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

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

#31

Post by PeterisP » Thu, Nov 15, 2018, 10:55 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…

If the only recourse for a defrauded buyer is either to simply eat the loss or lose even more money, that's not what I'd consider an acceptable solution that's competitive with other, non-crypto means of payment. It's a solution that does provide some disincentive against fraud, but it's significantly worse for most consumers than the current status quo.

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

#32

Post by DoctorOetker » Thu, Nov 15, 2018, 11:14 AM UTC

PeterisP wrote: post #30

DoctorOetker wrote: post #29

Earlier quoted context omitted.

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…

I am making no claims about priority of problems, so I certainly welcome identification of other issues and proposals to improve them.

If we mentally subdivide all commercial activity between traditional/centralized/blind trust commercial activities and novel/decentralized/cryptographic trust commercial activities, then (even if it is not occuring yet) it can desirable for the supporters of decentralization to be able to assure themselves that the status quo can not undermine the economic value of the cryptographic trust community.

Even outside of cryptocurrencies we have debates about net neutrality, priority of packets etc... One could similarily wonder if current delivery services are able to say profit by investing in specific companies within a sector of products, and differentially prioritizing the delivery of their goods (or gentleness of delivery for fragile goods, or even non-delivery).

I don't believe in moot points, people can work on different issues, design solutions for them and then they can look at how to intersect/generalize their protocols so that it displays both or more desirable traits...

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

#33

Post by PeterisP » Thu, Nov 15, 2018, 11:28 AM UTC

DoctorOetker wrote: post #32

PeterisP wrote: post #30

Earlier quoted context omitted.

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…

I am making no claims about priority of problems, so I certainly welcome identification of other issues and proposals to improve them. If we mentally subdivide all commercial activity between traditional/centralized/blind trust commercial activities and novel/decentralized/cryptographic trust commercial activities, then (even if it is not occuring yet) it can desirable for the supporters of decentralization to be abl…

Okay, in that regard the assumption that "the government or its postal system selectively withholds the goods payed for through cryptographic protocols" seems questionable. Is this a real problem that we're seeing in some markets? As far as I'm aware it seems that in general delivery services are decoupled from the payment for goods; the delivery system, no matter if it's government postal system or private parcel delivery, does not know and can not know how (and if) the goods were paid for. They may require some declaration from the sender about the value for insurance and customs purposes, but that's different than the payment data.

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

#34

Post by jrruethe » Thu, Nov 15, 2018, 3:21 PM 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…

An alternative solution to requiring a 3rd party escrow is to use the concept of "mutually assured destruction". The general idea is that each party deposits twice the value into a shared 2-of-2 multisig wallet. Then, two transactions are generated: 1 for completing the purchase, and one for completing a refund. Both parties need to sign one of the transactions, or all their funds remain locked up, so there is an incentive to cooperate and come to an agreement without needing a 3rd party involved. It isn't perfect, because there are other drawbacks such as needing a large amount of money up front, but it is a trustless alternative.

This page explains it better: http://nashx.com/HowItWorks

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

#35

Post by AnthonyMouse » Thu, Nov 15, 2018, 4:42 PM 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…

There are two parts to that. One is insurance -- 8% of packages don't make it to the destination and it would be preferable to pay an 8% premium than to lose 100% of the delivery 8% of the time. There is obviously an insurance market for this.

The second part is that it's often more efficient for the insurance provider to be the delivery provider, because then they have the right incentives to actually deliver your package. Then it's their problem whether they farm out the delivery to the local postal service and take the risk of having to pay claims, or operate some kind of underground railroad themselves in authoritarian countries and pay a little higher cost to reduce the losses they have to eat.

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

#36

Post by AnthonyMouse » Thu, Nov 15, 2018, 5:12 PM UTC

PeterisP wrote: post #31

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…

If the only recourse for a defrauded buyer is either to simply eat the loss or lose even more money, that's not what I'd consider an acceptable solution that's competitive with other, non-crypto means of payment. It's a solution that does provide some disincentive against fraud, but it's significantly worse for most consumers than the current status quo.

> If the only recourse for a defrauded buyer is either to simply eat the loss or lose even more money, that's not what I'd consider an acceptable solution that's competitive with other, non-crypto means of payment.

In the existing payment market you have a seller with no stake and have to correct for it by drafting the payment processor to post a stake instead. Then if the seller doesn't send the product (or sometimes even if they do), the buyer makes a claim with the payment processor and the payment processor is stuck refunding it because the alternative is having a larger cost imposed on them by the government. Then they try to mitigate the loss by not paying the seller, if they can.

This is just unnecessary indirection when the seller posts a stake instead. If the seller has $200 on the line over a $100 value item, they're going to deliver it because the alternative is a $100 net loss. It's the same reason the payment processor refunds your money -- because the alternative is worse for them.

The buyer doesn't actually lose the extra $50, they just sit on it until the seller makes good, which happens eventually because the seller's alternative is worse. The end result of MAD isn't that everybody gets nuked, it's that nobody does.