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> Once you have the ledger We've had ledgers for quite a while, bitcoin wasn't the first digital ledger. I still don't understand the use case of a decentraliz

> Once you have the ledger We've had ledgers for quite a while, bitcoin wasn't the first digital ledger. I still don't understand the use case of a decentralized ledger, other than for illegal uses.

natrius 11y ago
You're in for a treat, then. A blockchain is a world computer. Each program on the computer has its own storage that nothing else can write to, so anyone sending a transaction to the computer knows exactly what the result will be. (Most blockchains only have one program, like Bitcoin. Others have multiple programs that can call each other, like Ethereum.) This shared, unforgeable platform can be used to coordinate interactions between individuals, corporations, or other entities. This technology gives mankind a new superpower: we can interact with anyone on the planet with predictable results and near-zero transaction costs. Interactions that only involve information, like financial markets, can be guaranteed to follow the rules of the blockchain, which will eliminate all financial middlemen you pay fees to today. Real world interactions can't be governed by software, but they can be guided by software. Reputation systems that run on blockchains will tell you exactly how likely you are to be satisfied with a real world interaction, so you can interact with complete strangers who live anywhere on the planet. I think most trade will be blockchain-mediated in the near future.
- aliakhtar 11y ago
  Great essay. Now, can you point out which of those use cases can't be done with regular USD, if someone like Paypal released an API? Edit: I also disagree with 'reputation based blockchain'. Reputation based anything online is easy to beat, and given the massive amount of scams in bitcoin, it clearly doesn't work.
  - natrius 11y ago
    PayPal collects fees. They also restrict access to their platform and funds held on the platform. I am not talking about currency. Let's pretend the world will run on dollars indefinitely. Blockchains grease the skids of trade. You will trade with far more individual strangers than you do today. You will trade in new ways that weren't possible before blockchains let us encode the rules for interactions in a world computer. Blockchains will reshape our world. I think our currencies will be defined by blockchains as well, but don't get distracted just because you don't believe that particular bit. Blockchains are bigger than currency.
    - deleted 11y ago
      [deleted]
    - aliakhtar 11y ago
      > PayPal collects fees. So do miners. Again, you haven't really given me any specific use cases, you've just made some vague statements about how blockchains will revolutionize everything. If you mean smart contracts, they can be done more efficiently with a centralized service, without using a decentralized blockchain.
javert 11y ago
It lets you keep track of who has what bitcoins without having to trust a third party (bank, PayPal, etc.). That eliminates counterparty risk, which is a big deal. In particular, it creates an international payment system that is resilient to government interference. Also, that there is a strict cap of 21 million bitcoins. All governments eventually manipulate their currency by expanding the supply, so that's a big deal in terms of the unique financial properties it has as an asset.
- aliakhtar 11y ago
  > In particular, it creates an international payment system that is resilient to government interference. There we are back to what I said, > I still don't understand the use case of a decentralized ledger, other than for illegal uses.
  - dragonwriter 11y ago
    Not all acts of government are legal (even by the laws applicable to that government); often there is a remedial mechanism available for illegal government interference, but parties may still prefer a process which is resistant to such interference from the outset, particularly when engaging in activities (even lawful ones) where one or more of the governments involved have shown an interest in interference in the past. With international actions, there is also the additional concern that, with illegal (from the point of view of the law applicable where the transaction occurs) interference by some governments with actions involving foreigners that occur in other jurisdictions, there is less (if any) effective individual remedy than there would be with purely-domestic interference, and any remedy would be state-to-state with significant geopolitical ramifications. I'm not a bitcoin fan, but I can certainly see at least conceptual utility in a mechanism which is resilient against interference by outside parties (or failure or compromise of any single of the parties providing infrastructure.)
    - aliakhtar 11y ago
      So, you are dumping tons of real CO2 into the atmosphere, to run an extremely inefficient ledger, which is largely used for illegal activities, because of some hypothetical dystopian future.

> Once you have the ledger We've had ledgers for quite a while, bitcoin wasn't the first digital ledger. I still don't understand the use case of a decentralized ledger, other than for illegal uses.

natrius 11y ago

You're in for a treat, then. A blockchain is a world computer. Each program on the computer has its own storage that nothing else can write to, so anyone sending a transaction to the computer knows exactly what the result will be. (Most blockchains only have one program, like Bitcoin. Others have multiple programs that can call each other, like Ethereum.) This shared, unforgeable platform can be used to coordinate interactions between individuals, corporations, or other entities. This technology gives mankind a new superpower: we can interact with anyone on the planet with predictable results and near-zero transaction costs. Interactions that only involve information, like financial markets, can be guaranteed to follow the rules of the blockchain, which will eliminate all financial middlemen you pay fees to today. Real world interactions can't be governed by software, but they can be guided by software. Reputation systems that run on blockchains will tell you exactly how likely you are to be satisfied with a real world interaction, so you can interact with complete strangers who live anywhere on the planet. I think most trade will be blockchain-mediated in the near future.

aliakhtar 11y ago
Great essay. Now, can you point out which of those use cases can't be done with regular USD, if someone like Paypal released an API? Edit: I also disagree with 'reputation based blockchain'. Reputation based anything online is easy to beat, and given the massive amount of scams in bitcoin, it clearly doesn't work.
- natrius 11y ago
  PayPal collects fees. They also restrict access to their platform and funds held on the platform. I am not talking about currency. Let's pretend the world will run on dollars indefinitely. Blockchains grease the skids of trade. You will trade with far more individual strangers than you do today. You will trade in new ways that weren't possible before blockchains let us encode the rules for interactions in a world computer. Blockchains will reshape our world. I think our currencies will be defined by blockchains as well, but don't get distracted just because you don't believe that particular bit. Blockchains are bigger than currency.
  - deleted 11y ago
    [deleted]
  - aliakhtar 11y ago
    > PayPal collects fees. So do miners. Again, you haven't really given me any specific use cases, you've just made some vague statements about how blockchains will revolutionize everything. If you mean smart contracts, they can be done more efficiently with a centralized service, without using a decentralized blockchain.

javert 11y ago

It lets you keep track of who has what bitcoins without having to trust a third party (bank, PayPal, etc.). That eliminates counterparty risk, which is a big deal. In particular, it creates an international payment system that is resilient to government interference. Also, that there is a strict cap of 21 million bitcoins. All governments eventually manipulate their currency by expanding the supply, so that's a big deal in terms of the unique financial properties it has as an asset.

aliakhtar 11y ago
> In particular, it creates an international payment system that is resilient to government interference. There we are back to what I said, > I still don't understand the use case of a decentralized ledger, other than for illegal uses.
- dragonwriter 11y ago
  Not all acts of government are legal (even by the laws applicable to that government); often there is a remedial mechanism available for illegal government interference, but parties may still prefer a process which is resistant to such interference from the outset, particularly when engaging in activities (even lawful ones) where one or more of the governments involved have shown an interest in interference in the past. With international actions, there is also the additional concern that, with illegal (from the point of view of the law applicable where the transaction occurs) interference by some governments with actions involving foreigners that occur in other jurisdictions, there is less (if any) effective individual remedy than there would be with purely-domestic interference, and any remedy would be state-to-state with significant geopolitical ramifications. I'm not a bitcoin fan, but I can certainly see at least conceptual utility in a mechanism which is resilient against interference by outside parties (or failure or compromise of any single of the parties providing infrastructure.)
  - aliakhtar 11y ago
    So, you are dumping tons of real CO2 into the atmosphere, to run an extremely inefficient ledger, which is largely used for illegal activities, because of some hypothetical dystopian future.