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Maybe Blockchain Really Does Have Magical Powers

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Re: Maybe Blockchain Really Does Have Magical Powers

#21

Post by jcoffland »

skybrian wrote: post #19
jcoffland wrote: post #15

> The technological innovation of a blockchain is that it combines cryptographic signatures with a fault-tolerant distributed database. This is the naive view that has allowed the financial industry to ditch Bitcoin and run with blockchain. The problem that Bitcoin solves and private blockchains do not is called the Byzantine generals problem which did not have a known solution until Bitcoin came along. Private block…

True, but not necessarily that important. In world of Bitcoin this is important due to anonymity and criminal activity. In a regulated industry there are other ways to prevent cheating. Making cheating obvious and undeniable is probably enough to prevent it from happening (due to legal risk).

If a private blockchain forks how do you decide which one was the cheaters branch and which one legit?

Re: Maybe Blockchain Really Does Have Magical Powers

#22

Post by gbarc888 »

lhl wrote: post #3

I'm all for deflating blockchain hype, but I found the overall tone of the article pretty disagreeable, and more importantly, wholly missing the point. "In other words, the only thing previously stopping the standardization of reconciliation processes was the unwillingness of financial institutions to collaborate." No, actually, the one thing the blockchain provides, which was literally unsolved before pre-Nakamoto,…

The banks aren't using trustless consensus. They're using a third-party "uniqueness service" to prevent fraud.

Re: Maybe Blockchain Really Does Have Magical Powers

#23

Post by spullara »

Kinnard wrote: post #13
spullara wrote: post #8

Earlier quoted context omitted.

Neither one of these is compelling to me as you have to prove that this was the only prediction you made and you aren't cherry picking the correct ones.

Why can't you place multiple bets? Hedging?

Goes back to an old stock prediction scam. You choose 1024 and send 512 the prediction that a stock will go up and 512 the prediction that the same stock will go down. Each day you repeat this process only with the group where you were right. So, 512 -> 256 -> 128 -> 64 -> 32. Eventually you have a small number of people that think you can predict the future and you can ask them for money that you will invest on their behalf.

Re: Maybe Blockchain Really Does Have Magical Powers

#24

Post by JoshTriplett »

marcosdumay wrote: post #10
kfk wrote: post #6

Can somebody explain me how we deal with the increasing size of a blockchain? I get moore's law etc., but other than that? I mean, it's trillions of transactions we are talking about. Federated servers? We break the chain in some way?

The best theory I could found is that everybody just starts trusting an old enough snapshot of the chain, and its end becomes the chain's beginning. Then everybody just throws the older transactions away. I can imagine this working in a low volume chain. I do really doubt it would ever work on current Bitcoin chain or anything bigger.

It seems reasonable even on a massive chain. Some people do need to keep the whole archived part of the chain, and anyone who wants to verify it can do so, while day-to-day transactions can just compress that part of the chain down to a hash.

You'd need to keep enough of the chain live for all "live" transactions; that would likely have a time bound (days, perhaps). People who run a "full" client that verifies the complete blockchain then just need to have enough storage for the complete transaction volume over that time period. (And people who only need to worry about their own transactions and don't care about verifying other people's transactions can hold onto even less data.)

Re: Maybe Blockchain Really Does Have Magical Powers

#25

Post by valkea »

pipermerriam wrote: post #18
kfk wrote: post #6

Can somebody explain me how we deal with the increasing size of a blockchain? I get moore's law etc., but other than that? I mean, it's trillions of transactions we are talking about. Federated servers? We break the chain in some way?

Any blockchain client for any chain (Bitcoin, Ethereum, Dogecoin, ...) could very easily implement a storage layer for the underlying blockchain data using a protocol like IPFS. https://ipfs.io/ In this model, individuals would not need to store the entire chain as they could lazily fetch parts of the chain as they are needed. This would allow individuals to store very little of the historical blockchain data if thei…

How would you ensure the validity of the part of the blockchain you are reading from IPFS?

Re: Maybe Blockchain Really Does Have Magical Powers

#27

Post by kpil »

skybrian wrote: post #19
jcoffland wrote: post #15

> The technological innovation of a blockchain is that it combines cryptographic signatures with a fault-tolerant distributed database. This is the naive view that has allowed the financial industry to ditch Bitcoin and run with blockchain. The problem that Bitcoin solves and private blockchains do not is called the Byzantine generals problem which did not have a known solution until Bitcoin came along. Private block…

True, but not necessarily that important. In world of Bitcoin this is important due to anonymity and criminal activity. In a regulated industry there are other ways to prevent cheating. Making cheating obvious and undeniable is probably enough to prevent it from happening (due to legal risk).

In the context of banks, where there are a limited set of semi-trusted entities and multiple trusted third-parties, I seems that most most solutions to prevent cheating offers is either really similar to a trusted third party solution, or offers no major benefits, but comes with many drawbacks.

In cash transactions, it's hard to beat the speed of a trusted third party with a deposited "float" for ensuring that you can pay at the end of the day - even a bad day where a part defaults.

In securities, there is perhaps some room for a blockchain solution, as the infrastructure is much more complex and underdeveloped - due to the historically gigantic margins.

Re: Maybe Blockchain Really Does Have Magical Powers

#28

Post by mtkd »

gbarc888 wrote: post #22
lhl wrote: post #3

I'm all for deflating blockchain hype, but I found the overall tone of the article pretty disagreeable, and more importantly, wholly missing the point. "In other words, the only thing previously stopping the standardization of reconciliation processes was the unwillingness of financial institutions to collaborate." No, actually, the one thing the blockchain provides, which was literally unsolved before pre-Nakamoto,…

The banks aren't using trustless consensus. They're using a third-party "uniqueness service" to prevent fraud.

I doubt this message will propagate further than technical forums - you're just going to have suck up the homogenization, pasteurization, retail branding and consumer promotion of a once great technology

Re: Maybe Blockchain Really Does Have Magical Powers

#29

Post by jsprogrammer »

spullara wrote: post #8
drum wrote: post #5

Being a general ledger, the Blockchain also can be used as a more professional way of proving you made a prediction at a certain time. Sure, as an individual, I can tweet where I think the P/E of Amazon will be in a year and refer back to it to prove my point, but is that the best way for a financial institution? Having an entry in the blockchain has a more business oriented feel to it.

Neither one of these is compelling to me as you have to prove that this was the only prediction you made and you aren't cherry picking the correct ones.

They'd also need (to become compelling) to prove why one should care that they tweeted a P/E prediction a year ago that turned out to be right.

Re: Maybe Blockchain Really Does Have Magical Powers

#30

Post by semi-extrinsic »

jcoffland wrote: post #15

> The technological innovation of a blockchain is that it combines cryptographic signatures with a fault-tolerant distributed database. This is the naive view that has allowed the financial industry to ditch Bitcoin and run with blockchain. The problem that Bitcoin solves and private blockchains do not is called the Byzantine generals problem which did not have a known solution until Bitcoin came along. Private block…

> The problem that Bitcoin solves and private blockchains do not is called the Byzantine generals problem which did not have a known solution until Bitcoin came along.

I'm not an expert in any way, but the Wikipedia page for Byzantine Fault Tolerance suggests a solution to this problem was known as early as 2001, used in the Boeing 777 avionics software. See abstract of the paper below. That significantly predates Bitcoin. Or am I misunderstanding something?

http://ieeexplore.ieee.org/document/963311/?arnumber=963311

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