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There's No Good Reason to Trust Blockchain Technology

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Re: There's No Good Reason to Trust Blockchain Technology

#131

Post by blotter_paper »

jayd16 wrote: post #111
blotter_paper wrote: post #71

Earlier quoted context omitted.

I don't see how that fact is irrelevant. In one case, an upper limit of how much currency can enter the marketplace is known. In the other, it can keep being printed indefinitely. That doesn't seem like a trivial difference. This is basic inflation/deflation we're talking about, and while deflation isn't popular among modern economists it certainly isn't seen as irrelevant. Satoshi has no magical powers, only a stash…

I simply mean a large amount approaches infinity. In Satoshi's case he owns 5% of all bitcoin that will ever be and almost certainly much more in terms of what is in circulation. This amount of power is akin to that of a central bank for the purposes of this discussion.

USD inflated 2.44% last year. Satoshi can dump his alleged 5% of the total supply once, and then he can't do it again. The fed can keep inflating at whatever rate they want year after year. That's the difference, and it's huge. The fed's power approaches infinity, but Satoshi's does not. Gold doesn't become inflationary just because the pope owns a lot of it.

Re: There's No Good Reason to Trust Blockchain Technology

#132

Post by theseatoms »

verdverm wrote: post #115
theseatoms wrote: post #102

Earlier quoted context omitted.

As you've identified, a "private blockchain" is just a database. People can't wake up to this soon enough.

Yes and no. Consider HyperLedger. While it does have a shared, immutable ledger and chaincode, what is really interesting is the coordination and integration of business entities and processes. This is something a database does not facilitate like a blockchain.

Interesting. I'll have to read up on HyperLedger.

Re: There's No Good Reason to Trust Blockchain Technology

#133

Post by dragontamer »

blotter_paper wrote: post #131
jayd16 wrote: post #111

Earlier quoted context omitted.

I simply mean a large amount approaches infinity. In Satoshi's case he owns 5% of all bitcoin that will ever be and almost certainly much more in terms of what is in circulation. This amount of power is akin to that of a central bank for the purposes of this discussion.

USD inflated 2.44% last year. Satoshi can dump his alleged 5% of the total supply once, and then he can't do it again. The fed can keep inflating at whatever rate they want year after year. That's the difference, and it's huge. The fed's power approaches infinity, but Satoshi's does not. Gold doesn't become inflationary just because the pope owns a lot of it.

There were 5-Million BTC in 2011, and there are now over 15-million BTC today. BTC has inflated 300% in the past 7ish years.

There will be 657,000 BTC added to the system in the next year, or roughly 4.5%. Which means BTC is "inflating" more than USD right now (with your definition of 'inflation', which isn't very good IMO). The next halfening won't happen until 2020 or so.

Re: There's No Good Reason to Trust Blockchain Technology

#134

Post by amanaplanacanal »

afgkonionio wrote: post #93
darawk wrote: post #83

> What blockchain does is shift some of the trust in people and institutions to trust in technology. You need to trust the cryptography, the protocols, the software, the computers and the network. And you need to trust them absolutely, because they’re often single points of failure. This is wrong. You do not need to trust them, because you can verify their correctness yourself. You cannot similarly inspect the rectit…

>You do not need to trust them, because you can verify their correctness yourself. I certainly cannot verify their correctness myself, and I'm a professional programmer! I don't touch cryptography with a thirteen-and-a-half foot pole. Most people wouldn't even know where to start. Only a tiny minority has the skills to singlehandedly verify the economic theory, cryptography, and implementation of a cryptocurrency. Pr…

Piling on to your comment: even the experts get it wrong. Even if you are the most knowledgeable person in the world, you are going to miss things. Nobody can "verify the correctness", it's not technically possible.

Re: There's No Good Reason to Trust Blockchain Technology

#135

Post by notahacker »

jondubois wrote: post #70
joe_the_user wrote: post #48

Earlier quoted context omitted.

If you're a technical person, you don't need to trust Blockchain technology; you can verify that it works on your own. If you're not a technical person, you can find independent technical experts to verify it for you. Not really. Just as an example, the only people who expect to verify encryption algorithms all on their own are those incompetent at it. The competent take the "best of breed", note what other experts s…

>> but fiat money markets are many times more transparent than bitcoin markets. How so? When the Fed creates money out of nothing and engages in so-called 'open market operations': - Who brokers these deals? - Do they get a commission on those deals? What percentage? - When the Fed buys bonds/debt from the government through those brokers, who gets their hands on the credit when the government spends it? Is it the sa…

A trivial amount of research would answer your questions. Open market operations are conducted from the trading desk of the Federal Reserve Bank of New York, buying bonds through primary dealers listed on its website which fulfil the solvency requirements for buying and selling millions in securities at short notice. But anyone can buy and sell government bonds on regulated secondary markets (for that matter individuals can also buy Treasury securities direct)

The equivalent question with regard to crypto is who "mines" the BTC and what rate do they pay for electricity. Good luck getting systematic information on that...

I'm not sure why you decide to conflate the orthogonal issue of how the government spends funds it debt-finances, but government spending is unusually well documented, especially compared with "how crypto miners spend their profits". And corporations which get big government contracts use the funds they have paid to deliver the services paid for under the contract, with what is left over being profit for the firm to see fit (I thought cryptolibertarians liked capitalism!) Obviously giving the money to shareholders will not have the same effect as the shareholders do not have the capacity to deliver fighter jets, manpower, software or toiletries.

The intricacies of how money is created are is not widely understood, but I don't think many cryptocurrency users can audit blockchain code, name the largest actors in mining or evaluate whether rates on exchanges are being manipulated by wash trades either.

Re: There's No Good Reason to Trust Blockchain Technology

#136

Post by blotter_paper »

bduerst wrote: post #118
blotter_paper wrote: post #71

Earlier quoted context omitted.

I don't see how that fact is irrelevant. In one case, an upper limit of how much currency can enter the marketplace is known. In the other, it can keep being printed indefinitely. That doesn't seem like a trivial difference. This is basic inflation/deflation we're talking about, and while deflation isn't popular among modern economists it certainly isn't seen as irrelevant. Satoshi has no magical powers, only a stash…

For all intents and purposes it's the same central authority powers. You can split hairs over hypothetical scenarios where Satoshi doesn't have as large a share in some future, but the fact is that now they have the same control as a central bank does over putting currency into circulation.

Again, no. Satoshi can dump once, the fed inflates USD year after year at whatever rate they like. This is not the same power. Look at Venezuela; Satoshi can't do that. He can dump ~6% of current supply once (assuming high estimates of his holdings are correct), the IMF is estimating Venezuela's inflation at above 1,000,000% in 2018. That's totally different. This is the craziest modern example, of course, but USD could do the same at the whim of the fed (and they did increase supply by 2.44% last year, non-hypothetically). Satoshi holds no such power by any stretch of the imagination. There are legitimate criticisms of Bitcoin for you to make, but this isn't one of them. The supply is fixed. There is no "for all intents and purposes" disclaimer that can make your statement correct. This is basic economics, if you don't believe me find an economist to pick the brain of. They probably won't like Bitcoin, but they certainly won't argue that Satoshi is analogous to the fed.

Re: There's No Good Reason to Trust Blockchain Technology

#137

Post by baby »

legionof7 wrote: post #46
baby wrote: post #30

Earlier quoted context omitted.

I think it's a big but easy mistake to make. There is a lot of noise and scams do represent a huge majority of the market right now. But if you look underneath, you will see that the academic community has been at work and a lot of research about byzantine agreements is coming out. It's quite the exciting field actually if you can segregate the noise from the actual good stuff.

Completely agree with this. I was also getting slightly disillusioned with the ecosystem until I attended Grincon and met a bunch of people who were actually interested in building, researching, and exploring new tech.

Grin seems interesting, they gave a talk at Real World Crypto last year. I'm wondering why they think proof-of-work is the way forward though, I'm not sure I would agree with proof-of-work nowadays.

Re: There's No Good Reason to Trust Blockchain Technology

#138

Post by AgentME »

darawk wrote: post #83

> What blockchain does is shift some of the trust in people and institutions to trust in technology. You need to trust the cryptography, the protocols, the software, the computers and the network. And you need to trust them absolutely, because they’re often single points of failure. This is wrong. You do not need to trust them, because you can verify their correctness yourself. You cannot similarly inspect the rectit…

I agree with you. There's different types of trust. There's the first usual kind: "I trust my friend to give me back the stuff I let him borrow", "I trust my bank to make it easy for me to use my money the way I want and keep doing this forever". Then there's a separate kind, "I trust that I understand this open system correctly". Cryptocurrencies focus on removing the need for that first kind of trust. The second kind of trust is a different kind of issue that's much more tractable. It's an issue that we can make progress on, by having more people study it, by creating better learning materials, by making the system more understandable, etc.

The article really frustrates me because it doesn't draw this distinction at all. To re-state you a little, I feel like one could make a similar article saying that end-to-end encryption is a worthless improvement over Facebook messages because you still have to "trust" something to keep your messages private, which is a false equivalence.

Re: There's No Good Reason to Trust Blockchain Technology

#139

Post by chriswarbo »

optimuspaul wrote: post #73
baxtr wrote: post #8

I hate blockchain so much and I can’t even exactly say why. Not because of the technology itself. I care about it as much as any other technology. I think it’s because of the sleazy non-tech people that suddenly turned into “experts” raising money for their BC startup, people organizing meetups, becoming “consultants” and of course the whole crypto craze... I really wish it will die soon.

I also hate blockchain but I can say exactly why. Someone came up with a hard problem and created an overly complex and inefficient solution to it. So I have two issues with it. 1) I don't buy that the original problem it sought to solve, which I believe is currency related, but let's say it's trust in a distributed system where trust does not exist. I don't believe that is an actual problem that should be solved wit…

> I don't believe that is an actual problem that should be solved with a general solution like blockchain

AFAIK this was a well-known problem for digital currencies. I think it was "eCash" that went the furthest ( https://en.wikipedia.org/wiki/Ecash ), with "blind signatures" to prevent transactions being linked to the same user, but couldn't solve the centralised trust problem.

BitCoin's "solution" is to share a ledger, pick the longest in case of forks, prevent spam using Hashcash and keep the hashcash barrier high by turning mining into a lottery.

This is a pretty cool hack, since it addresses not only technical security concerns, but also economic and social aspects. Yet I see it as a pathological, brute-force edge-case: technically a solution, but less "this problem is now solved" and more "ha, I hadn't thought of that; we'll need to specify the problem better".

Re: There's No Good Reason to Trust Blockchain Technology

#140

Post by darawk »

amanaplanacanal wrote: post #134
afgkonionio wrote: post #93

Earlier quoted context omitted.

>You do not need to trust them, because you can verify their correctness yourself. I certainly cannot verify their correctness myself, and I'm a professional programmer! I don't touch cryptography with a thirteen-and-a-half foot pole. Most people wouldn't even know where to start. Only a tiny minority has the skills to singlehandedly verify the economic theory, cryptography, and implementation of a cryptocurrency. Pr…

Piling on to your comment: even the experts get it wrong. Even if you are the most knowledgeable person in the world, you are going to miss things. Nobody can "verify the correctness", it's not technically possible.

Of course, but that's not the point. The point is that you have the opportunity to check it yourself, even if you choose not to avail yourself of that opportunity. And just by that opportunity being available to people, it keeps people honest.
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