I think the top comment for this should be about Filecoin, instead of just another uninformed comments about Bitcoin that we see here every day.
That said, one thing most people don't talk about is: I think most people think IPFS is disruptive, but I think IPFS itself is susceptible to disruption.
The main reason why IPFS is useful is because there's not an easy way to do NAT traversal therefore it's super hard for people to run their own server on their laptop or mobile devices.
IPFS introduces all kinds of technologies to get around this, but in my opinion the ability to freely set up your own server on your device is the core problem.
You don't really need a globally addressable immutable file storage, because unless you're dealing with static images, a lot of files DO change all the time, and people want to store and share files privately.
Which means, if there's a new type of technology that lets people do just that--set up their own server anywhere and make it accessible via HTTP--then I don't see why we really need IPFS. This could be done by startups or other protocols, but even by some innovative ISPs, which decide to change their business model to compete against edge nodes that capture most of the value (such as Google, Facebook, etc.)
In my opinion, the reason IPFS is so hot nowadays is because it's riding the DApps wave where people want to build Ethereum apps with IPFS as a file storage. But after playing around with it a bit I think it's much better at this point to just use Github to host your file and use Ethereum as database because the whole point of immutable apps is in the data and transactions, not in the static files.
But I would love to be corrected. If anyone actually think IPFS is essential to DApps, feel free to correct me and educate me.
> Which means, if there's a new type of technology that lets people do just that--set up their own server anywhere and make it accessible via HTTP--then I don't see why we really need IPFS
I have a ton to say here, but I'll keep it to a few point. Tor onion services solve the setup-your-own-server issues, it's just not super easy yet. IPFS is needed regardless, because there is a need to distribute things when your machine isn't up and to solve discovery. What IPFS doesn't have natively is anonymity (tho there are onion transports conforming to libp2p transport iface) and distributed compute, but neither is that important.
More of an addendum than a correction, the Akasha project is an ETH & IPFS project that looks interesting
https://akasha.world/
What can you do with Akasha from the FAQ
"You can publish, share and vote for entries, similar to Medium and other modern publishing platforms, with the difference that your content is actually published over a decentralized network rather than on our servers."
Blog-ish websites are unreliable even when they have real hosting. If you put it on someone's laptop it gets so much worse. To me, the reliability boost is the killer feature of IPFS.
> You don't really need a globally addressable immutable file storage, because unless you're dealing with static images, a lot of files DO change all the time, and people want to store and share files privately.
While it boosts reliability, IPFS is not globally immutable. If you share a file with a limited scope, it won't stick around forever.
Though from a quick search you can't easily keep a file private, that's not great.
Most people don't want their own server. Consider the person whose only computer is a phone. (That's, for example, most people in Japan; most people in the West under 15; etc.) Do they want to serve documents from their phone? No, because their phone doesn't have an always-on high-upload-bandwidth internet connection!
Only certain computers make good servers. It's more likely that everyone will get an automatic slice of a good server somewhere (i.e. the ISP-hosted "cloudlets" concept—your phone can launch edge-hosted VMs as if they were threads) than that people will suddenly, after all this time, start wanting to host things directly on their crap low-availability hardware.
I see a lot of people here making the mistake of thinking that IPFS is a file storage system that splits up content among a decentralized, shared network when it's not.
If I have a file and "store" it on IPFS - that file sits on my own machine indefinitely. You would think that a project called “Interplanetary File System” would be able to store some data... but nope. Instead, files in IPFS are only ever distributed to other hosts if they express interest in that content, and they are mirrored only if their clients have been setup to seed that content.
IPFS in that sense is more like Bittorrent in that it doesn't magically guarantee data will be available. That is the reason why you see so many “decentralized” systems using IPFS that suck. Because the moment data is “stored” in Interplanetary “File System”, the user thinks they can close the application and the data will still be there.... Guess why there are so many stores on OpenBazaar that are inaccessible at the moment ;)
The reason why so many Ethereum developers are using IPFS is because these developers typically have no clue what they're doing. They're the kind of developers whose introduction to blockchains came in the form of an artificially-imposed toy sandpit and now they think that blockchain engineering consists of being able to build towers out of blocks built by other people. They cannot build anything new for themselves, and if they understood how any of the existing components worked they probably wouldn't use them... But they don't.
After doing some tests, IPFS seems to run their own caching servers that automatically cache content retrieved from the network via their servers. So I am guessing that “dapp developers” are “optimizing” their code to use these servers, or are making requests to these servers in tests and then assuming that IPFS is a magic data store that gives them infinite decentralized, scalable storage space for no cost.... I mean, economically that is already impossible. But even if it could technically do that, ask yourself what Filecoin is suppose to be for?
On the topic of Filecoin, it's a complete disaster and the paper linked in the OP doesn't cover any of the main technical problems. What this paper fails to address is how unreliable time-lock encryption is as a timing function for anything given that its impossible to know how much serial computational power an attacker has available. That already defeats most of the claims made around Filecoin's absurdly inefficient and impossible to verify “proof-of-spacetime” algorithm.
The other thing that none of these papers addresses is how an auction market is fundamentally at odds to the needs of a cryptoeconomic system. The problem is that with no way to regulate the supply of storage space, it naturally leads to more people wanting to sell what they have then there is demand for it (which will crash the price of the storage space.)
If hosts cannot remain profitable by playing fairly then the only option left is to cheat. This is actually the opposite to how blockchains work as they strictly control the supply to maintain a healthy security-cost ratio (technically there is only ever 1 Bitcoin whose scarcity is maintained via a growing proof-of-work. The “bit” comes from the virtually fragmented sub-coins, but there is only ever 1 Bitcoin.)
Tl; dr: Interplanetary File System can only do distribution and cannot actually store files; And Filecoin isn't really a coin at all since the supply is indeterminate and it functions more like an exchange for contracts than a currency. The Protocol Lab guys sure know how to bullshit people though, I'll give them that much.
> if there's a new type of technology that lets people do just that--set up their own server anywhere and make it accessible via HTTP--then I don't see why we really need IPFS
> In my opinion, the reason IPFS is so hot nowadays is because it's riding the DApps wave where people want to build Ethereum apps with IPFS as a file storage.
Whilst I enjoy reading and learning about dapps, blockchains, etc. they seem very niche at this point: it can be argued whether or not bitcoin is "mainstream" (many have heard of it, but how many have or use it, compared to e.g. bank accounts), but ethereum is even more niche in comparison; using dapps is presumably rather niche even in the ethereum world, compared to those simply speculating on ether or making pump-and-dump ICOs; those building dapps would be even more niche; those building dapps with IPFS for distributed file storage would be a niche part of that.
I don't think this is what's driving IPFS.
However, I do come across many potential uses of IPFS every day.
Whenever I see a broken link, especially for some old informational site or tarball or whatever, and Googling for an alternative link just brings up more and more of the same broken link, it makes me wish IPFS were around (most recent example: http://easyldap.exofire.net/files/installer/easyldap-install... )
Likewise, whenever I find myself writing a URL into a file, e.g. a source tarball for a Linux package, I want to use an IPFS hash instead (IPFS is hopefully coming to Nix at some point https://github.com/NixOS/nix/issues/859 ).
In the latter case, I could add these files to IPFS myself, but I'd probably be the only one using it, and I'm usually less reliable than those canonical HTTP URLs, so those hashes would likely disappear sooner than the HTTP ones.
I have high hopes for IPFS. At one point I thought magnet URLs might solve this. I was pleased when kio-magnet allowed KDE to browse Web sites via magnet links, but even the blog post announcing that seems to be no more :( https://www.reddit.com/r/linux/comments/ew0y4/kiomagnet_what...
I met Juan back in 2014, where us (Feross, Substack, Max Ogden, Mafintosh, and others) all showed off our P2P projects. How times have changed since then!
I can attest to the usefulness of Filecoin. But I do think you are right in that IPFS is for immutable file/asset storage, and not as efficient for mutable data. David, one of the core teams at IPFS, reached out to me the other week about how CRDTs on top of IPFS can fix that. That is what we have solved, mutable graph data that can update in realtime or offline, across a ad-hoc mesh network.
IPFS is still critical here though, because using our Radix Storage Engine (just released) adapter, we can batch high volume mutable data to disk (aka IPFS) for storage and retrieval, which once fetched gun kicks back into gear and does sync.
Ethereum is just not at this scale yet, last I heard it was doing about 7 transactions per second (and Bitcoin doing 4). We're doing 2K end-to-end (across a 4 peer network hop) table inserts/second! I demo this on stage here: https://youtu.be/nTbUCTgLmkY
In that talk, I also explain how to do load testing across a distributed system in order to verify its correctness, aka do simulations on failures like with Kyle Kingsbury's (Aphyr) Jepsen Tests.
So while Filecoin isn't ready yet, its market cap represents a massive emerging opportunity. If Uber unicorn-ed crowdsourced transportation, imagine what a truly P2P incentivized crowdsourced storage system could do. Remember, all machines need electricity (Bitcoin), computation (Ethereum), storage (filecoin), and bandwidth (what we're tackling, with data sync, and incentives).
If you look at it in that context, it makes sense. Hopefully the crypto-P2P community will deliver :) to keep up with the demand. Cheers!
Looking at my dropbox, <1% of files have been updated in the past year. So your premise that a lot of files change over time may not be correct.
Also, you started by warning against uninformed comments about BTC but your comment on FC seems uninformed itself - especially the last 2 paragraphs which go into hardcore speculation category.
Why do they need their own server? What's wrong with Dropbox, Google Drive, et al? Or, what's wrong with the network drives from Seagate and WD that will let you access those files remotely (aside from the fact that they do cost money)?
Dropbox feels like the wrong thing to compare it to. IPFS isn't really for storing files privately. Public S3 buckets would be closer. I don't have any numbers to say if it's overvalued based on how much public cloud storage there is (I wouldn't be surprised if it were though).
I dont know if the founders started out to make a Ponzi, but once the dollars started rolling in, I can imagine, they probably got "different ideas".
Who am I to judge, but if I was a founder of this, I would be driving my Ferrari in Thailand instead of slaving away trying to build some stupid file system. Who the hell cares about file systems :P
edit: Weird, I thought I was commenting on another thread, about Nobel laureates criticizing Bitcoin. I saw it on my phone, then opened HN at my notebook to comment. I misread the title and commented here, but now I can't find the correct thread (was it flagged?).
I am growing this idea that Bitcoin (and any cryptocurrency that is affected by aggressive price growth) is an anti-fragile indirect multilevel marketing scheme, the "diamond" of the digital era.
It is anti-fragile because it does not have a single point of failure, it is decentralized, its creators are unknown, it is adaptable to several use cases. So each attack on Bitcoin (be it exchange hacking, scams or celebrities' critics) that doesn't kill it, make it stronger.
It is a multilevel marketing scheme because it is mostly a zero-sum game, all earnings of bitcoin owners come from new money entering the game. It is indirect because the ones that are most fervourous advertising and defending bitcoin are holding it, not selling.
I believe it is the diamond of the new era because of some key similarities:
Both BTC and Diamond:
- Its original bump in value come from a marketing campaign (even if with Diamond it was centralized and offline, and with BTC is decentralized and viral)
- Its scarcity is artificially controlled
- Its main use case is black market commerce (for one side of the argument) or money laundry (for the other side).
For BTC owners the good news is that the "diamond bubble" it is still strong decades (centuries?) after its modern boom. The bad news is that Diamond was able to correlate to status, a strong (if subjective) value that is part of humanity since always. BTC only appeal is its value as money, so bubbly reinforcements (up and down) apply.
The bad news is that Diamond was able to correlate to status, a strong (if subjective) value that is part of humanity since always. BTC only appeal is its value as money ...
Startup idea: Bitcoin wedding rings.
A beautiful gold ring with a private key engraved on the inside. Give your loved one the gift of BTC! Your commitment to each other, eternalized on the global blockchain.
Gentlemen may prefer blondes, but the modern woman prefers Bitcoin to carats of squeezed carbon. Status, store of value, it's all there.
(This is satire, but now I'm worried it will actually happen if the coinmania doesn't subside soon.)
I agree with everything you say, except the idea that it is zero-sum. It is very nonzero-sum insofar as the bulk of the purported value of the system derived from revaluation and windfall: much of the $158 billion market cap of bitcoin derives not from outright transactions at market value (and thus conversion of assets from one form to another with face-value liquidity) but from revaluation of coins purchased at lower prices or mined out of thin air (or rather electricity). This means that the market has ballooned in value (as do speculative bubbles... not stating outright that this is a bubble, but analogously) and has benefitted all asset-holders super-linearly, but it also puts them all at immense risk of devaluation (which would be sub-proportional). This nonlinearity in the risk profile is a direct result of its nonzero-sumness.
As for it being anti-fragile... meh... that’s to be ascertained. For sure so past it has benefited from volatility, but in the relatively short-term many things do. Only the long term will tell whether it will regress to the mean or not, and only a bunch of ’real’ crashes (massive liquidity events, as opposed to strong fluctuations in value with limited trade volumes) will tell us empirically what that ”long term” timeframe is.
(Yup, finance’s a pain for anybody trying to predict the future.)
Cool, what does this have to do with Filecoin, their ICO, and Ponzi schemes?
A MLM scheme is that: a scheme requiring a central actor to pay commissions. This is why Bitcoin and decentralized currency has never fit this definition.
You could say there are some abstract resemblances (BTC bagholders encourage others to buy) but this is just abstract and not specific enough to fit the definition.
We've seen people run Ponzis using BTC, we've seen ICOs structured as Ponzis. However "Bitcoin is a Ponzi/pyramid/MLM" will never be true; not literally at least.
You're comparing Bitcoin to diamond, but there are many more asset classes that are actually more similar to Bitcoin, which actually work.
I think a lot of people make the mistake of using pattern matching to judge Bitcoin when they don't have enough patterns to work with. There are and were many financial products that could have worked (but failed because of corruption) or are working currently that most people who don't do a lot of financial investment aren't aware of.
That said, let me go through each of the comparisons you made:
> Its original bump in value come from a marketing campaign (even if with Diamond it was centralized and offline, and with BTC is decentralized and viral)
Diamond has a centralized cartel that does the marketing. Who do you think is doing the marketing for Bitcoin?
> Its scarcity is artificially controlled
Diamond's artificial scarcity is controlled by the cartel, just like OPEC controls oil.
Who do you think "controls" Bitcoin's scarcity?
> Its main use case is black market commerce (for one side of the argument) or money laundry (for the other side).
Nope. That's what you probably read a few years ago from some mainstream media.
Bikeshedding this some more because HN is for bikeshedding...
I am toying around with the wacky heresy that Karl Marx (not Lenin) was right. Capitalism will evolve into socialism.
It would be a form of socialism we haven't seen yet and that would have been technologically impossible in the past. Capitalism's role is to develop the technology, wealth, and infrastructure to enable it... as Marx said. Tech titans, startuppers, hackers, and VCs are in this view actually communist revolutionaries of a sort.
The new socialism would be fully decentralized, consensus based, anti-fragile, nameless, leaderless, borderless, and viral as hell. It would just take over by viral attrition. Later on historians would be like "wow, we now have a completely new social paradigm."
My read on Marx's original speculative idea was closer to that and quite far from the USSR. The USSR was like the ancient Egyptians deciding to build social media based on this vague wishy-washy futurist idea of what that is but without any of the tools or core innovations. They would have ended up with something that basically didn't work and in no way resembled Twitter, LinkedIn, or Facebook. Without the core enabling innovations they would not have been able to even imagine those, let alone build them. The apparatchiks and politburo of the USSR could not have imagined distributed consensus operating at global scale. The tools to even think about that didn't exist. They basically tried to force-fit the goals of socialism using the methods of fascism with predictably awful results.
I also think many capitalists of the Randian/libertarian school will see this as capitalism and not socialism since it will retain capitalist elements or at least entities and institutions that outwardly resemble them and fulfill the same functions. There will still be money, fund raising, capital gains, corporations in some form, etc. That's fine. Names don't matter. It will be nameless and formless.
Edit: I still see Bitcoin as version 0.1 alpha of something much more significant. I am more interested in what version 2.0, 3.0, or 4.0 might look like. I think Ethereum is version 0.5 beta. Version 1.0 will be something that somehow ditches the expensive boat-anchor of proof-of-work, resolves transactions a lot faster, and is way more secure and powerful.
I also do think Bitcoin at the moment is a bubble. Something being a major innovation and a bubble are not mutually exclusive. In fact most major innovations lead to bubbles when they first start climbing their hype/adoption curve.
Why does one painting sell for $10 and another for $100 million?
People can put value in whatever they want. I don't think there's a real objective way to say "oh yeah, it's mathematically proven that a diamond ring should cost $10,000...or a $1,000,000 if it's say Marilyn Monroe's ring, and that a single Bitcoin should have a value of no more than $10."
I don't agree with the comparison between diamonds and bitcoin. The supply of diamonds is constrained (just like the supply of many luxury goods) and that ends up making a physical product (a diamond ring or jewelry or even a Porsche (yep supply is constrained on that beyond what the market would buy)) more highly sought and valuable. But in the end you are getting a physical product which you can lust over and others can admire when they see you own it. The same does not exist with bitcoin. This is not even to mention that both diamonds and Porsches have actual use even if that use can be supplied by less expensive alternatives. Even Gold has this advantage. These are not tulip mania products that got bid up either and they have generally maintained and stood the test of time with regards to both their value and their utility. (Even if the utility of a diamond ring is what the person wearing it gets in good feeling).
filecoin is not BTC. BTC does have an inherent value, but only within the system. You're analogies to diamonds make no sense because diamonds are easy to produce and their cost does not reflect either the demand or the production of them. BTC, however, is required to actually run the system, are hard to produce and their value is set on their limited production plus demand. It is true that BTC currently has little value outside of the system, but that is not the same as saying it has no inherent value.
I don't think Bitcoin was designed as a scheme, but it's effectively been turned into an MLM scheme and a brilliant one at that.
I'm trying to hire a PR firm for a project and I've come across a handful of firms that have been hired to promote BTC.
Think about that for a minute: if BTC is distributed - then who on earth is paying massive $$$ for PR firms to be hustling BTC in the press? Massive BTC owners - that's who.
Also problematic is so many in the press reporting on it have positions in BTC they are not disclosing (although this might be changing).
And every owner of BTC seems to be a willing (or unwitting) participant in the propagandization simply by commenting it up on the various boards and chats around the internet.
It's an amazing phenom - the intersection of cool tech, the internet - and age old ponzi/pyramid schemes.
And it has not even yet hit mainstream - most readers here might think BTC is 'old hat' but it takes a long time for things to hit mainstreet - and even after they hit mainstreet USA, it takes a while to hit 'mainstreet globally'. Remember: when all your friends were on Facebook? It tooks several years for 'everyone in the world' to be on it.
The barrier to growth is that it is quite tricky to buy - my Mother is on Facebook and she will never by BTC unless there are some real changes - though I can see a 3rd party creating a solution.
Do you know Glen Beck's scammy 'buy gold from us' commercials, where people buy gold in coin format basically at 20% above market value?
The 'buy Gold' phenom used to hustle gold does well among those 'end of the world / I don't trust the government types' - the same people who buy 'end of the world seeds' (from Glen Beck as well!) - and BTC fits in perfectly with this narrative.
So - get ready for 'Glenn Beck supported Bitcoin Wallet' - then it will get really big, possibly go global. And then, who knows.
So many interesting outcomes: if there is too much noise about it being used in organized crime I can see a Scandinavian country banning it, with talk of EU banning it ... the US could move quickly to do something. On some level - this will actually strengthen BTC among the 'anti government' crowd.
For it to lose price, there kind of has to be a systematic reason for it to do so - and kind of a panic. Once the press starts touting 'BTC Crash' - you can be sure it will happen - though there are enough massive, institutional holders that it won't likely go to zero.
I think it will be around for a long while though - my guess is that there is some kind of crash at some point, but not to zero, some governments clamp down, and then people over a long period of time just stop talking about it and using it.
Well, bitcoin is actually solving a real world problem, unlike diamond. Seems way too much effort and thinking for a ponzi, I mean the result is actually groundbreaking work.
tl;dr conclusion from the article: "Filecoin’s economic feasibility is hard to predict and, given
a simple summary of risk related points, the biggest hurdles are
probably going to be acceptance from the users. In addition,
Filecoin shows certain characteristics of a Ponzi scheme but
the trust built by the team members in the past leads us to
believe that it is not one. Filecoin’s Whitepaper introduces
novel concepts and predecessor projects by the team members
which prove their technical capabilities. Hence, it appears that
Filecoin is poised to be an outstanding project although it
remains to be seen if it will be adopted by the average cloud
storage user."
It's pretty frustrating to see something that has an easily accessible value (M MBs stored for N seconds consuming X bandwidth) is denominated in the same way that all the other cryptocurrencies are denominated in, as a deflationary good that encourages speculation. If you want to create some token that scale with the value of the system, that's fine, but don't force your users to price their contacts in something that is untethered from the thing they are trying to buy.
What I'd do instead is allow people to store random data to mint new MBseconds at a fractional rate and then the cost of a new contract is trivial. If you want someone to store 1GB for a day the cost of that is well known. The price of storage constantly drops, but the price of a deflationary good that is actually desired will continue to rise. This encurages contact churn.
If you want to have a token that scales with the value of the network/product then just create tokens that generate MBseconds proportional to the fees paid.
I'm so lost, there are so many conversations here talking about IPFS compared to things like Dropbox and S3. Why?
To me, IPFS aims to solve a completely different problem. IPFS does not exist because we don't have means to host and distribute files - that is a problem solved by a hundred different entities. IPFS, as advertised in many mediums (video/etc), is a platform to distribute data from a local-first P2P medium. Like Bittorrent, but without ever leaving the local network/etc. Eg, transferring a file/video/site to someone next to you would not download the data from across the world twice.
Has the marketing changed? Because all of the videos I watched on it from months ago were all about reducing global bandwidth usage, utilizing local and distributed sources of the data as much possible.
Why is everyone acting like IPFS is trying to solve file hosting?
Actually, BitTorrent allows you to search specifically for local connections via multicast: http://bittorrent.org/beps/bep_0014.html. With proper prioritization of peers it won't download the data from across the world, if it's present in the same subnet.
Good discussion on the technical merits. However, let's take a look at the 'overvalued' claim and a critical error the authors make.
The analysis rests on this ratio calculated for Airbnb: "Airbnb is valued today at approximately $31 billion while holding around 3 million listings in total. The average apartment in the United States was 934 square feet in 2016. In a hypothetical scenario, Airbnb is therefore valued at $11.06 per square feet. If one compares this number to the median price per square foot in the United States, which is $123, the Airbnb ecosystem diminishes the median price by a factor of 11.12."
I get this is back of the envelope so let's ignore the international dimension. The critical error in these calculations is the apples-to-apples comparison of the square feet of an Airbnb listing to a purchased square foot.
Basically - when someone pays $123 per square foot (median price in the U.S.) they are paying for the use of that space for an entire year. Said another way, they are paying $0.34 per day per square foot. Airbnb listings are not in general year-long, which means the same square foot of space is rented out over and over again throughout the year, adding revenues along the way. The 11.12 scaling factor is therefore off and too high. This leads the authors to apply an erroneous scaling factor to the Dropbox sizing to come up with an invalid valuation assessment for Filecoin.
That means an Airbnb listing is rented out about 37 times a year (365 / 5 days * 50%). The $11.06 per square foot times 37 revenue-generating occasions is $409.22 per square foot ($1.12/day/sq ft v. $0.34/day/sq ft for a purchase). So the correct apples-to-apples comparison here is to say that Airbnb increases the median price of the asset by a factor of 3.32. Aka Filecoin would need to deliver 2,580 petabytes - not 95,185. That's only 5x Dropbox, which is a minnow compared to S3 etc.
Why would that be? Most directly, because Airbnb allows the owners of the asset (sq ft in this case) to ask for a higher per day charge since the length of stay is shorter and thus the owner of the asset has more uncertainty over utilization - it's part of why 30 nights in a hotel costs much more than a month of rent. This is a well-understood economic dynamic and one that would apply to Filecoin storage miners given how miners using Filecoin could theoretically 'rent out' the same gigabyte over and over again to different buyers throughout the year - but also cover the risk of less than 100% annual utilization rates of their fixed-cost asset.
Honestly, reading this article made me more confident in the future of Filecoin. The authors highlight multiple times the better technical features than competition, proven dev team, and unwittingly call out why economically speaking owners of gigabytes under Filecoin could expect a higher return than if you were going to buy the gigabytes yourself for your own use.
We think it's great that people ask hard questions, and get involved. It's great to see others studying our work and we really appreciate the open discourse. There are a few things from this article I’d like to address. (Despite the length of this post...) these are quick comments, and not a proper in-depth response.
- (a) The article gets some things right and some things wrong -- there is good summarizing of several of our projects, and discussion of many difficult aspects in these projects. The article discusses many technological aspects in good depth, and highlights difficulties in building these systems, aligning incentives, and the trials of past projects. The article also has significant inaccuracies. For example, the sale figure -- which appears in the title and impacts the analysis -- is incorrect. We raised $205M -- officially here: https://protocol.ai/blog/filecoin-sale-completed/
- (b) The authors chose a provocative title. As some commenters have already pointed out, the conclusion is “[we] believe that it is not one.” Despite Betteridge’s law ( https://en.wikipedia.org/wiki/Betteridge's_law_of_headlines ), many people who only read the headline will come to the opposite conclusion, and now we (not they) will have the burden of correcting those misunderstandings. Provocative titles, though they may drive imagination and clicks, can do a huge disservice to everyone in the space, and contribute to misinformation. Most people will only read the title, maybe the abstract, and use that to form and drive opinions. We choose titles of our research with diligence and care, and hope others do the same.
- (c) The article has a great technical overview of the Filecoin stack, and how it fits with IPFS and libp2p. This is a large structure with many pieces, and it is rare to see articles grasping how all the pieces fit together so well, and then explaining it cogently. In particular, it’s great to see this article diving deep and discussing advantages and disadvantages of low level technical structures (multihash, ipld, libp2p, and more). We modularized everything in the hope to generally improve peer-to-peer systems, and improve reusability. We hope these components will be useful to the author’s Tribler project (a network similar in goals to Filecoin), and we hope that we can also learn from and leverage solutions they have made.
- (d) many of the objectionable things described in this article are common in ICOs in general. Put another way, consider those claims also in terms of other significant token sales, such as Ethereum, Tezos, Polkadot, Blockstack, Cosmos, Golem. People were saying similar things about Ethereum when they did their sale in 2014. Perhaps worth doing a survey / analysis over all of them, comparing and contrasting the different things groups have done, how the ecosystem has improved, and suggest new directions.
- (e) It’s worth mentioning that the analysis gives a definition of a ponzi scheme, but their discussion does not map to that definition. Instead, the discussion centers on claims about future investor sentiment or speculation as the driver of value in the token, which is not the only way to establish value in token networks, and ignores the value of the services provided. That kind of analysis does not work for projects like Ethereum and other live and functioning crypto tokens. If the network is useful, and there is a way to generate or introduce value, by providing new or better services, and if the network can capture that value in the token itself (important step), then the tokens can hold value, based on the utility of the network as a service and not just or primarily speculation. Networks like Ethereum, Bitcoin, Zcash, and Filecoin aim to provide useful services, and much of the value stored in their tokens will be thanks to the utility of the networks.
Perhaps it’s worth pointing out that most crypto token projects are compared to ponzi schemes at some point :(
- (f) The article discusses the SAFT and assurances to investors, but does not discuss them in contexts of other token sales and ICOs. Most ICOs are structured as donations (not investments) to a project, with little to no legal recourse -- even though many people refer to these “donations” as being “investments”. In our case, we raised investment through an instrument (the SAFT) that is a direct liability to us, and gives investors greater guarantees on the completion of the project, or consequences otherwise. If we fail to deliver the network, we must return the proceeds of the token sale. Few token sales ever have such a clause. Our structure gives investors greater accountability, not less. The article discusses this in sec IV, but does not take into account that startups are similarly risky (i.e. that startup dissolution events return only remaining capital from the efforts), and does not mention how our structure improves on the ICO landscape in general.
- (g) We do share the legitimate concern that ICOs need stronger accountability, and some are structured in a way that leads to abuse. The community as a whole needs to raise the bar on accountability and ethical behavior. We have taken significant steps in this direction, not just in our sale but to improve the ecosystem -- the SAFT project, which was a gargantuan undertaking that many other networks are now using, is one example. Many other networks are introducing and improving structures. We believe token networks present a very important new way to form capital, with promising advantages to users, investors, and creators, but the space is still in its infancy, and significant changes are still ahead. Token sales have improved dramatically in the last three years, and we hope they continue to improve to find the right balance and protection of the interests of all parties involved with the network.
Filecoin is one of the ones I'd stay far away from. VCs got in before anyone else with special preferences, which taints the whole project. There are alternatives which don't come with the VC problem attached to them.
You're aware that a Ponzi has a very specific definition, more specific than "scam," correct?
Neither Bitcoin nor Ethereum have a central operator generating returns for older investors by disproportionately funneling revenue paid by new investors to them. When the price rises, new and old investors profit equally. You could use BTC as a currency in a Ponzi, Bitcoin being a Ponzi would be impossible by definition.
Ethereum at least acts as a platform for other things so it has utility outside of being currency. Bitcoin definitely feels more like one lately, though.
The thing about them is technically they are not. But - they can be used as schemes. And that's what makes them powerful as schemes - the veneer of credibility that actual bad actors can hide behind. Which taints the good actors.
[+] [-] cocktailpeanuts|8 years ago|reply
That said, one thing most people don't talk about is: I think most people think IPFS is disruptive, but I think IPFS itself is susceptible to disruption.
The main reason why IPFS is useful is because there's not an easy way to do NAT traversal therefore it's super hard for people to run their own server on their laptop or mobile devices.
IPFS introduces all kinds of technologies to get around this, but in my opinion the ability to freely set up your own server on your device is the core problem.
You don't really need a globally addressable immutable file storage, because unless you're dealing with static images, a lot of files DO change all the time, and people want to store and share files privately.
Which means, if there's a new type of technology that lets people do just that--set up their own server anywhere and make it accessible via HTTP--then I don't see why we really need IPFS. This could be done by startups or other protocols, but even by some innovative ISPs, which decide to change their business model to compete against edge nodes that capture most of the value (such as Google, Facebook, etc.)
In my opinion, the reason IPFS is so hot nowadays is because it's riding the DApps wave where people want to build Ethereum apps with IPFS as a file storage. But after playing around with it a bit I think it's much better at this point to just use Github to host your file and use Ethereum as database because the whole point of immutable apps is in the data and transactions, not in the static files.
But I would love to be corrected. If anyone actually think IPFS is essential to DApps, feel free to correct me and educate me.
[+] [-] kodablah|8 years ago|reply
I have a ton to say here, but I'll keep it to a few point. Tor onion services solve the setup-your-own-server issues, it's just not super easy yet. IPFS is needed regardless, because there is a need to distribute things when your machine isn't up and to solve discovery. What IPFS doesn't have natively is anonymity (tho there are onion transports conforming to libp2p transport iface) and distributed compute, but neither is that important.
[+] [-] 0x4f3759df|8 years ago|reply
What can you do with Akasha from the FAQ "You can publish, share and vote for entries, similar to Medium and other modern publishing platforms, with the difference that your content is actually published over a decentralized network rather than on our servers."
[+] [-] Dylan16807|8 years ago|reply
> You don't really need a globally addressable immutable file storage, because unless you're dealing with static images, a lot of files DO change all the time, and people want to store and share files privately.
While it boosts reliability, IPFS is not globally immutable. If you share a file with a limited scope, it won't stick around forever.
Though from a quick search you can't easily keep a file private, that's not great.
[+] [-] rklaehn|8 years ago|reply
[+] [-] derefr|8 years ago|reply
Only certain computers make good servers. It's more likely that everyone will get an automatic slice of a good server somewhere (i.e. the ISP-hosted "cloudlets" concept—your phone can launch edge-hosted VMs as if they were threads) than that people will suddenly, after all this time, start wanting to host things directly on their crap low-availability hardware.
[+] [-] unknown|8 years ago|reply
[deleted]
[+] [-] Uptrenda|8 years ago|reply
IPFS in that sense is more like Bittorrent in that it doesn't magically guarantee data will be available. That is the reason why you see so many “decentralized” systems using IPFS that suck. Because the moment data is “stored” in Interplanetary “File System”, the user thinks they can close the application and the data will still be there.... Guess why there are so many stores on OpenBazaar that are inaccessible at the moment ;)
The reason why so many Ethereum developers are using IPFS is because these developers typically have no clue what they're doing. They're the kind of developers whose introduction to blockchains came in the form of an artificially-imposed toy sandpit and now they think that blockchain engineering consists of being able to build towers out of blocks built by other people. They cannot build anything new for themselves, and if they understood how any of the existing components worked they probably wouldn't use them... But they don't.
After doing some tests, IPFS seems to run their own caching servers that automatically cache content retrieved from the network via their servers. So I am guessing that “dapp developers” are “optimizing” their code to use these servers, or are making requests to these servers in tests and then assuming that IPFS is a magic data store that gives them infinite decentralized, scalable storage space for no cost.... I mean, economically that is already impossible. But even if it could technically do that, ask yourself what Filecoin is suppose to be for?
On the topic of Filecoin, it's a complete disaster and the paper linked in the OP doesn't cover any of the main technical problems. What this paper fails to address is how unreliable time-lock encryption is as a timing function for anything given that its impossible to know how much serial computational power an attacker has available. That already defeats most of the claims made around Filecoin's absurdly inefficient and impossible to verify “proof-of-spacetime” algorithm.
The other thing that none of these papers addresses is how an auction market is fundamentally at odds to the needs of a cryptoeconomic system. The problem is that with no way to regulate the supply of storage space, it naturally leads to more people wanting to sell what they have then there is demand for it (which will crash the price of the storage space.)
If hosts cannot remain profitable by playing fairly then the only option left is to cheat. This is actually the opposite to how blockchains work as they strictly control the supply to maintain a healthy security-cost ratio (technically there is only ever 1 Bitcoin whose scarcity is maintained via a growing proof-of-work. The “bit” comes from the virtually fragmented sub-coins, but there is only ever 1 Bitcoin.)
Tl; dr: Interplanetary File System can only do distribution and cannot actually store files; And Filecoin isn't really a coin at all since the supply is indeterminate and it functions more like an exchange for contracts than a currency. The Protocol Lab guys sure know how to bullshit people though, I'll give them that much.
[+] [-] chriswarbo|8 years ago|reply
> In my opinion, the reason IPFS is so hot nowadays is because it's riding the DApps wave where people want to build Ethereum apps with IPFS as a file storage.
Whilst I enjoy reading and learning about dapps, blockchains, etc. they seem very niche at this point: it can be argued whether or not bitcoin is "mainstream" (many have heard of it, but how many have or use it, compared to e.g. bank accounts), but ethereum is even more niche in comparison; using dapps is presumably rather niche even in the ethereum world, compared to those simply speculating on ether or making pump-and-dump ICOs; those building dapps would be even more niche; those building dapps with IPFS for distributed file storage would be a niche part of that.
I don't think this is what's driving IPFS.
However, I do come across many potential uses of IPFS every day.
Whenever I see a broken link, especially for some old informational site or tarball or whatever, and Googling for an alternative link just brings up more and more of the same broken link, it makes me wish IPFS were around (most recent example: http://easyldap.exofire.net/files/installer/easyldap-install... )
Likewise, whenever I find myself writing a URL into a file, e.g. a source tarball for a Linux package, I want to use an IPFS hash instead (IPFS is hopefully coming to Nix at some point https://github.com/NixOS/nix/issues/859 ).
In the latter case, I could add these files to IPFS myself, but I'd probably be the only one using it, and I'm usually less reliable than those canonical HTTP URLs, so those hashes would likely disappear sooner than the HTTP ones.
I have high hopes for IPFS. At one point I thought magnet URLs might solve this. I was pleased when kio-magnet allowed KDE to browse Web sites via magnet links, but even the blog post announcing that seems to be no more :( https://www.reddit.com/r/linux/comments/ew0y4/kiomagnet_what...
[+] [-] marknadal|8 years ago|reply
I can attest to the usefulness of Filecoin. But I do think you are right in that IPFS is for immutable file/asset storage, and not as efficient for mutable data. David, one of the core teams at IPFS, reached out to me the other week about how CRDTs on top of IPFS can fix that. That is what we have solved, mutable graph data that can update in realtime or offline, across a ad-hoc mesh network.
IPFS is still critical here though, because using our Radix Storage Engine (just released) adapter, we can batch high volume mutable data to disk (aka IPFS) for storage and retrieval, which once fetched gun kicks back into gear and does sync.
Ethereum is just not at this scale yet, last I heard it was doing about 7 transactions per second (and Bitcoin doing 4). We're doing 2K end-to-end (across a 4 peer network hop) table inserts/second! I demo this on stage here: https://youtu.be/nTbUCTgLmkY
In that talk, I also explain how to do load testing across a distributed system in order to verify its correctness, aka do simulations on failures like with Kyle Kingsbury's (Aphyr) Jepsen Tests.
So while Filecoin isn't ready yet, its market cap represents a massive emerging opportunity. If Uber unicorn-ed crowdsourced transportation, imagine what a truly P2P incentivized crowdsourced storage system could do. Remember, all machines need electricity (Bitcoin), computation (Ethereum), storage (filecoin), and bandwidth (what we're tackling, with data sync, and incentives).
If you look at it in that context, it makes sense. Hopefully the crypto-P2P community will deliver :) to keep up with the demand. Cheers!
[+] [-] product50|8 years ago|reply
Also, you started by warning against uninformed comments about BTC but your comment on FC seems uninformed itself - especially the last 2 paragraphs which go into hardcore speculation category.
[+] [-] s73ver_|8 years ago|reply
[+] [-] synctext|8 years ago|reply
"Considering that Dropbox [53] currently holds around 500 petabytes of user data [54], one could argue that Filecoin is overvalued."
Study we conducted with a master student at Delft University of Technology. Open lab notes when writing this paper: https://github.com/Tribler/tribler/issues/3097 Note TUDelft has currently 8 professors in their http://blockchain-lab.org Various scientists and 38 master students working on improving our own Filecoin-like system, based on our Trustchain fabric: https://github.com/Tribler/tribler/issues?q=is%3Aissue+is%3A... It's home to one of the largest blockchain labs of Europe.
[+] [-] eco|8 years ago|reply
[+] [-] mads|8 years ago|reply
I dont know if the founders started out to make a Ponzi, but once the dollars started rolling in, I can imagine, they probably got "different ideas".
Who am I to judge, but if I was a founder of this, I would be driving my Ferrari in Thailand instead of slaving away trying to build some stupid file system. Who the hell cares about file systems :P
[+] [-] jstanley|8 years ago|reply
IPFS is fantastic technology, but the main developers getting sidetracked with yet another scammy ICO is the last thing we need.
[+] [-] soneca|8 years ago|reply
I am growing this idea that Bitcoin (and any cryptocurrency that is affected by aggressive price growth) is an anti-fragile indirect multilevel marketing scheme, the "diamond" of the digital era.
It is anti-fragile because it does not have a single point of failure, it is decentralized, its creators are unknown, it is adaptable to several use cases. So each attack on Bitcoin (be it exchange hacking, scams or celebrities' critics) that doesn't kill it, make it stronger.
It is a multilevel marketing scheme because it is mostly a zero-sum game, all earnings of bitcoin owners come from new money entering the game. It is indirect because the ones that are most fervourous advertising and defending bitcoin are holding it, not selling.
I believe it is the diamond of the new era because of some key similarities:
Both BTC and Diamond:
- Its original bump in value come from a marketing campaign (even if with Diamond it was centralized and offline, and with BTC is decentralized and viral)
- Its scarcity is artificially controlled
- Its main use case is black market commerce (for one side of the argument) or money laundry (for the other side).
For BTC owners the good news is that the "diamond bubble" it is still strong decades (centuries?) after its modern boom. The bad news is that Diamond was able to correlate to status, a strong (if subjective) value that is part of humanity since always. BTC only appeal is its value as money, so bubbly reinforcements (up and down) apply.
[+] [-] pavlov|8 years ago|reply
Startup idea: Bitcoin wedding rings.
A beautiful gold ring with a private key engraved on the inside. Give your loved one the gift of BTC! Your commitment to each other, eternalized on the global blockchain.
Gentlemen may prefer blondes, but the modern woman prefers Bitcoin to carats of squeezed carbon. Status, store of value, it's all there.
(This is satire, but now I'm worried it will actually happen if the coinmania doesn't subside soon.)
[+] [-] qubex|8 years ago|reply
As for it being anti-fragile... meh... that’s to be ascertained. For sure so past it has benefited from volatility, but in the relatively short-term many things do. Only the long term will tell whether it will regress to the mean or not, and only a bunch of ’real’ crashes (massive liquidity events, as opposed to strong fluctuations in value with limited trade volumes) will tell us empirically what that ”long term” timeframe is.
(Yup, finance’s a pain for anybody trying to predict the future.)
[+] [-] SippinLean|8 years ago|reply
A MLM scheme is that: a scheme requiring a central actor to pay commissions. This is why Bitcoin and decentralized currency has never fit this definition.
You could say there are some abstract resemblances (BTC bagholders encourage others to buy) but this is just abstract and not specific enough to fit the definition.
We've seen people run Ponzis using BTC, we've seen ICOs structured as Ponzis. However "Bitcoin is a Ponzi/pyramid/MLM" will never be true; not literally at least.
[+] [-] cocktailpeanuts|8 years ago|reply
I think a lot of people make the mistake of using pattern matching to judge Bitcoin when they don't have enough patterns to work with. There are and were many financial products that could have worked (but failed because of corruption) or are working currently that most people who don't do a lot of financial investment aren't aware of.
That said, let me go through each of the comparisons you made:
> Its original bump in value come from a marketing campaign (even if with Diamond it was centralized and offline, and with BTC is decentralized and viral)
Diamond has a centralized cartel that does the marketing. Who do you think is doing the marketing for Bitcoin?
> Its scarcity is artificially controlled
Diamond's artificial scarcity is controlled by the cartel, just like OPEC controls oil.
Who do you think "controls" Bitcoin's scarcity?
> Its main use case is black market commerce (for one side of the argument) or money laundry (for the other side).
Nope. That's what you probably read a few years ago from some mainstream media.
[+] [-] api|8 years ago|reply
I am toying around with the wacky heresy that Karl Marx (not Lenin) was right. Capitalism will evolve into socialism.
It would be a form of socialism we haven't seen yet and that would have been technologically impossible in the past. Capitalism's role is to develop the technology, wealth, and infrastructure to enable it... as Marx said. Tech titans, startuppers, hackers, and VCs are in this view actually communist revolutionaries of a sort.
The new socialism would be fully decentralized, consensus based, anti-fragile, nameless, leaderless, borderless, and viral as hell. It would just take over by viral attrition. Later on historians would be like "wow, we now have a completely new social paradigm."
My read on Marx's original speculative idea was closer to that and quite far from the USSR. The USSR was like the ancient Egyptians deciding to build social media based on this vague wishy-washy futurist idea of what that is but without any of the tools or core innovations. They would have ended up with something that basically didn't work and in no way resembled Twitter, LinkedIn, or Facebook. Without the core enabling innovations they would not have been able to even imagine those, let alone build them. The apparatchiks and politburo of the USSR could not have imagined distributed consensus operating at global scale. The tools to even think about that didn't exist. They basically tried to force-fit the goals of socialism using the methods of fascism with predictably awful results.
I also think many capitalists of the Randian/libertarian school will see this as capitalism and not socialism since it will retain capitalist elements or at least entities and institutions that outwardly resemble them and fulfill the same functions. There will still be money, fund raising, capital gains, corporations in some form, etc. That's fine. Names don't matter. It will be nameless and formless.
Edit: I still see Bitcoin as version 0.1 alpha of something much more significant. I am more interested in what version 2.0, 3.0, or 4.0 might look like. I think Ethereum is version 0.5 beta. Version 1.0 will be something that somehow ditches the expensive boat-anchor of proof-of-work, resolves transactions a lot faster, and is way more secure and powerful.
I also do think Bitcoin at the moment is a bubble. Something being a major innovation and a bubble are not mutually exclusive. In fact most major innovations lead to bubbles when they first start climbing their hype/adoption curve.
[+] [-] mtgx|8 years ago|reply
People can put value in whatever they want. I don't think there's a real objective way to say "oh yeah, it's mathematically proven that a diamond ring should cost $10,000...or a $1,000,000 if it's say Marilyn Monroe's ring, and that a single Bitcoin should have a value of no more than $10."
[+] [-] ghostly_s|8 years ago|reply
[+] [-] namenotrequired|8 years ago|reply
Is it this one?
https://news.ycombinator.com/item?id=15816294
[+] [-] gist|8 years ago|reply
[+] [-] hoofish|8 years ago|reply
[+] [-] alexasmyths|8 years ago|reply
I'm trying to hire a PR firm for a project and I've come across a handful of firms that have been hired to promote BTC.
Think about that for a minute: if BTC is distributed - then who on earth is paying massive $$$ for PR firms to be hustling BTC in the press? Massive BTC owners - that's who.
Also problematic is so many in the press reporting on it have positions in BTC they are not disclosing (although this might be changing).
And every owner of BTC seems to be a willing (or unwitting) participant in the propagandization simply by commenting it up on the various boards and chats around the internet.
It's an amazing phenom - the intersection of cool tech, the internet - and age old ponzi/pyramid schemes.
And it has not even yet hit mainstream - most readers here might think BTC is 'old hat' but it takes a long time for things to hit mainstreet - and even after they hit mainstreet USA, it takes a while to hit 'mainstreet globally'. Remember: when all your friends were on Facebook? It tooks several years for 'everyone in the world' to be on it.
The barrier to growth is that it is quite tricky to buy - my Mother is on Facebook and she will never by BTC unless there are some real changes - though I can see a 3rd party creating a solution.
Do you know Glen Beck's scammy 'buy gold from us' commercials, where people buy gold in coin format basically at 20% above market value?
The 'buy Gold' phenom used to hustle gold does well among those 'end of the world / I don't trust the government types' - the same people who buy 'end of the world seeds' (from Glen Beck as well!) - and BTC fits in perfectly with this narrative.
So - get ready for 'Glenn Beck supported Bitcoin Wallet' - then it will get really big, possibly go global. And then, who knows.
So many interesting outcomes: if there is too much noise about it being used in organized crime I can see a Scandinavian country banning it, with talk of EU banning it ... the US could move quickly to do something. On some level - this will actually strengthen BTC among the 'anti government' crowd.
For it to lose price, there kind of has to be a systematic reason for it to do so - and kind of a panic. Once the press starts touting 'BTC Crash' - you can be sure it will happen - though there are enough massive, institutional holders that it won't likely go to zero.
I think it will be around for a long while though - my guess is that there is some kind of crash at some point, but not to zero, some governments clamp down, and then people over a long period of time just stop talking about it and using it.
[+] [-] keymone|8 years ago|reply
[+] [-] patrickaljord|8 years ago|reply
[+] [-] XR0CSWV3h3kZWg|8 years ago|reply
What I'd do instead is allow people to store random data to mint new MBseconds at a fractional rate and then the cost of a new contract is trivial. If you want someone to store 1GB for a day the cost of that is well known. The price of storage constantly drops, but the price of a deflationary good that is actually desired will continue to rise. This encurages contact churn.
If you want to have a token that scales with the value of the network/product then just create tokens that generate MBseconds proportional to the fees paid.
[+] [-] saas_co_de|8 years ago|reply
https://www.youtube.com/watch?v=0akBdQa55b4
[+] [-] notheguyouthink|8 years ago|reply
To me, IPFS aims to solve a completely different problem. IPFS does not exist because we don't have means to host and distribute files - that is a problem solved by a hundred different entities. IPFS, as advertised in many mediums (video/etc), is a platform to distribute data from a local-first P2P medium. Like Bittorrent, but without ever leaving the local network/etc. Eg, transferring a file/video/site to someone next to you would not download the data from across the world twice.
Has the marketing changed? Because all of the videos I watched on it from months ago were all about reducing global bandwidth usage, utilizing local and distributed sources of the data as much possible.
Why is everyone acting like IPFS is trying to solve file hosting?
[+] [-] atomashpolskiy|8 years ago|reply
[+] [-] detaro|8 years ago|reply
[+] [-] CalChris|8 years ago|reply
[+] [-] pmorici|8 years ago|reply
https://coinlist.co/filecoin
[+] [-] tromp|8 years ago|reply
> a total of $257 million – so far the biggest initial coin offering (ICO) as of today (September 2017).
This appears incorrect, as the Sales Summary on https://eosscan.io/ shows EOS having raised over $400 million by September (first 68 days).
[+] [-] ertand|8 years ago|reply
[+] [-] enderwilde|8 years ago|reply
The analysis rests on this ratio calculated for Airbnb: "Airbnb is valued today at approximately $31 billion while holding around 3 million listings in total. The average apartment in the United States was 934 square feet in 2016. In a hypothetical scenario, Airbnb is therefore valued at $11.06 per square feet. If one compares this number to the median price per square foot in the United States, which is $123, the Airbnb ecosystem diminishes the median price by a factor of 11.12."
I get this is back of the envelope so let's ignore the international dimension. The critical error in these calculations is the apples-to-apples comparison of the square feet of an Airbnb listing to a purchased square foot.
Basically - when someone pays $123 per square foot (median price in the U.S.) they are paying for the use of that space for an entire year. Said another way, they are paying $0.34 per day per square foot. Airbnb listings are not in general year-long, which means the same square foot of space is rented out over and over again throughout the year, adding revenues along the way. The 11.12 scaling factor is therefore off and too high. This leads the authors to apply an erroneous scaling factor to the Dropbox sizing to come up with an invalid valuation assessment for Filecoin.
It looks like a good average stay for an Airbnb property is about 5 days (https://blog.atairbnb.com/economic-impact-airbnb/). Let's also assume 50% occupancy rate (https://www.mashvisor.com/blog/what-airbnb-occupancy-rate-ca...).
That means an Airbnb listing is rented out about 37 times a year (365 / 5 days * 50%). The $11.06 per square foot times 37 revenue-generating occasions is $409.22 per square foot ($1.12/day/sq ft v. $0.34/day/sq ft for a purchase). So the correct apples-to-apples comparison here is to say that Airbnb increases the median price of the asset by a factor of 3.32. Aka Filecoin would need to deliver 2,580 petabytes - not 95,185. That's only 5x Dropbox, which is a minnow compared to S3 etc.
Why would that be? Most directly, because Airbnb allows the owners of the asset (sq ft in this case) to ask for a higher per day charge since the length of stay is shorter and thus the owner of the asset has more uncertainty over utilization - it's part of why 30 nights in a hotel costs much more than a month of rent. This is a well-understood economic dynamic and one that would apply to Filecoin storage miners given how miners using Filecoin could theoretically 'rent out' the same gigabyte over and over again to different buyers throughout the year - but also cover the risk of less than 100% annual utilization rates of their fixed-cost asset.
Honestly, reading this article made me more confident in the future of Filecoin. The authors highlight multiple times the better technical features than competition, proven dev team, and unwittingly call out why economically speaking owners of gigabytes under Filecoin could expect a higher return than if you were going to buy the gigabytes yourself for your own use.
Thoughts?
[+] [-] KasianFranks|8 years ago|reply
[+] [-] DaniFong|8 years ago|reply
[+] [-] _prometheus|8 years ago|reply
We think it's great that people ask hard questions, and get involved. It's great to see others studying our work and we really appreciate the open discourse. There are a few things from this article I’d like to address. (Despite the length of this post...) these are quick comments, and not a proper in-depth response.
- (a) The article gets some things right and some things wrong -- there is good summarizing of several of our projects, and discussion of many difficult aspects in these projects. The article discusses many technological aspects in good depth, and highlights difficulties in building these systems, aligning incentives, and the trials of past projects. The article also has significant inaccuracies. For example, the sale figure -- which appears in the title and impacts the analysis -- is incorrect. We raised $205M -- officially here: https://protocol.ai/blog/filecoin-sale-completed/
- (b) The authors chose a provocative title. As some commenters have already pointed out, the conclusion is “[we] believe that it is not one.” Despite Betteridge’s law ( https://en.wikipedia.org/wiki/Betteridge's_law_of_headlines ), many people who only read the headline will come to the opposite conclusion, and now we (not they) will have the burden of correcting those misunderstandings. Provocative titles, though they may drive imagination and clicks, can do a huge disservice to everyone in the space, and contribute to misinformation. Most people will only read the title, maybe the abstract, and use that to form and drive opinions. We choose titles of our research with diligence and care, and hope others do the same.
- (c) The article has a great technical overview of the Filecoin stack, and how it fits with IPFS and libp2p. This is a large structure with many pieces, and it is rare to see articles grasping how all the pieces fit together so well, and then explaining it cogently. In particular, it’s great to see this article diving deep and discussing advantages and disadvantages of low level technical structures (multihash, ipld, libp2p, and more). We modularized everything in the hope to generally improve peer-to-peer systems, and improve reusability. We hope these components will be useful to the author’s Tribler project (a network similar in goals to Filecoin), and we hope that we can also learn from and leverage solutions they have made.
- (d) many of the objectionable things described in this article are common in ICOs in general. Put another way, consider those claims also in terms of other significant token sales, such as Ethereum, Tezos, Polkadot, Blockstack, Cosmos, Golem. People were saying similar things about Ethereum when they did their sale in 2014. Perhaps worth doing a survey / analysis over all of them, comparing and contrasting the different things groups have done, how the ecosystem has improved, and suggest new directions.
- (e) It’s worth mentioning that the analysis gives a definition of a ponzi scheme, but their discussion does not map to that definition. Instead, the discussion centers on claims about future investor sentiment or speculation as the driver of value in the token, which is not the only way to establish value in token networks, and ignores the value of the services provided. That kind of analysis does not work for projects like Ethereum and other live and functioning crypto tokens. If the network is useful, and there is a way to generate or introduce value, by providing new or better services, and if the network can capture that value in the token itself (important step), then the tokens can hold value, based on the utility of the network as a service and not just or primarily speculation. Networks like Ethereum, Bitcoin, Zcash, and Filecoin aim to provide useful services, and much of the value stored in their tokens will be thanks to the utility of the networks.
Perhaps it’s worth pointing out that most crypto token projects are compared to ponzi schemes at some point :(
- (f) The article discusses the SAFT and assurances to investors, but does not discuss them in contexts of other token sales and ICOs. Most ICOs are structured as donations (not investments) to a project, with little to no legal recourse -- even though many people refer to these “donations” as being “investments”. In our case, we raised investment through an instrument (the SAFT) that is a direct liability to us, and gives investors greater guarantees on the completion of the project, or consequences otherwise. If we fail to deliver the network, we must return the proceeds of the token sale. Few token sales ever have such a clause. Our structure gives investors greater accountability, not less. The article discusses this in sec IV, but does not take into account that startups are similarly risky (i.e. that startup dissolution events return only remaining capital from the efforts), and does not mention how our structure improves on the ICO landscape in general.- (g) We do share the legitimate concern that ICOs need stronger accountability, and some are structured in a way that leads to abuse. The community as a whole needs to raise the bar on accountability and ethical behavior. We have taken significant steps in this direction, not just in our sale but to improve the ecosystem -- the SAFT project, which was a gargantuan undertaking that many other networks are now using, is one example. Many other networks are introducing and improving structures. We believe token networks present a very important new way to form capital, with promising advantages to users, investors, and creators, but the space is still in its infancy, and significant changes are still ahead. Token sales have improved dramatically in the last three years, and we hope they continue to improve to find the right balance and protection of the interests of all parties involved with the network.
Thanks, Juan
[+] [-] unknown|8 years ago|reply
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[+] [-] brndnmtthws|8 years ago|reply
[+] [-] j_s|8 years ago|reply
[+] [-] chvid|8 years ago|reply
[+] [-] SippinLean|8 years ago|reply
Neither Bitcoin nor Ethereum have a central operator generating returns for older investors by disproportionately funneling revenue paid by new investors to them. When the price rises, new and old investors profit equally. You could use BTC as a currency in a Ponzi, Bitcoin being a Ponzi would be impossible by definition.
[+] [-] taoistextremist|8 years ago|reply
[+] [-] alexasmyths|8 years ago|reply