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Comment by madeofpalk | Hacker News Reader

Solve an actual, real life problem.

All I see are Long Island Ice Tea Blockchain Corp. and Walmat saying that they're using blockchain to help their supply chain (whatever that means).

The reality is is that Blockchain is no longer new. Compare it to iPhone - they both roughly came out at the same time, yet we're still having the same conversations - "What problem does Blockchain solve" - while the iPhone found its place in the market. The reality is is that if Blockchain had a 'killer app' beyond tech bros speculating, we would have found it by now.

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> The reality is is that Blockchain is no longer new. Compare it to iPhone - they both roughly came out at the same time, yet we're still having the same conversations - "What problem does Blockchain solve" - while the iPhone found its place in the market.

I still do not understand what kind of problem the iPhone solves (seriously!), while I can imagine quite well what kind of problem Bitcoin attempted to solve when it came out. If you want to understand it, consider the coinbase parameter in the Genesis block:

> https://en.bitcoin.it/wiki/Genesis_block

"The Times 03/Jan/2009 Chancellor on brink of second bailout for banks".

This summarizes quite well the situation at that time: People feared that the dollar and euro system was on the brink of collapse; because of the bailouts and money printing, people feared inflation; the central banks became highly distrusted institutions etc.

So at that time, a currency system that

- is not based on a central trusted institution

- has a limit on maximum amount of currency that can exist (so it is free of inflation)

became a very desired one. We know that history turned out somewhat different - most people would argue that the trust in the national currencies has at least partly been reestablished. On the other hand, at least the original bitcoin protocol was eventually not able to abide its promises (e.g. scaling) or properties that people projected into it (anonymity; Bitcoin was never anonymous, only pseudonymous).

So to me it is quite obvious what kind of Bitcoin attempted to solve and why at that time this solution seemed quite attractive. From today's perspective, we can probably say that Bitcoin - as in the original protocol - has mostly failed. On the one hand, people regained trust in the central banks (whether this trust is justified, can of cours be debated for hours), which makes the Bitcoin product now less attractive to the masses. On the other hand, the original protocol had scalability issues.

Bitcoin promoters will argue that the scalability issues are now solved, altcoin promoters will argue that their altcoin offers properties that people loved to project into Bitcoin (anonymity). For most people, with the regained trust in national currencies, the problem that Bitcoin attempts/attempted to solve is - in opposite to the situation 2008/2009 - simply not a burning issue anymore.

My opinion is: Bitcoin was an idea that seemed very attractive at the time when it came out, but history turned out differently (for good or bad).

While I'm not certain I could state what problem iPhone (or smartphones in general) solves, it's definitely proven market fit. Bitcoin has not.

> While I'm not certain I could state what problem iPhone (or smartphones in general) solves, it's definitely proven market fit.

Being a market fit does not mean that it solves a problem. To me, this is only one important reason (though IMHO a more safe one to bet on) among many, why aroduct is successful in the market.

As I wrote: Bitcoin attempted to solve a problem that seemed (and in my opinion was) very important at the time when it came out (this also IMHO explains the initial hype). The problem simply has become a lot less important and urgent for most people in our days.

Smartphones: "I want to search for something on the Internet when I'm not at home." It's a very simple problem statement, it's well solved by a smartphone, and it's a far superior solution than the pre-existing one, which was to find an Internet cafe or free wifi hotspot. This is borne out by smart phone adoption worldwide.

Meanwhile, bitcoin was never better than the existing alternatives of barter and foreign currency for dealing with a failing central currency. It's not got substantial traction as an electronic currency.

Bitcoin does solve one problem: "how can I rake money in from suckers when I'm providing them with nothing in return". It does this well. Tremendous amounts of money are going from "investors" to miners and people at the top of the pyramid. This can only continue so long as there's a growing base of new money coming in - but nothing of value is coming out, just the promise of more coming in later.

My opinion is that Bitcoin was originally a political statement or thought experiment in crypto-anarchy, with a poorly thought out economic model that actively discourages its use as a coin, and history continues to reinforce that opinion.

> I still do not understand what kind of problem the iPhone solves

Did you try smart phones before the iPhone? It solves the problem they promised to solve but it actually delivered.

High fidelity web browsing in your pocket is probably the biggest one, but there are more.

I still do not understand what kind of problem the iPhone solves (seriously!)

I went from carrying a phone, an MP3 player and having a GPS and maps in my car to having one device and never having to stop for directions. That's just the most obvious ones.

Solves a lot of problems.

> "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks".

This kind of motivation has arguably always been about people misunderstanding economics. In this particular quote: government bailouts are not a function of the exact mechanisms of the currency, but of whether you elect politicians that want to keep banks in check or not. Even if everybody used Bitcoin, a certain type of politician would still be tempted to do bank bailouts.

> - has a limit on maximum amount of currency that can exist (so it is free of inflation)

And this is actually an anti-feature.

It should be obvious that relative prices need to be able to adjust in order for markets to function well, and if you look at economic history without ideological blinders, it becomes clear that there are many important markets in which absolute prices move up more easily than they move down, notably but not only wages and salaries.[0]

Having a modest amount of inflation means that the absolute price that you as a seller can earn must increase if you want your relative price to be stable - a kind of economic Red Queen hypothesis. This makes it easier for relative prices to adjust downwards, which is good for the functioning of markets.

The economics behind Bitcoin has always been a bad idea.

[0] There are good reasons for this. In order to improve your financial position, you have to reduce your monetary outflows or increase your monetary incomes. The amount of effort you spend is proportional to the number of contracts you negotiate, not to the value of those contracts. So if you have many monetary outflows, but comparatively fewer (but larger) monetary incomes, then you'll rationally focus your efforts on increasing those incomes (or fighting against decreases of those incomes). Almost every household, and many companies, are in the position of having fewer incomes than outflows, so they all have an incentive to fight relatively harder against price decreases on their income. Which has the net effect that absolute prices move upwards more easily than they move downwards.

The sad thing about the Walmart usecase is all they really mean is hashing. Just hashing.

That’s it.

I believe the actual problem this solves, the "killer application," is already out there.

Can you specify what that is?

Blockchain conferences.

Buying drugs off the internet.

Murder for hire?

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