The most disruptive thing cryptocurrencies will do is undermine the legal distinctions between currencies, commodities, and stocks. There's no real difference between any of them, but they are treated legally quite differently. Cryptocurrencies will flood the gaps in between these categories with so many examples that it will DoS the legal system with questions it can't answer, social adoption will outstrip courtroom resolution, and there will have to be a post-hoc reckoning with a new legal framework.
The blockchain paradox: Why DLTs may do little to transform the economy
231–240 of 355 posts
Re: The blockchain paradox: Why DLTs may do little to transform the economy
#232Earlier quoted context omitted.
If it's so uncheatable, why did the original DAO get hacked?
IIRC, It wasn't "hacked". Rather the contract was written incorrectly from the outset, and the "hacker" merely used the withdraw method to ... withdraw.
In the real world, you appoint a judge who decides based on cultural convention (civil law, common law, sharia law, idk) what the contract was supposed to mean.
Sometimes it does come down to punctuation, but all of the time it comes down to what was meant with the contract.
Letting the system only mean what it says is not great for users, either. You get an overhead of always having to check and double check everything you do.
Re: The blockchain paradox: Why DLTs may do little to transform the economy
#233If I had a Bitcoin for every skeptic that posts a blog on why it can't work... This may just be my general observation but I feel like Silicon Valley hegemony has a grudge against crypto currencies and I'm not sure why. For an industry that has constantly tried new things and saw potential where no one else did, I just don't see the love for the potential of smart contracts, DApps, etc. And how this is just the begin…
The source of the distaste is obvious: breathless hyperbole without much substance to show for it. Posts like yours are a great example of it. In this very comment you write: > leading the charge on what could be the next major technical revolution Unsubstantiated hype. Where is the revolution? A common thread among cryptocurrency enthusiasts is that the revolution is coming... except it never does. When you talk abo…
> Where is the revolution?
To me, the revolution is the realization that certain softwares don't need to be built, merely described and they will bring certain things into being. If Satoshi hadn't built Bitcoin, he had simply released the paper, I think Bitcoin would still exist today. That's interesting. I don't think the same is true, if, for example Mark Zuckerberg had just described Facebook rather than writing it.
The insight is: when a set of incentive structures stable and self-reinforcing, they can become an autonomous agent of their own, existing on top of, but also outside of, human activities.
Very interesting. And I think it is revolutionary. The revolution hasn't happened yet though, perhaps that's what you're pointing out?
The computer revolution hasn't even happened yet though. Still only a tiny number of us can use computers directly. Most people need to use another human (some programmer who makes a static human interface for them) as a proxy. The Big Talk claims of the computer revolution won't happen until we're past this phase. These things take time.
Re: The blockchain paradox: Why DLTs may do little to transform the economy
#234Earlier quoted context omitted.
With bitcoin, it is agreed upon using byzantine consensus. The only way a bad actor can manipulate the ledger is if they own enough nodes to gain a majority, which is virtually impossible. After just a handful of bit times is economically and mathematically impossible to reverse the contract. I suggest listening to this Tim Ferris podcast with Nick Szabo: http://tim.blog/2017/06/04/nick-szabo/ The entire idea is that…
> The only way a bad actor can manipulate the ledger is if they own enough nodes to gain a majority, which is virtually impossible. At times the leading BTC mining pool has controlled greater than 50% of the nodes. Would this not be enough to alter the ledger?
Yes, you could abuse that power to allow double-spending. For what it's worth, I'd say I'm a bit concerned about this, but it seems many aren't.
Re: The blockchain paradox: Why DLTs may do little to transform the economy
#235If I had a Bitcoin for every skeptic that posts a blog on why it can't work... This may just be my general observation but I feel like Silicon Valley hegemony has a grudge against crypto currencies and I'm not sure why. For an industry that has constantly tried new things and saw potential where no one else did, I just don't see the love for the potential of smart contracts, DApps, etc. And how this is just the begin…
Bitcoin is mostly popular in Eastern Europe and Asia for transfer payments, fiat currency conversion, money laundering, and evading capital controls (getting money out of China). In the US if you're doing legitimate business with other US entities then there's really no need for such a thing. I can write a check or send a credit card payment or wire transfer to another US bank with a reasonably high level of trust th…
Americans won't realize the benefits of cryptocurrencies until they start to be able to do capital-B Banking with it. Not deposits, withdrawals, and transfers, but the creation of new financial instruments.
Cryptocurrency wants to move people up the banking hierarchy. So it tries to lift Eastern Europeans to the level of New Yorkers, in terms of access to stable currencies and transfers. But it also tries to lift the New Yorkers to the level of Wall Street executives in terms of issuing securities. And it tries to lift the Wall Street executives to nation states in terms of creating self-contained regulatory regimes.
The endgame is that all of these power relations become so commonplace that they lose their power. Like clothing has become.
It won't feel like anything is changing for a while though. Imagine the Titanic slowly sinking... at first the ship is tilting a bit, in a funny way, but nothing unusual. Then you start to notice the floor is on a distinct slope, but things are still in the same place relative to each other, so you think the whole world hasn't changed, just one property of it.
Eventually people start involuntarily sliding in one direction, which is different, but there's still structure there. It's not as if there's no ship anymore. Then, the slope becomes so large that almost everything seems beholden to it. That's the point at which everyone starts to agree that "everything has changed". Finally the ship sinks into the sea.
We're still early in that process.
Re: The blockchain paradox: Why DLTs may do little to transform the economy
#236Earlier quoted context omitted.
With bitcoin, it is agreed upon using byzantine consensus. The only way a bad actor can manipulate the ledger is if they own enough nodes to gain a majority, which is virtually impossible. After just a handful of bit times is economically and mathematically impossible to reverse the contract. I suggest listening to this Tim Ferris podcast with Nick Szabo: http://tim.blog/2017/06/04/nick-szabo/ The entire idea is that…
> If the poor of the world can understand the social mobility that crypto currency affords them Can you expand on how crypto currencies relate to positive social mobility? Off-handedly it seems to me it would be the opposite, although I'm admittedly fuzzy on this.. In theory crypto currencies reduce rent-seeking from intermediaries; since much financial rent seeking is established as percentages of an exchange (like…
> Can you expand on how crypto currencies relate to positive social mobility?
Bringing those who are unbanked into the global financial system is a powerful way to help lift people out of poverty. In many cases, banks are unwilling or unable to serve the poor, so cryptocurrencies could potentially fill the gap. I don't think any current cryptocurrencies will achieve this, but there is some research being done on "stablecoins" which could fit the bill.
Re: The blockchain paradox: Why DLTs may do little to transform the economy
#237I pose this as a question as much as a statement: Bitcoin does not have to solve the governance problem. It need merely perform some functions better than a fiat currency.
Consider economists' Taylor Rule. It represents an effort to impost constraints on a bureaucratic institution and how people manage the dollar. Cool, we pass a law called the Taylor Rule. Now just don't enforce it. People who want stuff are hard to constrain.
In other words, the Bitcoin community doesn't have to be uncompromising and immutable, like its technology, for the currency to succeed—it just has to do better than its alternative (even in narrow applications).
Thoughts?
Re: The blockchain paradox: Why DLTs may do little to transform the economy
#238Earlier quoted context omitted.
>a sufficiently large ec2 buy can rapidly fragment the Bitcoin consensus You grossly underestimate the hashing capacity of the bitcoin network. The hashing capacity, at time of posting, is approximately 5,000,000,000 Gigahashes/second[1]. Spot measurement of the hashing capacity of an EC2 instance is 0.4 Gigahashes/second[2]. You would need 12 BILLION EC2 instances to 51% attack the bitcoin network.[3] Using EC2 to a…
In the OP, the author says there are "approximately 5,000 computers" in the bitcoin network. I'm curious if you believe this is right too? Those are some powerful computers... (yes, "duh" indeed, I'm still awed).
That could very well be true. All mining for BTC is done via ASICs now, specialized silicon that just hashes crazy fast, but can't even get a TCP connection up and running. For networking, a bunch of ASIC chips is typically connected to some embedded computer, and even that usually isn't a direct peer on the Bitcoin network, but only connected to a mining pool server with hundreds of other such ASIC controllers. And this server then is the first actual part of the Bitcoin p2p network, single-handedly representing a mind-boggling multi-Megawatt hash power infrastructure.
Even most BTC users do not run actual clients anymore but use exchanges or wallet services which bundle huge numbers of users behind few actual Bitcoin network nodes.
Re: The blockchain paradox: Why DLTs may do little to transform the economy
#239You can begin to see the beauty of Bitcoin when you want to accept payments. All you need to do is download a wallet, generate an address and put it online. You don't need anybody's permission, as would be the case with PayPal or the likes. The risk of somebody deciding on a whim to freeze your funds is also greatly diminished (again, very different from PayPal and the likes).
"Governance" and "Accountability" seem to be the antithesis to that. No, Bitcoin doesn't need that and doesn't want that.
Yes, it is a bit scary, it is a system that develops on its own, depending on the way it is being used (network effects and so on). I guess economists freak out because they are unsure about the rules, and they can't have that.
But it is also not true that it would be a huge problem if there were forks. Why would it be? People will simply use what works best for them, controlled by market forces (they need other people to use the same fork).
Who decides how Bitcoin develops? Ultimately the users do, by using it or not. Developers and miners merely provide proposals.
And why does a system need 100% agreement on everything? Such a system may well never exist.
Re: The blockchain paradox: Why DLTs may do little to transform the economy
#240Earlier quoted context omitted.
> the miners control bitcoin. Incorrect. Nodes enforce consensus in bitcoin, not miners. It is thus. It has always been thus.
Plain 'nodes' weren't even a thing back in the early days of bitcoin. The original design envisaged all participants to be miners. It was only when mining became out of reach of ordinary computers that people started running nodes. They do very little, just sending and receiving bitcoin transactions, a task which the miners could do just as well by themselves. Nodes have no say in consensus, the miners can ignore the…
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