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Hard Problems in Cryptocurrency: Five Years Later

vitalik.ca

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Re: Hard Problems in Cryptocurrency: Five Years Later

#211

Post by stale2002 »

dunkelheit wrote: post #124
cyphar wrote: post #72

Earlier quoted context omitted.

Excluding the transaction fees problem you mentioned (which cryptocurrencies also have -- while it might not be 4% it's definitely not 0%), all of the uses you listed are really just one use-case -- uncensorable transactions. Don't get me wrong, that's a very good feature of cryptocurrencies (assuming that you have the ability to transform crypto back to real money on the other end), but you should be aware that your…

I'm struggling to understand if uncensorable transactions are a good thing (note: struggling not in a sense of "I actually think it is evil but let's hear your bullshit arguments so that I can easily debunk them", but in a sense of really being undecided). I am not a libertarian so I don't think that laws are just a useless form of violence. So how can uncensorable transactions be useful for a law-abiding citizen? On…

Donations to WikiLeaks were blocked, even though they were never charged with any crime.

So, this is an example of where a fully law abiding citizen, had their transactions blocked, but the crypto payments weren't.

The legal Bitcoin payments weren't blocked, but the bank transactions were.

Re: Hard Problems in Cryptocurrency: Five Years Later

#212

Post by nootropicat »

jotakami wrote: post #187
nootropicat wrote: post #123

Earlier quoted context omitted.

Incorrect. The supposed MR=MC law means that the entire economy is zero-sum and wealth creation is impossible. His reasoning also directly translates to real world physical security, as in, if you want to protect wealth worth $1000 from theft, according to him you have to spend $1000-epsilon, otherwise someone is going to outspend you and steal it. Fortunately, that's not how the world works. Visual illustration of t…

Fortunately, we get asymmetric security through laws and criminal punishment rather than machine gun bunkers. Also, MR=MC doesn’t imply that wealth is never created, it just means that it can’t be created purely through exchanging commodities.

Nothing special about commodity exchange. The difference between marginal revenue and marginal cost is marginal wealth creation (destruction if negative). A world in which MR=MC is in a global maximum and no improvement is possible - any state changes imposed externally can either lead to the same score ('wealth') or make it worse.

In other words, he first assumes that no improvement is possible, and then indeed manages to show that, according to the assumptions, no improvement is possible.

Re: Hard Problems in Cryptocurrency: Five Years Later

#214

Post by zaphar »

Terretta wrote: post #206
arcticbull wrote: post #141

None of these are the actual hard problems in cryptocurrency and the fact this is the focus speaks volumes. The real hard problems are: 1. How do we stop using more power than Switzerland to process 4 transactions per second (lol) 2. How do we stop payments to international terrorists and rogue states. 3. How do we stop money laundering. 4. How do we stop price manipulation by fraudulent actors. 5. How do we allow pe…

> These are the actual hard problems of cryptocurrency and until solved it will never, and I mean never, reach mass adoption... Let's look at these for cash, which has some level of mass adoption. > 2. How do we stop payments to international terrorists and rogue states. Both of these are amply funded today, so between cash and banking system, this isn't really a thing. Whatever form does work, isn't hampering adopti…

    A friend once tossed a $100 bill from her birthday into
    the wood stove with birthday wrapping paper. There was no 
    expectation this form of currency could recover access by 
    negligence, fraud, theft, acts of god, or otherwise, yet 
    she was thrilled to mass-adopt that $100 until it turned 
    into ash.
Remove the negligence item and fraud and theft are still there. Banks and other regular institutions have remedies for these and they are an "improvement" for most users in this area.

Put that together with the fact that it is far and away easier to lose your cryptocoin holdings than it is to lose cash or money in your bank account and a cryptocoin is in most ways a step backward for consumers. They benefits they tout (Easier to send money to someone else, Proof against government meddling) sound good but the second is why it's a step backward for most people and the first is hampered by the combination long transaction times and the volatility of the coins value.

Is it possible that these will all get remedied? Sure. But until you remedy them most people shouldn't be using a cryptocoin unless they can afford to lose what they put in there.

Re: Hard Problems in Cryptocurrency: Five Years Later

#215

Post by seibelj »

dunkelheit wrote: post #124
cyphar wrote: post #72

Earlier quoted context omitted.

Excluding the transaction fees problem you mentioned (which cryptocurrencies also have -- while it might not be 4% it's definitely not 0%), all of the uses you listed are really just one use-case -- uncensorable transactions. Don't get me wrong, that's a very good feature of cryptocurrencies (assuming that you have the ability to transform crypto back to real money on the other end), but you should be aware that your…

I'm struggling to understand if uncensorable transactions are a good thing (note: struggling not in a sense of "I actually think it is evil but let's hear your bullshit arguments so that I can easily debunk them", but in a sense of really being undecided). I am not a libertarian so I don't think that laws are just a useless form of violence. So how can uncensorable transactions be useful for a law-abiding citizen? On…

> I am not a libertarian so I don’t think that laws are just a useless form of violence.

Libertarians aren’t anti-law, they are pro-constitution. Libertarians are against the drug war, pro-marijuana legalization, against civil asset forfeiture, and trying to end the endless wars waged in the Middle East.

You will not find a better friend than a libertarian if you ever find yourself arrested or sued for any reason. Judges inventing laws is the antithesis of the belief system - libertarians follow the law as written.

Re: Hard Problems in Cryptocurrency: Five Years Later

#216

Post by seibelj »

koheripbal wrote: post #201
beefield wrote: post #49

Funny. Article discussing hard problems of crypto and ignoring the elephants in the room. There is still no actual and relevant use case for crypto outside illegal transactions and gambli^H^H^H^H^Hinvestment purposes. The second elephant is that it brings monetary policy back to medieval times. Third is that in practice the whole concept of credit and ots role in money creation is ignored.

As long as coins are designed as a store of value rather than an actual currency, they will have limited use-cases. People need to get over the concept of inflation. Inflation is GOOD.

Inflation is good for governments who want to reduce their debt obligations denominated in their own currency, and it encourages economic activity.

It’s bad if you have little money, your wages don’t raise automatically with inflation, and every year what little you have has been reduced in value 1 to 10%.

I as a homeowner with a government-subsidized 30 year fixed rate mortgage love it however, as what I pay for my asset each month is less and less as inflation helps me and the tax payers finance my wealth creation. Renters, not so much!

Re: Hard Problems in Cryptocurrency: Five Years Later

#217

Post by dblank9 »

arcticbull wrote: post #141

None of these are the actual hard problems in cryptocurrency and the fact this is the focus speaks volumes. The real hard problems are: 1. How do we stop using more power than Switzerland to process 4 transactions per second (lol) 2. How do we stop payments to international terrorists and rogue states. 3. How do we stop money laundering. 4. How do we stop price manipulation by fraudulent actors. 5. How do we allow pe…

1. Bitcoin isn't meant to be fast, it's meant to be reliable, and that's what you're paying for. Other chains are a different question. 2. We don't. One man's terrorist is another's freedom fighter. 3. We don't. The system is broken, Bitcoin is a new system. We need to figure out a new way to transact. 4. Maturity of the system will achieve this, just like it did with Wall Street. Or did it? :P 5. Many many solutions. Threshold signatures, regular multisig, mintable cryptos, etc... [bonus] Life is not fair. Early birds always get the worm.

Re: Hard Problems in Cryptocurrency: Five Years Later

#218

Post by ErikAugust »

simias wrote: post #171
alanfalcon wrote: post #110

Earlier quoted context omitted.

The best smart contracts don't need to be reverse engineered, they've got shared, verified source code. The bugginess is a real problem as you've pointed out. The "impossible to sell anything" couldn't actually be farther than the truth from all my experience buying and selling NFTs. Over $150,000 USD worth of digital collectable game cards have been traded this week alone over at https://opensea.io/recent - everythi…

Digital assets are obviously the best possible use case for blockchains and smart contracts, but can it really work outside of that use case? And even for that use case is it really more convenient than centralized solutions? From what I can tell browsing through this website those digital "assets" seem to be yet another speculative outlet with some limited gamification on top. It's cool from a technical perspective…

You can make real games that leverage these type of assets. Plug: https://www.megacity.gg.

Re: Hard Problems in Cryptocurrency: Five Years Later

#219

Post by cdiddy2 »

acdha wrote: post #207
rmtech wrote: post #166

Earlier quoted context omitted.

> 2. How do we stop payments to international terrorists and rogue states. We should definitely build a technical system that stops payments to terrorists but allows payments to freedom fighters; that stops payments to rogue states but allows payments to states that stand up to bullying by tyrannical regional powers. /s Seriously I think these kinds of questions need un-asking rather than answering.

> Seriously I think these kinds of questions need un-asking rather than answering. That’s equivalent to conceding that the concept cannot work and giving up. No matter your personal views on a particular issue, this is really just asking how to comply with legal obligations: governments don’t care if your system is broken by design and makes compliance hard, and that’ll deter most legitimate users.

These are problems that aren't fixed in traditional money either. Money still gets to terrorists and still gets laundered through our biggest banks.

Re: Hard Problems in Cryptocurrency: Five Years Later

#220

Post by leppr »

arcticbull wrote: post #141

None of these are the actual hard problems in cryptocurrency and the fact this is the focus speaks volumes. The real hard problems are: 1. How do we stop using more power than Switzerland to process 4 transactions per second (lol) 2. How do we stop payments to international terrorists and rogue states. 3. How do we stop money laundering. 4. How do we stop price manipulation by fraudulent actors. 5. How do we allow pe…

Points number 7, 8, and 9 in Vitalik's article are about your 1, if you cared to read it.

The rest of your points are as you say "currency" and usability problems, problems that a layer above will decide to solve or not. There is a lot of work being done on these points too, but Vitalik and the Ethereum 2.0 research teams are tackling a more low level set of issues.

Think of it like Visa, SWIFT, or the internet: those are also technical platforms that need to be engineered and thought about, often in abstraction of other issues like monetary policy and local regulations.

Many systems are built that way, where the underlying platform is kept "dumb", and requirements that need highly flexible enforcement (like the selective censorship/cancelation in your examples) are applied a level above, where humans are kept in the loop.

There aren't any protocol-level rules in TCP/IP that says network packets containing information about the Tiananmen square protests can't go from US to China, those rules are implemented in Chinese routers. Maybe if you had your say in the design of TCP/IP things would've been different, but this approach has so far proven wildly successful.

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