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The problem is that you can't just take an inherently centralised asset and sprinkle some blockchain on it to make it decentralized. If an asset is backed by a

by haakon 13y ago

The problem is that you can't just take an inherently centralised asset and sprinkle some blockchain on it to make it decentralized. If an asset is backed by a vault of gold bars, it is inherently centralised because the gold is in a central location and has counterparty risk as well as being prone to confiscation. In this case, there is no point in representing the asset in a blockchain. The blockchain is probably the least inefficient datastructure we have seen in modern times. A centralised asset is much more efficiently represented by a centralised ledger. You can still use triple-ledger accounting.

baddox 13y ago
> If an asset is backed by a vault of gold bars, it is inherently centralised because the gold is in a central location and has counterparty risk as well as being prone to confiscation. This sounds a bit like saying that Bitcoin is inherently centralized because someone can physically hold a gun to your head and compel you to turn over all your coins. I think there are still benefits to a blockchain approach, even if the represented asset is "centralized."
- rdl 13y ago
  With a ledger, you don't get non-repudiability. No transferability if the ledger is down. Does nothing for redemption risk. With a signed token (optionally blinded), you get non-repudiability, but if the central exchange is shut down, you don't have safe transfers (it becomes impossible to prevent double spending, so you probably do a single payment to a trustworthy entity and get new tokens from elsewhere). Does nothing for redemption risk. With blockchains, you have non-repudiability (although less strong than the signed tokens, due to 51% double spend attack being easier than defeating RSA 4096 or whatever), and continue with transferability even in the face of issuer failure, but still have redemption risk (if it's a "backed" currency). Arguably sidechains give you non-repudiability, eternal transferability, and no redemption risk (at least back to bitcoin). However, it only makes sense for things which are anchored in the root blockchain (i.e. ultimately bitcoin derivatives of some kind); it doesn't make sense for gold bars.
wyager 13y ago
>If an asset is backed by a vault of gold bars, it is inherently centralised because the gold is in a central location and has counterparty risk as well as being prone to confiscation. That's true. But gold is a physical asset; shares in a company are not. There is no technical challenge to distributing abstract assets (like shares) over a decentralized system, and there are many advantages to doing so.

by haakon 13y ago

baddox 13y ago

> If an asset is backed by a vault of gold bars, it is inherently centralised because the gold is in a central location and has counterparty risk as well as being prone to confiscation. This sounds a bit like saying that Bitcoin is inherently centralized because someone can physically hold a gun to your head and compel you to turn over all your coins. I think there are still benefits to a blockchain approach, even if the represented asset is "centralized."

rdl 13y ago
With a ledger, you don't get non-repudiability. No transferability if the ledger is down. Does nothing for redemption risk. With a signed token (optionally blinded), you get non-repudiability, but if the central exchange is shut down, you don't have safe transfers (it becomes impossible to prevent double spending, so you probably do a single payment to a trustworthy entity and get new tokens from elsewhere). Does nothing for redemption risk. With blockchains, you have non-repudiability (although less strong than the signed tokens, due to 51% double spend attack being easier than defeating RSA 4096 or whatever), and continue with transferability even in the face of issuer failure, but still have redemption risk (if it's a "backed" currency). Arguably sidechains give you non-repudiability, eternal transferability, and no redemption risk (at least back to bitcoin). However, it only makes sense for things which are anchored in the root blockchain (i.e. ultimately bitcoin derivatives of some kind); it doesn't make sense for gold bars.

wyager 13y ago

>If an asset is backed by a vault of gold bars, it is inherently centralised because the gold is in a central location and has counterparty risk as well as being prone to confiscation. That's true. But gold is a physical asset; shares in a company are not. There is no technical challenge to distributing abstract assets (like shares) over a decentralized system, and there are many advantages to doing so.