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While running transactions on a distributed blockchain would provide some additional resilience here, I'm unsure if I can picture any situation where the added

by pr0zac 4y ago

While running transactions on a distributed blockchain would provide some additional resilience here, I'm unsure if I can picture any situation where the added protection provided over current contract and civil law would outweigh the issue of having your financial transactions publicly available for review by all other actors to most businesses. It also doesn't really do much for most real world transactions because of the oracle problem. Unless both businesses only care about entities that exist on that blockchain as well having the transactions there doesn't provide any additional benefit since the blockchain cannot verify nor enforce anything outside of it. Regardless of whether the transaction of you sending me money is immutable I can still just not send you what you paid me for.

legutierr 4y ago
Good points! Yes, public blockchains are often not suitable for private or confidential transactions. That being said, anonymization tools do exist, which can solve this problem for many use cases. Also, I agree that blockchains only work in the context of a functioning legal system, in that the link between on-chain assets and physical assets must be enforced via some legal or governmental mechanism. This should be possible using contracts under current law, however, and such contracts could be limited to establishing this linkage, avoiding more complex issues that might otherwise come into play if it were not for the use of a blockchain for record-keeping, transfers and settlement.
- pr0zac 4y ago
  It’s actually an interesting question if or how anonymization tooling/coins would work in a business context. You want to shield your transactions some of the time to prevent competitive analysis of your business expenses etc but other times require provable transaction reporting and tracking for stuff like tax purposes and financial disputes. You want to be able to prove you sent a payment or need to document yearly expenditures for instance, being anonymous in those situations could cause issues. You could use signatures to prove ownership of the keys involved in a transaction I suppose but I’m not familiar enough with the laws in this context to know if it’s sufficient legally nor am I an accountant. I guess stuff like that is kind of a gray area and is an example of the unclear guidance that pro-regulation crypto folks in the US have been asking for the government to provide clarity on.
hanniabu 4y ago
ZK proofs provide anonymity. There's also shielded transactions using ZK proofs: https://github.com/EYBlockchain/nightfall_3 https://github.com/EYBlockchain/nightfall_3
- pr0zac 4y ago
  My comment here responds to this as well: https://news.ycombinator.com/item?id=34061496 https://news.ycombinator.com/item?id=34061496
digitaltrees 4y ago
Enforcement is only as good as the records available to ascertain the facts. Imagine installment sales where the original seller transfers their right to collect the remaining balance to two separate companies. How does the original buyer have any confidence that their payments will be applied correctly if they are reliant on and beholden to shoddy records of the seller or some third party?
- pr0zac 4y ago
  I mean if this were such a big problem with our current system I feel like there would be a lot more financial issues occurring. Counterpoint to that being maybe there actually are already, see the 2008 collapse for instance which happened in part from mismanagement like your example. More importantly though I don’t feel like blockchain prevents shoddiness and human error from causing problems, it just changes the methods available and how they manifest. Badly written contracts, mistyped addresses, and misplaced keys have lost people tons of coins. And the lack of reversibility and centralization makes cleaning up mistakes significantly more difficult. What happens to the buyer when the original seller writes a broken contract to transfer the recipient for the remaining balance that results in the payments being completely irretrievable?

by pr0zac 4y ago

legutierr 4y ago

Good points! Yes, public blockchains are often not suitable for private or confidential transactions. That being said, anonymization tools do exist, which can solve this problem for many use cases. Also, I agree that blockchains only work in the context of a functioning legal system, in that the link between on-chain assets and physical assets must be enforced via some legal or governmental mechanism. This should be possible using contracts under current law, however, and such contracts could be limited to establishing this linkage, avoiding more complex issues that might otherwise come into play if it were not for the use of a blockchain for record-keeping, transfers and settlement.

pr0zac 4y ago
It’s actually an interesting question if or how anonymization tooling/coins would work in a business context. You want to shield your transactions some of the time to prevent competitive analysis of your business expenses etc but other times require provable transaction reporting and tracking for stuff like tax purposes and financial disputes. You want to be able to prove you sent a payment or need to document yearly expenditures for instance, being anonymous in those situations could cause issues. You could use signatures to prove ownership of the keys involved in a transaction I suppose but I’m not familiar enough with the laws in this context to know if it’s sufficient legally nor am I an accountant. I guess stuff like that is kind of a gray area and is an example of the unclear guidance that pro-regulation crypto folks in the US have been asking for the government to provide clarity on.

hanniabu 4y ago

ZK proofs provide anonymity. There's also shielded transactions using ZK proofs: https://github.com/EYBlockchain/nightfall_3 https://github.com/EYBlockchain/nightfall_3

pr0zac 4y ago
My comment here responds to this as well: https://news.ycombinator.com/item?id=34061496 https://news.ycombinator.com/item?id=34061496

digitaltrees 4y ago

Enforcement is only as good as the records available to ascertain the facts. Imagine installment sales where the original seller transfers their right to collect the remaining balance to two separate companies. How does the original buyer have any confidence that their payments will be applied correctly if they are reliant on and beholden to shoddy records of the seller or some third party?

pr0zac 4y ago
I mean if this were such a big problem with our current system I feel like there would be a lot more financial issues occurring. Counterpoint to that being maybe there actually are already, see the 2008 collapse for instance which happened in part from mismanagement like your example. More importantly though I don’t feel like blockchain prevents shoddiness and human error from causing problems, it just changes the methods available and how they manifest. Badly written contracts, mistyped addresses, and misplaced keys have lost people tons of coins. And the lack of reversibility and centralization makes cleaning up mistakes significantly more difficult. What happens to the buyer when the original seller writes a broken contract to transfer the recipient for the remaining balance that results in the payments being completely irretrievable?