Winds of Change: The Case for New Digital Currency • Hacker News Board

Re: Winds of Change: The Case for New Digital Currency

#21

Post by netcan » Wed, Nov 14, 2018, 3:31 PM UTC

Because of bitcoin, cryptocurrency has a strong association with "free money," which is basically a dissent theory of macroeconomics that doesn't want central banks to have control. This was written by a central banker, so obviously there's a belligerence here...

In any case... Idk what I think about free money. Macroeconomics is hard.

OTOH, I think cryptocurrencies have other disruptive potential even if we want to keep our current macroeconomics, central bank control over interest rates.

It's the kind of technology that turns a £100bn industry into a £1bn one. There are several clunky inefficient financial services sub-industries that could potentiall be digitised by good implementation of blockchain tech.

The problem is too-big-to-fail. Besides actual central banking, does Christine Lagarde see her job as protector of the financial services industry? If so, she's going to build bureaucracy that maintains the status quo.

Re: Winds of Change: The Case for New Digital Currency

#22

Post by AnthonyMouse » Wed, Nov 14, 2018, 4:10 PM UTC

fro0116 wrote: post #10

larrysalibra wrote: post #7

> This currency could satisfy public policy goals, such as (i) financial inclusion, and (ii) security and consumer protection; and to provide what the private sector cannot: (iii) privacy in payments. If financial inclusion and privacy in payments were actual public policy goals, cryptocurrencies would be a lot less attractive. In reality, the real public policy goals are: 1) Financial exclusion: using denial of acce…

I don't disagree with your points around the public policy goals of currency, but suggesting that minimal balance / monthly fee requirements come from AML/KYC regulations is quite the stretch. I'd wager those come from greed, pure and simple. The banks charge those fees because they can. If we got rid of AML/KYC regulations and reduced the banks' costs around regulatory compliance, do you think the banks will pass th…

> If we got rid of AML/KYC regulations and reduced the banks' costs around regulatory compliance, do you think the banks will pass the savings onto customers or pocket the difference?

The existing banks, on their own? Surely not. But complicated and expensive regulations like that are the main reason we don't have more, smaller banks, and they would be happy to gain customers by charging lower fees. Then the existing banks would have to compete and do the same.

Re: Winds of Change: The Case for New Digital Currency

#23

Post by AnthonyMouse » Wed, Nov 14, 2018, 4:25 PM UTC

emiliobumachar wrote: post #13

randaouser wrote: post #12

Earlier quoted context omitted.

>If I want to use money to pay for some goods, I need trust that I can get that money back if the goods won't arrive. Math alone can't provide that, it needs something extra, e.g. a trusted escrow service in the case of crypto. No need for extras, you can do this today on Ethereum with Hashed Time Lock Contracts

Could you please expand on how does the Ethereum blockchain get to know whether the goods arrived if the buyer and seller are saying conflicting things and no third parties are involved?

> Could you please expand on how does the Ethereum blockchain get to know whether the goods arrived if the buyer and seller are saying conflicting things and no third parties are involved?

It's possible to have some mutually assured destruction here, e.g. the contract is for $100 so the buyer puts in $150 and the seller puts in $100. Then when the buyer releases the money, they get $50 of their money back and the seller gets $200 ($100 from the buyer and their original $100). If the buyer doesn't release the money, nobody gets anything.

It gives the buyer a way to punish the seller for non-delivery, but without receiving any personal benefit (and in fact at a personal cost) for using it.

Re: Winds of Change: The Case for New Digital Currency

#24

Post by erikpukinskis » Wed, Nov 14, 2018, 4:29 PM UTC

larrysalibra wrote: post #7

> This currency could satisfy public policy goals, such as (i) financial inclusion, and (ii) security and consumer protection; and to provide what the private sector cannot: (iii) privacy in payments. If financial inclusion and privacy in payments were actual public policy goals, cryptocurrencies would be a lot less attractive. In reality, the real public policy goals are: 1) Financial exclusion: using denial of acce…

We need two things to operate productively without the State:

Cryptocurrency is one. It does the job of the mint.

The second piece, is we need a set of contracts that allow us to never take ownership of assets anymore.

Instead of "here's a dollar, please may I have a taco", we'll say "please may I have a taco, here are my contracts" and the chef will ask the computer, "are this one's contracts aligned enough that I give them a taco?"

There will be times you need to create revenue, which will be taxable, but it won't be the default.

I'm not talking about tax evasion here. I'm talking about operating in a way that human activity can't be modeled as a transfer of assets. Essentially widening your friends and family circle to temporarily include arbitrary individuals.

Re: Winds of Change: The Case for New Digital Currency

#25

Post by PeterisP » Wed, Nov 14, 2018, 5:40 PM UTC

nobody271 wrote: post #20

PeterisP wrote: post #4

Earlier quoted context omitted.

You can't remove the need for trust - that need is inherently beyond the reach of math. If I want to use money to pay for some goods, I need trust that I can get that money back if the goods won't arrive. Math alone can't provide that, it needs something extra, e.g. a trusted escrow service in the case of crypto. If I want to use money as a store of value, I need trust that the value is going to stay stable and maint…

Well there are smart contracts which can act as an escrow service. I don't know how that works in reality, though. If smart contracts have to be deterministic how can they be used to guarantee that, say, a delivery was made? I want to belieber.

The way how that's usually done within smart contracts relies on a trusted (the key word here) "oracle" that is considered to hold the truth about reality.

E.g. you may have a smart contract that's conditional on the price of some stocks in the future or on the result of some sports game. It'll get the information about the price of these stocks from some place which is assumed to tell the truth, that's the oracle - for example, it could be some NASDAQ service or the sports league website. However, it's obviously not guaranteed to tell the truth about the reality, you need to trust it, because if it lies, there's no recourse afterwards.

If I make a "real" bet on the superbowl results and bribe the superbowl website admin to publish a wrong result on the official site for 5 minutes at the right time while my bet is settled, then the bet will be revoked afterwards by the courts; however, if it's a smart contract looking at that site, then once I've cheated the escrow service, then I've won because it was falsely trusted.

Re: Winds of Change: The Case for New Digital Currency

#26

Post by nobody271 » Wed, Nov 14, 2018, 5:59 PM UTC

PeterisP wrote: post #25

nobody271 wrote: post #20

Earlier quoted context omitted.

Well there are smart contracts which can act as an escrow service. I don't know how that works in reality, though. If smart contracts have to be deterministic how can they be used to guarantee that, say, a delivery was made? I want to belieber.

The way how that's usually done within smart contracts relies on a trusted (the key word here) "oracle" that is considered to hold the truth about reality. E.g. you may have a smart contract that's conditional on the price of some stocks in the future or on the result of some sports game. It'll get the information about the price of these stocks from some place which is assumed to tell the truth, that's the oracle -…

What if the oracle stops working or gives inconsistent results?

Do you think having to rely on oracles is a major flaw in that they will become trust authorities?

Re: Winds of Change: The Case for New Digital Currency

#27

Post by hanniabu » Wed, Nov 14, 2018, 6:25 PM UTC

nobody271 wrote: post #26

PeterisP wrote: post #25

Earlier quoted context omitted.

The way how that's usually done within smart contracts relies on a trusted (the key word here) "oracle" that is considered to hold the truth about reality. E.g. you may have a smart contract that's conditional on the price of some stocks in the future or on the result of some sports game. It'll get the information about the price of these stocks from some place which is assumed to tell the truth, that's the oracle -…

What if the oracle stops working or gives inconsistent results? Do you think having to rely on oracles is a major flaw in that they will become trust authorities?

This is where consensus comes in. Projects like Blocknet have the ability where you can request an answer from N amount of nodes and the response will be that of the majority.

Re: Winds of Change: The Case for New Digital Currency

#28

Post by rstuart4133 » Thu, Nov 15, 2018, 3:06 AM UTC

PeterisP wrote: post #4

hanniabu wrote: post #3

> cryptocurrencies seek to anchor trust in technology. So long as they are transparent.....Still, I am not entirely convinced. Proper regulation of these entities will remain a pillar of trust. I don't think they understand that the purpose of cryptocurrencies is to remove the need for trust. Trust in the math, not the banker. AKA the economy should be built off the monetary system rather than the monetary system bei…

You can't remove the need for trust - that need is inherently beyond the reach of math. If I want to use money to pay for some goods, I need trust that I can get that money back if the goods won't arrive. Math alone can't provide that, it needs something extra, e.g. a trusted escrow service in the case of crypto. If I want to use money as a store of value, I need trust that the value is going to stay stable and maint…

> You can't remove the need for trust - that need is inherently beyond the reach of math.

That hides more than it reveals. Yes, trust is beyond math.

Measuring value is also beyond math. However there are ways of measuring value that aren't amenable to math (eg, how much you like a diamond) and ways of measuring value that are amenable to math (how much you are willing to pay for the diamond). The first worked method fine in a subsistence economy. The second way is how our current economy works. We are not completely and utterly dependent on being able to measure and transfer value with math. If we could not do it capitalism would not exist, nor would our society or way of life.

And so it is with trust. You can trust a banker not to embezzle your money because he has a reputation, mouths to feed, or he's your brother, or he will be perused by government agents armed with big guns, or any number of the other reasons we do now - none of which are easily quantified. Or you can trust him because he can't undo his decisions without corrupting a while pile of others and do to that he had to expend the net energy output of New Zealand for days. One is amenable to being manipulated with math, and one isn't.

Because the trust provided by crypto currencies can be quantified and manipulated with math we have smart contracts. Smart contracts mean the example you gave about trusting someone to deliver the goods means a computer can be the escrow agent and it is all done automatically the 99 times in 100 there is no dispute.

Yes, the OP was wrong in that crypto currencies allow us to replace trust with math. But only a little wrong. Crypto currencies allow us to manipulate and transfer trust with math, which is not so different.

Re: Winds of Change: The Case for New Digital Currency

#29

Post by DoctorOetker » Thu, Nov 15, 2018, 8:01 AM UTC

AnthonyMouse wrote: post #23

emiliobumachar wrote: post #13

Earlier quoted context omitted.

Could you please expand on how does the Ethereum blockchain get to know whether the goods arrived if the buyer and seller are saying conflicting things and no third parties are involved?

> Could you please expand on how does the Ethereum blockchain get to know whether the goods arrived if the buyer and seller are saying conflicting things and no third parties are involved? It's possible to have some mutually assured destruction here, e.g. the contract is for $100 so the buyer puts in $150 and the seller puts in $100. Then when the buyer releases the money, they get $50 of their money back and the sel…

there's an endless supply of replies to comments like yours that go like "it will never be possible to fix every problem so the safest move is no move", and I don't wish to be that kind of commenter, i.e. I think it is good to at least try and propose mechanisms -even flawed ones- so that at least the discussion of the problems continue and hopefully the mechanisms can be improved.

it is in this mindset that I am asking if we can adress the following issue: suppose the government or its postal system selectively withholds the goods payed for through cryptographic protocols, then buyer and seller lose.

again, I'm not trying to be destructive, just wondering out loud if we can generalize the kind of protocol you describe to include the transporter as an attacker in the attack model.

I think we could split up in 2 cases: transporters that are paid on the same cryptographic protocol/platform, and transporters that are paid outside. I believe it will be easier to solve the problem by restricting to transporters who get paid by the same contract/platform, since we could have the transporter deposit an insurance of same or higher value as the good to be transported, and upon arrival his pre-agreed transport cost and deposit are released?

Obviously the traditional postal system can not be forced to be paid through this platform, so this hole in the market would effectively create demand for crypto postage and hence create jobs.

I would like to see a more rigorous breakdown of such a protocol, and a censor-ship free listing of issues remaining with the protocol, so that the discussion on improvement can continue.

Also it seems like the first transporter does not need to be the same person as the last transporter, i.e. intermediary packet handoff could also be handled by the protocol such that the first transporter gets paid back his deposit after doing "his part" of the packet journey...

Re: Winds of Change: The Case for New Digital Currency

#30

Post by PeterisP » Thu, Nov 15, 2018, 10:48 AM UTC

DoctorOetker wrote: post #29

AnthonyMouse wrote: post #23

Earlier quoted context omitted.

> Could you please expand on how does the Ethereum blockchain get to know whether the goods arrived if the buyer and seller are saying conflicting things and no third parties are involved? It's possible to have some mutually assured destruction here, e.g. the contract is for $100 so the buyer puts in $150 and the seller puts in $100. Then when the buyer releases the money, they get $50 of their money back and the sel…

there's an endless supply of replies to comments like yours that go like "it will never be possible to fix every problem so the safest move is no move", and I don't wish to be that kind of commenter, i.e. I think it is good to at least try and propose mechanisms -even flawed ones- so that at least the discussion of the problems continue and hopefully the mechanisms can be improved. it is in this mindset that I am ask…

It seems that you're describing a solution to the problem of delivery failure. However, the larger problem where consumers need the ability to revoke deals is not failure of delivery as such, but failure to deliver the right goods, possibly maliciously. And vice versa, the possibility by consumers to exploit the system to maliciously refuse paying for goods.

Censorship resistance is an edge case that's nice to have for some people, fraud resistance is the mainstream need that's mandatory for most users. Current crypto approaches don't handle fraud resistance as well as the traditional payment systems, so censorship resistance is a moot point until/unless that gets solved.