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Comment by tCfD | Hacker News Reader

The problem with blockchain is actually rooted in hazy, unexamined assumptions about the viability of 'decentralization' that are are used as if they are conclusions rather than premises for justifying the technology's utility.

I think ultimately the conversation will turn to discuss the cost premium entailed by a decentralized coordination problem solving system of any kind, and whether it centralization is really a problem that needs such an redundantly-expensive solution in the first place. Also whether decentralization is really sustainable indefinitely or merely a transitional phase from one centralized regime to another one.

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People have an abstract distaste for "trusted intermediaries" because they think the intermediary just sits in between you and somebody else while collecting fees for adding no value. In many cases the fees absolutely need to be reduced through market competition.

However the root of this thinking is wrong. Intermediaries do add value. Humans are inherently un-trustworthy animals, and you pay your fees to buy the valuable peace of mind the intermediary provides.

So we know trust costs money. The question is whether the cost of decentralized cryptographic trust will ever be lower than centralized trust. The Rube Goldberg machine that is bitcoin has proved the answer at least for the foreseeable future (the next few decades) is...no.

Centralized intermediaries are only trustworthy as long as they’re incentivized to be truthful. If another party comes along and offers them a bag of cash, the intermediary might choose to betray its clients’ trust.

Decentralized miners, on the other hand, are highly incentived to tell the truth, because it’s the only way they can collect fees.

You’re right that you have to pay for the truth either way; the difference is that the decentralized approach gives you stronger guarantees.

Yes, intermediaries add value but in many cases they get paid disproportionately, define rules and regulations that range from one sided at best and truly evil at worst. And this has been going on for a long time and people are understandably irritated and looking for alternatives.

If the system wasn't so unfair, we probably wouldn't need to look for alternatives. Fixing the current systems is impossible at this point as the intermediaries have grown too big and too strong, so people are looking for alternatives.

It’s strange. Blockchain and crypto currencies biggest advantages are simultaneously its biggest detractors.

It may have its day if global systems fail for some reason, but right now it’s just not something that anyone really wants. Both people and companies are inherently risk averse and like stability.

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