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The blockchain paradox: Why DLTs may do little to transform the economy

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Re: The blockchain paradox: Why DLTs may do little to transform the economy

#321

Post by contingencies »

nullstyle wrote: post #299
contingencies wrote: post #295

Earlier quoted context omitted.

Right. I had some ideas around this previously when thinking around http://www.ifex-project.org/our-proposals/ifex/2012-04-11-pa... In short each node would have its own risk management profile. Entering a transaction using any settlement path or asset type (even multi-hop transactions involving multiple paths or assets) is the explicit decision of the actor in question, against that risk profile, available informati…

Thanks for the link! I'll check it out. I agree such a system is quite lofty at this point. I can start to see a feasible system in my mind, but IMO we're still just so far away from it working in reality and in practice. I'm still on the horse for now... sorry to hear you got burnt out at kraken.

Hehe. Just on crypto specifics not the rest :)

Re: The blockchain paradox: Why DLTs may do little to transform the economy

#322

Post by chii »

dragonwriter wrote: post #88
devrandomguy wrote: post #73

Earlier quoted context omitted.

That is a pretty loose definition of accountability. If your bank screws around, are you going fix it by voting for a different candidate in the next election? I would say that my ability to purchase and run mining hardware, at a loss if necessary, gives me more control over my altcoins than my citizenship gives me over my bank.

> I would say that my ability to purchase and run mining hardware, at a loss if necessary, gives me more control over my altcoins than my citizenship gives me over my bank. It's roughly similar to buying shares in a publicly-traded bank, which you can do as well as electing candidates for public office to whom the central bank, which is the entity making monetary policy decisions, is accountable. So it gives you more…

> It's roughly similar to buying shares in a publicly-traded bank

i dont believe that even owning a bank could you directly control monetary policy or procedures that the gov't legislates. You'd have to own either the majority of all banks, or own the gov't yourself (i.e., dictatorship), and even then, it's a hardsell.

Re: The blockchain paradox: Why DLTs may do little to transform the economy

#323

Post by yoz-y »

someSven wrote: post #182
yoz-y wrote: post #21

I always thought of bitcoin as a commodity, not a currency. It seems to solve the same problems and follow the same rules. E.g.: a commodity (such as gold) can not be created, but it is an important feature for a currency. Without inflation it will never be a good choice for currency anyways because it will always be a more interesting to hold on it rather than use it.

Like it or not: Gold is money. And Bitcoin even works better as money. And of course it is used at some point. It just doesn't need to be invested into the economy to increase value. So theris an alternative to betting in the pyramid of debt.

Gold is a commodity, it can (and was) used as a currency but not as a very good one. For a good useful currency it has to have a stable price (this is why some countries prefer to use other countries money rather their own). It also has to be widely accepted. Gold is not very liquid nowadays, if I come to a car seller and throw a gold bar at them, I will most probably not get a car.

Re: The blockchain paradox: Why DLTs may do little to transform the economy

#324

Post by davidgerard »

wyc wrote: post #54
davidgerard wrote: post #48

Earlier quoted context omitted.

The "Look at the popularity of Bitcoin in [country]" argument always turns out to be made-up rubbish. I did actually try tracking the Venezuela hype to its source. You have linked the Reason article as a reference, but if you actually read the thing, its title is "The Secret, Dangerous World of Venezuelan Bitcoin Mining: How cryptocurrency is turning socialism against itself" and the article itself is an unhinged lib…

Thank you for your research into this! I found it difficult to locate good sources too, and that fact is worthy of more disclaimer than I gave. I think you're right in giving any claimed causality in new territory a good hard knock. The rate of usage growth could give more insights than just current volumes: https://coin.dance/volume/localbitcoins/VEF It could indeed be just a blip, but would you agree that there exi…

Further on this: I'll just have a little rant.

I'm writing a book on Bitcoin/blockchain https://davidgerard.co.uk/blockchain/ and have taken to researching Bitcoin/blockchain stories that make it to mainstream media - because this is what ordinary people hear about it - and tracing them to their sources, because far too much of what I'm trying to use as sources just doesn't check out.

In almost all cases they're complete BS started by Bitcoin/blockchain promoters. Every "Bitcoin adoption in xxx" story is rubbish. Most corporate blockchain adoption stories are rehashed press releases, usually from IBM.

Blockchain marketers consistently claim some prominent company "is using" a blockchain when there’s just been a press release that they are "investigating" running a future trial. This is because an "investigation" is cheap, and telling Beleaguered Bob in the office to look into this "blockchain" stuff is worth the PR value in showing you're fully up to date with current buzzwords. "Researching the opportunities" could mean anything, but pretty much always does mean nothing.

If you see a use case that catches your attention, a web search on the company names and the word "blockchain" will often track down the original press release. Check very carefully which details are clearly substantiated in the present tense, and which are (what's a good word) aspirational.

Journalists who bother actually picking up the phone and talking to people, e.g. Izabella Kaminska at FT, get a barrage of personal abuse from Bitcoin advocates, whose social skills really haven't gotten any better in the past several years.

The Bitcoin press is possibly even worse - it pretends to be news coverage, but it's actually advocacy blogs posting any boosterism that crosses their path, because what their readers want is reassurance that this is the future and their holding will go TO THE MOON. The best of them is probably CoinDesk, and even they've never seen an unreleased hype they didn't like and run an enthusiastic article on. The mainstream press keep assuming all this is specialist coverage that's done with journalistic intent (rather than advocacy from holders) and copy'n'pasting it.

Even when the Bitcoin blogs are trying to do real news, they're inexcusably sloppy, and you really do have to check every factual claim individually.

tl;dr Bitcoin journalism is bloody terrible.

Re: The blockchain paradox: Why DLTs may do little to transform the economy

#325

Post by davidgerard »

nemo44x wrote: post #111
nradov wrote: post #106

Earlier quoted context omitted.

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…

I agree with this but you might be missing my point. Crypto as a store of value and the ability to transfer funds is nice and all but it's not the big picture. I think focusing on that you rightly see limited practical application in large parts of the world, such as the USA. The real revolution is in smart contracts and virtual machines that run on a blockchain and the ability to define ownership of a distributed or…

> The real revolution is in smart contracts and virtual machines that run on a blockchain and the ability to define ownership of a distributed organization to distribute profits accordingly.

e.g., the $50 million distributed to The DAO hacker.

The DAO was the first famous smart contract, on the first popular smart contract platform. Every objection to smart contracts in the past couple of decades (computer programs model real law badly, immutability means you need to be a perfect programmer, immutability copes badly with changes in circumstances) came true, bang bang bang.

Though I think even blockchain objectors were surprised when Ethereum came up with a new one: your smart contract is IMMUTABLE right up to the moment the big boys are in danger of losing money.

Later of course we were reminded of the programming perfection requirement extending to all layers of the stack, e.g. the Solidity compiler bug that meant that a mathematically-proven-perfect contract could have a 'sploit.

Smart contracts are a terrible and stupid idea, and The DAO should have put the idea firmly in the bin. That it didn't is a testament to human gullibility and the power of wishful thinking rather than the value of smart contracts.

Re: The blockchain paradox: Why DLTs may do little to transform the economy

#326

Post by acdha »

russdpale wrote: post #273
patrickk wrote: post #236

Earlier quoted context omitted.

> 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 "sta…

Cryptocurrency is already doing this, I don't have the names offhand, butt, (Ill eave the typo, hehe) there are several regions in Africa where bitcoin is a primary currency being traded.

Do you have any sources for that claim? Given the massive existing mobile payment deployment it seems like a very ambitious target.

Re: The blockchain paradox: Why DLTs may do little to transform the economy

#327

Post by drh »

dobin wrote: post #319
rockmeamedee wrote: post #85

I agree with this article. Proponents of blockchain tech argue its revolutionary quality is its ability to act as a decentralized and trustless database. But I don't ever hear them sort through the issue of how to agree on the schema for this trustless database. For a group of people to use a decentralized DB, they have to agree as to what to store in it, and how to store it. They need to form consensus about how the…

Decentralized trustless databases can also be implemented with Merkle Trees (as it is done with certificate transparency). I dont understand why people choose blockchains instead.

Blockchains are currently implemented with a Merkle tree at each block, and Merkle proofs are used to store the transactions in that block.

Re: The blockchain paradox: Why DLTs may do little to transform the economy

#328

Post by acdha »

gorthol wrote: post #269
root_axis wrote: post #118

Earlier quoted context omitted.

I asked for a practical example. Just because a bunch of people decided to spend their money on internet tokens does not mean it is useful. How is it useful ?

For example you could implement a credit system where anyone could be a creditor and vote (with their digital signature) what requests get approved. Then, once the money changes hands, the smart contract would automatically deduce que periodic payments, including the interests, and distribute it to the lenders in the correct proportions. If a payment is missed, a penalization or increased interest could be implemente…

What advantage does that really offer? You still need to deal with the expensive parts (assessing credit worthiness, dealing with fraud or malfeasance) and if you have the infrastructure to do that, how much is a rigid contract-as-code system which you don't control really adding?

Consider what happens if someone takes the loan and never repays it. If you have a government with a functioning court system you can use any commonly accepted contract form, even a signed IOU, so a blockchain adds no value even if you do convince the court it's trustworthy; if you don't have a reliable court system, they can just walk away and you've just spent a lot of money on irrelevant infrastructure. If you have a credit rating system and sufficient proof of identity there might be a consequence but in every case the real value appears to be created by other entities (government IDs and courts; private credit rating services), none of which even need to know what a blockchain is.

Re: The blockchain paradox: Why DLTs may do little to transform the economy

#329

Post by BaronSamedi »

contingencies wrote: post #272
nullstyle wrote: post #230

Earlier quoted context omitted.

Trustless isn't the only option. https://www.stellar.org/papers/stellar-consensus-protocol.pd... The reason I believe in our model for consensus is that it more closely resembles trust in the real world. We're more explicit than meatspace, which could be a drawback, but I think it's a better model than trustless. Disclosure: I work for stellar.org

Didn't read the paper (got crypto burnout after 4 years at Kraken) but it occurs to me that the problem with explicit trust is that it is usually a one size fits all approach or someone has to tediously specify it in specific terms, neither of which work well at scale in the real world.

I wonder what a protocol might look like based on more cynical assumptions? Let's call it the House protocol because it assumes that everyone is hostile--lying and trying to cheat you. Sadly, I think this a more realistic assumption for the global digital environment.

Re: The blockchain paradox: Why DLTs may do little to transform the economy

#330

Post by knopkop »

russdpale wrote: post #273
patrickk wrote: post #236

Earlier quoted context omitted.

> 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 "sta…

Cryptocurrency is already doing this, I don't have the names offhand, butt, (Ill eave the typo, hehe) there are several regions in Africa where bitcoin is a primary currency being traded.

> I don't have the names offhand

Tether?

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