract, the immutable rules burned into the contract upon its creation control the contract. The central entity get to initially craft those rules however they like, and so can certainly design the contract to act favorably to them; but then the contract gets (immutably) deployed, and everyone else then gets the opportunity to look at the rules of the contract-as-deployed, to decide for themselves if they're equitable. If they're not, nobody will bother to interact with the contract.
      - RandomLensman 4y ago
        Societies (and their evolutions) don't run by truly immutable rules - so having truly immutable things is placing things outside of them in a way. Would mean either the use cases for immutable rules are highly regulated and limited or there has to be a way to change them.
        derefr 4y ago
        The immutability of a blockchain isn't fundamental; it's rooted in the consensus of the chain state. Look at the Ethereum "The DAO" state-fix hard-fork: if the entire community of node operators agrees to forcefully alter the state-database of the chain, they can do arbitrarily anything they like to that state. But crucially, this "community of node operators" consists of a multilateral coalition of people and companies operating under every different society / government jurisdiction on the planet, with no single government that can compel enough operators at once to actually get the majority required to compel the state of the blockchain to change. In other words, blockchains are systems with democratic recourse, but not authoritarian recourse. They can be altered from the bottom up to fix problems caused by immutability, if basically "a referendum run against a representative sampling of the population of Earth" agrees with the alteration; but they cannot be commanded to change from the top down, just because some individual entity with a conflux of power wants it to happen. No legal system can force a smart contract to do what you like; but common sense and human empathy can still override bad machine decisions when necessary.
- whatisweb3 4y ago
  Three properties of cash make it tend toward centralization: physical size, difficulty of movement, and ease of access. If you store a lot of cash in your home safe, eventually you will need more space - this is one reason banks exist. If you try to move a lot of cash quickly from one person or location to another, you will have a hard time - this is another reason banks and money transfer exists. If somebody breaks into your home safe, they probably will have immediate access to your cash - see smart contract wallets[1] and social recovery wallets[2] as an example of a more secure "crypto safe." I agree that a concern in blockchain is that regulation and services may restrict users ability to withdraw to the base layer, see my other comment[3]. To me this is not a failing of the blockchain. It would be like governments restricting the use of internet or E2EE chat protocols - which is happening in some parts of the world - this does not mean the protocols have failed to meet their goals. [1] https://www.argent.xyz/learn/what-is-a-smart-contract-wallet/ https://www.argent.xyz/learn/what-is-a-smart-contract-wallet... [2] https://vitalik.ca/general/2021/01/11/recovery.html https://vitalik.ca/general/2021/01/11/recovery.html [3] https://news.ycombinator.com/item?id=32422921 https://news.ycombinator.com/item?id=32422921
  - whatisweb3 4y ago
    To add, cash is not neutral, it is tied to a particular state. It is a US centric view to say that USD cash is the base layer, rather than the EUR or GBP.
manholio 4y ago
> But as long as users can still withdraw into a non custodial address, they have the option to escape to that neutral base layer. Using blockchains for money is just about the most absurd solution a society can come up to the problems of financial centralization. Money is a form of power and the solutions to power problems are always political. We need a financial system that protects individual privacy while reducing the options for money laundering, tax evasion, bribes, fraud and all the types of crimes motivated by money. There is a inherent contradiction in these requirements, the hope that a private actor or some non-accountable peer to peer algorithm can find a good political compromise is an ideological pipe dream.
- lern_too_spel 4y ago
  What's more, this idea that the blockchain lies in a magical place outside the reach of the law is a persistent error that blockchain promoters make. Treasury could overnight decide to step up sanctions enforcement against DPRK and declare that anybody who recognizes a block that includes a transfer to one of DPRK's known wallets is not complying with sanctions. This would force Coinbase, Binance, and any exchange accepting Americans' money to hard fork the chain, removing noncompliant blocks. Whoever last accepted a DPRK coin or any other coins that were in those blocks or downstream whose transactions aren't replayed would end up a bag-holder, or transactions would grind to a halt to wait for allowed old transactions to be replayed into the fork. Whether Treasury would do this is another question, but that they have the technical ability to do so is not in question, and Treasury's counterparts in other countries have the same power.
petesergeant 4y ago
> they are a shared, permissionless and open source protocol that is resistant to takeover by a single entity Sure, but what’s an actual real world use where that’s a good thing? For domain names it’s exceptionally useful that a stolen, infringing, or fraudulent domain can be recovered through the legal system.
- whatisweb3 4y ago
  > it’s exceptionally useful that a stolen, infringing, or fraudulent domain can be recovered through the legal system. Useful for who? It is often useful for large companies with powerful legal teams who will try to exert control over domain name registrars as they see fit.[1] The nice thing with the blockchain is that you have the choice. If you want your asset to be recoverable through the legal system and courtroom decisions, it can be put into a centralized custodian. If you want to maintain complete ownership of that asset even though you risk not being able to recover it if somebody steals it from you, you might like to hold it non-custodially. It is very possible that laws end up being defined around ownership of blockchain assets to give them a stronger degree of legal and intellectual property. [1] https://domainnamewire.com/2022/03/08/meta-platforms-and-namecheap-settle-trademark-lawsuit/ https://domainnamewire.com/2022/03/08/meta-platforms-and-nam...
  - petesergeant 4y ago
    > Useful for whom? People who use DNS to resolve any service they rely on and expect to end up at that service, rather than on some hijacked version, which is essentially everyone who uses the DNS system. Your linked examples are of companies attempting to put themselves beyond the reach of the legal system, which doesn't really counter the pervasive idea that crypto is only useful for breaking the law and for speculation.
    - whatisweb3 4y ago
      Interesting you mention hijacking, only yesterday Curve’s .com DNS was hijacked and users lost funds as a result[1]. This is also possible with ENS but ownership can be secured more easily, two ways this could be approached: 1. ENS ownership is held by a 5-of-7 multisig. Attacker would need to socially engineer 5 entities instead of just one, Namecheap. Users can also clearly see when ENS ownership changes as it’s broadcast to the network. 2. ENS is set to a 100 year expiry and ownership records are then set to the burn address. Now, short of faulty RPC or frontends, there is no way that the domain can point to a different address. My previously linked example was that of Meta entering into a court battle with a domain name registrar, who has full control over these records and may decide to alter them to avoid paying the cost of defending themselves in court. See [2] which is loosely related to this discussion of centralized services exerting control over name aliases. In a hypothetical blockchain application where usernames are secured with ENS or another smart contract, there would be limited recourse for anybody except the owner of these aliases to be able to transfer ownership. [1] https://coingape.com/crv-tanks-over-10-as-attackers-stole-570k-from-curve-finances-users-wallets/amp/ https://coingape.com/crv-tanks-over-10-as-attackers-stole-57... [2] https://www.nytimes.com/2021/12/13/technology/instagram-handle-metaverse.html https://www.nytimes.com/2021/12/13/technology/instagram-hand...
cmckn 4y ago
> as long as users can still withdraw into a non custodial address Uh, that’s a pretty big “if”, right? It’s completely up to the custodian whether you can withdraw or not, and we’ve seen several large platforms freeze withdrawals recently (and then fold). To an average individual, the hypothetical possibility of withdrawing to the “base layer” is at best a marginal improvement over the existing financial system; hardly a revolution.
- whatisweb3 4y ago
  This is why many crypto proponents will say things like "not your keys not your coins" which means, do not hold tokens in a custodial service without understanding the risk. Many advocates of decentralization and blockchain do not want to support centralized services like Celsius. This is an area that laws and regulation could be added to protect users. If a service is holding user funds, there should be recourse to allow those users to withdraw the funds to a base layer, or if the funds are at risk of being frozen as we see with Celsius, this should be more clearly indicated. FDIC style insurance could be addressed in some hypothetical future crypto banks, giving users further protection.
  - soco 4y ago
    So basically replicating the way financials work today, but with blockchain.
    - whatisweb3 4y ago
      Yes, recreating some aspects of the financial system but with an open source, permissionless, and decentralized base layer that uses more modern code and cryptography. From that, additional applications can also be built on top - multi signatory accounts, a social graph, ownership of digital property, decentralized exchange and lending services, escrow, crowdfunding, and more.
PinguTS 4y ago
Celcius, The DAO, … q.e.d.
- whatisweb3 4y ago
  Celsius is a centralized custodian, not a blockchain. Anybody can build a company that uses the blockchain technology and accept funds into their USD bank accounts, and after entering insolvency, be unable to pay their creditors. The DAO is a more interesting scenario. Users deposited into a smart contract that had a bug. This happens often in DeFi - see all the recent bridge hacks. The difference with the DAO is that the users were able to withdraw their assets because of a blockchain hard fork.
5350-uiop-1130 4y ago
> You can hold ETH or an ENS domain with nothing but a private key. Until the government decides to blacklist your account. Ethereum is only decentralised until it isn't.
- whatisweb3 4y ago
  I made this point in another comment: this is not a failing of the blockchain. To compare, imagine an E2EE chat app built on Matrix protocol is blacklisted in your country. Anybody attempting to use it is treated as criminal, and the app will not be accepted into your country's App Stores. Does this mean the Matrix protocol has failed to deliver on its goals of end-to-end encryption? In practical terms, it is very possible that a government can "shut down" the usefulness of a blockchain for many people. They could go as far as to criminalize any person who is found to be hosting their own blockchain nodes, or sending or receiving message packets to an RPC without first going through a centralized and permissioned service. If this were to happen, people would not willingly be using a blockchain out of fear of prosecution. Some countries like China and Russia seem to be moving in that direction, and some might argue the US too with their strong-arm censorship of Tornado Cash and all things related to it.
  - soco 4y ago
    It is not a failing of the blockchain, fully agreed, but it's definitely not a success (as touted) either.
    - whatisweb3 4y ago
      The blockchain is only going to succeed if people use it, and if people are allowed to use it.
- Ferret7446 4y ago
  The government can blacklist all they want, they can't prevent you from transferring your assets to someone else. They can't freeze ETH like they can freeze your bank accounts or traditional capital assets. That's what decentralised means.
yashg 4y ago
>>they are a shared, permissionless and open source protocol that is resistant to takeover by a single entity And to prevent that takeover by a single entity (AKA 51% attack) it uses a very expensive (as in processing power) mechanism - proof-of-work to delegate the right of adding new transactions to the chain. And that makes is unscalable because as the network grows, you need more processing power. It flies in the face of economies of scale. It's a feature not a bug but that also makes it unsuitable for any business use cases. Like any other market, consolidation will eventually lead to 2-3 whales will end up controlling majority of the nodes and can control an entire chain. In fact some of the new age blockchain startups are straight up centralized. What they are peddling is anything but a shared, permission-less and trust-less blockchain.
- whatisweb3 4y ago
  This argument rests on the idea that blockchains cannot operate without Proof of Work, but this statement is untrue as there are several decentralized blockchains running today and securing millions of dollars on Proof of Stake. Ethereum has successfully merged Proof of Stake on all of its test networks, and is aiming for a complete merge on the main network some time next month.
  - yashg 4y ago
    https://antsstyle.medium.com/explanation-of-blockchain-consensus-algorithms-pow-pos-etc-735fa50d93c8 https://antsstyle.medium.com/explanation-of-blockchain-conse...
    - whatisweb3 4y ago
      This is an extremely poorly researched article. If somebody were to spend a dozen billion dollars to gain 51% control of Eth PoS, the users could coordinate to ignore their chain, or even burn their stake and destroy their purchased funds. You can read about the economics of it here: https://vitalik.ca/general/2020/11/06/pos2020.html https://vitalik.ca/general/2020/11/06/pos2020.html

adament 4y ago

Assuming you are allowed to transfer into the base layer. Most currencies and finance have a similar decentralized base layer: Cash. However in many jurisdictions your ability to transfer into that base layer is severely restricted due to money laundering, anti-terror-financing and / or currency-control regulation.

derefr 4y ago
This is not guaranteed as a general property of blockchain systems, but can be guaranteed on a case-by-case basis by the immutable nature of smart-contract systems. I.e., if a centralized system sets up a lockup contract such that value can be forcibly unlocked by making a request on the blockchain side, and the centralized system just has to observe the event and deal with that — then for the company running the centralized system, that contract becomes an immutable part of "the way things are"; they can't decide to later renege on it, keeping people's funds locked up, because nothing can change the working of the [non-upgradable] contract once deployed — it just "is what it is." By deploying such an immutable contract to be the custodian of customer funds, such an entity is essentially making a hard/inescapable precommitment to doing for users, whatever the contract happens to do. In a sense, the central entity's owner is not the true custodian of people's locked funds; rather, the contract itself is, and the contract can be independently audited by anyone who cares, before anyone begins using it, to prove that it will only ever be able to act in the public interest, rather than in the corporation's interest.
- cryvate1284 4y ago
  Why can't they renege on it? What if a judge orders them renege?
  - derefr 4y ago
    They technologically cannot. The central entity has no power to decide to keep user funds, nor can anyone compel them to do so, because they don't truly have the user funds in their possession; rather, the contract has control of the funds, and they don't control the contract, the immutable rules burned into the contract upon its creation control the contract. The central entity get to initially craft those rules however they like, and so can certainly design the contract to act favorably to them; but then the contract gets (immutably) deployed, and everyone else then gets the opportunity to look at the rules of the contract-as-deployed, to decide for themselves if they're equitable. If they're not, nobody will bother to interact with the contract.
    - RandomLensman 4y ago
      Societies (and their evolutions) don't run by truly immutable rules - so having truly immutable things is placing things outside of them in a way. Would mean either the use cases for immutable rules are highly regulated and limited or there has to be a way to change them.
      - derefr 4y ago
        The immutability of a blockchain isn't fundamental; it's rooted in the consensus of the chain state. Look at the Ethereum "The DAO" state-fix hard-fork: if the entire community of node operators agrees to forcefully alter the state-database of the chain, they can do arbitrarily anything they like to that state. But crucially, this "community of node operators" consists of a multilateral coalition of people and companies operating under every different society / government jurisdiction on the planet, with no single government that can compel enough operators at once to actually get the majority required to compel the state of the blockchain to change. In other words, blockchains are systems with democratic recourse, but not authoritarian recourse. They can be altered from the bottom up to fix problems caused by immutability, if basically "a referendum run against a representative sampling of the population of Earth" agrees with the alteration; but they cannot be commanded to change from the top down, just because some individual entity with a conflux of power wants it to happen. No legal system can force a smart contract to do what you like; but common sense and human empathy can still override bad machine decisions when necessary.
whatisweb3 4y ago
Three properties of cash make it tend toward centralization: physical size, difficulty of movement, and ease of access. If you store a lot of cash in your home safe, eventually you will need more space - this is one reason banks exist. If you try to move a lot of cash quickly from one person or location to another, you will have a hard time - this is another reason banks and money transfer exists. If somebody breaks into your home safe, they probably will have immediate access to your cash - see smart contract wallets[1] and social recovery wallets[2] as an example of a more secure "crypto safe." I agree that a concern in blockchain is that regulation and services may restrict users ability to withdraw to the base layer, see my other comment[3]. To me this is not a failing of the blockchain. It would be like governments restricting the use of internet or E2EE chat protocols - which is happening in some parts of the world - this does not mean the protocols have failed to meet their goals. [1] https://www.argent.xyz/learn/what-is-a-smart-contract-wallet/ https://www.argent.xyz/learn/what-is-a-smart-contract-wallet... [2] https://vitalik.ca/general/2021/01/11/recovery.html https://vitalik.ca/general/2021/01/11/recovery.html [3] https://news.ycombinator.com/item?id=32422921 https://news.ycombinator.com/item?id=32422921
- whatisweb3 4y ago
  To add, cash is not neutral, it is tied to a particular state. It is a US centric view to say that USD cash is the base layer, rather than the EUR or GBP.

manholio 4y ago

> But as long as users can still withdraw into a non custodial address, they have the option to escape to that neutral base layer. Using blockchains for money is just about the most absurd solution a society can come up to the problems of financial centralization. Money is a form of power and the solutions to power problems are always political. We need a financial system that protects individual privacy while reducing the options for money laundering, tax evasion, bribes, fraud and all the types of crimes motivated by money. There is a inherent contradiction in these requirements, the hope that a private actor or some non-accountable peer to peer algorithm can find a good political compromise is an ideological pipe dream.

lern_too_spel 4y ago
What's more, this idea that the blockchain lies in a magical place outside the reach of the law is a persistent error that blockchain promoters make. Treasury could overnight decide to step up sanctions enforcement against DPRK and declare that anybody who recognizes a block that includes a transfer to one of DPRK's known wallets is not complying with sanctions. This would force Coinbase, Binance, and any exchange accepting Americans' money to hard fork the chain, removing noncompliant blocks. Whoever last accepted a DPRK coin or any other coins that were in those blocks or downstream whose transactions aren't replayed would end up a bag-holder, or transactions would grind to a halt to wait for allowed old transactions to be replayed into the fork. Whether Treasury would do this is another question, but that they have the technical ability to do so is not in question, and Treasury's counterparts in other countries have the same power.

petesergeant 4y ago

> they are a shared, permissionless and open source protocol that is resistant to takeover by a single entity Sure, but what’s an actual real world use where that’s a good thing? For domain names it’s exceptionally useful that a stolen, infringing, or fraudulent domain can be recovered through the legal system.

whatisweb3 4y ago
> it’s exceptionally useful that a stolen, infringing, or fraudulent domain can be recovered through the legal system. Useful for who? It is often useful for large companies with powerful legal teams who will try to exert control over domain name registrars as they see fit.[1] The nice thing with the blockchain is that you have the choice. If you want your asset to be recoverable through the legal system and courtroom decisions, it can be put into a centralized custodian. If you want to maintain complete ownership of that asset even though you risk not being able to recover it if somebody steals it from you, you might like to hold it non-custodially. It is very possible that laws end up being defined around ownership of blockchain assets to give them a stronger degree of legal and intellectual property. [1] https://domainnamewire.com/2022/03/08/meta-platforms-and-namecheap-settle-trademark-lawsuit/ https://domainnamewire.com/2022/03/08/meta-platforms-and-nam...
- petesergeant 4y ago
  > Useful for whom? People who use DNS to resolve any service they rely on and expect to end up at that service, rather than on some hijacked version, which is essentially everyone who uses the DNS system. Your linked examples are of companies attempting to put themselves beyond the reach of the legal system, which doesn't really counter the pervasive idea that crypto is only useful for breaking the law and for speculation.
  - whatisweb3 4y ago
    Interesting you mention hijacking, only yesterday Curve’s .com DNS was hijacked and users lost funds as a result[1]. This is also possible with ENS but ownership can be secured more easily, two ways this could be approached: 1. ENS ownership is held by a 5-of-7 multisig. Attacker would need to socially engineer 5 entities instead of just one, Namecheap. Users can also clearly see when ENS ownership changes as it’s broadcast to the network. 2. ENS is set to a 100 year expiry and ownership records are then set to the burn address. Now, short of faulty RPC or frontends, there is no way that the domain can point to a different address. My previously linked example was that of Meta entering into a court battle with a domain name registrar, who has full control over these records and may decide to alter them to avoid paying the cost of defending themselves in court. See [2] which is loosely related to this discussion of centralized services exerting control over name aliases. In a hypothetical blockchain application where usernames are secured with ENS or another smart contract, there would be limited recourse for anybody except the owner of these aliases to be able to transfer ownership. [1] https://coingape.com/crv-tanks-over-10-as-attackers-stole-570k-from-curve-finances-users-wallets/amp/ https://coingape.com/crv-tanks-over-10-as-attackers-stole-57... [2] https://www.nytimes.com/2021/12/13/technology/instagram-handle-metaverse.html https://www.nytimes.com/2021/12/13/technology/instagram-hand...

cmckn 4y ago

> as long as users can still withdraw into a non custodial address Uh, that’s a pretty big “if”, right? It’s completely up to the custodian whether you can withdraw or not, and we’ve seen several large platforms freeze withdrawals recently (and then fold). To an average individual, the hypothetical possibility of withdrawing to the “base layer” is at best a marginal improvement over the existing financial system; hardly a revolution.

whatisweb3 4y ago
This is why many crypto proponents will say things like "not your keys not your coins" which means, do not hold tokens in a custodial service without understanding the risk. Many advocates of decentralization and blockchain do not want to support centralized services like Celsius. This is an area that laws and regulation could be added to protect users. If a service is holding user funds, there should be recourse to allow those users to withdraw the funds to a base layer, or if the funds are at risk of being frozen as we see with Celsius, this should be more clearly indicated. FDIC style insurance could be addressed in some hypothetical future crypto banks, giving users further protection.
- soco 4y ago
  So basically replicating the way financials work today, but with blockchain.
  - whatisweb3 4y ago
    Yes, recreating some aspects of the financial system but with an open source, permissionless, and decentralized base layer that uses more modern code and cryptography. From that, additional applications can also be built on top - multi signatory accounts, a social graph, ownership of digital property, decentralized exchange and lending services, escrow, crowdfunding, and more.

PinguTS 4y ago

Celcius, The DAO, … q.e.d.

whatisweb3 4y ago
Celsius is a centralized custodian, not a blockchain. Anybody can build a company that uses the blockchain technology and accept funds into their USD bank accounts, and after entering insolvency, be unable to pay their creditors. The DAO is a more interesting scenario. Users deposited into a smart contract that had a bug. This happens often in DeFi - see all the recent bridge hacks. The difference with the DAO is that the users were able to withdraw their assets because of a blockchain hard fork.

5350-uiop-1130 4y ago

> You can hold ETH or an ENS domain with nothing but a private key. Until the government decides to blacklist your account. Ethereum is only decentralised until it isn't.

whatisweb3 4y ago
I made this point in another comment: this is not a failing of the blockchain. To compare, imagine an E2EE chat app built on Matrix protocol is blacklisted in your country. Anybody attempting to use it is treated as criminal, and the app will not be accepted into your country's App Stores. Does this mean the Matrix protocol has failed to deliver on its goals of end-to-end encryption? In practical terms, it is very possible that a government can "shut down" the usefulness of a blockchain for many people. They could go as far as to criminalize any person who is found to be hosting their own blockchain nodes, or sending or receiving message packets to an RPC without first going through a centralized and permissioned service. If this were to happen, people would not willingly be using a blockchain out of fear of prosecution. Some countries like China and Russia seem to be moving in that direction, and some might argue the US too with their strong-arm censorship of Tornado Cash and all things related to it.
- soco 4y ago
  It is not a failing of the blockchain, fully agreed, but it's definitely not a success (as touted) either.
  - whatisweb3 4y ago
    The blockchain is only going to succeed if people use it, and if people are allowed to use it.
Ferret7446 4y ago
The government can blacklist all they want, they can't prevent you from transferring your assets to someone else. They can't freeze ETH like they can freeze your bank accounts or traditional capital assets. That's what decentralised means.

yashg 4y ago

>>they are a shared, permissionless and open source protocol that is resistant to takeover by a single entity And to prevent that takeover by a single entity (AKA 51% attack) it uses a very expensive (as in processing power) mechanism - proof-of-work to delegate the right of adding new transactions to the chain. And that makes is unscalable because as the network grows, you need more processing power. It flies in the face of economies of scale. It's a feature not a bug but that also makes it unsuitable for any business use cases. Like any other market, consolidation will eventually lead to 2-3 whales will end up controlling majority of the nodes and can control an entire chain. In fact some of the new age blockchain startups are straight up centralized. What they are peddling is anything but a shared, permission-less and trust-less blockchain.

whatisweb3 4y ago
This argument rests on the idea that blockchains cannot operate without Proof of Work, but this statement is untrue as there are several decentralized blockchains running today and securing millions of dollars on Proof of Stake. Ethereum has successfully merged Proof of Stake on all of its test networks, and is aiming for a complete merge on the main network some time next month.
- yashg 4y ago
  https://antsstyle.medium.com/explanation-of-blockchain-consensus-algorithms-pow-pos-etc-735fa50d93c8 https://antsstyle.medium.com/explanation-of-blockchain-conse...
  - whatisweb3 4y ago
    This is an extremely poorly researched article. If somebody were to spend a dozen billion dollars to gain 51% control of Eth PoS, the users could coordinate to ignore their chain, or even burn their stake and destroy their purchased funds. You can read about the economics of it here: https://vitalik.ca/general/2020/11/06/pos2020.html https://vitalik.ca/general/2020/11/06/pos2020.html