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The Blockchain Bubble Will Pop, What Next?

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Re: The Blockchain Bubble Will Pop, What Next?

#81
post #18

The biggest problem is that blockchains are inherently not scalable. That is more or less by design, but it limits the types of applications that can run on top of them. I think a more likely outcome is that most types of payment infrastructure and settlement/transaction layers move to blockchains and not actual applications. For example, it’s not too difficult to imagine the stock market switch to tokenized stocks t…

nobody wants to censor Uber. Think bigger. Censorship, transparency etc. Uber and Airbnb are wrong examples, they don't need those kind of things. Now think governments

That’s an interesting perspective to be sure, but let’s back up a bit. Has a blockchain proven that it can run a smaller organization yet? What happened to the DAO after all the hype and scandal?

I’m not in the anti-blockchain macro-economics fiat-currency camp or anything, but is it unreasonable to say that this stuff needs a lot more time to develop? There’s no way in hell I’d go along with laws from a blockchain-government backed by SHA256 and ED25519 in 2018, would you?

Re: The Blockchain Bubble Will Pop, What Next?

#82
post #18

The biggest problem is that blockchains are inherently not scalable. That is more or less by design, but it limits the types of applications that can run on top of them. I think a more likely outcome is that most types of payment infrastructure and settlement/transaction layers move to blockchains and not actual applications. For example, it’s not too difficult to imagine the stock market switch to tokenized stocks t…

> Remember TCP/IP was developed in the 1970s so it took almost twenty years before HTTP came out, and another 5-10 years before people really started using it.

There were significant barriers to entry – network connections were slow and enormously expensive into the 90s – but TCP already had significant value by the 80s (see e.g. FTP). Within a few years of the web arriving in the 90s, there were businesses using it for revenue-positive activity.

In contrast, blockchains were available to everyone on the Internet very early on and have yet to find a single case where they’re cost effective despite the barriers to entry being orders of magnitude lower.

Re: The Blockchain Bubble Will Pop, What Next?

#83
post #18

The biggest problem is that blockchains are inherently not scalable. That is more or less by design, but it limits the types of applications that can run on top of them. I think a more likely outcome is that most types of payment infrastructure and settlement/transaction layers move to blockchains and not actual applications. For example, it’s not too difficult to imagine the stock market switch to tokenized stocks t…

As we speed toward the era of deep fakes and extreme forgery of media, I wonder if blockchains might play some crucial social role as sources of truth and proof.

Re: The Blockchain Bubble Will Pop, What Next?

#84
post #76
post #18

The biggest problem is that blockchains are inherently not scalable. That is more or less by design, but it limits the types of applications that can run on top of them. I think a more likely outcome is that most types of payment infrastructure and settlement/transaction layers move to blockchains and not actual applications. For example, it’s not too difficult to imagine the stock market switch to tokenized stocks t…

If ownership of a house is decided by contracts, written by lawyers, then adding a blockchain will only add issues, since it can get out of sync with reality. And if the blockchain is the source of truth, it means that stealing your house-token will result in you losing your house. Do you use an intel processor vulnerable to Meltdown/Spectre, or with a vulnerable IME? Do the people you know and love know and understa…

I didn’t say that all the problems have been figured out, but I feel like you are being a little close minded with regards to the idea. Maybe properties would use some form of multi signature transactions so a single person hacking it would not be able to take over ownership. Perhaps there would still be some sort of intermediary.

I am not saying just add a blockchain on top of the existing infrastructure. That does not make much sense. I’m saying replace the existing infrastructure completely.

Ten years ago people didn’t think solving the double spending problem was possible. It’s silly to try to imagine the future of blockchain innovation when thinking about it only how it exists today.

That’s like in 1995 saying that no one would ever want to watch videos on the internet because the download speeds and quality would be so poor.

Re: The Blockchain Bubble Will Pop, What Next?

#85
post #7

I used to think that the blockchain bubble was like the dotcom bubble, in that the core technology was actually genuinely transformative, so that even after the bubble burst and all the over-valued companies went bust, the technology would remain and continue change our lives. However, I must admit I'm starting to have my doubts now. It was 10 years in to the dotcom era that the dotcom bubble burst, and by that time…

First: the dotcom bubble burst five years after it began, and the technological advancements didn't see "mass adoption" - because they were not consumer facing. I get the feeling that you're thinking that pets.com was the dotcom bubble... the bubble was centered around telecom technology - not retail websites. The bubble is fairly disconnected from what one would describe as the success of the internet today - web 2.0, the rise of APIs.

Second: The region of experience that blockchain tech is best suited to revolutionize, finance, is also the one that is most sensitive to rapid change and most heavily regulated. The US government is still grappling with the idea, hell - the NIST draft that was supposed to provide some clarity of what cryptocurrencies actually are got totally nuked by every interested party. I'm still waiting for the IRS to issue a clarifying statement on the tax handling of a hardfork so that I can amend last year's filing. It has led to a very strange situation where a hands-off approach has allowed for development, but also prevented integration.

Re: The Blockchain Bubble Will Pop, What Next?

#86
post #40
post #7

I used to think that the blockchain bubble was like the dotcom bubble, in that the core technology was actually genuinely transformative, so that even after the bubble burst and all the over-valued companies went bust, the technology would remain and continue change our lives. However, I must admit I'm starting to have my doubts now. It was 10 years in to the dotcom era that the dotcom bubble burst, and by that time…

The dot com era actually started in the late 1960s with packet switching networks. It took 50 years to get mass adoption. The first really working cryptocurrency was in 2008. I expect mass adoption by 2058.

Web != packet switched network. But, if you want to go that far, the first cryptographic hash functions were being designed in the late 1970s, so cryptocurrency has a decade or so to go before it'll be "late" by that standard, and it's progress so far has been lackluster compared to the internet's as of 40 years after it's "packet switching network ancestry".

Re: The Blockchain Bubble Will Pop, What Next?

#87
post #18

The biggest problem is that blockchains are inherently not scalable. That is more or less by design, but it limits the types of applications that can run on top of them. I think a more likely outcome is that most types of payment infrastructure and settlement/transaction layers move to blockchains and not actual applications. For example, it’s not too difficult to imagine the stock market switch to tokenized stocks t…

>The biggest problem is that blockchains are inherently not scalable. Blockchains can be made extremely scalable. You can break the problem into transaction volume (how many transactions can be processed on average per sec) and transaction velocity (how fast a particular transaction can be approved). Transaction volume scalability results almost entirely from checking that the rules of the system have been followed i…

> We can solve the scalability problems of blockchain. The thing that keeps me up at night is not scalability, it is user adoption beyond the use cases which Bitcoin already successfully fulfills.

Fair point. But none of the biggest chains right now are nearly as scalable as using something like AWS or Azure or Google Cloud. Unless they are able to handle the same amount of traffic, there is no reason for someone to use them for typical applications.

On the development side it will be more cumbersome to develop for, and on the user side it will be slower and/or more costly to use.

Re: The Blockchain Bubble Will Pop, What Next?

#88

My thinking about the blockchain/cryptocurrency space shifted significantly when I changed my perspective from thinking about technology to thinking about problems . The web caught on because in the late 80s, the biggest problem in the world was that we were starved for information. We didn't know it yet, because we'd never lived in any other world, but once we could fire up Netscape and view homepages from people wh…

>The biggest problem in the world today is lack of trust and the failure of institutions. That's a pretty strong statement, one that I would disagree with, mostly because it's so vague. How did you come to that conclusion?

Because of what's happening in [government, media, science, public spaces, labor markets]. I view all of them as examples of the same underlying phenomena.

In government, you have the UK voting to remove itself from the EU, and then when the referendum passed, the prime minister resigning, all of the major proponents of the referendum resigning, and Scotland threatening to secede from the UK (again). You have a U.S. president who starts his term with under 50% approval rates, the lowest since WW2 [1], to cries of "not my president", and Congressional approval ratings below 20%. You've got continued polarization - instead of converging on compromise candidates in the center, the Republicans has moved rightwards toward nominating actual Nazis (5 running in 2018) [2], and the Democrats have moved leftwards toward nominating actual socialists [3].

In the media, you've got an Overton Window that doesn't overlap - no matter where you are on the spectrum, there are publications with a large readership who are publishing what you perceive to be blatant falsehoods. Take a look at the comment sections of the same story on Breitbart [4] and News & Guts [5]. Could you imagine a reader of one reading the other with any sort of any open mind? Would you consider anything you read there an example of trust?

In science, you have movements such as anti-vaxxers who would reject one of the most important health advances of the last century because they don't trust it. You have continued rejection of climate science, largely because it's inconvenient. You have a replication crisis in many social scientists.

In public spaces - go to an airport and listen to the loudspeaker say "Please report any unattended baggage or suspicious persons to the nearest TSA agent" and think about what that's saying about the level of trust in society and the constant messages of fear. There was another recent story on HN about air marshals secretly tailing random civilians [6]; that's not exactly something that happens in a society that trusts its citizens. There's also continuing helicopter parenting [7] and the assumption that everything around you is dangerous, which tends to become a self-fulfilling prophecy.

And in labor markets - I did a bunch of market research on a startup to fix unemployment a couple years ago. My hypothesis was that with all the startups desperate for workers, and workers desperate for jobs, it was a simple information problem to match up supply to demand and make everything efficient. What I found was that hiring isn't really an information problem, it's a trust problem - employers are terrified of getting a bad hire and so reject a lot of candidates that with a little training could be great employees, and similarly employees are terrified of ending up in a career dead-end and so are unwilling to invest in significant self-study or commit to a career path or potential employer. End result - unemployment and underemployment even though there are both workers and jobs available.

All of these are pretty far afield from cryptocurrencies, but you asked why I believe the #1 problem in the world is lack of trust, and that's why. A world where people trust each other is one where they're willing to take risks on the assumption that they won't be taken advantage of, and that is...very far from the state of the world right now.

[1] https://projects.fivethirtyeight.com/trump-approval-ratings/

[2] https://www.vox.com/2018/7/9/17525860/nazis-russell-walker-a...

[3] http://www.cc.com/video-clips/jzbxb9/the-daily-show-with-tre...

[4] https://www.breitbart.com/big-government/2018/07/29/trump-wa...

[5] https://www.newsandguts.com/trump-will-shut-government-doesn...

[6] https://news.ycombinator.com/item?id=17635761

[7] http://www.dailymail.co.uk/news/article-462091/How-children-...

Re: The Blockchain Bubble Will Pop, What Next?

#89

Earlier quoted context omitted.

>"They come from being able to do old things better: cheaper, more securely, free from the interference of trusted parties / government." Name one thing that blockchain has made, or is even close to making cheaper or more secure or trustless? The largest application of the technology has been bitcoin thus far, and bitcoin is more expensive; less secure than the traditional financial system (where if you get hacked yo…

I'll give you one. The year is 2010. And I am a normal citizen and I want to donate money to WikiLeaks without the banks colluding to stop my financial transaction, even though nobody has been convicted of a crime. How do you do it? The only way I can think of to do this easily (easily being the key word!) is a cryptocurrency transaction. Banks and credit card companies collude all the time in order to censor financi…

With bitcoin, what would stop governments from passing laws making certain addresses tainted resulting in people that send coins to or receive coins from them to be audited and having to explain why and how they linked to certain causes.

What makes you think if bitcoins (or any *coin) becomes the main currency in a country or region, we would not have laws were all addresses would need to be linked to people (or companies) and the ledger would not be used for figuring out and persecuting people supporting certain causes?

Re: The Blockchain Bubble Will Pop, What Next?

#90

Earlier quoted context omitted.

How many people do you know with savings in physical gold? How big do you think the consumer market is for that? The major holders of gold bullion are banks and governments – they are not going to pile in to a pyramid scheme style system where by a small number of early adopters become worth the GDP of a small country.

Nobody has savings in physical gold because it's a PITA to acquire and store. Digital gold obviously doesn't suffer from these problems.

After all, it's not like people breaking into computers and stealing stuff from them is anywhere near as common as people breaking into houses or bank vaults.
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