Wall Street rethinks blockchain projects as euphoria meets reality • Hacker News Board

Re: Wall Street rethinks blockchain projects as euphoria meets reality

#161

Post by kerkeslager » Thu, Mar 29, 2018, 4:38 PM UTC

rsynnott wrote: post #97

> The project, which had successfully tested with startup Digital Asset Holdings (DA), was shelved because banks and other potential users believed the same results could be achieved more cheaply using current technology, he said. This is more or less the curse of the almighty blockchain; it's very hard to think of a plausible, actually useful, application which can't be accomplished far more cheaply and simply using…

It's really not hard to think of useful applications for blockchain.

The problem HN has with blockchain is that a lot of HN users are the problem which decentralization solves. The basic startup monetization strategies these days revolve around centralizing user data and then collecting rent (usually in the form of ads) or centralizing transactions and then collecting a percentage. Decentralization is the antithesis of these models: you can't collect rent or percentages if you don't have centralized control of the platform. The problem blockchain solves is that it cuts out a lot of middle men and what middle men it leaves (miners) have to compete.

For the vast majority of HN users, blockchain doesn't solve problems you want to solve, but that shouldn't be mistaken for meaning that blockchain isn't a revolutionary technology that solves a lot of problems. If anything, the technology is important because it affects your future. Data and transaction middle men are the problem that blockchain solves, and as middle men you should be paying attention.

I don't hold any resentment toward people trying to run a centralized business, but I do find it amusing when people are pushing blockchain forward to their own detriment.

Re: Wall Street rethinks blockchain projects as euphoria meets reality

#162

Post by throwawaylolx » Thu, Mar 29, 2018, 4:39 PM UTC

hudon wrote: post #121

jcoffland wrote: post #109

Earlier quoted context omitted.

> If you change the consensus ruleset...then you need an oracle to tell you which chain to choose. What are you talking about? The rule to choose the correct chain is well defined and simple. The longest chain, i.e. the one with the most work done, is the correct chain.

I'm not sure if you've spoken to any Bitcoin developers recently, but they'll tell you you're wrong and that it is the valid chain with the most work, not the chain with the most work. They'll then tell you what valid means. Some developers would agree with you though, like Gavin Andresen [0]. Either way, you end up with either centralized miners deciding the fate of the chain, or centralized developers deciding the…

It has always been the longest valid chain though. If miners were to introduce double-spending transactions in a block, full nodes would--by default--reject the blocks, regardless of how much work the chain contains. This also highlights why miners don't control the network and never had.

Re: Wall Street rethinks blockchain projects as euphoria meets reality

#163

Post by jfasi » Thu, Mar 29, 2018, 4:39 PM UTC

I get suspicious whenever I read about companies piling on to technology trends, not least because of the damage it does to the rank and file developers who work on it. The short version is: leaders got bamboozled and their subordinates suffered, but it's a little more nuanced than that.

We tend to think of large companies as either these monolithic beasts that act according to their own best interests, or as emergent hiveminds that move in a direction because they smell money. These have the advantage of allowing us to presume that the actions taken by these organizations were vetted by many people and arrived at via consensus.

However, there is a third, less popular, way to view organizations, and that's as an organ of a handful of people, if not one person. This is an important framing because it allows us to consider the actions of these large companies as reflecting the foibles of the individuals at the helm. Viewed this way, Apple under Steve Jobs was an extension of one man's vision and design priorities. Microsoft under Ballmer was an extension of one man's putting the MBA approave above the tech approach.

I can't help but wonder if, within these Wall Street companies as well as throughout SV, there wasn't a single person or a handful of people who swallowed the blockchain coolaid and started these projects. Pitched high hopes to developers. Hired developers. Set goals. Failed to meet goals. Made their developers' lives miserable. Gave up. Blamed their subordinates. Moved on.

This is a tale as old as tech itself, but somehow it just keeps happening. To all young developers deciding where to invest their time and talent: be very careful choosing to follow an individual, because individuals are stupid enough to fall for nonsense like "blockchain for banking."

Re: Wall Street rethinks blockchain projects as euphoria meets reality

#164

Post by paulgb » Thu, Mar 29, 2018, 4:39 PM UTC

chrisco255 wrote: post #150

brightball wrote: post #133

Earlier quoted context omitted.

But one of the biggest selling points of Bitcoin itself was mathematically limited supply. A new cryptocurrency appearing every day fundamentally undermines the value proposition. Blockchain may have value as a decentralized ledger in other areas, but “lots of blockchain based currencies” aren’t really one of them since it’s self-sabotaging.

Not really. Network effects matter. Otherwise we would see social networks and other free services replaced on the regular.

> Otherwise we would see social networks and other free services replaced on the regular.

Don't we? I can think of a dozen or more social networks of one sort or another that I've belonged to in the last decade or so.

Re: Wall Street rethinks blockchain projects as euphoria meets reality

#165

Post by lisper » Thu, Mar 29, 2018, 4:41 PM UTC

xapata wrote: post #151

JumpCrisscross wrote: post #110

Earlier quoted context omitted.

> Mining is decentralized Cryptocurrency mining is as close as one can get to a theoretical free market in the real world. Free markets have known modes of failure [1]. One of these is where first-mover advantage and economies of scale combine to produce a barrier to entry; the result is oligopoly or monopoly. [1] https://en.wikipedia.org/wiki/Market_failure

And availability of cheap inputs, like cheap electricity.

Actually, it's the exact opposite. The security of a blockchain is fundamentally dependent on mining being expensive. That is the only defense against a 51% attack. Cheap energy just drives up consumption to the point where mining is expensive enough to deter attacks.

This is ultimately what I think will sink blockchain as a medium of exchange (not necessarily as a store of value). By its very nature it cannot be cheap, so TTPs will always be able to beat it on price.

Re: Wall Street rethinks blockchain projects as euphoria meets reality

#166

Post by throwawaylolx » Thu, Mar 29, 2018, 4:41 PM UTC

toomuchtodo wrote: post #51

this_user wrote: post #22

What does "blockchain" even mean in this generalised context? When we are talking about crypto currencies, it is a distributed database with a consensus mechanism that is extremely costly to run. But this is not something you would need or want in most other situations, because there is always some degree of trust with your counterparties (and legal recourse if necessary). If we strip away the consensus mechanism, al…

Blockchain is simply a sexy term for a distributed ledger, which has its place in a limited set of use cases.

There exists non-blockchain distributed ledger technology such as the ledger implemented by the IOTA team.

Re: Wall Street rethinks blockchain projects as euphoria meets reality

#167

Post by SkyMarshal » Thu, Mar 29, 2018, 4:41 PM UTC

KirinDave wrote: post #118

yxhuvud wrote: post #96

Earlier quoted context omitted.

No, the fundamental assumption is that distributed consensus in itself is useful. So far, there are some applications (databases), but for the stuff they are using the blockchain for, not so much.

If distributed trustless consensus is useful, there are cheaper ways to get it than PoW mining. It's just that most folks don't understand them. The principle value of Bitcoin as a protocol is its incredible (even detrimental, from a technical perspective) simplicity.

Are there other means of distributed trustless consensus as secure as PoW? Secure being the operative word here. Lots of attempts, but none yet convincingly as or more secure.

Re: Wall Street rethinks blockchain projects as euphoria meets reality

#168

Post by michaelchisari » Thu, Mar 29, 2018, 4:43 PM UTC

chrisco255 wrote: post #125

djyaz1200 wrote: post #111

Earlier quoted context omitted.

Good point. Having a strong 3rd party intermediary moderating/backing transactions is a feature not a bug. This is why people bank with JP Morgan and similar huge banks. Although they charge fees you do get something for the money. They are governed by laws, have physical locations, people to talk to, fraud prevention and raw financial, legal, and regulatory power. I have no love for them but I believe they will guar…

Did 2008 teach us nothing?

By cryptocurrency standards, 2008 was any given Tuesday.

Re: Wall Street rethinks blockchain projects as euphoria meets reality

#169

Post by kerkeslager » Thu, Mar 29, 2018, 4:43 PM UTC

bpicolo wrote: post #102

kerkeslager wrote: post #85

Earlier quoted context omitted.

What's stopping them is a simple question: who are you transferring the money to? A lot of banks allow customers to do instant transfers between customers of that bank, but for this to be a killer feature, you have to have enough customers that this is significant. In NYC, Chase is almost there--they have enough of a share of NYC that it's worth asking if the person you're transferring to has Chase so you can use the…

> But the vast majority of transactions are still between customers of different banks, and there's not much reason for a bank to process a competitor's payment quickly But they're doing exactly this now with Zelle.

Interesting, I hadn't heard of them and I don't know enough about their business model to comment.

Re: Wall Street rethinks blockchain projects as euphoria meets reality

#170

Post by darawk » Thu, Mar 29, 2018, 4:43 PM UTC

icebraining wrote: post #154

JumpCrisscross wrote: post #94

Earlier quoted context omitted.

I think this paper [1] made a decent case for permissioned blockchains ( i.e. "where the participants are limited to a predefined set") in cases where one must store state, accommodate multiple writers who do not trust each other and does not have access to an always-online trusted third party. The number of cases where the final condition applies is small, but positive. [1] https://eprint.iacr.org/2017/375.pdf

The Blockchain is a clever combination of two preexisting concepts: distributed merkel trees, and a consensus algorithm. If you remove one of them, you no longer have a Blockchain, you just have one of its preexisting components. "Permissioned blockchains" is like someone thought "what if we took the radios out of cellphones and connected them by cables" and proceeded to call that a brand new invention.

That's not actually true. Git is a blockchain, for instance. Permissioned blockchains are a real thing. Even centralized blockchains can be useful (e.g. a government publishing property record transactions, the blockchain aspect would be useful to ensure retroactive modifications weren't made, even if the gov. was still in full control of the chain itself).