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Bitcoin's Shared Ledger Technology: Money's New Operating System

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Re: Bitcoin's Shared Ledger Technology: Money's New Operating System

#41

Post by vectorpush »

Bitcoin and blockchain enthusiasts have been claiming that bitcoin (or etherum) is going to take the world by storm any day now, yet all I ever see anywhere are big claims (revolutionizing payments, disrupting remittance, ending wars, freeing the people, destroying the banks etc, ad nauseam) with very little substance and lots of scams, frauds and dead-end ventures. Dark markets, internet gambling and a handful of other novelty and niche communities can extract genuine utility from bitcoin, and that should continue into the foreseeable future, but the general population just has no use for it. None. Despite all the hand wringing about having to endure the treachery of big banks, pull style payments, and entering long credit card numbers, bitcoin is still harder to use, even harder to keep secure, and without any guarantees, assurances or consumer protections. Bitcoin is an interesting novelty at best, and everyone knows it, even many bitcoin enthusiasts.

Now, in recent months, we're suddenly hit with a bevy of stories about big name financial brands and famous VCs pouring cash and research into the blockchain, and just like that, the goalposts have shifted. This is what we've all been waiting for; this is what will really bring bitcoin into the mainstream, there has to be something big here when you look at all the colossal mountains of cash that have been dumped into the bitcoinverse... yet somehow, we're still at a loss as to exactly how the "x but with blockchains" formula is meant to revolutionize everything. If the 100 million dollar investment into 21inc's vision of putting a bitcoin miner in every refrigerator is any indication of what we're to expect from all this investor cash, I think we can safely assume that what we're witnessing is simply the hyperbolic bitcoin hype machine functioning within normal parameters.

Of course, I'm probably just an idiot who doesn't "get" bitcoin, it's pretty difficult to understand, since even after all these years I just can't grasp the amazing potential of bitcoin. What other explanation could there be?

Re: Bitcoin's Shared Ledger Technology: Money's New Operating System

#42

Post by kolbe »

Kinnard wrote: post #28
kolbe wrote: post #4

One of two things: I either do not understand Wall Street's obsession with blockchainesque technologies, or Wall Street's obsession with it is totally emblematic of their buzzword-obsessed technology-ignorant groupthink that fried the tech industry in the late 90's. I'm seeing companies like this pop up all over the place. Blythe Masters's new venture[1], which made the cover of this month's Bloomberg Business, seems…

>"Bitcoin technologies solved some very important problems in the creation of currencies: double spending, decentralization, cost distribution, &c. These are not problems that need to be solved in securities trading. One company running on one platform doesn't have a double spendng problem. Decentralization is irrelevant. And cost is no issue." You're thinking of the securities trading of today, which has its roots i…

Equity markets have the DTCC and registered exchanges. Even though there are some 16th century pieces of paper still around today, actual transfer of equity from one party to another is little more than an exchange notifying the DTCC that a transaction took place, and the DTCC changing a log in its own database moving the stock from one clearing firm to the other. That sounds boatloads more efficient that blockchain already.

There are other security markets that do not operate as efficiently, but to me, the solution looks more similar to the DTCC model, not the blockchain model.

Keep in mind, too, we still do not have any system that reasonably ties bitcoin technology back to a real-life asset. Bitcoin works because it's self-contained. In the world you described, I could have all the necessary ones and zeros to represent an ownership stake in a Nigerian oil company, but that means diddly squat if it's impossible for me to exert control on the company or receive dividends. Nigeria nationalizing the rigs has nothing to do with whether or not I have a claim on it with a piece of paper from an exchange or a cryptographic key. Those are currently real-world issues impairing investment in those regions, not the exchanging mechanisms. Though I do concede, the exchanging mechanisms aren't perfect.

Re: Bitcoin's Shared Ledger Technology: Money's New Operating System

#43

Post by natrius »

brighton36 wrote: post #26
natrius wrote: post #11

Earlier quoted context omitted.

Blockchains can be built without 10 minute block times or wasteful proof-of-work for mining. You can just pick people the users trust to make blocks or use proof-of-stake mining. Blockchains are harder to break than most corporate databases. Reading up on Ethereum will answer most of your questions.

Proof of work is entirely required. Proof of stake is at best a pipe dream - read Andrew Poelstra's writing on the matter.

I disagree.

https://blog.ethereum.org/2014/11/25/proof-stake-learned-lov...

Re: Bitcoin's Shared Ledger Technology: Money's New Operating System

#44

Post by Ologn »

hermanmerman wrote: post #35
Ologn wrote: post #20

Earlier quoted context omitted.

That's a tautological answer. When a Bitcoin was worth over 4 times its present value a number of months ago, the same answer could be given - "it's worth that because people will pay for that". I can give a rational answer for why commodities like apples have value, or a gallon of gasoline, or a table, or a shirt. Even houses in 2007 real estate development projects in the outskirts of Sacramento have a rational (if…

1. Gold had value 4000 years ago because it was rare enough that people could use it as a currency, not because it was a useful metal. Incidentally, it's not useful at all compared to steel, copper, aluminum, etc. hence its use in jewelry. 2. Gold has value today because some people are willing to buy it and some others are willing to sell it. I don't see how it couldn't be the same with Bitcoins (or anything for tha…

Of course gold has value due to its usefulness. Plenty of electrical equipment is gold-plated. Dentists fill teeth with gold. It has other industrial uses as well.

The value of precious metals are solely due to their usefulness, extending usefulness to their aesthetic, decorative quality as well. The price reflects this over the medium and long term. Of course, an ounce of silver in 1979 and 1981 was $8 an ounce, but for a variety of reasons it hit $40 an ounce for a few days in 1980. Short term price swings happen due to events, or major technological breakthroughs, but over time, price reflects value and utility.

> Can you explain to me why dollars have value? Euros? Drachmas?

Until 1971, dollars (and other currencies) were explicitly exchangeable for gold. Today they're implicitly backed by gold (or whatever commodity the US government can drum up).

Can you explain why the USA holds thousands of tons of gold in Fort Knox and other places? What is the purpose of the expenditures to hold all of that gold? There is only one answer - to put a floor under the value of the dollar.

Bitcoin does not have thousands of tons of gold propping up its market cap.

Re: Bitcoin's Shared Ledger Technology: Money's New Operating System

#45

Post by Ologn »

CuriousSkeptic wrote: post #40
Ologn wrote: post #20

Earlier quoted context omitted.

That's a tautological answer. When a Bitcoin was worth over 4 times its present value a number of months ago, the same answer could be given - "it's worth that because people will pay for that". I can give a rational answer for why commodities like apples have value, or a gallon of gasoline, or a table, or a shirt. Even houses in 2007 real estate development projects in the outskirts of Sacramento have a rational (if…

Things don't have value on their own. They have value to someone in some context. Your Apple has value to a hungry person because it can be eaten, it has value to an apple producer, or merchant, because it can be sold, and it has value to a truck driver because it needs transporting. It's not an intrinsic property of the apple. It is entirely a result of the plans and hopes of those individuals who deals with the app…

> And that's where something like Bitcoin could enter the picture. It establish value in the other direction. It has value to the apple eater because it can be used to buy an apple

Right...but this can be said about any commodity. If I own a new iPhone, or a bar of gold, or what have you, it won't take me long to sell those and buy apples. But iPhones, gold etc. have inherent value and use, Bitcoin has no use value.

> fixed supply most commodities

> highly divisible, cheap to store some commodities have these properties...like precious metals

> securely transferable fortunes are wired from bank to bank around the world every day

Gold is a useful commodity. For wiring, for filling teeth, for other purposes. It is also durable, divisible, uniform, portable, and all those things which make a commodity useful as a currency. Bitcoins are not a useful commodity, they are a hash number ultimately. When the game of musical chairs ends, people flock to commodities that have had value for thousands of years, like gold. They have inherent usefulness and value. Bitcoins don't.

Re: Bitcoin's Shared Ledger Technology: Money's New Operating System

#46

Post by natrius »

dogma1138 wrote: post #39
natrius wrote: post #3

The "shared ledger" analogy for blockchains is limiting. If you want to understand the potential applications, you should stop using it in your thinking. Blockchains give us publicly writable databases . Such a thing never existed before. A blockchain has one or more programs that define what can be written to the public database. Bitcoin's program is mostly about distributing the 21 million coins to miners and preve…

Calling it a public database is misleading, it's not really public even the Bitcoin blockchain ins't really public as it's access isn't free (proof of work). The blockchain that will be used by banks won't be public just like SWIFTNet and other similar banking networks aren't public. What WS and the banks want is a private blockchain to replace the current messaging and clearance systems and services into something w…

Access isn't free, but anyone can write to it without permission. That makes it public.

Individuals couldn't compete with SWIFT because they had no way to coordinate their actions. Public databases change that. The first phase will be financial institutions using blockchains to lower their costs. The second phase will be financial institutions pursuing new business models around blockchains anyone can access every time they use Apple Pay.

The genie is out of the bottle. Middlemen are no longer necessary for anything.

Re: Bitcoin's Shared Ledger Technology: Money's New Operating System

#47

Post by kalleboo »

natrius wrote: post #3

The "shared ledger" analogy for blockchains is limiting. If you want to understand the potential applications, you should stop using it in your thinking. Blockchains give us publicly writable databases . Such a thing never existed before. A blockchain has one or more programs that define what can be written to the public database. Bitcoin's program is mostly about distributing the 21 million coins to miners and preve…

> Blockchains give us publicly writable databases. Such a thing never existed before

Not true. We had Microsoft SQL Server[0]

[0] https://en.wikipedia.org/wiki/SQL_Slammer

Re: Bitcoin's Shared Ledger Technology: Money's New Operating System

#48

Post by dogma1138 »

natrius wrote: post #46
dogma1138 wrote: post #39

Earlier quoted context omitted.

Calling it a public database is misleading, it's not really public even the Bitcoin blockchain ins't really public as it's access isn't free (proof of work). The blockchain that will be used by banks won't be public just like SWIFTNet and other similar banking networks aren't public. What WS and the banks want is a private blockchain to replace the current messaging and clearance systems and services into something w…

Access isn't free, but anyone can write to it without permission. That makes it public. Individuals couldn't compete with SWIFT because they had no way to coordinate their actions. Public databases change that. The first phase will be financial institutions using blockchains to lower their costs. The second phase will be financial institutions pursuing new business models around blockchains anyone can access every ti…

Again you think that those blockchains will be publicly accessible which is incorrect, they'll have their own blockchains for their own settlement, maybe they'll have some sub-chains in the long run for end-users but still you can bet your house on that they'll find a way to ensure that users can't simply join the blockchain "fully" (e.g. find a way to separate wallets from mining, like BC does with mining pools for example but for another reason) like they can currently with Bitcoin.

And having a non-free access make it non-public by definition sorry. Bitcoin is moderated by the amount of effort needed to perform certain operation, some take very little like generating your key and address tomorrow they can change that to a point where only the large bitcoin farms could do it would you still call it a public system? If so so is SWIFTNet sure you just need a couple of billion and to open a bank but hey any one can join....

BTW you see a similar thing today, BC is "complicated" this is why things like coinbase become more and more popular, people don't keep their bitcoins in their own wallets anymore they use a 3rd party mostly in the form of various bitcoin exchanges. If a "public" based system has already degraded into pretty much a hierarchy what do you think a system designed by the financial sector will turn out like?

Re: Bitcoin's Shared Ledger Technology: Money's New Operating System

#49

Post by Ologn »

brighton36 wrote: post #33
Ologn wrote: post #6

For all the bubble talk...if there is any sign of a bubble, it is Bitcoin. Bitcoins are completely worthless, they have no value. The price action shows it - they are currently bouncing between $230 and $235, six months ago that was $260, and one year ago it was $400. It is headed to $0. The smell of scam is all over it. The inventor hides his identity. Bitcoin companies are awash in scams and criminal charges - Mt.…

The intrinsic value of bitcoin (if this matters) is immutable storage. You see this utilized with projects such as counterparty. The non-intrinsic value of bitcoin is the ability to engage in censored commerce. (backpage, wikileaks, silk road, etc.)

> The intrinsic value of bitcoin (if this matters) is immutable storage. You see this utilized with projects such as counterparty.

I have heard people talk about the storage aspect of Bitcoin as having value before, and it's probably the best argument for Bitcoin having any inherent value whatsoever. You're making a more intelligent observation than most of the people in this thread.

That said, Bitcoin has a $3.4 billion market cap. Litecoin has a $119 million market cap, and even the joke crypto-currency Dogecoin has a $12 million market cap - and they can be used as storage mediums as well. As a storage medium, Bitcoin would be way overpriced. It's price is due to the other points I mentioned, mainly the hype.

Re: Bitcoin's Shared Ledger Technology: Money's New Operating System

#50

Post by hliyan »

natrius wrote: post #3

The "shared ledger" analogy for blockchains is limiting. If you want to understand the potential applications, you should stop using it in your thinking. Blockchains give us publicly writable databases . Such a thing never existed before. A blockchain has one or more programs that define what can be written to the public database. Bitcoin's program is mostly about distributing the 21 million coins to miners and preve…

I think the shared ledger analogy is meant as a simplification for the general public. I did the same thing in my explanatory article two years ago: http://zen.lk/2013/11/28/how-i-finally-understood-bitcoin/
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