Systems built on trust, norms, and institutions function better than blockchain

Relevant article. Replying to why decentralization matters

http://muratbuffalo.blogspot.com/2018/03/change-my-mind-abou...

I think the author of this article is making an either/or argument about centralized vs. decentralized trust when this can just as easily be a both/and proposition.

Cryptocurrencies have not yet eliminated and may never eliminate the need for centralized reputation based systems of trust. Centralized trusted systems are more efficient for reasons that may be fundamental and rooted in physics and math, and they can do things that no current generation decentralized system can do. Complex secure computations that are cheap to perform on a server are massively expensive on a block chain or other distributed system.

Yet what cryptocurrencies do offer is a system that levels the playing field between trusted entities and allows a once-trusted but now corrupt entity to be replaced without completely ditching the entire system. That's not true of things like centrally banked fiat currencies. If the current US financial system becomes irredeemably corrupt, this can't really be fixed without risking the destruction of the dollar and all assets and contracts denominated in dollars. A new dark age is a very high price to pay for the replacement of a corrupt or incompetent system.

I think an argument can be made that replacement of institutions will always be necessary at some point. As institutions become large their size insulates them from reality, allowing something like "genetic drift" to occur that gradually erodes their competence. Combine this with the fact that psychopaths gravitate toward positions of power and you have a general tendency of large powerful systems toward decay and corruption over time.

We saw a very concrete example of this in 2008 when banking institutions that had failed badly due to a mixture of incompetence, hubris, and corruption received a blank-check bailout on the backs of taxpayers and the rest of the non-financial economy. It is no coincidence that cryptocurrency went mainstream right after this, since these events demonstrated the need to start thinking about ways to devolve power away from these systems or at least to reduce the cost of doing so.

Side note: I think we've officially entered the cryptocurrency / block chain trough of disillusionment. See: https://en.wikipedia.org/wiki/Hype_cycle

> That is untenable, as people will always override software, whether that's through a courtroom, a government/regulatory body, or a fork based on majority consensus.

I would say every single non-naive person in this space realises this, so it's not true that blockchain proponents "desire a technical fix to social problems" in that sense. What smart contracts for eg could be good for is to leverage social consensus much more highly, rather than replace it (since like you said replacement is impossible)

Imagine playing that game in the 1950s about computers. IBM thought there was a market for maybe 5.

Gotta love how he begins saying he was bashing the tech in December(when the market was on the rise) just so that no one can tell him "everyone bashes bitcoin when it's going down".

Venmo is centralized. I cannot use it as I live in a third world county with no access to it.

Paypal sucks. It takes 5% from the seller and it has power over your money, they can(AND HAVE IN THE PAST) seize it whenever they want.

I had my salary confiscated once over a mistake in the bank. I telecomute, working for a company overseas, and the fees are stupidly high.

I find your lack of vision disturbing.