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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

#301

Post by Taek »

linkregister wrote: post #224
russdpale wrote: post #217

Earlier quoted context omitted.

With bitcoin, it is agreed upon using byzantine consensus. The only way a bad actor can manipulate the ledger is if they own enough nodes to gain a majority, which is virtually impossible. After just a handful of bit times is economically and mathematically impossible to reverse the contract. I suggest listening to this Tim Ferris podcast with Nick Szabo: http://tim.blog/2017/06/04/nick-szabo/ The entire idea is that…

> The only way a bad actor can manipulate the ledger is if they own enough nodes to gain a majority, which is virtually impossible. At times the leading BTC mining pool has controlled greater than 50% of the nodes. Would this not be enough to alter the ledger?

Notably, 'altering the ledger' here has a very restricted meaning. You can spend money, then reverse the spend back into your wallet. Or you can commit to a piece of information, then delete it.

But you can't alter the core protocol or fundamental network rules. If you do, the other nodes will ignore you.

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

#302

Post by Taek »

matthewowen wrote: post #293
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…

I don't find this a wholly satisfying position (and I say this even as someone who's generally a blockchain skeptic). Concretely, this argument conflates agreeing on a set of rules with agreeing on an arbiter to determine the application of those rules. Those aren't the same thing, because only one of them centralizes power. > At this point they already have a consensus, they trust each other, they might as well just…

Notably, you don't have to agree on how to design a system. Many such systems exist and you just have to pick which one you want to use. If you see the rules as fixed, you can enter the system that most closely matches your needs, and then trust that it's not going to change from under your feet.

Well, the properly decentralized ones let you assume that the rules aren't going to change. Many blockchains though will implement whatever changes their developers desire.

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

#303

Post by Taek »

lawrenceyan wrote: post #300
MarkPNeyer wrote: post #244

Earlier quoted context omitted.

Here is a proposed solution to mob rule: https://github.com/neyer/dewdrop With a much simpler version of the same concept here https://github.com/neyer/respect I think it's doable.

Interesting. So reputation would act as a mediator for decision making then? Those with greater reputation would have more influence, and theoretically this should work because reputation would be gained only when other people notice that the person has done something beneficial/helpful in their eyes. Overall that should result in high reputation values being directly correlated to those who are altruistic and good.…

How would such a reputation system defeat the Sybil attack?

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

#304

Post by Taek »

cortesoft wrote: post #260
anothercomment wrote: post #239

You can begin to see the beauty of Bitcoin when you want to accept payments. All you need to do is download a wallet, generate an address and put it online. You don't need anybody's permission, as would be the case with PayPal or the likes. The risk of somebody deciding on a whim to freeze your funds is also greatly diminished (again, very different from PayPal and the likes). "Governance" and "Accountability" seem t…

Your dismissal of the problem with forks is missing a big danger to users. You say that market forces will control it, and people should just use what works best for them. The problem is that you might guess wrong; you might look at the two forks, make your best guess as to which side is going to win out via the network effect, and put your money there. If you are wrong, and your fork dies out, there goes all your mo…

Forks tend not to die out. See ethereum classic. As long as people are using the currency that you use, your currency will have value. Also, if your currency is losing traction, the value will decrease gradually, not evaporate to zero all at once.

Well, highly speculative currencies can tumble dramatically, but as we've seen with Bitcoin, as the legitimate use cases grow, so to does the price stability.

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

#305

Post by Taek »

anothercomment wrote: post #249
zilchers wrote: post #248

Earlier quoted context omitted.

I think this is the point though - for something like bitcoin, this tension is ok. It's when you start getting into things like blockchains for real estate in developing countries (I think there are a few startups working on this) when it becomes an issue. Someone still fundamentally needs to issue the blockchain deeds, or ok that you, in fact, own the property you are claiming to own. At that point, you have a centr…

Agreed, and it is a reason why I am holding back on Etherium so far. I don't know if they have a proposed solution to that, tbh, but it seems pretty impossible to solve. Although, to be fair, "classic" contracts also need that someone to enforce them. Maybe Etherium & the likes only replace one aspect of it, not the whole process. If company X publicly announces that they'll adhere to a certain contract in the blockc…

You'd only be able to use a blockchain for land ownership of the government agreed to unconditionally honor whatever appeared in the blockchain. And even then, the government found change its mind at any moment.

So really, it would not work well unless your whole government was also properly decentralized.

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

#306

Post by criddell »

cnnsucks wrote: post #298
criddell wrote: post #296

Earlier quoted context omitted.

Services are also part of GDP. If I pay you to sing, that's part of GDP.

That's true, but it doesn't salvage your argument. Your accounting fiction isn't a 'service' for the purposes of GDP.

Yes it is. It's a pretty common criticism of GDP.

The other comment had it right though - taxes would kill this scheme.

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

#307

Post by [deleted] »

seagreen wrote: post #242
jerguismi wrote: post #200

Earlier quoted context omitted.

> because their proponents think: Come on, you can't generalize things like that on a group such as cryptocurrency users. I think this generalization tells more about you than cryptocurrency proponents.

I can, because I'm trying to explain a mindset, not make an argument. Maybe cryptocurrencies are the future, but there are reasons people are suspicious of them besides being silicon valley hegemons afraid of being disrupted.

[deleted]

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

#308

Post by runeks »

bo1024 wrote: post #277
runeks wrote: post #158

Earlier quoted context omitted.

The more important point is that VISA is broken by design. Every day hackers steal credit card info and leech millions from the system, which is included in the fee you pay. The only reason it keeps working is because hackers aren't sufficiently sophisticated yet. The solution, of course, is to store a private key on a hardware device, not have the private key be 16+3 decimal digits and an expiration date.

I agree with you, but this is in principle a separate issue. We would like to aim for a system that has both the security of Bitcoin AND the "efficiency" of, in this example, VISA.

That would be great, but what if such a system doesn't exist? Pointing out inefficiencies in Bitcoin isn't very useful when no alternative exists to reach the same level of decentralization.

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

#309

Post by spectrum1234 »

I agree with the article yet the article fails to address a large benefit of DLTs, reducing transaction/3rd party fees. A ~2% reduction in costs is still enormous at scale.

Another benefit that is overlooked is adaptation. Once mature, creativity and innovation will happen faster with DLTs.

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

#310

Post by snowwrestler »

cortesoft wrote: post #260
anothercomment wrote: post #239

You can begin to see the beauty of Bitcoin when you want to accept payments. All you need to do is download a wallet, generate an address and put it online. You don't need anybody's permission, as would be the case with PayPal or the likes. The risk of somebody deciding on a whim to freeze your funds is also greatly diminished (again, very different from PayPal and the likes). "Governance" and "Accountability" seem t…

Your dismissal of the problem with forks is missing a big danger to users. You say that market forces will control it, and people should just use what works best for them. The problem is that you might guess wrong; you might look at the two forks, make your best guess as to which side is going to win out via the network effect, and put your money there. If you are wrong, and your fork dies out, there goes all your mo…

You have to put your faith in something.

I suppose it's not surprising that people with strong affinities for computing systems would rather put their trust in a computing system than a government of people. They understand computing, and so they feel more confident they can understand and mitigate its risks. They might not feel that way about the solvency of the Federal Reserve, or the fiscal health of the U.S. federal government.

It doesn't mean they're right. Blockchains might be objectively riskier than central banking. It's just that we each see the world through the filter of our own experience.

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