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The blockchain paradox: Why DLTs may do little to transform the economy

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Re: The blockchain paradox: Why DLTs may do little to transform the economy

#101

Post by SamBam »

rlpb wrote: post #9
jasode wrote: post #7

I agree with Vili Lehdonvirta's analysis about governance and wrote a similar conclusion previously.[1] Yes, the concept of "money" existed before governments and therefore doesn't require government. That said, today's modern money is very much an instrument of government power. This is why alt-coins will not overthrow fiat currencies like some enthusiasts believe because Bitcoin does not come with its own Bitcoin-p…

> Bitcoin does not come with its own Bitcoin-police-force and Bitcoin-law-courts My government will enforce a contract even if it is denominated in some foreign currency, will it not? Currency used is independent of jurisdiction. They may award damages in legal tender, rather than in Bitcoin, but I have to pay taxes in legal tender anyway, so there will always be a market to convert back. Right now they might be conf…

So the point is to use the stateless currency, but continue to rely on the state to settle disputes and redistribute funds as it sees fit?

That seems counter to the ethos of the BitCoin enthusiasts.

I also doubt it will necessarily work for large sums. Governments may enforce contracts related to foreign money (if they find that the contract itself is in their jurisdiction, which isn't always the case) because they have quid pro quo agreements with other states, and it is mutually beneficial to global trade if global contracts can be enforced. (In a way, it similar to foreign mail being carried by local postal services.) But there is no quid pro quo with any friendly BitCoin government, so there is no incentive to enforce contracts.

Re: The blockchain paradox: Why DLTs may do little to transform the economy

#102

Post by gjem97 »

nemo44x wrote: post #98

If I had a Bitcoin for every skeptic that posts a blog on why it can't work... This may just be my general observation but I feel like Silicon Valley hegemony has a grudge against crypto currencies and I'm not sure why. For an industry that has constantly tried new things and saw potential where no one else did, I just don't see the love for the potential of smart contracts, DApps, etc. And how this is just the begin…

I think there are a couple of reasons behind a Silicon Valley disillusionment with Bitcoin. First, I think we're probably in a trough in the hype cycle right now. 3-4 years ago there were a lot of very high expectations amongst the Sand Hill Road crew. Bitcoin transaction volumes have been fairly flat (in native BTC terms [1]), whereas the VC crowd expected--required even--exponential growth.

Second I think that people in the US--Silicon Valley included--have the benefit of good corporate governance on many of the centralized authorities that underpin the economy. SWIFT, DTCC, etc. People who live in countries where that is not the case have a lot more to gain from the technology. That may explain some of the relative popularity outside the US.

[1] https://blockchain.info/charts/estimated-transaction-volume?...

Re: The blockchain paradox: Why DLTs may do little to transform the economy

#103

Post by yoz-y »

criddell wrote: post #84
tveita wrote: post #53

Earlier quoted context omitted.

> it would be like keeping all your money in an index fund whenever you're not actively spending it But without even the pretense of funding businesses and actually participating in the economy. Your money can grow on hot air and wishes alone! Why don't we give all people some bitcoin, so everyone can grow richer and richer without doing anything.

There's plenty of hot air and wishes behind regular currency as well. I have a plan to double the US GDP in one year: 1. I'll pay you $1 million to sing a song for me. 2. You pay somebody else $1 million to sing a song for you. 3. Continue doing this for n turns. 4. The last person pays me $1 million to sing them a song. The US GDP is around $20 trillion. That means we only need to set n to 20 million and we now have…

Wouldn't somebody somewhere in this kind of transaction have to pay the VAT, thus rendering this impossible?

Re: The blockchain paradox: Why DLTs may do little to transform the economy

#104

Post by wildbunny »

KirinDave wrote: post #68
wildbunny wrote: post #59

Earlier quoted context omitted.

If miners chose to mine on a chain that no-one wants, then everybody has to grudgingly go along with it, or cease to transact. The longest chain is always the most valuable.

You're also referring to a major weakness in the distributed consensus of bitcoin: the longest-chain-preferred mechanism is almost certainly a vector of attack on the chain.

On the contrary, this is the major strength of the system.

Re: The blockchain paradox: Why DLTs may do little to transform the economy

#105

Post by eterm »

jasode wrote: post #7

I agree with Vili Lehdonvirta's analysis about governance and wrote a similar conclusion previously.[1] Yes, the concept of "money" existed before governments and therefore doesn't require government. That said, today's modern money is very much an instrument of government power. This is why alt-coins will not overthrow fiat currencies like some enthusiasts believe because Bitcoin does not come with its own Bitcoin-p…

> prove useful for other recordkeeping such as real estate property transactions (e.g. no need to pay $300 fee for title searches in the future)

That doesn't require a distributed ledger, just a database. In the UK it costs £3 and is searchable online.

If it costs $300 then that is because someone wants it to cost that much.

Re: The blockchain paradox: Why DLTs may do little to transform the economy

#106

Post by nradov »

nemo44x wrote: post #98

If I had a Bitcoin for every skeptic that posts a blog on why it can't work... This may just be my general observation but I feel like Silicon Valley hegemony has a grudge against crypto currencies and I'm not sure why. For an industry that has constantly tried new things and saw potential where no one else did, I just don't see the love for the potential of smart contracts, DApps, etc. And how this is just the begin…

Bitcoin is mostly popular in Eastern Europe and Asia for transfer payments, fiat currency conversion, money laundering, and evading capital controls (getting money out of China). In the US if you're doing legitimate business with other US entities then there's really no need for such a thing. I can write a check or send a credit card payment or wire transfer to another US bank with a reasonably high level of trust that I won't be cheated, and that I have legal recourse if something goes wrong.

Re: The blockchain paradox: Why DLTs may do little to transform the economy

#107

Post by jasode »

eterm wrote: post #105
jasode wrote: post #7

I agree with Vili Lehdonvirta's analysis about governance and wrote a similar conclusion previously.[1] Yes, the concept of "money" existed before governments and therefore doesn't require government. That said, today's modern money is very much an instrument of government power. This is why alt-coins will not overthrow fiat currencies like some enthusiasts believe because Bitcoin does not come with its own Bitcoin-p…

> prove useful for other recordkeeping such as real estate property transactions (e.g. no need to pay $300 fee for title searches in the future) That doesn't require a distributed ledger, just a database. In the UK it costs £3 and is searchable online. If it costs $300 then that is because someone wants it to cost that much.

> In the UK it costs £3 and is searchable online. If it costs $300 then

My short text didn't give enough context. In the USA, that $$$ isn't really for the "search"; it's to pay for the "title insurance". That title company insures that the buyer is getting a "clean title" with no conflicting claims of ownership from others he doesn't know about. The "search" is just one component of labor of what you're paying for. (I looked at my mortgage documents again and my title insurance actually cost $4000.)

With a distributed ledger for property deeds and title transfers, that was used by say -- 1 million people -- that essentially means you have 1 million "witnesses" to the transactions. Therefore "title insurance" becomes superfluous.

I'm not predicting that DLT would be used for property records but proposing that hypothetical scenario as something more realistic than bitcoin replacing the Euro/USD.

Re: The blockchain paradox: Why DLTs may do little to transform the economy

#108

Post by gjem97 »

cayblood wrote: post #100

One aspect of his argument that seems insufficiently explored is an apparent assumption that governance is primarily a binary state, either present or absent. It's important to recognize that different approaches to governance have different levels of effectiveness and efficiency, and one of the most important aspects of blockchain is how it presents the first real improvement on the present state of the art in gover…

And furthermore that DTLs are a tool for enforcing corporate governance. It's a way of imposing it on organizations that otherwise would not exist.

Re: The blockchain paradox: Why DLTs may do little to transform the economy

#109

Post by KirinDave »

wildbunny wrote: post #104
KirinDave wrote: post #68

Earlier quoted context omitted.

You're also referring to a major weakness in the distributed consensus of bitcoin: the longest-chain-preferred mechanism is almost certainly a vector of attack on the chain.

On the contrary, this is the major strength of the system.

If by strength you mean, "A clear methodology from which a sufficiently large ec2 buy can rapidly fragment the Bitcoin consensus" then yes, I suppose that's fantastic.

From the perspective of people transacting on Bitcoin's infrastructure I suspect they'd call it "an attack."

Re: The blockchain paradox: Why DLTs may do little to transform the economy

#110

Post by KirinDave »

simias wrote: post #75
KirinDave wrote: post #68

Earlier quoted context omitted.

You're also referring to a major weakness in the distributed consensus of bitcoin: the longest-chain-preferred mechanism is almost certainly a vector of attack on the chain.

Wouldn't you need to have a majority of the hash power to fork the chain and generate a longer one anyway? I think it's well understood that anybody managing to go above 50% of the hash capacity effectively "rules" the currency.

This is a common response to this but I don't think it's true in every case. I think if your goal is strictly to disrupt the Bitcoin service you can accomplish that by disrupting and attacking individual nodes in parallel and letting the resulting chaos from these cheaper attacks widen the scope of your disruption, stepwise.
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