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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

#201

Post by sciyoshi »

rockmeamedee wrote: post #85

I agree with this article. Proponents of blockchain tech argue its revolutionary quality is its ability to act as a decentralized and trustless database. But I don't ever hear them sort through the issue of how to agree on the schema for this trustless database. For a group of people to use a decentralized DB, they have to agree as to what to store in it, and how to store it. They need to form consensus about how the…

This argument sums up my recent thoughts on blockchains. Proofs of their trustlessness and eventual consistency rely on explicit assumptions (no cartels with >50% computation power, bounds on network partitions), but the underlying unstated assumption is that there is consensus about the protocol and its rules to begin with. We've seen this assumption break down with the block size debate and the DAO fork.

However, I don't think that this completely rules out their usefulness. Blockchains are more like "consensus abstractions" - if you have the underlying consensus (achieved through a governance model that can engender it), then it allows for uses like smart contracts that can efficiently work on top of it. The "trustless" property is also maintained - for example, even if a cryptocurrency is designed, issued and governed by a central bank, the fact that the network is decentralized and its integrity can be independently verified (even if it is centrally secured) still has some social benefit.

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

#202

Post by jerguismi »

rhino369 wrote: post #67
rlpb wrote: post #9

Earlier quoted context omitted.

> 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…

Sure. But having to convert to pay taxes and debts is huge pain point for trying to conduct all your business in a foreign currency. It also adds transaction costs. If you are a business, why would you ever try to run on bitcoin alone? There would have to be a huge advantage. And we see that in many small cottage industries where that is an advantage, like buying drugs online or illegal gambling. But without the need…

> But having to convert to pay taxes and debts is huge pain point for trying to conduct all your business in a foreign currency. It also adds transaction costs.

To some extent yes, but for any more serious business this really isn't a problem at all. I've been running a business that makes income in bitcoin only for 5 years now, and converting for taxes and accounting is quite trivial actually. Hardly any work is spent on those problems. You know, that kind of stuff is very trivial to automatize using those computers, unlike many other problems.

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

#203

Post by coldtea »

Meekro wrote: post #155
coldtea wrote: post #120

Earlier quoted context omitted.

> If I had a Bitcoin for every skeptic that posts a blog on why it can't work... And if I had a real dollar for everyone raving about some optimistic Bitcoin utopia... > 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. Because they're a solution of a problem that doesn't exist? Or rather, whose actual solution is political, no…

Your claim that "the fad is over and nobody much cared" is measurably false. Coinbase is currently the top bitcoin exchange in the world. Have a look at their traffic: http://www.alexa.com/siteinfo/coinbase.com Not only are they in the top 1000 websites in the world, but they have set a new traffic record every day of 2017, without exception.

>Not only are they in the top 1000 websites in the world, but they have set a new traffic record every day of 2017, without exception.

For a "revolutionary" "disruptive" technology to have, after 8 years and tons of coverage and touting, its "top exchange" merely hit the top 1000 is not exactly something to write home about. There are sites even in the Top 200 - 500 that are totally irrelevant (the "power law" distribution of visitors falls quickly after the top 10-20 websites).

Now, take away developing world etc safe-keeping and money laundering motives, and add in some heightened regulations from national governments (when/if it gets to a size worthy to regulate properly), and adoption will get close to zero.

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

#204

Post by nemo44x »

nradov wrote: post #189
nemo44x wrote: post #185

Earlier quoted context omitted.

Another idea: Etsy. Makers build things and post it to a Website and price it in some crypto currency. People buy it by sending money to a smart contract. A third party "oracle" is used to remit payment when the order is received. For instance the company that ships the product will signal delivery to the contract. The company that hosted the product takes a percent of the transaction payable after the final payment…

So basically just clone Etsy plus an escrow service. We already have those, so what. Where is the compelling customer benefit?

Not at all.

The customer benefit is that because the business is run more efficiently things can be priced cheaper. This gets passed down to the consumer and producer.

It's far more than escrow. It's a distributed business where many of the functions of the business are automated all enforced on the same blockchain.

Could be crazy - I'm not pitching this! I'm sure many people have better grasps of the potential and imaginations. But you clearly don't see how a company can be run more efficiently (but massive margins) with a distributed, partially anonymous structure where obligations and payments are guaranteed through the shared system.

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

#205

Post by saalweachter »

jasode wrote: post #177
eterm wrote: post #162

Earlier quoted context omitted.

If "dirty" titles are an issue (and title insurance costing $300 suggests it is), Why is there no government department (state or federal) holding the title registry? That would also solve the problem. Once again it seems like this is a social issue not a technical issue.

>Why is there no government department (state or federal) holding the title registry? The governments (e.g. county courthouses) do store copies of the documents such as deeds and transfers. They stamp them with their seal so in that sense, they do "hold the authoritative title records". However, there is no computer database with rows for all real estate that has a binary column called "CLEAN_TITLE" with values TRUE/…

The fundamental question is "why is it easier to get everyone to agree to put their real estate transactions in a distributed ledger than in a centralized ledger?"

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

#206

Post by coldtea »

mr_spothawk wrote: post #170
coldtea wrote: post #137

Earlier quoted context omitted.

> Cars were a solution to a problem that didn't exist when considered a certain way. What way? Because people absolutely would have jumped at the chance to go from a place to another faster (and more comfortably) and had myriads of reasons to want to do so at any time in history. > I'm not saying that crypto isn't getting love. But that it isn't getting much love from a very particular place. A place that traditional…

>Because people absolutely would have jumped at the chance to go from a place to another faster (and more comfortably) and had myriads of reasons to want to do so at any time in history. The first cars were incredibly noisy, smelly, and actually killed a lot of folks. Yet somehow, here we are something like 100 years later, evaluating how many more years we'll have to wait before we can get go place to place without…

>The first cars were incredibly noisy, smelly, and actually killed a lot of folks.

And despite that their utility was evident, and adoption very fast.

Even so, bitcoin is not supposed to improve with time. It is an invention that is delivered as is (technology and algorithm wise). At best they can make better exchanges. But there are also very real possibilities of regression to those (stricter regulations imposed, etc).

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

#207

Post by Rmilb »

_Marak_ wrote: post #91
hdhzy wrote: post #86

Earlier quoted context omitted.

I wonder what's the energy consumption of an average credit card transaction (including keeping the infrastructure, charge backs etc.)...

From the article: VISA Network Statistics VISA's estimated annual electricity consumption (TWh) 0.54 Number of U.S. households that could be powered by VISA 50,000 Electricity consumed per transaction (KWh) 0.00651 Number of seconds the electricity consumed by 1 VISA transaction could power 1 U.S. household 19 Number of VISA transactions that could be powered with the electricity consumed by 1 Bitcoin transaction 20,…

A decentralized network has trade offs associated with it.

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

#208

Post by mariano54 »

coverband wrote: post #151

This is an excellent analysis: insightful and to the point. I'd love to read a counter-analysis that can objectively argue against what I see as the central point here: "Blockchains still need good governance, but once you have good governance in place, you don't need a blockchain."

Here's a thought: I don't think it's black or white, governance solved or not solved. I think it's varying degrees of decentralization in governance.

Try to come up with a system that has more decentralized governance than Bitcoin.

The core developers in bitcoin don't have all the power. Coinbase doesn't have all the Power. Each user doesn't have all the power. Miners either (if they abuse their power, POW function can be changed)

So basically while bitcoin governance is not perfectly decentralized, its much better than anything else.

You can try to come up with a system where people vote. But the votes have to be collected and analyzed somewhere, centrally. So you still have central governance.

So yes, while 100% solving governance would make bitcoin useless, bitcoin can improve governance (compared to federal Reserve, for example), while providing a lot of value from this decentralization.

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

#209

Post by subway »

jerguismi wrote: post #195
subway wrote: post #184

Earlier quoted context omitted.

Decentralized systems aren't attractive only to decentralized groups. One application for which I've been considering use of a (private) blockchain is user authentication, and logging of authentication attempts.

Why would you want to do that with a blockchain? Is it necessary to store this logging data to thousands of nodes? What about 5 servers, geographically distributed?

Why do you assume a blockchain has to consist of thousands of nodes? A private blockchain works equally well across those 5 geographically distributed nodes.

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

#210

Post by serg_chernata »

gjem97 wrote: post #149
serg_chernata wrote: post #143

Earlier quoted context omitted.

PoS seems to be definitely happening for Ether.

Could you expand on that any? What's your basis for that belief?

Sorry, that was my conclusion from seeing tweets and commends made by Vitalik and his team.

Besides the other response you received, there also seems to be a shift to PoS simply because PoW mining wastes a lot of electricity.

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