Blockchains in their original design were special because they could resist contentious changes in the event of political turmoil. Bitcoin protects users against hyperinflation chosen by a ruling elite trying to fund a war, for example.
Bitcoin is a money that doesn't grant massive economic power to a controlling authority. The US has massive global influence derived from its status as the global reserve currency. Using bitcoin does not grant that power to anyone, and therefore could be argued as a better base for a global currency.
Namespace stuff is exciting for the same reason. Today there are powers and squatters and authorities that can decide if you get the right to a domain. This is inherently political for contentious names and sites. Decentralization isolates you from these risks.
Blockchain 2.0 has spoiled this quite a bit by running things like a startup and essentially giving full control to the founding team. I think most people who are newer to the blockchain space completely miss the advantages of a system that is extremely difficult to change.
> Today there’s a lot of work going into decentralized distributed storage keyed on blockchain indexes; Storj, Sia, Blockstack, et al. This is amazing, groundbreaking work… but why would an ordinary person, one already comfortable with Box or Dropbox, switch over to Storj or Blockstack? The centralized solution works just fine for them, and, because it’s centralized, they know who to call if something goes wrong. Blockstack in particular is more than “just” storage … but what compelling pain point is it solving for the average user?
Ryan here from Blockstack. Our goal with storage is to allow users to bring their own storage (e.g. Dropbox, Google Drive, iCloud, etc). We believe in re-using the best infrastructure out there and not reinventing the wheel.
The key is that Blockstack delivers a thin layer on top of all of these storage providers with a common interface and end-to-end encryption, reducing them all to dumb drives. This (1) removes the potential for vendor lock-in (2) puts pressure on all the providers to be more competitively priced (3) enables greater data security.
Additionally, Blockstack isn't just about storage. It's a full stack for an entirely new kind of internet and a new way of building applications. Developers can work with a new blockchain-based domain name system (BNS), a new user-owned identity system, and a new BYOS storage system. The dream is for developers to be able to create a decentralized twitter by simply publishing a bundle of html, css and JS. The app folder runs as a single page application in your browser and can exist and replicate and live beyond the developer without the need for server or database maintenance. Servers could be relied upon for push notifications and feed aggregation, but they wouldn't be critical for operation and they'd be throwaway.
All this represents a pretty massive shift away from the model today. Instead of users revolving around applications, applications will revolve around users.
But why would I build a new decentralized Twitter "simply" (it's the HN go-to "I could build that in a weekend" that none of us could build half of in a year if we were actually trying to clone actual Twitter) when all of the money and control is in the centralized version?
Also, if the best example you have is "you can make easily decentralized Twitter after you learn all of our brand new replacement technologies for the things that you're already familiar with" then I don't think that's much of a value proposition.
Also also, come on - "applications will resolve around users"? Great catchphrase, but what does that even mean? Like we don't have product teams already trying to build things people want?
I'm not very well versed in the world of banking and finance. What would banks use a blockchain for?
All I can think of is a trustless clearing house. That would make sense on one hand, but it would also divulge a lot of possibly sensitive information to the public.
Other that that I know there have been a lot of hackathons about Bitcoin organised by banks but I never heard anything coming out of them.
> I'm not very well versed in the world of banking and finance. What would banks use a blockchain for?
Nothing, in my opinion. The value of a blockchain stems from the fact that, combined with proof-of-work, a single history of transactions can be agreed upon without a central party. This is the same feature that prevents alteration of history, because it would require recalculating the proof-of-work. This comes at a very high cost, however, since energy is literally burnt off just to reach this distributed consensus. Therefore, it only makes sense for the utmost valuable applications, like digital money.
I mean, right now Bitcoin miners are paid over a million USD per day in order for the network to reach distributed consensus. Please, anyone, let me know which kinds of applications can bear even a tiny fraction of this cost, except digital money. Even at 1% of this cost, a blockchain-based clearing protocol would be both more expensive and orders of magnitudes slower than using a central party -- and the purpose of clearing is to increase efficiency/reduce costs in the first place.
Banks are in the business of taking in deposits and lending them out, while taking a cut. Trustless lending makes no sense; you need to trust whoever you lend money to, or you'll be lending a lot of money to gambling addicts, with little chance of repayment.
So I can't provide a strictly bank-oriented response, but blockchain is just a distributed ledger system. I think some disservice is done in not clearly separating out the functions of blockchain from those of cryptocurrencies. You could use blockchain to manage property, contracts, microtransactions, data commerce, file storage, or certification, to name a few things. I think it's mostly a question of what can be fit into the ledger framework. Some people think that various local networks and other functionalities in the Internet of Things could be a testing ground for its broader uses (e.g., managing ownership of smart devices). Blockstack envisions it as kind of a backbone for a new Internet browsing paradigm, leveraging blockchain as a sort of DNS replacement if memory serves correctly. It's unclear if any of these ideas will take off in the near term.
Going back to these blockchain applications being separate from cryptocurrencies, to me Ethereum is a step away from the coupling of the two, because it is designed with contracts in mind rather than just money. And a number of folks have signed on to developing systems that leverage Ethereum - take a look at the Enterprise Ethereum Alliance. Still I suspect that given the fact that it's unproven, the actual investment made in personnel and capital by these firms is low. Also, the ironic counterpoint to this view is that Ethereum also has ETH, a cryptocurrency. I'm an investor in ETH, but even so, I am not sure what it is worth at this point, since the value of Ethereum seems to lie not in currency but in other applications of the blockchain.
A lot of the financial system is built on legacy systems that don't work very well, don't interoperate very well, and don't really have the capacity to handle what's demanded of them. Hence why a lot of very simple things takes days when they should take seconds, or cost several dollars when they should cost fractions of a penny: Stuff like transferring money between accounts, registering a change in ownership of financial assets, etc. Generally speaking the situation is something like "there's a central organisation that everyone trusts, they run a central ledger, but it's slow and limited; we need to upgrade it."
However, spending millions and millions of dollars to make a better system for recording payments, or changes in land title, or whatever is a hard sell. It's an extremely boring problem that's been solved ages ago, and now someone needs to actually go and build it, but nobody wants to fund it, and nobody wants to work on it.
A blockchain, on the other hand, is cool. People want to talk about them, people want to work on them, and you can get funding. Of course, it's totally unsuited to solving any problems banks actually face, but that's neither here nor there. :)
I recently read an Interview with the CEO of one of Germany's biggest travelling agencies, TUI[1]. In it, he described selling the "hotelbeds" database service for 1.19bn€ because in the future information about hotelbed vacancies would be stored in a public blockchain, not in centralised closed data silos. He described this as a democratization of data, a counter model compared to how Facebook and Google currently hoard data without giving anyone else access to it.
To me it didn't make sense, because who would participate in such a blockchain? Who is the miner? Why? Where is the trustless concensus feature needed? Maybe someone more knowledgeable can explain what he meant.
It's not so much banks using blockchain. It's more blockchain being the new 'magic beans' that Deloitte, Accenture and their ilk can sell to clueless (but 'agile'!) executives.
Read up on how international banking and specifically correspondent banking works[0]. There is a lot of counter party risk for banks in that process. Bitcoin or something like it would allow a system to be built that eliminated a lot of that counter party risk.
The crypto-currency Ripple is meant to replace the SWIFT banking system. Right now, transfers between banks are relatively expensive, think for example about a $25 Wire transfer fee.
Ripple would make it so these transactions between banks costs only a few cents, and can be verified easier. That being said, I am not a fan of investing in Ripple because they have no private wallets, and they have stolen from customers because of KYC/AML (Know your customer/Anti-Money Laundering).
Having a block chain doesn't mean that you have to give access worldwide to anyone and everyone. Banks could provide blockchain access to only computers that cleared their firewall, and are API authorized. Think ach except with a black chain as th back end.
I think the author has hit the nail on the head here. Blockchains offer two useful things:
* Decentralized authority
* A way to make digital goods scarce
To my knowledge, no one has created a business that takes maximum advantage of these strengths to provide value to the user. I can't imagine what kind of business could do this. Someone who can will make a lot of money.
What offers distributed consensus is proof-of-work, not blockchains themselves. The append-only list of blocks, that is a blockchain, is designed the way it is such that past blocks accumulate work performed on later blocks.
And the only "digital good" a blockchain can make scarce is the token which exists on the blockchain itself, which is completely useless unless it's supposed to act as a store of value. And, arguably, if a blockchain token is valuable because it's scarce, it makes little sense to have an unlimited number of blockchains even if each of them only have a limited number of tokens.
Now that people are making money in bitcoin again, you'd think folks would relax on these "everything looks like a nail" unnecessary blockchain solutions.
In order for a decentralized and autonomous blockchain to live up to it's name it needs to provide value to those who verify the transactions on it (ie. the miners or those who hold a stake in case of PoS). So the two extreme outcomes are: Truly decentralized and autonomous blockchains will disappear an be replaced by private, regulated versions and the value of most current implementations (ethereum, bitcoin) will go towards zero. Or people really value blockchains which can't be controlled by any government and prices will remain high. Most likely we'll see the emergence of both kinds of blockchains - depending on the use case. So to me this is where the analogy to Linux breaks down. Linux became one of the most important - if not the most important - operating system because it was free, open source and had a non-restrictive licence. Truly autonomous blockchains on the other hand can only prevail if they are exclusive and not free.
interesting read, still if the author is correct and blockchain becomes the defacto standard for decentralized server structure for banks, etc it is a huge position to take and will open up space for a lot of innovative applications on top of it.
Consumers don't use the internet any more than they use Linux. They interact with Google, Dropbox, Facebook, etc., not tcp, ip and ssl. Only only engineers use the internet, just like Linux. Maybe I always saw it different than the author, but to me the analogy of Bitcoin being like the internet in 1996, has always been about infrastructure.
I don't even get how this is supposed to be a criticism? Like this guy considers Linux an also-ran OS overall because it is only a bit player in one niche of "desktop OS"?
His point is that people are investing in blockchain technology like it's the next Microsoft/Facebook (read: headlock on a monopoly source of thousandfold profits), when it's actually more like Canonical/SuSE/Red Hat (competitive services business with low margins).
[+] [-] abalone|8 years ago|reply
If you scroll way down this is what you get:
- "a reserve/settlement currency" - Why?? certainly not for stability.
- "replacements for huge swathes of today’s financial industry" - Still not concrete!
- "namespaces (such as domain names)" - Also vague what it would improve.
- "implementations of distributed storage systems" - To which he adds "the centralized solution works just fine".
So... still waiting to hear a concrete, specific, cogent use case.
[+] [-] Taek|8 years ago|reply
Bitcoin is a money that doesn't grant massive economic power to a controlling authority. The US has massive global influence derived from its status as the global reserve currency. Using bitcoin does not grant that power to anyone, and therefore could be argued as a better base for a global currency.
Namespace stuff is exciting for the same reason. Today there are powers and squatters and authorities that can decide if you get the right to a domain. This is inherently political for contentious names and sites. Decentralization isolates you from these risks.
Blockchain 2.0 has spoiled this quite a bit by running things like a startup and essentially giving full control to the founding team. I think most people who are newer to the blockchain space completely miss the advantages of a system that is extremely difficult to change.
[+] [-] dwaltrip|8 years ago|reply
Bitcoin volatility year over year shows a very strong downtrend. I would not be surprised at all if this trend continues. Here's a nice graph:
https://www.lombardiletter.com/wp-content/uploads/2017/01/bi...
[+] [-] shea256|8 years ago|reply
Ryan here from Blockstack. Our goal with storage is to allow users to bring their own storage (e.g. Dropbox, Google Drive, iCloud, etc). We believe in re-using the best infrastructure out there and not reinventing the wheel.
The key is that Blockstack delivers a thin layer on top of all of these storage providers with a common interface and end-to-end encryption, reducing them all to dumb drives. This (1) removes the potential for vendor lock-in (2) puts pressure on all the providers to be more competitively priced (3) enables greater data security.
Additionally, Blockstack isn't just about storage. It's a full stack for an entirely new kind of internet and a new way of building applications. Developers can work with a new blockchain-based domain name system (BNS), a new user-owned identity system, and a new BYOS storage system. The dream is for developers to be able to create a decentralized twitter by simply publishing a bundle of html, css and JS. The app folder runs as a single page application in your browser and can exist and replicate and live beyond the developer without the need for server or database maintenance. Servers could be relied upon for push notifications and feed aggregation, but they wouldn't be critical for operation and they'd be throwaway.
All this represents a pretty massive shift away from the model today. Instead of users revolving around applications, applications will revolve around users.
[+] [-] vosper|8 years ago|reply
Also, if the best example you have is "you can make easily decentralized Twitter after you learn all of our brand new replacement technologies for the things that you're already familiar with" then I don't think that's much of a value proposition.
Also also, come on - "applications will resolve around users"? Great catchphrase, but what does that even mean? Like we don't have product teams already trying to build things people want?
[+] [-] yeukhon|8 years ago|reply
[+] [-] lumberjack|8 years ago|reply
All I can think of is a trustless clearing house. That would make sense on one hand, but it would also divulge a lot of possibly sensitive information to the public.
Other that that I know there have been a lot of hackathons about Bitcoin organised by banks but I never heard anything coming out of them.
[+] [-] runeks|8 years ago|reply
Nothing, in my opinion. The value of a blockchain stems from the fact that, combined with proof-of-work, a single history of transactions can be agreed upon without a central party. This is the same feature that prevents alteration of history, because it would require recalculating the proof-of-work. This comes at a very high cost, however, since energy is literally burnt off just to reach this distributed consensus. Therefore, it only makes sense for the utmost valuable applications, like digital money.
I mean, right now Bitcoin miners are paid over a million USD per day in order for the network to reach distributed consensus. Please, anyone, let me know which kinds of applications can bear even a tiny fraction of this cost, except digital money. Even at 1% of this cost, a blockchain-based clearing protocol would be both more expensive and orders of magnitudes slower than using a central party -- and the purpose of clearing is to increase efficiency/reduce costs in the first place.
Banks are in the business of taking in deposits and lending them out, while taking a cut. Trustless lending makes no sense; you need to trust whoever you lend money to, or you'll be lending a lot of money to gambling addicts, with little chance of repayment.
[+] [-] srbl|8 years ago|reply
Going back to these blockchain applications being separate from cryptocurrencies, to me Ethereum is a step away from the coupling of the two, because it is designed with contracts in mind rather than just money. And a number of folks have signed on to developing systems that leverage Ethereum - take a look at the Enterprise Ethereum Alliance. Still I suspect that given the fact that it's unproven, the actual investment made in personnel and capital by these firms is low. Also, the ironic counterpoint to this view is that Ethereum also has ETH, a cryptocurrency. I'm an investor in ETH, but even so, I am not sure what it is worth at this point, since the value of Ethereum seems to lie not in currency but in other applications of the blockchain.
[+] [-] Lazare|8 years ago|reply
However, spending millions and millions of dollars to make a better system for recording payments, or changes in land title, or whatever is a hard sell. It's an extremely boring problem that's been solved ages ago, and now someone needs to actually go and build it, but nobody wants to fund it, and nobody wants to work on it.
A blockchain, on the other hand, is cool. People want to talk about them, people want to work on them, and you can get funding. Of course, it's totally unsuited to solving any problems banks actually face, but that's neither here nor there. :)
[+] [-] Roritharr|8 years ago|reply
To me it didn't make sense, because who would participate in such a blockchain? Who is the miner? Why? Where is the trustless concensus feature needed? Maybe someone more knowledgeable can explain what he meant.
[1] https://www.welt.de/wirtschaft/article164874973/Die-Internet...
[+] [-] cjbprime|8 years ago|reply
[+] [-] spangry|8 years ago|reply
[+] [-] pmorici|8 years ago|reply
[0] https://gendal.me/2013/11/24/a-simple-explanation-of-how-mon...
[+] [-] rampage101|8 years ago|reply
Ripple would make it so these transactions between banks costs only a few cents, and can be verified easier. That being said, I am not a fan of investing in Ripple because they have no private wallets, and they have stolen from customers because of KYC/AML (Know your customer/Anti-Money Laundering).
[+] [-] SkyMarshal|8 years ago|reply
https://gendal.me/2015/04/27/how-to-explain-the-value-of-rep...
[+] [-] dismantlethesun|8 years ago|reply
[+] [-] ChemicalWarfare|8 years ago|reply
Internally (as in completely private intra-bank blockchain) - for transaction tracking/mining etc.
[+] [-] Temasik|8 years ago|reply
[+] [-] tehlike|8 years ago|reply
[+] [-] apozem|8 years ago|reply
* Decentralized authority
* A way to make digital goods scarce
To my knowledge, no one has created a business that takes maximum advantage of these strengths to provide value to the user. I can't imagine what kind of business could do this. Someone who can will make a lot of money.
[+] [-] runeks|8 years ago|reply
And the only "digital good" a blockchain can make scarce is the token which exists on the blockchain itself, which is completely useless unless it's supposed to act as a store of value. And, arguably, if a blockchain token is valuable because it's scarce, it makes little sense to have an unlimited number of blockchains even if each of them only have a limited number of tokens.
[+] [-] dismantlethesun|8 years ago|reply
[+] [-] paulmd|8 years ago|reply
Here it is, ladies and gentlebeans: Bitcoin, but for digital hats. I take cash or check.
[+] [-] jgalt212|8 years ago|reply
[+] [-] jcfrei|8 years ago|reply
[+] [-] koonsolo|8 years ago|reply
I'm a firm believer that cryptocurrency (and no other blockchain application) is going to have a huge impact on the world.
To me it always sounds like "Wikipedia is nice, but wiki software is going to have a huge application one day, we just don't know yet what".
Cryptocurrency has a chance of replacing a (huge part) of fiat money. Which will have a huge impact on the currently existing systems.
And there is a pretty straightforward way towards it:
- If you have a smartphone, you can accept payments.
- Everyone has smartphones these days, including small shop owners in developing countries.
- No more currency exchanges when traveling, just pay with bitcoins.
[+] [-] lsobral|8 years ago|reply
[+] [-] thinkloop|8 years ago|reply
[+] [-] sengork|8 years ago|reply
[+] [-] none_to_remain|8 years ago|reply
[+] [-] jpatokal|8 years ago|reply
[+] [-] lngnmn|8 years ago|reply
[+] [-] aqsheehy|8 years ago|reply
[+] [-] unlmtd|8 years ago|reply
[deleted]
[+] [-] wcr3|8 years ago|reply
[+] [-] drdeca|8 years ago|reply
[+] [-] mootothemax|8 years ago|reply
And... on to the next analogy.
[+] [-] tehlike|8 years ago|reply