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You Do Not Need Blockchain: Popular Use Cases and Why They Do Not Work

blog.smartdec.net

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Re: You Do Not Need Blockchain: Popular Use Cases and Why They Do Not Work

#201

Post by will_brown »

gregschlom wrote: post #33

I've said this several times before on this site but will keep repeating it: there's exactly one use case where the blockchain is a superior (and, in fact, the only) solution: when you can't use contracts and the legal system to ensure trust between the parties. In other words, anything illegal. For any other conceivable use case, a database and a contract between parties are a superior solution. Edit: To clarify wha…

>Guys, this works. It's literally how the world works.

How about corporate stock?

You know how many third parties are involved with the markets and the added costs of those third parties? Even with a corporation with a stock ledger, stock trusts who own them, banks/brokers who handle all the buying/selling of stock...things don’t work.

Take the Dole case where the corporation had almost double the number of stock issued as actually existed.

Whereas every corporation could memorialize their stock on the Blockchain and each sale of stock would be completed via smart contract. Instant settlement, no stock trusts, no banks, no brokers...a peer to peer market. Stocks are a particular use case because unlike the authors examples of “real world counter parts” (supply chain, authorship, land registry) shares in a company can be represented entirely digitally allowing the peer to peer and trustless system (at least for purposes of transaction settlement).

Re: You Do Not Need Blockchain: Popular Use Cases and Why They Do Not Work

#202

Post by the_gastropod »

oarabbus_ wrote: post #156
gregschlom wrote: post #80

Earlier quoted context omitted.

I'm not saying: you don't need the blockchain because you shouldn't be doing bad things. I'm saying: you need the blockchain if and only if you are doing things that are illegal in your country. It's a decision criteria for when you need the blockchain. I'm making no moral judgement. And there are very good reasons to want to do things that your government deems illegal (for example, donating to a political organizat…

>I'm saying: you need the blockchain if and only if you are doing things that are illegal in your country. It's a decision criteria for when you need the blockchain. This is, at face value, simply false. I want to send $5 to a poor African family. I'll even relax my criteria - I'm willing to wait _up to 3 business days_ for this African family to receive my $5. I live in California. Could you please point me towards…

Transferwise is both faster and cheaper than sending Bitcoin. And it doesn't require your poor African family to sign up for a probably poorly run poor African Bitcoin exchange.

Re: You Do Not Need Blockchain: Popular Use Cases and Why They Do Not Work

#203

Post by the_gastropod »

oarabbus_ wrote: post #148
gregschlom wrote: post #33

I've said this several times before on this site but will keep repeating it: there's exactly one use case where the blockchain is a superior (and, in fact, the only) solution: when you can't use contracts and the legal system to ensure trust between the parties. In other words, anything illegal. For any other conceivable use case, a database and a contract between parties are a superior solution. Edit: To clarify wha…

>Guys, this works. It's literally how the world works. There were people saying the same thing as you before the wheel was invented, and in 1550, and 1800, and 1900, and 1910 (guys, horses shit on the streets and you occasionally contract dysentary. But overwhelmingly you can get from point A to B. Guys, horse-drawn carriages work. It's how the world works!) and 1950 and 1990 and... "This is how the world works" is n…

Do you think 10 years after the wheel's invention, people were still unconvinced by it?

Bitcoin has been out since 2008. Over a decade later, the only thing it's been useful for is for masking illegal activity, and speculating wildly.

Just because something is new does not mean it's revolutionary. The Segway was in all likelihood a more revolutionary invention than blockchain will ever be.

Re: You Do Not Need Blockchain: Popular Use Cases and Why They Do Not Work

#204

Post by awrence »

There has just been immense confusion about what blockchain technology is meant to enable because unfortunately, amidst all the hype, a ton of people who don't understand the point of it have started to peddle the absolute non sense concept that is a private blockchain. These are actually better known as databases, and are obviously not a miracle innovation, they’re just SQL wrapped up in blockchain hype. And in most cases you’re just fine with SQL et al between a few responsible counterparties that can go through the court system if they need to but generally trust each other.

The only true innovation is the decentralized public ledger. A properly decentralized public ledger is actually a horribly inefficient way to maintain a ledger, but this is necessary and by construct, because the only way you can have a secure immutabl'ish ledger (no human abstract creation is truly immutable) is to make amending it or the rules it follows highly democratic and expensive to change. The united states constution is a good analogy of a properly decentralized blockchain.

From an economic impact perspective there is only one absolutely major groundbreaking application for this: to create monetary digital vehicles immune from centralized manipulation (read mostly, from inflationary interventions). The market value for money in the world is between 100-300 tn USD equivalent depending on what you count which is ballpark equivalent to the amount of real wealth in the world (that's a coincidence). This is by orders of magnitude the killer use case of cryptocurrencies, which incidentally was Satoshi’s original vision.

After that, you can conceive of all sorts of other applications, but mostly smart contracts which can theoretically provide immutablish programmable transfers of wealth mechanisms, free of intermediaries or corrupt legal frameworks. This has tons of downsides and risks and the max valuation down the line is a fraction of the monetary use case, but it’s a thing that does get plenty of people excited and i'm sure some of it is potentially legit, especially in disfunctional countries.

In general though the second you read private and blockchain used together, you can mostly roll your eyes and move on. EG JPM coin to name but the latest example.

Re: You Do Not Need Blockchain: Popular Use Cases and Why They Do Not Work

#205

Post by zhoujianfu »

AnthonyMouse wrote: post #137
gregschlom wrote: post #33

I've said this several times before on this site but will keep repeating it: there's exactly one use case where the blockchain is a superior (and, in fact, the only) solution: when you can't use contracts and the legal system to ensure trust between the parties. In other words, anything illegal. For any other conceivable use case, a database and a contract between parties are a superior solution. Edit: To clarify wha…

> In other words, anything illegal. Not exactly. It's anything for which the legal system is not effective. For example, you can have a perfectly legal contract, but the other party is in a corrupt foreign jurisdiction that would never find in your favor in the event of a breach. Then you can't contract with them because they have no incentive not to breach, without an alternative method of ensuring compliance that d…

Exactly... a good use of crypto is for merchants who get a lot of fraud. It’s not worth trying to find and persecute every potential customer who rips you off, so you outsource that job to the client themselves (if you can get crypto and send it to me, we’re good).

Re: You Do Not Need Blockchain: Popular Use Cases and Why They Do Not Work

#206

Post by sgeisler »

dragontamer wrote: post #146
josaka wrote: post #123

Earlier quoted context omitted.

My sense is the set of scenarios where "you can't use contracts and the legal system to ensure trust between the parties" is broader than just illegal agreements. Contract often fail when the damages for breach are too small, diffuse, and heterogeneous, making class action unsuitable. And many contract provisions are often not honored in bankruptcy. Litigation is an unwieldy tool and preferably avoided where possible…

But that's where small-claims court comes in. It mostly only costs you your time, you aren't really allowed to bring in a lawyer to argue on your behalf, etc. etc. Depending on your location, the MAXIMUM damages for small-claims court is $5000 to $10,000. The whole system is designed so that smaller issues can be resolved quickly. > And many contract provisions are often not honored in bankruptcy That's literally the…

> If you put 20 BTC into an exchange (in promise for 550 ETH or whatever), but the exchange goes bankrupt... you lose both your BTC and your ETH. You have to go through the courts to try to get your money back.

That's actually solvable with atomic swaps [1]. They anable you to trustlessly exchange crypto currencies at an agreed on price.

[1] https://en.bitcoin.it/wiki/Atomic_swap

Re: You Do Not Need Blockchain: Popular Use Cases and Why They Do Not Work

#207

Post by skilgarriff »

gregschlom wrote: post #157
skilgarriff wrote: post #106

Earlier quoted context omitted.

I can send 1 bitcoin from myself living in Minnesota to my friend living in Japan for the equivalent of $0.46. That's an improvement over the existing system. I don't have to trust anyone in between to get my money to him. How would that be as possible and as "trustless" without blockchain?

1. Regarding the fees: $0.46 is (I presume) only the transaction fees. To make an accurate comparison, you'd have to include the exchange fees to convert from USD to BTC and then from BTC to JPY. Right now Coinbase is charging me $59 to buy 1 BTC, and I don't know how much more it would be to sell exchange that back to JPY. You can send $4000 (about 1 BTC) to someone in Japan for $30.14 with TransferWise. And guess w…

1. First these are totally different points.

a. If you do not currently own Bitcoin and want to own it there are many ways you can get it. They range from fast (generally more expensive) to slow (generally less expensive). Sure, if you want to buy Bitcoin on Coinbase you can do that and you will pay them a fee for that service - which I've done. You can also mine it - which I've done, be paid it in - also done, etc.

b. Secondly you are assuming that my friend can't pay for services in Bitcoin. We have both had lunch together at a restaurant in which we paid for the entire meal in BTC.

So it's an unfair statement to say my transferring of BTC to my friend costs me these fees. If you want to make the statement of "transferring USD to BTC to my friend to JPY" then sure, your statement about fees is relevant. I'm not sure suggesting that a pure BTC transfer is not an "accurate comparison" is fair.

2. See the above point. There is no trust beyond math when it come to a pure Bitcoin to Bitcoin transfer. There are plenty of things that you can buy using pure Bitcoin which I, and many of my friends, have done.

Re: You Do Not Need Blockchain: Popular Use Cases and Why They Do Not Work

#208

Post by arcticbull »

shepardrtc wrote: post #116
jVinc wrote: post #84

Earlier quoted context omitted.

> but who owns the database? And who enforces the contract? And who owns the actual data? > Blockchain provides satisfactory answers to all those problems. What problems? I mean your arguing like something like public transportation is an impossibility without blockchain backing because: "Who owns the stations, who enforces the schedules and who owns the actual busses?" Those are not problems. They are all just quest…

But what if two banks are transferring money between themselves? Which bank owns the database? Why should the other bank trust that database?

In every jurisdiction I can think of, this was answered decades ago. Each country has a national association or clearinghouse. In some it's government operated, in some it's a consortium of businesses. The US has NATCHA.

Re: You Do Not Need Blockchain: Popular Use Cases and Why They Do Not Work

#209

Post by skilgarriff »

biot wrote: post #169
skilgarriff wrote: post #106

Earlier quoted context omitted.

I can send 1 bitcoin from myself living in Minnesota to my friend living in Japan for the equivalent of $0.46. That's an improvement over the existing system. I don't have to trust anyone in between to get my money to him. How would that be as possible and as "trustless" without blockchain?

What are you trading the 1 bitcoin for? Given that the typical use case is to purchase some product or service (rather than just transferring bitcoin for fun), how do you secure that aspect of the transaction?

The same way that I secure my transaction when I pay the waiter for my meal in cash by giving it to them when I'm done eating.

I've paid for a lot of services in Bitcoin and been paid in Bitcoin. It's generally been a very smooth and enjoyable process.

Re: You Do Not Need Blockchain: Popular Use Cases and Why They Do Not Work

#210

Post by nickpsecurity »

shepardrtc wrote: post #197
bunderbunder wrote: post #181

Earlier quoted context omitted.

I can't speak to banks, but I have some personal experience with this sort of thing in the case of trading. I'm guessing it's at least somewhat similar to how it works among banks. All the big players have got real-time feeds they're sharing with each other to keep track of who's made what transactions, and they're constantly reconciling them against each other, to make sure that everyone's looking at the same pictur…

> All the big players have got real-time feeds they're sharing with each other to keep track of who's made what transactions, and they're constantly reconciling them against each other, to make sure that everyone's looking at the same picture. That is exactly what blockchain is. It is literally doing that. > None of this is strictly necessary, because there is a central source of truth that you can rely on. But who i…

"That is exactly what blockchain is. It is literally doing that."

It isn't: it's a chain of hashes with signature. Those predate blockchains that do things like wasteful mining. An example was Surety's timestamping service. A hashchain using standard primitives is way less wasteful, supports higher transaction volume, is cheaper, and can take advantage of hardware acceleration in client and server devices.

One of reasons I oppose blockchain tech is that you get better cost-benefit ratio out of high-performance, centralized protocols with decentralized checking. We also have some of that mathematically verified for correctness down to assembly. So, they will be more secure than complex, decentralized protocols.

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