5 ms·

There aren't that many uses for blockchains (2022)

49 points by karagenit 2y ago

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hdevalence 2y ago
This article lists international money transfers as a non-useful application of blockchains. USDT on Tron alone is now settling 1.25T$ (1/3 of Visa’s annual settlement volume). Clearly some people do find them useful.
- aketchum 2y ago
  I think the autor would argue that we are still in the era of "crypto is too small to fully regulate" stage. But if we take it to the extreme and 50% of all transactions are done with a crypto currency, why would governments _not_ apply all the traditional financial regulations to crypto? Moving money internationally is not hard due to technical reasons, but due to political reasons.
  - jl6 2y ago
    Assuming full regulation is possible, would crypto still be useful? It seems a very large portion of its utility is in its semi-unregulated nature.
    - aketchum 2y ago
      I would have agreed, but the US BTC ETF success shows that people care about the asset of BTC divorced from the promise of lack of regulation.
      - jl6 2y ago
        Or is the US BTC ETF just a convenient way to speculate on the rising value of BTC, when the rising value is driven by the illicit activity happening elsewhere?
      - amrocha 2y ago
        That’s just gambling
        aketchum 2y ago
        I would agree
  - randomdata 2y ago
    If we take the logical extreme to mean that 50% of the transactions are carried out by 50% of the people, why would, at least where there are democratic governments, the people actively choose crypto because of its unregulated properties and then promptly undo it all with regulation? But you're probably thinking of either cases where 50% of the transactions are carried out by a much smaller segment of the population or where there is a dictatorship?
  - atemerev 2y ago
    Easier said than done. With crypto, you can move a billion dollars in 15 minutes to anywhere in the world for like $15, without giving away either source or destination. To do this, you need to send about 250 bytes of information to any node in the blockchain network, using any way possible, up to and including dictating these numbers by phone or writing them on a piece of paper and smuggling said piece to anybody with a non-censored internet connection. Goverments can make this illegal, but it is impossible to enforce it. These 250 bytes are just another "illegal number", which can be written anywhere, sewn on your t-shirt, etched in stone, etc. There are many fully secure ways to transmit 250 bytes without anyone knowing about it (including governments). Therefore, there is a secure and bulletproof way to smuggle a billion dollars out of the country without getting stopped. No one can do anything about it. (Well, there is a crypto-sanctions mechanism which can taint some money on the blockchain and can make it difficult to sell on exchanges etc. But it just creates some inconvenience -- there are many ways to launder crypto, from mixers to bridges and coinjoin and anonymizing through fees arbitrage and whatever).
    - duped 2y ago
      > No one can do anything about it Maybe online, but with state actors the fear is what they can/will do to you IRL and how to avoid ever raising suspicion. And moving a billion dollars overnight is something that I think is impossible to do with raising eyebrows, regardless of the technical mechanism to move it.
      - atemerev 2y ago
        If you observe the activity on blockchains, there are occasionally billion dollar-class transfers visible. Nobody knows who is behind them.
    - aketchum 2y ago
      if you make it illegal to convert btc to cash (which a government can do trivially), my contention is that this will kill crypto. Most people simply don't want to break the law. Much of the liquidity in the system dries up. Yes you can break the law if you want, but that just goes to show that crypto's number one real world use case is to skirt regulations.
  - cherryteastain 2y ago
    The whole point of crypto is that, assuming you stay fully on chain, it cannot be regulated the way banks are. When you have the right keys and a connection to a node, nothing can stop you from sending BTC to another wallet. Regulation of crypto is possible only at the blockchain-tradfi interface (e.g. US Govt could tell Coinbase to not interact with a particular wallet). However, if crypto gains the sort of traction where you can buy most items with purely on-chain transfer, regulation becomes close to impossible as we see with cash.
    - aketchum 2y ago
      The government in question can easily pass a law making it illegal for traditional financial institutions to interact with crypto. In this scenario, most users will simply stop using it to follow the law. For the die hards fans they will still reduce the use of the currency. They need to pay for taxes in the national currency and thus need income in the national currency. You still owe taxes on illegal income. Businesses need to pay payroll, vendors, and all taxes in the national currency. All of this means that individuals and businesses need national currency backed transactions to get the national currency to pay the taxes. I agree that if you made "using btc" illegal then you and I could still send each other BTC. But I believe that you would rapidly see the use of crypto die out if governments cut it off from trad-fi, which they could do trivially easily.
      - cherryteastain 2y ago
        Posession of gold was banned in several leadimg economies such as US and UK in the 20th century [1]. Didnt really stop people from using gold as a store of value. [1] https://en.m.wikipedia.org/wiki/Executive_Order_6102 https://en.m.wikipedia.org/wiki/Executive_Order_6102
- JohnFen 2y ago
  International money transfers is the only really useful (non-scammy) application I can see for blockchains. But I personally wouldn't use cryptocurrency for even that because of the elevated risk involved.
rodiger 2y ago
The "1-2%" number the author repeatedly cites is misleading at best. These fees do not scale with the amount transacted. BTC tranfers are currently ~$0.80 whether you're moving $1 or $100k, which is a unique feature. > SQL databases will continue to get faster as hardware speeds up - but blockchains only tend to get slower, as the volume of transactions grows. This is also misleading, as there are systems like Solana which prioritize speed of confirmation, and do indeed get faster as hardware speeds up. It also allows for sub-cent fees (again, not based on a percentage of the amount moved).
- treyd 2y ago
  > and do indeed get faster as hardware speeds up. This is not actually true, it still has the same scaling bottlenecks with state access but they are expressed differently (via hidden tx finality slowdowns) since it does not have an effective fee market. Solana also ignores that part of the core reasoning that you'd want to use blockchains is for their decentralization and your ability to independently verify them in their pursuit of being able to claim 4000 tx/s. You need a 10 gigabit network connection to run a full node.
  - rodiger 2y ago
    Ideal condition speed vs congestion speed is a different thing- I'm not suggesting they don't face the standard scaling bottlenecks, but it is also true that under similar congestion conditions, the network will run faster as hardware improves. SQL databases also run slower under high load, which is totally independent of faster hardware allowing for faster databases vs the baseline Re: independent verification, I agree with you. It's not a great tradeoff. I'm not here to shill Solana as a panacea or anything of the sort, just pointing out clear inaccuracies from the OOP.
- snapcaster 2y ago
  But it doesn't, nobody has strictly improved on bitcoin (in terms of crypto design) since it was developed. Other cryptos will make claims about their speed or other things compared to bitcoin but never highlight what trade offs they had to make for those
brigadier132 2y ago
Crypto is a way to store and exchange things over the internet without counterparty risk. Crypto has value for the same reason gold has value beyond its practical use. Think SVB type situations or needing to flee a country that just became a dictatorship. The article espouses a very US centric view where the government is a trusted arbiter of all financial transactions and there is always a trusted third party to take on counterparty risk. This is obviously not the case all over the world. The question is how much is that actually worth and can it support crypto's current market capitalization? Crypto also has value as being able to create digital scarcity and ownership. For example, when you play games online today and you purchase cosmetic items or you play magic the gathering and buy cards, it's pretty silly that you only own a license to use those things for as long as the game exists and there is no way to trade them. The above concept obviously falls flat when there is no effective scarcity, ie when everyone and their mother can produce nfts that are just jpegs with no actual use. Compare this to a magic the gathering or pokemon card that is just cardboard but still manages to maintain its value.
- tedivm 2y ago
  Crypto hasn't solved the digital scarcity issue at all. If the game stops existing so do the servers hosting the assets, since most crypto systems can only hold small tokens rather than the assets themselves. There are plenty of NFT examples where the underlying company went broke and the assets themselves disappeared from the internet. The MTG example falls flat if Wizards (the owners) take down their asset hosting services, so it's still mostly centralized and dependent on a company to function.
  - abrahms 2y ago
    I believe this depends on the location of hosting. One version is that things are hosted by URI on wizards.com. Another is the data being stored on something content-addressable like IPFS where anyone with the content can verifiably attest to both ownership (b/c it's on the block chain) and that this is the real thing (b/c the content hashes match).
  - westoncb 2y ago
ArtTimeInvestor 2y ago
Running programs in a decentralized, trustworthy way is useful for a million usecases. One of the things this article gets wrong is how "facts about the real world" are made available to smart contracts. It states that this is done via "a conventional program" and it makes the whole system "pointless". Oracles can be set up in a way so that they rely on an incentive structure just like the rest of the system. Example: The DAI stable coin does not hold its peg to the dollar because a conventional program feeds the DAI/USD price into the system.
- joshlemer 2y ago
  What is the incentive structure that facilitates pegging DAI to the dollar?
  - immibis 2y ago
    Very complex. https://github.com/makerdao/dss/wiki https://github.com/makerdao/dss/wiki The summary appears to be that participants can stake their non-DAI crypto assets into the system, and then borrow an equivalent amount of DAI at current prices minus a haircut (e.g. 80% of what they put in). This is the way DAI is created. Borrowers pay interest on their borrowed DAI. (How does this not result in a negative total amount of DAI? not sure) If your borrowed DAI falls below another threshold (e.g. 90%) of the value of your collateral, you lose all your collateral. Someone somewhere gets to buy your collateral for only 90% of its dollar value in DAI, and is incentivized to do so because they can then get 100% of the value back on the open market. Therefore borrowers are incentivized to keep their borrowing below this threshold. That's a pretty standard DeFi loan system; it seems there are also a lot more tacked-on bits which, I assume, prevent it from melting down in a similar way to all the other DeFi loan systems...
- snapcaster 2y ago
  Yeah, agreed some of the things people point to with regards to the oracle problem are hysteria or not relevant but it is a very real problem. It also leads to lots of confusion (or grifting) when people don't acknowledge it and act like you can have "trustless weather reports" or things like that. Many oracle problems won't arise until the stakes are high enough
mindcandy 2y ago
I've only ever seen bad-faith arguments about oracles. They set up the goal posts as if the goal was "You can trust absolutely nothing. You are born and will die trapped in The Matrix. You are in Descartes's proposal where everything you can possibly observe is a deception from a malicious demon. How do you set up a home-loan contract?" And then declare themselves clever by pointing out that any input to the system requires trusting that input. That's not the goal of trustless contracts. The goal is that some resident of an oppressive nation can get a loan without being denied all access to finance at the whim of government-controlled bank. Can't trust your region's banks? Crypto is a wild land. But, it's a better alternative for billions of people. It's easy to say that crypto is useless when you are in the top 2% of global wealth, a well-regulated banking system is scrambling to serve you, your government doesn't frequently confiscate your assets or inflate your hard-earned money to worthlessness. And, it's easy to complain that crypto didn't magically spring from bottom-up grass-roots overnight, solving all financial problems by the poor for the poor in a single step before enriching a bunch of already-rich tech bros. Creating a new global financial system from scratch is a lot of work. It requires a lot of investment, a lot of losses, a lot of hard-earned lessons. Blockchains have been demonstrating utility in that endeavor for 15 years. Growing from nothing to being valued higher than the global market of silver in that time. Maybe "global financial system" is a small number of uses. But, it's a small number of rather large, rather important uses.
- skybrian 2y ago
  But is it even possible to achieve that goal? It seems like the only kind of loans supported by cryptocurrency use cryptocurrency as collateral - that is, they’re effectively margin loans used to increase leverage, or a way to cash out while avoiding taxes. That seems rather limiting. Are there other ways to implement loans? I’m skeptical because repossessing real-world collateral is a physical process, not something just done on in software.
  - red_trumpet 2y ago
    I had the same question. Typically, loans are inherently trustful, because the bank has to trust to get the money back at some point. And if the debtor does not want to pay, there is (hopefully) a working justice system to make them pay, which is also something the bank trusts in.
ChrisArchitect 2y ago
(2022) Some discussion then: https://news.ycombinator.com/item?id=32422082 https://news.ycombinator.com/item?id=32422082
humbleferret 2y ago
Blockchains are not intended to be a universal solution, they excel in different ways, particularly enabling trustless and censorship-resistant value transfer. Which, for many new chains, is still their most used function.
its-summertime 2y ago
isn't git effectively a blockchain? Its got blocks, they are chained (or tree'd) (to some degree), it doesn't need verifiers or mining since it can have users signing their inputs, and that is the only thing to be cared about.
- snapcaster 2y ago
  The verification and mining are the things that make blockchains unique (allow for adversarial nodes, censorship resistance) but you're not wrong that blockchains have a lot in common with git
- cherryteastain 2y ago
  Git does not have a consensus mechanism. You have your copy of the repository, and someone else has their copy. If you want to push your changes to a remote, if there were divergent changes you need to first pull the remote, merge the changes and resolve conflicts, and then push. The remote can change their version of the repo anytime they want in any way they want. Also, when you try to push a change, it is up to the remote to accept it or not, they can deny it for whatever reason. The point of a blockchain is that 1. There is a distributed consensus about the state of the blockchain (the one accepted by 51%+ of nodes) and 2. No one can alter information relating to your wallet without your keys. Git lacks either of these properties and these properties cannot be introduced without a centralized system like Github/Gitlab. Thus, Git is just a decentralized protocol, not a blockchain.
  - its-summertime 2y ago
    I'd agree if blockchains didn't also fork based on disagreements of the next block. > No one can alter information relating to your wallet without your keys Git has signing of commits etc. So the equivalent (no one can alter your presentation of the view of the code) can be enforced. - - - To focus on 1 specific concept of consensus, would be to also claim the very common idea of private blockchains is poorly named.
- Terr_ 2y ago
  > isn't git effectively a blockchain? IMO no, this is one of those cases where a word means a lot more than just its component parts, much like how "television" means a lot more than just "anything where you do far-seeing." The practical/effective distinction between what is promoted as "blockchain" and older stuff--like "a distributed database with cryptographic features"--involves: 1. Unrestricted global public membership, new nodes can be created by anyone at any time. 2. A global data structure that cannot have more than short-term conflicts or branches. (Hence a pruned "chain" instead of "tree".) 3. A cascade of other features all designed to stop someone from taking advantage of #1 and #2 to take over with an infinite army of sockpuppet nodes. (Proof of work, proof of stake, etc.) In contrast, with git: 1. The default membership is "just me." Groups are ad-hoc as you find other people who you do (or don't) agree to work with and choose what to push/pull to one another. 2. Separate branches are extremely normal and can live indefinitely, and it's also normal to shift data from a conflicting branch or entirely rewrite subtrees. 3. There is no "majority rule" or "tiebreaker" logic, and thus no extra machinery to try to stop it.
cabirum 2y ago
Blockchain is best thought not as database, but a authenticated linked list data structure. Or, AES in CBC mode if you will.
- forgetfulness 2y ago
  Wouldn't an authenticated linked list data structure be a very simple append-only database? That's the whole critique, as storage technologies they are very bare-bones, and they make trade offs that just don't come up organically in most software development, you normally are building distributed systems for performance and availability, blockchains provide availability at the cost of performance to satisfy the requirement that writers be downright adversarial in nature, and you normally simply don't allow untrusted parties to access the database.
Terr_ 2y ago
Yeah, ultimately there is only one reason to use what people are calling "a blockchain", and that is when the system requires global unrestricted membership, where anybody can spin up any number of new nodes at any time if they want to. This is rare. That one requirement is what triggers a exponential spray of additional features and complexity and tradeoffs, each one designed to curb the worst security-risks or performance-issues from the previous step until you get something not-too-horrible. When you relax that requirement, everything can be reduced to a dramatically simpler, faster, easier-to-manage system, which often qualifies as a "traditional" distributed database. _____ For example, take election voting records. Nobody actually needs to allow infinite/random nodes to pop up anywhere at any time simply to "Dude I saw that too" the data. "Blockchain" proposals all carry serious risks, like: People losing their vote because they didn't stay at the polls for an hour to confirm that it went through and re-vote if it didn't; Some foreign government declaring their own National Botnet Day to fuck it up; Your own government pre-emptively investing bajillions in a short-term "defensive" CPU mob that you might not be able to trust either; etc. In contrast, a far saner traditional approach: The election already relies on authorities for voter-rolls and candidate-choice. So have each US state runs 3-5 DB nodes, blend in 50 nodes from federal government agencies. That small networkof 200-300 computers get preloaded with one-another's public keys and IP addresses. The only other computers they need talk to are the ones reporting from respective state polling sites. Safety comes from the fact that any attack (record tampering or plain day-ruining sabotage) would require an attacker to simultaneously hack, corrupt, or destroy many different groups/locations simultaneously, which is pretty unlikely. The system would be dramatically faster, cheaper, easier to audit, better able to tolerate local polling site connection outages, etc. ...Buuuut it doesn't drive the cryptocurrency PR hype machine. I'm OK with that.
adhoc32 2y ago
There is room for only one blockchain app in the world we live in. And that is for Bitcoin.
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gwbas1c 2y ago
Blockchain came about because of the assumption that an internet currency must be zero-trust. But let's look at these paragraphs: > Blockchain stocks fail criterion #2: there being no trusted party to host the database. The fact is that if you're going to hold the shares of a company, you explicitly need to trust them - so you may as well trust them to host your database. > For example you need to trust that their published financial statements are accurate. You also need to trust that they will try to return your investment. Traditional companies hold their own register of shareholders (they just outsource the trading) and it is a problem very, very rarely. Currencies work because we trust that the government (IE, the thing that governs,) keeps a stable value in the currency. IE, currencies are built on trust. Even Bitcoin relies on trust: You have to trust the source code. You have to trust that there isn't a large bad actor perpetuating a >50% attack. You have to trust that, at some point in the future, your bitcoin will be worth something. Governments have it in their best interests to keep their currency valuable. (Unless you're post-WWI Germany and it's in your best interest to hyper-inflate your currency to make your debt worthless. IE, Germany realized that hyper-inflation was preferable to the economic toll of paying off their debt.) This lesson, that currencies only work through trust, really negates the point of cryptocurrency for general-purpose usage.
gumby 2y ago
My company actually does have a use case where a blockchain makes sense, and we are proceeding that with it. Unfortunately we have a buzzword trifecta of "blockchain", "AI", and "cloud" so we are careful about the words we use when we talk about it publicly. We never utter the work blockchain because if you say "a blockchain" most people hear ** THE blockchain!! ** and either think we're a yet another bunch of scammers or worse, get tremendously excited thinking we're doing web3 or some other scam they want in on. Instead we say "we protect the data using Merkel trees." We have the other buzzword problem too: we use some machine vision (for some safety matters) and use RNNs to determine some local operating parameters and to crunch data for some lab experiments. Even though we have two former AI research scientists on the team, none of us want to be lumped in with the big langage model folks, since that's not what we do (and the hype is insane). The blockchain application: we have a shitload of sensors monitoring equipment we'll be deploying all over the world. Our revenue depends on the performance of this equipment. So every sensor is built into a little box that signs and timestamps its data. The data are aggregated by the equipment and streamed up to our servers (cough "the cloud"). Connectivity can be intermittent, so machines can offload data to topologically nearby installations. It's actually pretty nice to be outside the hype bubbles. We just concentrate on our work instead, and mostly the prospective customers don't understand any of the tech, much less what those buzzwords mean.
- eska 2y ago
  If I understood your use case correctly, then you don’t actually have a decentralized deployment since there’s a central server, and you’re literally not employing the blockchain though?
  - gumby 2y ago
    Yeah, we only need a distributed chain at the edge, and even there there aren’t “competing” changes in the sense there could be in an implementation of a currency. But it’s a block chain like any other Merkel tree. But it’s to prove chain of custody / lack of tampering since revenue ultimately depends on the data.
tetrisgm 2y ago
I've built consumer apps in the space since 2016. (See lab.dns.xyz for context). At the end of the day, even if you gave the average person a venmo like UX that paid in any currency, instantly, for nearly zero fees, I still don't expect them to prefer it to a dollar bill or gold. While the counterpoints regarding UX are very significant (lose all your money in one click, no undo, lack of support, difficult concepts that don't map to common consumer use cases), they can be solved through sheer effort. We did that on dns.xyz. Social login, gasless minting, rollup for fast interactions, all doable. There is no escaping the fact that blockchains are slow databases. That they aren't particularly good at storing data. Much less private than one might think. You do get consensus and attribution. You can use it as a sort of open standard or api where the items you've bought or the things you're written are open enough to be reused in the future. None of these problems are pains that need solving. And they are inferior solutions compared with alternatives. It is great tech. It is great intellectual exploration. It is a fun stack. It has made people money through unregulated speculation. But it is tarnished, clunky, and not necessary.

49 points by karagenit 2y ago

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hdevalence 2y ago

This article lists international money transfers as a non-useful application of blockchains. USDT on Tron alone is now settling 1.25T$ (1/3 of Visa’s annual settlement volume). Clearly some people do find them useful.

aketchum 2y ago
I think the autor would argue that we are still in the era of "crypto is too small to fully regulate" stage. But if we take it to the extreme and 50% of all transactions are done with a crypto currency, why would governments _not_ apply all the traditional financial regulations to crypto? Moving money internationally is not hard due to technical reasons, but due to political reasons.
- jl6 2y ago
  Assuming full regulation is possible, would crypto still be useful? It seems a very large portion of its utility is in its semi-unregulated nature.
  - aketchum 2y ago
    I would have agreed, but the US BTC ETF success shows that people care about the asset of BTC divorced from the promise of lack of regulation.
    - jl6 2y ago
      Or is the US BTC ETF just a convenient way to speculate on the rising value of BTC, when the rising value is driven by the illicit activity happening elsewhere?
    - amrocha 2y ago
      That’s just gambling
      - aketchum 2y ago
        I would agree
- randomdata 2y ago
  If we take the logical extreme to mean that 50% of the transactions are carried out by 50% of the people, why would, at least where there are democratic governments, the people actively choose crypto because of its unregulated properties and then promptly undo it all with regulation? But you're probably thinking of either cases where 50% of the transactions are carried out by a much smaller segment of the population or where there is a dictatorship?
- atemerev 2y ago
  Easier said than done. With crypto, you can move a billion dollars in 15 minutes to anywhere in the world for like $15, without giving away either source or destination. To do this, you need to send about 250 bytes of information to any node in the blockchain network, using any way possible, up to and including dictating these numbers by phone or writing them on a piece of paper and smuggling said piece to anybody with a non-censored internet connection. Goverments can make this illegal, but it is impossible to enforce it. These 250 bytes are just another "illegal number", which can be written anywhere, sewn on your t-shirt, etched in stone, etc. There are many fully secure ways to transmit 250 bytes without anyone knowing about it (including governments). Therefore, there is a secure and bulletproof way to smuggle a billion dollars out of the country without getting stopped. No one can do anything about it. (Well, there is a crypto-sanctions mechanism which can taint some money on the blockchain and can make it difficult to sell on exchanges etc. But it just creates some inconvenience -- there are many ways to launder crypto, from mixers to bridges and coinjoin and anonymizing through fees arbitrage and whatever).
  - duped 2y ago
    > No one can do anything about it Maybe online, but with state actors the fear is what they can/will do to you IRL and how to avoid ever raising suspicion. And moving a billion dollars overnight is something that I think is impossible to do with raising eyebrows, regardless of the technical mechanism to move it.
    - atemerev 2y ago
      If you observe the activity on blockchains, there are occasionally billion dollar-class transfers visible. Nobody knows who is behind them.
  - aketchum 2y ago
    if you make it illegal to convert btc to cash (which a government can do trivially), my contention is that this will kill crypto. Most people simply don't want to break the law. Much of the liquidity in the system dries up. Yes you can break the law if you want, but that just goes to show that crypto's number one real world use case is to skirt regulations.
- cherryteastain 2y ago
  The whole point of crypto is that, assuming you stay fully on chain, it cannot be regulated the way banks are. When you have the right keys and a connection to a node, nothing can stop you from sending BTC to another wallet. Regulation of crypto is possible only at the blockchain-tradfi interface (e.g. US Govt could tell Coinbase to not interact with a particular wallet). However, if crypto gains the sort of traction where you can buy most items with purely on-chain transfer, regulation becomes close to impossible as we see with cash.
  - aketchum 2y ago
    The government in question can easily pass a law making it illegal for traditional financial institutions to interact with crypto. In this scenario, most users will simply stop using it to follow the law. For the die hards fans they will still reduce the use of the currency. They need to pay for taxes in the national currency and thus need income in the national currency. You still owe taxes on illegal income. Businesses need to pay payroll, vendors, and all taxes in the national currency. All of this means that individuals and businesses need national currency backed transactions to get the national currency to pay the taxes. I agree that if you made "using btc" illegal then you and I could still send each other BTC. But I believe that you would rapidly see the use of crypto die out if governments cut it off from trad-fi, which they could do trivially easily.
    - cherryteastain 2y ago
      Posession of gold was banned in several leadimg economies such as US and UK in the 20th century [1]. Didnt really stop people from using gold as a store of value. [1] https://en.m.wikipedia.org/wiki/Executive_Order_6102 https://en.m.wikipedia.org/wiki/Executive_Order_6102
JohnFen 2y ago
International money transfers is the only really useful (non-scammy) application I can see for blockchains. But I personally wouldn't use cryptocurrency for even that because of the elevated risk involved.

rodiger 2y ago

The "1-2%" number the author repeatedly cites is misleading at best. These fees do not scale with the amount transacted. BTC tranfers are currently ~$0.80 whether you're moving $1 or $100k, which is a unique feature. > SQL databases will continue to get faster as hardware speeds up - but blockchains only tend to get slower, as the volume of transactions grows. This is also misleading, as there are systems like Solana which prioritize speed of confirmation, and do indeed get faster as hardware speeds up. It also allows for sub-cent fees (again, not based on a percentage of the amount moved).

treyd 2y ago
> and do indeed get faster as hardware speeds up. This is not actually true, it still has the same scaling bottlenecks with state access but they are expressed differently (via hidden tx finality slowdowns) since it does not have an effective fee market. Solana also ignores that part of the core reasoning that you'd want to use blockchains is for their decentralization and your ability to independently verify them in their pursuit of being able to claim 4000 tx/s. You need a 10 gigabit network connection to run a full node.
- rodiger 2y ago
  Ideal condition speed vs congestion speed is a different thing- I'm not suggesting they don't face the standard scaling bottlenecks, but it is also true that under similar congestion conditions, the network will run faster as hardware improves. SQL databases also run slower under high load, which is totally independent of faster hardware allowing for faster databases vs the baseline Re: independent verification, I agree with you. It's not a great tradeoff. I'm not here to shill Solana as a panacea or anything of the sort, just pointing out clear inaccuracies from the OOP.
snapcaster 2y ago
But it doesn't, nobody has strictly improved on bitcoin (in terms of crypto design) since it was developed. Other cryptos will make claims about their speed or other things compared to bitcoin but never highlight what trade offs they had to make for those

brigadier132 2y ago

Crypto is a way to store and exchange things over the internet without counterparty risk. Crypto has value for the same reason gold has value beyond its practical use. Think SVB type situations or needing to flee a country that just became a dictatorship. The article espouses a very US centric view where the government is a trusted arbiter of all financial transactions and there is always a trusted third party to take on counterparty risk. This is obviously not the case all over the world. The question is how much is that actually worth and can it support crypto's current market capitalization? Crypto also has value as being able to create digital scarcity and ownership. For example, when you play games online today and you purchase cosmetic items or you play magic the gathering and buy cards, it's pretty silly that you only own a license to use those things for as long as the game exists and there is no way to trade them. The above concept obviously falls flat when there is no effective scarcity, ie when everyone and their mother can produce nfts that are just jpegs with no actual use. Compare this to a magic the gathering or pokemon card that is just cardboard but still manages to maintain its value.

tedivm 2y ago
Crypto hasn't solved the digital scarcity issue at all. If the game stops existing so do the servers hosting the assets, since most crypto systems can only hold small tokens rather than the assets themselves. There are plenty of NFT examples where the underlying company went broke and the assets themselves disappeared from the internet. The MTG example falls flat if Wizards (the owners) take down their asset hosting services, so it's still mostly centralized and dependent on a company to function.
- abrahms 2y ago
  I believe this depends on the location of hosting. One version is that things are hosted by URI on wizards.com. Another is the data being stored on something content-addressable like IPFS where anyone with the content can verifiably attest to both ownership (b/c it's on the block chain) and that this is the real thing (b/c the content hashes match).
- westoncb 2y ago

ArtTimeInvestor 2y ago

Running programs in a decentralized, trustworthy way is useful for a million usecases. One of the things this article gets wrong is how "facts about the real world" are made available to smart contracts. It states that this is done via "a conventional program" and it makes the whole system "pointless". Oracles can be set up in a way so that they rely on an incentive structure just like the rest of the system. Example: The DAI stable coin does not hold its peg to the dollar because a conventional program feeds the DAI/USD price into the system.

joshlemer 2y ago
What is the incentive structure that facilitates pegging DAI to the dollar?
- immibis 2y ago
  Very complex. https://github.com/makerdao/dss/wiki https://github.com/makerdao/dss/wiki The summary appears to be that participants can stake their non-DAI crypto assets into the system, and then borrow an equivalent amount of DAI at current prices minus a haircut (e.g. 80% of what they put in). This is the way DAI is created. Borrowers pay interest on their borrowed DAI. (How does this not result in a negative total amount of DAI? not sure) If your borrowed DAI falls below another threshold (e.g. 90%) of the value of your collateral, you lose all your collateral. Someone somewhere gets to buy your collateral for only 90% of its dollar value in DAI, and is incentivized to do so because they can then get 100% of the value back on the open market. Therefore borrowers are incentivized to keep their borrowing below this threshold. That's a pretty standard DeFi loan system; it seems there are also a lot more tacked-on bits which, I assume, prevent it from melting down in a similar way to all the other DeFi loan systems...
snapcaster 2y ago
Yeah, agreed some of the things people point to with regards to the oracle problem are hysteria or not relevant but it is a very real problem. It also leads to lots of confusion (or grifting) when people don't acknowledge it and act like you can have "trustless weather reports" or things like that. Many oracle problems won't arise until the stakes are high enough

mindcandy 2y ago

I've only ever seen bad-faith arguments about oracles. They set up the goal posts as if the goal was "You can trust absolutely nothing. You are born and will die trapped in The Matrix. You are in Descartes's proposal where everything you can possibly observe is a deception from a malicious demon. How do you set up a home-loan contract?" And then declare themselves clever by pointing out that any input to the system requires trusting that input. That's not the goal of trustless contracts. The goal is that some resident of an oppressive nation can get a loan without being denied all access to finance at the whim of government-controlled bank. Can't trust your region's banks? Crypto is a wild land. But, it's a better alternative for billions of people. It's easy to say that crypto is useless when you are in the top 2% of global wealth, a well-regulated banking system is scrambling to serve you, your government doesn't frequently confiscate your assets or inflate your hard-earned money to worthlessness. And, it's easy to complain that crypto didn't magically spring from bottom-up grass-roots overnight, solving all financial problems by the poor for the poor in a single step before enriching a bunch of already-rich tech bros. Creating a new global financial system from scratch is a lot of work. It requires a lot of investment, a lot of losses, a lot of hard-earned lessons. Blockchains have been demonstrating utility in that endeavor for 15 years. Growing from nothing to being valued higher than the global market of silver in that time. Maybe "global financial system" is a small number of uses. But, it's a small number of rather large, rather important uses.

skybrian 2y ago
But is it even possible to achieve that goal? It seems like the only kind of loans supported by cryptocurrency use cryptocurrency as collateral - that is, they’re effectively margin loans used to increase leverage, or a way to cash out while avoiding taxes. That seems rather limiting. Are there other ways to implement loans? I’m skeptical because repossessing real-world collateral is a physical process, not something just done on in software.
- red_trumpet 2y ago
  I had the same question. Typically, loans are inherently trustful, because the bank has to trust to get the money back at some point. And if the debtor does not want to pay, there is (hopefully) a working justice system to make them pay, which is also something the bank trusts in.

ChrisArchitect 2y ago

(2022) Some discussion then: https://news.ycombinator.com/item?id=32422082 https://news.ycombinator.com/item?id=32422082

humbleferret 2y ago

Blockchains are not intended to be a universal solution, they excel in different ways, particularly enabling trustless and censorship-resistant value transfer. Which, for many new chains, is still their most used function.

its-summertime 2y ago

isn't git effectively a blockchain? Its got blocks, they are chained (or tree'd) (to some degree), it doesn't need verifiers or mining since it can have users signing their inputs, and that is the only thing to be cared about.

snapcaster 2y ago
The verification and mining are the things that make blockchains unique (allow for adversarial nodes, censorship resistance) but you're not wrong that blockchains have a lot in common with git
cherryteastain 2y ago
Git does not have a consensus mechanism. You have your copy of the repository, and someone else has their copy. If you want to push your changes to a remote, if there were divergent changes you need to first pull the remote, merge the changes and resolve conflicts, and then push. The remote can change their version of the repo anytime they want in any way they want. Also, when you try to push a change, it is up to the remote to accept it or not, they can deny it for whatever reason. The point of a blockchain is that 1. There is a distributed consensus about the state of the blockchain (the one accepted by 51%+ of nodes) and 2. No one can alter information relating to your wallet without your keys. Git lacks either of these properties and these properties cannot be introduced without a centralized system like Github/Gitlab. Thus, Git is just a decentralized protocol, not a blockchain.
- its-summertime 2y ago
  I'd agree if blockchains didn't also fork based on disagreements of the next block. > No one can alter information relating to your wallet without your keys Git has signing of commits etc. So the equivalent (no one can alter your presentation of the view of the code) can be enforced. - - - To focus on 1 specific concept of consensus, would be to also claim the very common idea of private blockchains is poorly named.
Terr_ 2y ago
> isn't git effectively a blockchain? IMO no, this is one of those cases where a word means a lot more than just its component parts, much like how "television" means a lot more than just "anything where you do far-seeing." The practical/effective distinction between what is promoted as "blockchain" and older stuff--like "a distributed database with cryptographic features"--involves: 1. Unrestricted global public membership, new nodes can be created by anyone at any time. 2. A global data structure that cannot have more than short-term conflicts or branches. (Hence a pruned "chain" instead of "tree".) 3. A cascade of other features all designed to stop someone from taking advantage of #1 and #2 to take over with an infinite army of sockpuppet nodes. (Proof of work, proof of stake, etc.) In contrast, with git: 1. The default membership is "just me." Groups are ad-hoc as you find other people who you do (or don't) agree to work with and choose what to push/pull to one another. 2. Separate branches are extremely normal and can live indefinitely, and it's also normal to shift data from a conflicting branch or entirely rewrite subtrees. 3. There is no "majority rule" or "tiebreaker" logic, and thus no extra machinery to try to stop it.

cabirum 2y ago

Blockchain is best thought not as database, but a authenticated linked list data structure. Or, AES in CBC mode if you will.

forgetfulness 2y ago
Wouldn't an authenticated linked list data structure be a very simple append-only database? That's the whole critique, as storage technologies they are very bare-bones, and they make trade offs that just don't come up organically in most software development, you normally are building distributed systems for performance and availability, blockchains provide availability at the cost of performance to satisfy the requirement that writers be downright adversarial in nature, and you normally simply don't allow untrusted parties to access the database.

Terr_ 2y ago

Yeah, ultimately there is only one reason to use what people are calling "a blockchain", and that is when the system requires global unrestricted membership, where anybody can spin up any number of new nodes at any time if they want to. This is rare. That one requirement is what triggers a exponential spray of additional features and complexity and tradeoffs, each one designed to curb the worst security-risks or performance-issues from the previous step until you get something not-too-horrible. When you relax that requirement, everything can be reduced to a dramatically simpler, faster, easier-to-manage system, which often qualifies as a "traditional" distributed database. _____ For example, take election voting records. Nobody actually needs to allow infinite/random nodes to pop up anywhere at any time simply to "Dude I saw that too" the data. "Blockchain" proposals all carry serious risks, like: People losing their vote because they didn't stay at the polls for an hour to confirm that it went through and re-vote if it didn't; Some foreign government declaring their own National Botnet Day to fuck it up; Your own government pre-emptively investing bajillions in a short-term "defensive" CPU mob that you might not be able to trust either; etc. In contrast, a far saner traditional approach: The election already relies on authorities for voter-rolls and candidate-choice. So have each US state runs 3-5 DB nodes, blend in 50 nodes from federal government agencies. That small networkof 200-300 computers get preloaded with one-another's public keys and IP addresses. The only other computers they need talk to are the ones reporting from respective state polling sites. Safety comes from the fact that any attack (record tampering or plain day-ruining sabotage) would require an attacker to simultaneously hack, corrupt, or destroy many different groups/locations simultaneously, which is pretty unlikely. The system would be dramatically faster, cheaper, easier to audit, better able to tolerate local polling site connection outages, etc. ...Buuuut it doesn't drive the cryptocurrency PR hype machine. I'm OK with that.

adhoc32 2y ago

There is room for only one blockchain app in the world we live in. And that is for Bitcoin.

deleted 2y ago

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gwbas1c 2y ago

Blockchain came about because of the assumption that an internet currency must be zero-trust. But let's look at these paragraphs: > Blockchain stocks fail criterion #2: there being no trusted party to host the database. The fact is that if you're going to hold the shares of a company, you explicitly need to trust them - so you may as well trust them to host your database. > For example you need to trust that their published financial statements are accurate. You also need to trust that they will try to return your investment. Traditional companies hold their own register of shareholders (they just outsource the trading) and it is a problem very, very rarely. Currencies work because we trust that the government (IE, the thing that governs,) keeps a stable value in the currency. IE, currencies are built on trust. Even Bitcoin relies on trust: You have to trust the source code. You have to trust that there isn't a large bad actor perpetuating a >50% attack. You have to trust that, at some point in the future, your bitcoin will be worth something. Governments have it in their best interests to keep their currency valuable. (Unless you're post-WWI Germany and it's in your best interest to hyper-inflate your currency to make your debt worthless. IE, Germany realized that hyper-inflation was preferable to the economic toll of paying off their debt.) This lesson, that currencies only work through trust, really negates the point of cryptocurrency for general-purpose usage.

gumby 2y ago

My company actually does have a use case where a blockchain makes sense, and we are proceeding that with it. Unfortunately we have a buzzword trifecta of "blockchain", "AI", and "cloud" so we are careful about the words we use when we talk about it publicly. We never utter the work blockchain because if you say "a blockchain" most people hear ** THE blockchain!! ** and either think we're a yet another bunch of scammers or worse, get tremendously excited thinking we're doing web3 or some other scam they want in on. Instead we say "we protect the data using Merkel trees." We have the other buzzword problem too: we use some machine vision (for some safety matters) and use RNNs to determine some local operating parameters and to crunch data for some lab experiments. Even though we have two former AI research scientists on the team, none of us want to be lumped in with the big langage model folks, since that's not what we do (and the hype is insane). The blockchain application: we have a shitload of sensors monitoring equipment we'll be deploying all over the world. Our revenue depends on the performance of this equipment. So every sensor is built into a little box that signs and timestamps its data. The data are aggregated by the equipment and streamed up to our servers (cough "the cloud"). Connectivity can be intermittent, so machines can offload data to topologically nearby installations. It's actually pretty nice to be outside the hype bubbles. We just concentrate on our work instead, and mostly the prospective customers don't understand any of the tech, much less what those buzzwords mean.

eska 2y ago
If I understood your use case correctly, then you don’t actually have a decentralized deployment since there’s a central server, and you’re literally not employing the blockchain though?
- gumby 2y ago
  Yeah, we only need a distributed chain at the edge, and even there there aren’t “competing” changes in the sense there could be in an implementation of a currency. But it’s a block chain like any other Merkel tree. But it’s to prove chain of custody / lack of tampering since revenue ultimately depends on the data.

tetrisgm 2y ago

I've built consumer apps in the space since 2016. (See lab.dns.xyz for context). At the end of the day, even if you gave the average person a venmo like UX that paid in any currency, instantly, for nearly zero fees, I still don't expect them to prefer it to a dollar bill or gold. While the counterpoints regarding UX are very significant (lose all your money in one click, no undo, lack of support, difficult concepts that don't map to common consumer use cases), they can be solved through sheer effort. We did that on dns.xyz. Social login, gasless minting, rollup for fast interactions, all doable. There is no escaping the fact that blockchains are slow databases. That they aren't particularly good at storing data. Much less private than one might think. You do get consensus and attribution. You can use it as a sort of open standard or api where the items you've bought or the things you're written are open enough to be reused in the future. None of these problems are pains that need solving. And they are inferior solutions compared with alternatives. It is great tech. It is great intellectual exploration. It is a fun stack. It has made people money through unregulated speculation. But it is tarnished, clunky, and not necessary.