> Venmo is a free service to transfer dollars, and bitcoin transfers are not free
Venmo is not free. There's a cost, it's just hiding.
> Blockchain-based trustworthiness falls apart in practice...
The particular brand of trustworthiness the author is arguing against is indeed a myth, but that doesn't mean blockchain is "crappy technology" or "a bad vision for the future"
Blockchain adds a new thing to the world: digital property that cannot be reproduced for free.
Smart contracts add another new thing to the world: the ability to build immutable software that interacts directly with the financial system.
Both of these ideas are very powerful, and almost all of the interesting blockchain projects are still in the R&D phase.
The hype around blockchain is ridiculous and absurd, but that doesn't mean the technology isn't exciting or potentially transformative.
Only if you opt into the particular set of constraints that define what that property is (as set forth in the base of protocol code most commonly used to define it).
If you don't, as innumerable forks of Bitcoin have demonstrated, you certainly can reproduce it for free. I suspect there is a hypothesis of "property" at work here that is being subject to some very privileged and Protean interpretations.
Seems to me that there's this bipolar relationship with blockchain, and now that the manic period is over, we're going into depression. Instead of being this magic solution to all these problems, now it's some hideous failure, and I think both viewpoints don't really see blockchain for what it is.
If you're a journalist, now is the time to be extremely critical of blockchain and cryptocurrencies if you want some easy popularity.
Blockchain is actually a technological shadow cast by a sociological proposition, which is then you can trust people to voluntarily deprive themselves of leverage for the sake of the greater good.
Blockchain is essentially a tool for measuring how much leverage different nodes have in a network system. All of the functional premises of blockchain depend on the assumption that the only leverage that exists in a blockchain network is that which can be represented by the various metrics exposed by the protocol. Obviously this is not the case, networks are often stacked with multiple layers, not all of which are visible to instrumentation, and many are deliberately hidden or informally created as the opportunity arises. Cliques form, whether by design or merely as a consequence of some underlying structure or geometric boundary domain, influence builds around them, and sooner or later someone finds the ideal geometric position from which they can become the center of decentralisation.
This is essentially another instance of goodhart's law, which states that the moment any given metric becomes a useful target for optimization, it ceases to be a useful measurement. Or another variation of this same observation, the McNamara fallacy, which can be summed up as the belief that the only factors in a system that count, are those that can be counted.
The problem that proof-of-work blockchain solves is widely misunderstood. It uses proof-of-work to establish consensus over points in time which are universally unique. Prior to the publication of Satoshi's paper we did not have a solution to this problem and for that reason it is a significant advance in technology. I wouldn't call it crappy, it's actually quite brilliant.
> I wouldn't call it crappy, it's actually quite brilliant.
I agree with you, I always thought that the Bitcoin algorithm was very clever and "mind opening" in a way. It's one of these things I'd never have thought about but almost seems obvious in hindsight. What's even more interesting is that basically all of it is pre-existing technology: HashCash, ECC, Merkle trees etc... Just combined together in a clever way to create something that's more than the sum of their parts.
Now where I become a naysayer is when we switch from the realm of intellectual curiosity and into the world of cryptocurrencies today. Being clever and innovative doesn't necessarily mean useful or valuable. We have plenty of clever ideas out there that don't have much of a practical use (or used to have one but are now obsolete). Duff's Device, sleep sort, the fast inverse square root, one instruction set computers, code golf and 4KB demos ...
I think I do understand the technological value of Bitcoin's PoW blockchain, I just think that its only practical use is for a tiny niche. It's the Prolog of consensus algorithms, I'm sure it'll be useful to some but I doubt it's going to be the new C++. You say that "It uses proof-of-work to establish consensus over points in time which are universally unique" and it's true but how useful or valuable is that? Is it such a huge problem in our modern society to agree on a sequence of events? Do you often program something and think "man, I wish that there was a way to establish a consensus over points in time which are universally unique" and 1/ there's no other simpler solution to achieve that and 2/ a blockchain could actually solve it? There's only a tiny gap between these two propositions.
But I think at this point talk is cheap and all that needs to be said about the blockchain has been said long ago and multiple times. How many billion of dollars has been poured into "blockchain" technology these past few years, in the form of pre-mined coins or ICOs? How many hundreds of engineers are working on those killer blockchain applications? How many high profile companies have boldly announced blockchain-related tech investments lately? So.... where are the results? How long do we wait for them until we decide that maybe it's not that revolutionary?
> It uses proof-of-work to establish consensus over points in time which are universally unique.
Did we really?
BTC vs BCH, Ethereum vs Ethereum Classic. Sigwitx2.
These hardforks technically break established consensus and rely upon social means (hey everyone: switch algorithms right now!!) to stay in order. At the end of the day, it seems to me that the "blockchain" is only as strong as the community's resolve to work together.
As far as I can tell, Bitcoin is turning into a governance structure. The current power players are the devs, who most people trust (and I see no reason not to trust them). And the social structure is organized on Github and forums.
> I wouldn't call it crappy, it's actually quite brilliant.
The New Oxford American Dictionary defines technology as "the application of scientific knowledge for practical purposes". If the application does not fulfill the purpose, the technology is crappy, regardless of how brilliant the science behind it is. The author is not saying that the science is crappy but that the technology -- i.e. the application for the practical purpose -- is.
In many ways, blockchain tech is the stupidest thing that has ever existed. It is a colossal monument to the inefficiency of human behavior. You are literally throwing energy and immensely valuable computation time out of a window simply because people can't trust each other. It is a massive sink for the destructively self-interested behavior of mankind. The problems that blockchains are trying to solve are not inherent difficulties involved in the tasks that they're being applied towards, they're problems with us. We can design an astronomically more efficient system for accounting, but it would be have to be one that is not being run by stupid, short-sighted apes. The entire overhead of the blockchain is devoted to dealing with a problem that we shouldn't even have, the whole thing is basically made of market failure. If there's any value in it, it's that we can use it to establish objective metrics for just how much value is destroyed by human irrationality and information deficits. We don't need to fix centralized accounting, centralized accounting works fine. We need to fix human beings.
Meanwhile, imagine if every GPU used for mining right now was being used for training neural nets instead. The value in that is nearly unimaginable; we could be making massive leaps in almost every field and industry, because the applications of deep learning to making tasks marginally more efficient are essentially endless.
>Directly working with companies to solve their problems
or
>Writing something open ended so other companies can develop their own uses
>Get paid with supporting software
>Big cost increase because of miners
I completely understand Bitcoin and currencies. But I think most blockchain is going to be bad for the environment and not needed. Centralized servers are superior for most uses.
FYI: when you talk about GPU/mining/energy, you are talking about Proof of Work (pow) and not blockchain. You can look up about Proof of Stake among other ways for consensus
I am perplexed. If I wanted to, say, record licenses for a piece of software and enable people to transfer the licenses to others, why wouldn't a blockchain ledger be the perfect solution? Sure I could require them to physically buy a disc and then have them physically give the disc to a person they want to transfer it to, and it's just overcoming our human limitation of being meat-based creatures that exist in physical space that is particularly difficult to move through... but what's wrong with that? Every technology exists to overcome human limitations.
Technology serves human beings, human beings do not serve technology. Human beings are messy and unreliable. Making them non-messy and reliable would make them not human.
Gotta love how he begins saying he was bashing the tech in December(when the market was on the rise) just so that no one can tell him "everyone bashes bitcoin when it's going down".
Venmo is centralized. I cannot use it as I live in a third world county with no access to it.
Paypal sucks. It takes 5% from the seller and it has power over your money, they can(AND HAVE IN THE PAST) seize it whenever they want.
I had my salary confiscated once over a mistake in the bank. I telecomute, working for a company overseas, and the fees are stupidly high.
"Instead of relying on trust or regulation, in the blockchain world, individuals are on-purpose responsible for their own security precautions. And if the software they use is malicious or buggy, they should have read the software more carefully."
This is also one of the aspects of "the blockchain" that I struggle with. I don't think normal people want this or should be expected to do this effectively. And once you outsource the security (which most everyone will because it's the rational choice, e.g. Coinbase is better at protecting your crypto than you are, John Q Public.) you're no longer in a "trustless" state. The "trustless" pipe-dream (in the consumer use case) all sort of unravels from there for me.
FWIW, my position in the world is protecting vulnerable seniors and people with special needs from fraud. So part of my view that this isn't a better recipe for trust is coming from that perspective - just imagine telling a person with alzheimer's that their life savings are gone and it's their own fault for downloading a virus…
I don't think that many users would store their tokens locally. I believe the trust aspect is that YOU have a choice where as currently you may not (if you think globally).
You could think of it like hosting your own email server.
> And once you outsource the security you're no longer in a "trustless" state. The "trustless" pipe-dream (in the consumer use case) all sort of unravels from there for me.
I think the conclusion doesn't follow. An analogous solution is that traditional public-key cryptography (e.g. as implemented in TLS) is supposed to be trustless, but I haven't personally audited or even read any of the relevant code (e.g. TLS), so I'm "not in a trustless state". It doesn't follow that TLS is useless for me.
I think that putting some responsibility for security on the user is a good idea. All too often users are lax with security and don't realise the impact that has, say when their credentials are used to access a system illegally because they used the password "password", or poor security on their own PC sees it become part of a botnet. If you don't take security seriously when dealing with cryptocurrency then you can be taught a very personal and expensive lesson in no time at all.
One thing is sure, if you're hanging on to the past you'll always lose in the end.
That's not to say blockchain is the be all and end all, but constantly hunting for arguments why something will never work , is not only terribly boring, but IMO the most counterproductive way to look at anything.
Wow--it's both amazing to me and yet deeply unsurprising that the comments here so far seem to ignore the thrust of the article. Well, whatever--I like how it makes explicit the political theses embedded in current discussion of an "apolitical" technology.
I think the author of this article is making an either/or argument about centralized vs. decentralized trust when this can just as easily be a both/and proposition.
Cryptocurrencies have not yet eliminated and may never eliminate the need for centralized reputation based systems of trust. Centralized trusted systems are more efficient for reasons that may be fundamental and rooted in physics and math, and they can do things that no current generation decentralized system can do. Complex secure computations that are cheap to perform on a server are massively expensive on a block chain or other distributed system.
Yet what cryptocurrencies do offer is a system that levels the playing field between trusted entities and allows a once-trusted but now corrupt entity to be replaced without completely ditching the entire system. That's not true of things like centrally banked fiat currencies. If the current US financial system becomes irredeemably corrupt, this can't really be fixed without risking the destruction of the dollar and all assets and contracts denominated in dollars. A new dark age is a very high price to pay for the replacement of a corrupt or incompetent system.
I think an argument can be made that replacement of institutions will always be necessary at some point. As institutions become large their size insulates them from reality, allowing something like "genetic drift" to occur that gradually erodes their competence. Combine this with the fact that psychopaths gravitate toward positions of power and you have a general tendency of large powerful systems toward decay and corruption over time.
We saw a very concrete example of this in 2008 when banking institutions that had failed badly due to a mixture of incompetence, hubris, and corruption received a blank-check bailout on the backs of taxpayers and the rest of the non-financial economy. It is no coincidence that cryptocurrency went mainstream right after this, since these events demonstrated the need to start thinking about ways to devolve power away from these systems or at least to reduce the cost of doing so.
> I would assert that there is no single person in existence who had a problem they wanted to solve, discovered that an available blockchain solution was the best way to solve it
What about Wikileaks? They had all their payments shutdown and then they were able to start accepting payments.
The "use case" for Bitcoin was stated up front. It is to allow censorship resistant transactions. And for Wikileaks in 2010, when their financial transactions were being censored, it worked!
Blockchain is perfect for its original use case, a distributed trustless database. The tradeoffs don't make any sense for a trusted system, i.e. replacing SWIFT or storing titles to property.
All the evidence to date suggests that banks are much more capable of providing useful financial services than blockchains. Can you give a counter example of a real world use?
This article highlight a really interesting point here:
Trust.
And even if there are the “proof-of-work” people are going to distrust that “it’s a mathematical proof”. Just look at Trumps alt-facts and “fake news”. You don’t need to go even that far to find people putting money under the mattress because they distrust authorities. And even if math is “universal” people are going to mistrust it because they don’t understand it. I don’t think they will ever trust bitcoin. And I think they are in a majority.
And when the mattresses are being stuffed with fiat currency, the utter lack of cognitive dissonance becomes striking. To a lesser degree, the same goes for "keep the government out of my Medicare".
>In fact, I would assert that there is no single person in existence who had a problem they wanted to solve, discovered that an available blockchain solution was the best way to solve it, and therefore became a blockchain enthusiast.
I would say that every person running a darkweb drug market would disagree...
I'm seeing more of these "anti-blockchain" criticisms circulating lately. This one makes valid points about problems with the present state of the ecosystem, but the author seems to ignore the fact that these problems are addressable.
His basic criticism of smart contracts is they can have bugs, and they can be costly since they will often involve moving money. Yes, this is a fact. Many potential solutions are out there, but how about these two ideas for starters:
- a crypto-currency where at least accounts for certain transactions can be de-anonymized, so a person can be identified and face consequences when they commit a crime like hacking.
- special transactions with settlement periods in which they can be canceled in the event of a hack, which might be identified by voter consensus.
I honestly thought the author was trolling us (until I read the comments). There are so many holes in his example of ebook transaction. Here's just the two points he made that were the most egregious to me:
>> and that the book — rather than some other file, or nothing at all — will actually arrive
Really? Ever heard of checksums - its used all over the place. And if we weren't able to trust it, I guarantee you that blockchain tech is not the only thing that will break.
>> It’s a complicated way to buy a book! It’s not trustless, you’re trusting in the software (and your ability to defend yourself in a software-driven world), instead of trusting other people
It's like arguing with my grandma about evolution. "But you are trusting the scientists!!". I don't know where to begin.
How are you supposed to checksum the book before you have it? You can't do that without trust, because you need to trust someone to give you the right checksum.
I read the bitcoin whitepaper about 7 years ago. I find it funny when people talk about blockchain like it's new technology, or like it's a vision for future. It's old tech that has been generally increasing in market value.
Blockchain consensus algorithms are slow and use a lot of power. There may be competing technologies, like Hashgraph, that solve speed and power usage issues in the future. As of now all live implementations of blockchain are underwhelming.
As someone born and lived in a 3rd world country for a better part of my life, I believe Blockchain solves a very real problem. That's equal participation in internet economy irrespective of someone's geographic location.
It was thanks to the internet I realized I can also contribute to the world (by creating something people want & writing about something others want to learn). However, when it came to making a living out of that there weren't many options. One of the prime motives for me to move out of Sri Lanka was it will be way easier for me to accept payments online.
PayPal is still not available in Sri Lanka, even after repeated attempts to convince Central Banks and governments [1]. Also, recently Stripe blocked a payment from one of my customers due to high-risk profile. Reason? He used a US issued debit card from Nigeria. I reached out to the person, turns out he was a passionate young entrepreneur who was trying to build a really interesting business. But his geographic location becomes a resistance in a medium it shouldn't.
For me, Blockchain( and Cryptocurrencies) is a reframing of the trust model from heuristics such as geographic location to verifiable algorithms. The Internet protocols enabled us to exchange code, art & virtual goods without geographic boundaries. Then why not money?
Blockchains are accounting mechanisms. In their simplest form, blockchains are just a linked list of linked lists that that fulfill the requirements of an easily immutable, distributed and auditable system of accounts.
I'm not sure how the author is attributing so much doom and gloom to cryptographically secured accounting systems, some of which have survived for a decade without a major failure of their primary function (securing digital assets with enforceable contractual conditions and private keys).
> I would assert that there is no single person in existence who had a problem they wanted to solve, discovered that an available blockchain solution was the best way to solve it, and therefore became a blockchain enthusiast.
He hasn't been paying attention to the space long enough: Many traders in contraband meet that description, and used to talk about it at length in r/darknetmarkets, before it was banned. (BTW, does anyone know where they hang out, now?)
[+] [-] cowpig|8 years ago|reply
Venmo is not free. There's a cost, it's just hiding.
> Blockchain-based trustworthiness falls apart in practice...
The particular brand of trustworthiness the author is arguing against is indeed a myth, but that doesn't mean blockchain is "crappy technology" or "a bad vision for the future"
Blockchain adds a new thing to the world: digital property that cannot be reproduced for free.
Smart contracts add another new thing to the world: the ability to build immutable software that interacts directly with the financial system.
Both of these ideas are very powerful, and almost all of the interesting blockchain projects are still in the R&D phase.
The hype around blockchain is ridiculous and absurd, but that doesn't mean the technology isn't exciting or potentially transformative.
edit: I actually wrote an article about the "trustlessness" thing: http://cowpig.github.io/bitcoin/ethereum/poker/cryptocurrenc...
[+] [-] spookthesunset|8 years ago|reply
Sure, all through the magic of using a medium sized country's worth of electricity....
> Smart contracts add another new thing to the world: the ability to build immutable software that interacts directly with the financial system.
"Immutable" as in "immutable up until the folks at the top decide to alter history to benefit themselves financially". See also - Ethereum & The DAO.
> and almost all of the interesting blockchain projects are still in the R&D phase.
Bitcoin is more than 10 years old. It is a mature tech that is still in search of a problem.
[+] [-] tCfD|8 years ago|reply
Only if you opt into the particular set of constraints that define what that property is (as set forth in the base of protocol code most commonly used to define it).
If you don't, as innumerable forks of Bitcoin have demonstrated, you certainly can reproduce it for free. I suspect there is a hypothesis of "property" at work here that is being subject to some very privileged and Protean interpretations.
[+] [-] calibas|8 years ago|reply
If you're a journalist, now is the time to be extremely critical of blockchain and cryptocurrencies if you want some easy popularity.
[+] [-] landryraccoon|8 years ago|reply
What's that now?
[+] [-] tCfD|8 years ago|reply
Blockchain is essentially a tool for measuring how much leverage different nodes have in a network system. All of the functional premises of blockchain depend on the assumption that the only leverage that exists in a blockchain network is that which can be represented by the various metrics exposed by the protocol. Obviously this is not the case, networks are often stacked with multiple layers, not all of which are visible to instrumentation, and many are deliberately hidden or informally created as the opportunity arises. Cliques form, whether by design or merely as a consequence of some underlying structure or geometric boundary domain, influence builds around them, and sooner or later someone finds the ideal geometric position from which they can become the center of decentralisation.
This is essentially another instance of goodhart's law, which states that the moment any given metric becomes a useful target for optimization, it ceases to be a useful measurement. Or another variation of this same observation, the McNamara fallacy, which can be summed up as the belief that the only factors in a system that count, are those that can be counted.
[+] [-] gtrubetskoy|8 years ago|reply
For a detailed description see this: https://grisha.org/blog/2018/01/23/explaining-proof-of-work/
[+] [-] simias|8 years ago|reply
I agree with you, I always thought that the Bitcoin algorithm was very clever and "mind opening" in a way. It's one of these things I'd never have thought about but almost seems obvious in hindsight. What's even more interesting is that basically all of it is pre-existing technology: HashCash, ECC, Merkle trees etc... Just combined together in a clever way to create something that's more than the sum of their parts.
Now where I become a naysayer is when we switch from the realm of intellectual curiosity and into the world of cryptocurrencies today. Being clever and innovative doesn't necessarily mean useful or valuable. We have plenty of clever ideas out there that don't have much of a practical use (or used to have one but are now obsolete). Duff's Device, sleep sort, the fast inverse square root, one instruction set computers, code golf and 4KB demos ...
I think I do understand the technological value of Bitcoin's PoW blockchain, I just think that its only practical use is for a tiny niche. It's the Prolog of consensus algorithms, I'm sure it'll be useful to some but I doubt it's going to be the new C++. You say that "It uses proof-of-work to establish consensus over points in time which are universally unique" and it's true but how useful or valuable is that? Is it such a huge problem in our modern society to agree on a sequence of events? Do you often program something and think "man, I wish that there was a way to establish a consensus over points in time which are universally unique" and 1/ there's no other simpler solution to achieve that and 2/ a blockchain could actually solve it? There's only a tiny gap between these two propositions.
But I think at this point talk is cheap and all that needs to be said about the blockchain has been said long ago and multiple times. How many billion of dollars has been poured into "blockchain" technology these past few years, in the form of pre-mined coins or ICOs? How many hundreds of engineers are working on those killer blockchain applications? How many high profile companies have boldly announced blockchain-related tech investments lately? So.... where are the results? How long do we wait for them until we decide that maybe it's not that revolutionary?
[+] [-] monochromatic|8 years ago|reply
[+] [-] dragontamer|8 years ago|reply
Did we really?
BTC vs BCH, Ethereum vs Ethereum Classic. Sigwitx2.
These hardforks technically break established consensus and rely upon social means (hey everyone: switch algorithms right now!!) to stay in order. At the end of the day, it seems to me that the "blockchain" is only as strong as the community's resolve to work together.
As far as I can tell, Bitcoin is turning into a governance structure. The current power players are the devs, who most people trust (and I see no reason not to trust them). And the social structure is organized on Github and forums.
[+] [-] pron|8 years ago|reply
The New Oxford American Dictionary defines technology as "the application of scientific knowledge for practical purposes". If the application does not fulfill the purpose, the technology is crappy, regardless of how brilliant the science behind it is. The author is not saying that the science is crappy but that the technology -- i.e. the application for the practical purpose -- is.
[+] [-] 411mrc|8 years ago|reply
http://satoshi.nakamotoinstitute.org/emails/cryptography/11/
The magical thing is that you can actually know that the distributed system is consistent by how much work was performed.
[+] [-] holtalanm|8 years ago|reply
what was the problem that this solved, exactly?
[+] [-] aalleavitch|8 years ago|reply
Meanwhile, imagine if every GPU used for mining right now was being used for training neural nets instead. The value in that is nearly unimaginable; we could be making massive leaps in almost every field and industry, because the applications of deep learning to making tasks marginally more efficient are essentially endless.
[+] [-] klibertp|8 years ago|reply
I admire your optimism. Meanwhile, we have quite a few millennia of trying and failing in this, so I'd rather try fixing the system instead.
> Meanwhile, imagine if every GPU used for mining right now was being used for training neural nets instead
With what, MNIST? For the billionth time?
ML and the current incarnation of AI don't need more CPUs, they need more data and better algorithms.
[+] [-] mkirklions|8 years ago|reply
If you were a logistics company would you rather-
>Total control of fees and servers
>Directly working with companies to solve their problems
or
>Writing something open ended so other companies can develop their own uses
>Get paid with supporting software
>Big cost increase because of miners
I completely understand Bitcoin and currencies. But I think most blockchain is going to be bad for the environment and not needed. Centralized servers are superior for most uses.
[+] [-] mido22|8 years ago|reply
[+] [-] clarkmoody|8 years ago|reply
As a non-utopian, I understand that human beings cannot be "fixed." Thus, we must create systems that cannot be corrupted by humans.
Creating a money outside of state control may be the smartest thing that humanity ever does. We'll need maybe a century to see how it plays out.
That said, most of the blockchain projects out there are scams. If your project can run on a centralized database, then you don't need a blockchain.
[+] [-] otakucode|8 years ago|reply
Technology serves human beings, human beings do not serve technology. Human beings are messy and unreliable. Making them non-messy and reliable would make them not human.
[+] [-] phasnox|8 years ago|reply
Venmo is centralized. I cannot use it as I live in a third world county with no access to it.
Paypal sucks. It takes 5% from the seller and it has power over your money, they can(AND HAVE IN THE PAST) seize it whenever they want.
I had my salary confiscated once over a mistake in the bank. I telecomute, working for a company overseas, and the fees are stupidly high.
I find your lack of vision disturbing.
[+] [-] localhost3000|8 years ago|reply
This is also one of the aspects of "the blockchain" that I struggle with. I don't think normal people want this or should be expected to do this effectively. And once you outsource the security (which most everyone will because it's the rational choice, e.g. Coinbase is better at protecting your crypto than you are, John Q Public.) you're no longer in a "trustless" state. The "trustless" pipe-dream (in the consumer use case) all sort of unravels from there for me.
[+] [-] kaistinchcombe|8 years ago|reply
[+] [-] CraigRood|8 years ago|reply
[+] [-] zodiac|8 years ago|reply
I think the conclusion doesn't follow. An analogous solution is that traditional public-key cryptography (e.g. as implemented in TLS) is supposed to be trustless, but I haven't personally audited or even read any of the relevant code (e.g. TLS), so I'm "not in a trustless state". It doesn't follow that TLS is useless for me.
[+] [-] celticninja|8 years ago|reply
[+] [-] tCfD|8 years ago|reply
[+] [-] ghthor|8 years ago|reply
[+] [-] kaolti|8 years ago|reply
That's not to say blockchain is the be all and end all, but constantly hunting for arguments why something will never work , is not only terribly boring, but IMO the most counterproductive way to look at anything.
[+] [-] kixiQu|8 years ago|reply
[+] [-] api|8 years ago|reply
Cryptocurrencies have not yet eliminated and may never eliminate the need for centralized reputation based systems of trust. Centralized trusted systems are more efficient for reasons that may be fundamental and rooted in physics and math, and they can do things that no current generation decentralized system can do. Complex secure computations that are cheap to perform on a server are massively expensive on a block chain or other distributed system.
Yet what cryptocurrencies do offer is a system that levels the playing field between trusted entities and allows a once-trusted but now corrupt entity to be replaced without completely ditching the entire system. That's not true of things like centrally banked fiat currencies. If the current US financial system becomes irredeemably corrupt, this can't really be fixed without risking the destruction of the dollar and all assets and contracts denominated in dollars. A new dark age is a very high price to pay for the replacement of a corrupt or incompetent system.
I think an argument can be made that replacement of institutions will always be necessary at some point. As institutions become large their size insulates them from reality, allowing something like "genetic drift" to occur that gradually erodes their competence. Combine this with the fact that psychopaths gravitate toward positions of power and you have a general tendency of large powerful systems toward decay and corruption over time.
We saw a very concrete example of this in 2008 when banking institutions that had failed badly due to a mixture of incompetence, hubris, and corruption received a blank-check bailout on the backs of taxpayers and the rest of the non-financial economy. It is no coincidence that cryptocurrency went mainstream right after this, since these events demonstrated the need to start thinking about ways to devolve power away from these systems or at least to reduce the cost of doing so.
Side note: I think we've officially entered the cryptocurrency / block chain trough of disillusionment. See: https://en.wikipedia.org/wiki/Hype_cycle
[+] [-] stale2002|8 years ago|reply
What about Wikileaks? They had all their payments shutdown and then they were able to start accepting payments.
The "use case" for Bitcoin was stated up front. It is to allow censorship resistant transactions. And for Wikileaks in 2010, when their financial transactions were being censored, it worked!
[+] [-] ty_a|8 years ago|reply
[+] [-] jeremyjh|8 years ago|reply
[+] [-] he0001|8 years ago|reply
Trust.
And even if there are the “proof-of-work” people are going to distrust that “it’s a mathematical proof”. Just look at Trumps alt-facts and “fake news”. You don’t need to go even that far to find people putting money under the mattress because they distrust authorities. And even if math is “universal” people are going to mistrust it because they don’t understand it. I don’t think they will ever trust bitcoin. And I think they are in a majority.
[+] [-] webmaven|8 years ago|reply
[+] [-] RIMR|8 years ago|reply
I would say that every person running a darkweb drug market would disagree...
[+] [-] antiffan|8 years ago|reply
His basic criticism of smart contracts is they can have bugs, and they can be costly since they will often involve moving money. Yes, this is a fact. Many potential solutions are out there, but how about these two ideas for starters:
- a crypto-currency where at least accounts for certain transactions can be de-anonymized, so a person can be identified and face consequences when they commit a crime like hacking.
- special transactions with settlement periods in which they can be canceled in the event of a hack, which might be identified by voter consensus.
[+] [-] l8again|8 years ago|reply
>> and that the book — rather than some other file, or nothing at all — will actually arrive
Really? Ever heard of checksums - its used all over the place. And if we weren't able to trust it, I guarantee you that blockchain tech is not the only thing that will break.
>> It’s a complicated way to buy a book! It’s not trustless, you’re trusting in the software (and your ability to defend yourself in a software-driven world), instead of trusting other people
It's like arguing with my grandma about evolution. "But you are trusting the scientists!!". I don't know where to begin.
[+] [-] eridius|8 years ago|reply
[+] [-] lev99|8 years ago|reply
[+] [-] atomical|8 years ago|reply
[+] [-] laktek|8 years ago|reply
PayPal is still not available in Sri Lanka, even after repeated attempts to convince Central Banks and governments [1]. Also, recently Stripe blocked a payment from one of my customers due to high-risk profile. Reason? He used a US issued debit card from Nigeria. I reached out to the person, turns out he was a passionate young entrepreneur who was trying to build a really interesting business. But his geographic location becomes a resistance in a medium it shouldn't.
For me, Blockchain( and Cryptocurrencies) is a reframing of the trust model from heuristics such as geographic location to verifiable algorithms. The Internet protocols enabled us to exchange code, art & virtual goods without geographic boundaries. Then why not money?
[1] https://www.change.org/p/enable-receiving-money-to-sri-lanka...
[+] [-] ecocentrik|8 years ago|reply
I'm not sure how the author is attributing so much doom and gloom to cryptographically secured accounting systems, some of which have survived for a decade without a major failure of their primary function (securing digital assets with enforceable contractual conditions and private keys).
[+] [-] AlexCoventry|8 years ago|reply
He hasn't been paying attention to the space long enough: Many traders in contraband meet that description, and used to talk about it at length in r/darknetmarkets, before it was banned. (BTW, does anyone know where they hang out, now?)