How Blockchain Works
blockchain.mit.edu
blockchain.mit.edu
In what way? Publishing a DB dump with a checksum has been around for decades, and doesn't require a new user to download an entire history of deltas from day 1.
As somebody pointed out https://news.ycombinator.com/item?id=18076542 high transaction throughput is not exactly the killer feature of modern-day blockchains.
I'd argue that you did not settle a transaction but more exchanged in a barter of one item for another. I am glad it worked out well for you and pray that you will experience continued expedient transactions in the future - blockchain-powered or not.
What would you mean by "settle" if you don't mean the point when the seller receives payment?
I mean when the seller receives payment. And I concede that there are banks that are releasing funds on a tighter timeline. But that decision is still backed by a credit requirement at some level and at the whim of a centralized bank. What they deign to grant to us they can also take away from us.
The current system is familiar and comforting but it is not the stable panacea we like to think it is in comparison to a scary blockchain. The stability is manufactured at the cost of the occasional blow-up - which we conveniently forget about as the market rebound to new and loftier heights.
In standard interbank settling times, the transaction time takes days. But that's because transactions will automatically abort if they don't clear fast enough, and banks will take as much time as they can to actually close the transaction so as to avoid having to reverse it after the fact. In practice, many banks are happy to credit your balance with the deposit immediately (if the deposit is small enough, about $5k with my bank) without waiting for confirmation.
Of course, the time it takes to settle the transaction actually doesn't matter that much for the most part. In many cases, the transaction clearing time is going to be an insignificant portion of the time between invoicing the transaction and actually sending the goods.
Data is worth billions and trillions of dollars. And blockchain allows you to take control of it.
People will still need loans. People will still want low risk investment vehicles to "store" their wealth in. At least some sizable number of them will want an institutional actor to handle operational security and insure against key loss.
> auditors go away
The blockchain mostly guarantees that a ledger hasn't been tampered with, but it doesn't guarantee that the transactions were correct and complete in the first place. Plus, it's trivially easy to transfer funds without it registering on the ledger; all I have to do is create a wallet and give the private key to you out of band somehow.
> credit requirements for market participation go away.
There are no credit requirements today, as long as you're only spending funds you have on hand. Credit requirements allow an actor to spend funds they don't actually possess with a reasonable expectation that they will be willing and able to produce those funds (plus interest) at some later date. Having the ledger public reduces, but doesn't eliminate, the need for the actual providers of those temporary funds to want to form some expectations of future performance.
Most of the ancillary infrastructure that's grown up around fiat currencies is there for really good reasons, and most of those reasons don't automatically go away when the underlying currency type changes.
As for the credit requirements comment, yes - good point. But in the case of a micro-transaction, realtime agreement. I can consume 15 minutes of power and pay for it at 15:01. A credit requirement still exists -0 but it is one second as opposed to 60-90 days worth of power. This idea assumes many things into existence that do no currently exist - I am merely offering the idea as a thought experiment. Blockchain could make everything pay-as-you-consume.
Cryptocurrencies are genuinely useful for parties who don't have access to the formal banking system for one reason or another, but I've got every reason to believe that crypto-backed banks will still be profitable and that people will flock to them as soon as they're available.
As for microtransactions, I can also consume 15 minutes of some service and not pay for it at 15:01, then automatically generate another burner account to consume another 15 minutes. This might not work for power, since there's physical infrastructure that would have to be cut over, but it would work just fine for a very large number of other services. The service provider is going to pretty quickly generate some fraud prevention strategy to prevent you from doing that, and now we've reinvented credit requirements for market participation.
Crytpocurrencies are useful to people for a variety of reasons. And if a bank wants to deal in crytpocurrency, that is fine with me. I am glad that you have no doubt they will be profitable but you are pulling such sentiment out of thin air. There is not a precedent for cryptocurrency and how it may affect and integrate with existing systems. But consider that if you consider having a bank involved is a good thing for cryptocurrency - you might not understand the point of blockchain.
And the final point, the ledger is open, and everyone can see everything. You must consider this aspect in your scenario. I would imagine such a microtransactions agreement manifested into a smart contract or if not, prepaid. But again, only at a 15 minute. There is a level of credit there but still much smaller than 30 days worth.
Do you really want to bring volatility into this? Because in the real world fiats are orders of magnitude more stable than cryptos.
Besides, that's tangential to why people prefer banks to cash. If the Federal Reserve screws up and tanks the dollar I'm just as screwed regardless of whether my money's in a dollar-denominated bank account or a suitcase under my bed. Why do you think the vast majority of people prefer to keep their dollars in the bank instead of the suitcase?
> I am glad that you have no doubt they will be profitable but you are pulling such sentiment out of thin air.
I'm pulling that sentiment out of a basic understanding of a bank's business model and value proposition, neither of which are actually directly related to the underlying currency. We had banks with metal-backed currencies, we have them with fiats, and we're starting to see them with cryptos. Unless you can somehow convince me that Coinbase isn't a bank.
> And the final point, the ledger is open, and everyone can see everything.
Right, I can see that three dozen pseudonymous wallets owe me for 15 minutes of service each.
Anyway, the whole point of credit is I can't actually pay up today, but there's reason to believe I will be able to in 30 days. Or 6 months. Or 10 years.
Yes, but if you'll allow me a little latitude - the fiat currency is under centralized control. And in that case is remarkably stable - until it is not. And 2008 happens. Blockchain is decentralized and yes, volatile. But fiat currency is FALSELY stable - it is engineered to be stable by a centralized authority that does not understand what it is doing and the machinations are generating an increasingly problematic economic environment. I can't stress this enough - the stability that is trumpeted as such a wonderful aspect of fiat currency is manufactured and at the whim of fools.
And absolutely, point taken about banks. I do not fully appreciate the role of centralized banking and certainly, few do. I should qualify some of my statements with the idea that banking is an option, but not a necessity. and that optionality certainly applies to the marble facade we see all over the American landscape.
And finally, yes, you can setup as many accounts as you like - and that behavior will be partially obfuscated because those IDs do not have to be linked. But if you would please give me a modicum of credit (pun intended) - the smart contract would likely require its own level of background on any given ID. If shenanigans are present - the ID is not permitted access to the transaction. Or it might not care - I guess it would depend on the potential exposure. Trivial problems have trivial solutions. There are much bigger problems that would need to be tackled. Thoughts?
I think we're saying mostly the same thing, just with slightly different framing.
We have one mechanism for maintaining a stable store of value (centrally managed fiat) that in practice seems to work well most of the time but periodically experiences catastrophic failures. We have another mechanism for maintaining a stable store of value (crypto markets) where catastrophic failure appears to be standard operating procedure. The first is far from ideal, for all the reasons you mention and many more, but from where I'm sitting it still seems like the lesser of two evils.
Also worth noting that central banks predate fiat currency. Back when currencies were metal-backed governments would hoard or release metal to try and control the market value. That's what Fort Knox is for. It didn't work as well as in fiat-world, because there are bounds to how much metal you can actually manage to store, but it worked well enough. It'll still work well enough when the Fed has a Strategic Bitcoin Reserve that they can manipulate the market with.
> the smart contract would likely require its own level of background on any given ID
Oh, yeah, no halfway competent vendor is going to allow themselves to get scammed like this. And the technical solutions are pretty obvious. My whole point, though, is that we're almost immediately reinventing credit requirements for market participation.
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There are a lot of people making starry eyed predictions for exciting new developments that a crypto-based economy would allow to happen, but when you dig into the details the vast majority of those things are just as feasible under a halfway decent centrally-managed ACH system. There are also a lot of people joyously awaiting the collapse of large sectors of the financial system, but again when you dig into the details most of those sectors exist to solve problems and meet needs that are still present on a blockchain.
We've been through half a dozen currency transitions over the past few centuries. From precious metal coins to private scrip backed by precious metal to government scrip backed by precious metal to government scrip backed by fiat to paper transaction logging (checks) to electronic transaction logging (ACH), and the financial sector has not only survived but embraced the infrastructure shift every time.
Don't get me wrong, I've got my fair share of complaints about the modern financial system. But for good or ill I just don't see a fiat to crypto transition having anything close the apocalyptic effects that HN, collectively, seems to expect.
The idea of the government creating a Strategic Bitcoin Reserve is interesting. You are right, whatever the current players can do to control any new financial instruments they will. I suppose the libertarian response to such an action on such a chain would be to abandon the chain. And I am WAY out over my skis here but there is a drastic difference between the money printing that is happening in America as opposed to the American govt attaching its keys to a large amount of a cryptocurrency. If they did that and did not transact with that coin then they could have a marked impact on the coin's liquidity and that would affect its value. It could also impact the transactability as fewer and fewer people would be active on that blockchain. But I keep coming back to the true difference being transparency and not being under centralized control as being the POTENTIAL game changers. I am not sure the populace has the stomach for such responsibility. Heck, I am not sure I do.
Would this require globally broadcasting all transaction? If yes, wouldn't globally broadcasting all transaction give you a lot of transparency anyway?
And please don't bring up scaling (it's already viable today so the future is irrelevant to the point) or high fess (caused by Bitcoin's incompetent devs).
Also we can already achieve PayPal like transaction amounts today, with Bitcoin Cash having in practice 20% of throughput. The limiting factor to scale further is software limited, not hardware. Furthermore it's possible to reach VISA levels of throughput with further work.
Scaling is one of the hardest issues for sure, but dismissing the viability of cryptocurrency because of it is naive.
As I mentioned Bitcoin Cash tries to see how far we can go with on-chain scaling.
Bitcoin on the other hand mostly avoids on-chain scaling and wants to add on side-chains which are supposed to scale. They're basically a second blockchain but it works a bit differently with different security trade-offs and comes with easy on and off settlements.
Monero wants to make all transactions private and thus make the coin itself fungible. The trade-off is that it's much harder to scale than the transparent blockchain of Bitcoin.
Ethereum wants to explore the idea of having advanced smart contracts on chain and again have several hard problems ahead.
Which approach is the best? Who knows...? Maybe in the end we'll have one coin that integrates all breakthroughs or they will each tend to their own niche. Overall I'm quite hopeful (obviously).
Now surrounding all this we need a lot of plumbing services. Payment processors which can accept the different coins and exchanges that makes it easy to swap between different coins.
I'm not sure if that answers your question though!
The definition implies that if someone says "I'm on block 1000" they cannot create altered version of history without touching all the blocks after the change.
But how is this useful? If there is a disagreement about the last block, majority wins, right? So couldn't majority simply have the most up-to-date version of the database with a single signature?
- Fraud
- DDoS
- Censorship
The usefulness of a consensus protocol is that no one party can be trusted to have the most up-to-date AND valid blockchain. Every node has the incentive to cheat and the consensus rules define a method of evaluating the proposed chain of blocks and determine it's "trustworthiness". In PoW this is often an algorithm like Greedy Heaviest Observed Sub-Tree (GHOST) which favours the fork with the highest accumulated work.
This is why it's important that mining is an expensive activity, to discourage attackers from wasting thousands of euros in electricity and then losing the block reward payment.
Consensus protocols do not require mining. You can simply poll X random nodes and compare what they tell you. I don't understand what mining adds to the equation. Okay, instead of "I need to control 50% of all nodes" it becomes "I need to control 50% of all mining capacity". Is that the point of mining? To make inserting hordes of cheap lying nodes impossible?
You can poll multiple nodes and each one will give you a different answer because of message propagation times.
Mining fulfils two roles:
- identity management: To identify who is a trustworthy block producer in an anonymous and trustless network, mining introduces a cost to the block generation process and we use a game theory assumption that it serves as a barrier for attackers. This doesn't mean there aren't validation checks performed by other nodes in the network and the consensus forming rules themselves of course.
- consensus formation: In a distributed network, nodes are bound to disagree on which is the canonical chain out of two or more competing forks. The most common algorithm calculates the accumulated computational effort of each chain of blocks and picks the "heaviest" one, ie the one with the most work done on it. This has the nice side effect of ensuring economic finality for the transactions in those blocks.
That's called a Sybil attack, and yes that's one of the reasons.
Mining also makes creating blocks have a real world energy cost. So rewriting history quickly becomes almost impossible as blocks are added. An attacker would have to have more than 50% of all mining power for a sustained period of time.
I suggest reading the Bitcoin whitepaper, it's short and sweet.
That's what it solves. It removes the need for trust and dependence in a central authority. There's no central actor to hack, or that can abuse the system, or be compelled to censor.
Consider Paypal. They're obligated to follow the regulations of every single government whose citizens they serve. Paypal themselves can also make value judgements. That severely limits who can use the system, for what purposes, in what quantities, and how frequently.
The reasons to run a personal node are related with privacy, trust and decentralisation.
This solves the problem of where you would publish said checksum. Instead of publishing it in an issue of the New York Times, say (which could theoretically be forged), you publish it somewhere that you can be 99.99% sure won't be forged, is viewable to everyone, and can be done fairly cheaply and would likely hold up in any court of law.
However, that's pretty much it. That's the whole benefit. You could also probably publish said checksum on facebook, with the same likelihood of it not being tampered with.
Note that I'm not arguing that blockchain won't gain adoption, just as people probably could have made a similar value-based argument about facebook in its early days, I personally believe there are cultural forces that will keep some blockchain asset in somewhat high demand.
That's not quite it. The other thing you get is "and this database guaranteed to have some properties". In the case of bitcoin for example you are guaranteed every transaction was authorised by the owner of the bitcoin being exchanged and there are no double spends.
But even that's not quite it, because those properties are flexible - even for bitcoin. They are actually assertions made by computer programs, something the lines of "if the database says X an Y are true, then I say Z is true". For example X might be "I have the put $x in an escrow account". Y might be "I have not paid the supplier $x in the agreed y days". Z might be "The escrow agent is allowed to deduct an fee from $x for himself, and pay the balance to myself and the supplier as he sees fit".
And thus we have gone from publishing the checksum of a database to controlling what can happen to $x in the future.
In general taking a snapshot of a blockchain at a single point in time and saying "all I have done is published an immutable database" misses the bigger picture. The blockchain is a chain of assertions about what has happened in the past and based on those what can happen in the future - and you can't alter the control of those future assertions re-writing the past, which is prohibitively expensive.
We currently have another way of doing a similar thing that has been refined over the centuries - contracts, interpreted by courts rather than software, enforced by governments, police and guns. Right now the new boy on the block, blockchains, only thrives where this existing system refuses to play - which is to say illegal transactions. (And maybe its detractors are right - maybe it will always be too clumsy and slow to expand beyond that.) However to say the blockchain is merely a snap shot of its database rendered immutable by a published checksum is like saying our system of law is a just the series of title deeds on house, rendered immutable because they line in some government office.
Unfortunately, this is a problem almost no-one has; meanwhile, where parties are able to agree on a trustworthy central authority - as parties operating within the rule of law, relying on cooperation with protocol and old-fashioned police/lawyers to identify and punish defectors in old-fashioned meatspace, generally are - blockchain is an incredibly expensive solution to the problem of distributed consensus compared to other options available to them.
I also think that the mad gold rush has the potential to turn off those who would build the real ecosystem, small pieces of useful, reusable smart-contract code at a time.
Also, are you the Dan Collins in Phoenix? I think we did a project together about 4 years ago...
But more importantly, blockchain might provide a way to get around the information asymmetry problem that dominates financial value exchange. Blockchain is better in the idea that the entity trying to transact exposes all their cards on the blockchain - if they want to extract value from a transaction it will not simply be because they "know more than you". Power to the people.
I worked on Square's payment systems and I agree. Most credit card payments at least go through a merchant acquirer, one or two card networks (they can proxy to one another), and the card issuer. Settlement tends to involve other parties like First Data. Sometimes there are extra middlemen like Braintree.
Settlement is slow mainly because of the ancient technology. Payments are usually settled in batches, which are typically processed once a day, and transferred with some variant of FTP. Since there are a few parties involved, it usually takes a few days for each of their batch settlement jobs to complete. The companies involved tend to be very cautious and slow to change; a lot of them still use COBOL running on IBM mainframes.
> On a blockchain that can happen in as little as 10 minutes
Or a matter of seconds with BFT systems :) I'm working on a BFT system with a goal of subsecond consensus.
1. It's a potentially revolutionary technology (trust-less, decentralized, nearly tamper proof, etc) that hasn't yet found a killer app(s) at scale
2. We're in the middle of a gold rush with zillions of shit-coins really throwing off the signal to noise ratio
This period will pass. Blockchain tech is maturing (PoS replacing PoW, throughput increasing, formal verification, on-chain governance, etc). Most of the shit-coins will disappear (a common headline these days is exchange X delisting NN coins because they're worthless). Things will consolidate, the really valuable tech will bubble to the top.
If you follow the news, you'd know there's a lot of stuff in the works, from major corporations to governments trialing blockchain for different purposes. Now, you can take a philosophical position about blockchain and say it's worthless, but the rest of the world doesn't seem to care and its widespread adoption is beginning to look like a foregone conclusion.
> In energy for instance, much talk about the financial aspect of a blockchain-based energy solution but absolutely zero talk of how the physical grid and infrastructure would engage to support the financial activity.
http://news.trust.org/item/20180828095937-yg29h/
This is a project trialing in Bangkok. Excess electricity from private solar is sold off automatically.
> Helping it along is blockchain, the distributed ledger technology that underpins bitcoin currency, which offers a transparent way to handle complex transactions between users, producers, and even traders and utilities.
> Blockchain also saves individuals the drudgery of switching between sending power and receiving it, said Martin.
I don't have any details, but it seems they've figured out how 'energy on blockchain' actually works. I have heard the project has been successful enough that city decided to tax them to the point of being unprofitable (will likely correct itself in the future, was probably just a knee jerk reaction).
I'd argue it has: cryptocurrency and all the criminal enterprises it supports (e.g., ransomware). If you're willing to enter legally-enforceable contracts with other parties, then "trustless" and "decentralized" don't matter all that much to you.
And of course, you can always include as many people in your transactions as possible but what blockchain does is to make those people unnecessary. Why is this important? Because it enables micro-transactions and credit-less agreements. A blockchain provide options that fiat-based systems can never provide.
To give you a concrete example of a use case that can't be met without a blockchain, I'd suggest looking into Aragon and their DAO (decentralised autonomous organisation) software.
Edit: Oh wow -- Anders is the author of the MIT demo. All the same stuff really.
Would love your feedback on it!
1) Some people are ignorant;
2) Some people are trolls;
3) And some people have an agenda e.g. they're trying to get folk in 1) to buy something.
But if you're talking specifically about cryptocurrencies and bitcoin then I assume you're a bit salty because you think you missed the hype. Don't worry tho, we are still early adopters.
If you are a small producer and you send a shipment of your widgets to Wal Mart, and Wal Mart then say "what widgets?", the efficiency of their SQL Server installation isn't a benefit that will bring you much comfort.
If you are a small producer and you send a shipment of your widgets to Wal Mart with little rfid stickers on tracked by a blockchain system that you, the shipping company, border security, Wal Mart's warehouse and Wal Mart's stores run nodes for, you have a system that may bring you a bit more comfort. Running a node is simpler (or at least more efficient - pen and paper is simpler than SQL Server...), and the outcomes more encouraging for all participants, than some of the alternatives.
The question "Why not just banks using computers?" is where distributed timestamp servers came in and there is an extensive literature devoted to both the ideological and practical arguments around this. Briefly because banks are untrustworthy, expensive and slow. Banks themselves using blockchains is recuperation ideologically speaking, and FOMO technologically speaking. It is less silly to the degree that it does improve banking transparency and trustworthiness, but abandoning proof-of-of-work for the nonsense of "permissioned" blockchains restores it to being very silly.
> little rfid stickers on them ...
If the problem you're trying to solve is the one you say, you might as well just run a few servers across different organizations / companies which replicate between themselves, like certificate transparency does, or like the gpg web of trust does... which isn't a blockchain because it's vastly more efficient.
We could have one big CT-style log system host many applications, but as the number of participants grew, we would want some mechanism to prevent spam. Even if there was no outright spam, some users would generate a large volume of logs with questionable utility, and humans would need to get together to decide if those users should be blacklisted or what.
Ethereum gives us spam control via gas costs. I can't imagine a good, low-maintenance solution that doesn't resemble some cryptocurrency. Paying fees from a ledger isn't absolutely necessary -- we could proof of work to discourage spam, like iota -- but charging fees in a ledger seems like the better solution, and isn't that much more complicated.
So in short, it is an extension of the internet (trust layer) and it will change the world. So I don't think that's nonsense to say, but I can see how these claims would appear to be exaggerated to someone with limited exposure to Bitcoin and other cryptocurrencies.
Solution: blockchain smart contracts where code is law, more secure, trustworthy and transparent than any individual, bank, government or company.
As for the yacht it's easy, the ownership is transfered from your address to the buyers address on the government's blockchain. :)
The DAO issue [0] clearly showed that "code is law" doesn't really work. It's people writing cryptocurrency software and running the nodes that are "the law".
[0]: https://www.coindesk.com/ethereum-executes-blockchain-hard-f...
Otherwise you have a synchronization problem between the upcoming blockchain token system and the existing government deed registry, and of course the government registry would take preference, and has a history of working just fine for lower cost.
This video is an excellent overview of this topic: https://www.youtube.com/watch?v=YxmXIgLEAIE
I haven't seen blockchain systems as being more secure or more trustworthy. I see them being overhyped, subject to lax and magical thinking, and full of theft of coins due to hacks and scams.
Also we are just talking opinions here, a lot of things seem impossible until they are actually here and in our everyday lives.
You might learn something.
The blockchain can't (or at the very least shouldn't) overwrite legal infrastructure.
You can not otherwise too, right? A blockchain holds interactions/transactions not the data itself. Most blockchains are incredibly small in size. For example, the size of the entire Bitcoin blockchain is 215.84 GB [0].
Also, I see a possibility for licensing/DRM of some types of media IP.
That does not mean it needs to be distributed, though.
At the expense of time. So most real-world use cases (securities trading, vehicular networks, payments) fail when you introduce a 10-minute delay required for distributed confirmation.
For time-insensitive examples you've provided - supply chain and health records - the use cases work better, but who will dedicate the resources and mine the blocks to ensure that specific blockchain's survival?
First, for blockchain to work you need trustable sources. Problem is, when the aource is trustworthy, what added benefit comes from a blockchain?
Second, having a, theoretically uninterrupted blockchain from the first raw material to, say, a car would provide way to much insight into supply chains. I pretty sure companies do not want that.
Finally, and that is IMHO the haedest point to practically solve, you need to make 100 percent sure that the physical and information flow in your supply chain are never ever seperated. One single separation and your whole blockchain is worthless. And that risk is so incredibly high in the real world it's almost laughable. So, to make sure a given blockchain matches the physical product you need a trustworthy party to assure that. And then, what value does blockchain add?
Someday someone a lot smarter than me will find a use case. At which I will say how damn obvious it is.
I could see how this would be useful for medical device manufacturing, especially something like a pacemaker.
Almost always a blockchain is (i) useless or (ii) something kinda vaguely like Satoshi's blockchain but really more like Git.
You wouldn't need such a system for cars to communicate in the presence of authority or in the absence of value. The former is the case for Lyft or Uber, the latter is the case if we have an infinite supply of cars.
But if one wishes to have peer-to-peer value (and cars ain't cheap) without a central authority (and Uber is evil) a proof-of-work blockchain is better for that than Git or a server run by some guy is.
There may of course be superior social or technical forms for this use case. But once you have added the qualifier that the system should be decentralised (and for everyone making a career out of pretending not to understand what this word means: I mean here that there should be no central point of control at the point of transaction) a blockchain may make more sense than some of the alternatives.
Bitcoin has a throughput of about 3 tx per second. Ethereum a little better at 7 tx per second. Confirmations are on the order of minutes at best.
Why do you think this would be a good idea?
But let me ask you this: exactly what problem will a database/tree/file solve for vehicles or currencies? We can agree upon that what you are asking and looking for can't be answered or will get a reply similar to: we don't have that problem. You may have asked the wrong question though.
Let me be more precise and create a problem that doesn't exist but for programming purposes I want these requirements: many users should be able to read a (hardly) modifiable data structure that gets more resilient the more use it and that is a singleton who everybody has access to (call it decentralised if you will). Blockchain sounds like a perfect fit doesn't it? Now, when we replace the data structure keyword with OS and resiliency with speed, we can agree upon that this sounds like a decentralised operating system (Ethereum or whatnot).
Don't get me wrong. I don't see any problems that need to be solved with blockchain right now either. But clearly there is a trend in cryptocurrencies and decentralisation that seems to be important to a lot of people. There are tons of problems that need solving: trust misuse, censorships, privacy issues, advertising and so on. That there is a need for a change is obvious. That this change started with blockchain technology is good. I'm also sure cryptography is important to you too. Why not embrace an emerging technology that benefit your field of study?
Vehicle purchasing/financing paperwork.
Inspection tracking.
Can you explain this step?
To avoid the verification process being gamed we split up the data and send pieces to random people across the across the network. So, someone may be asked "Is this article about Trump?" and the next person may be asked "Which state is this sentence about?". They may not even see the whole original article.
Asking humans to review the accuracy of all published text will never scale.
I don’t really understand your business. It’s a business, but also dencentralised. Are you trying to verify if news is fake or not? Why do you need a blockchain or machine learning for this? Do you have your own coin?
To do fact checking you first need to know what has been reported. We verify that a source reported that Trump was involved in a news event where he gave a speech, and convert that to data (For example: Trump, gives speech, text of what he said, location etc, with links to the sources). Anyone can then use that data combined with their own algorithms or external data to evaluate the quality of the data -- primarily by evaluating the sources -- to create quality scores for that news event.
> don’t really understand your business. It’s a business, but also dencentralized.
We are setting up a foundation to oversee the blockchain, but it really only exists to distribute the initial funds and to provide initial guidance, until on-chain governance can be set up. Companies and individuals run the apps that use the data on the blockchain.
>Are you trying to verify if news is fake or not?
See above. You can use the data for lots of things. Detecting fake news is just one application.
>Why do you need a blockchain or machine learning for this?
There is no way to ensure that the data is verified independently across the network, and stored in a censorship and tamper-resistant way without a blockchain.
>Do you have your own coin?
The coin (NewsBlocks Tokens) will be used by apps to pay for the data. The payments are then sent to the people who added the data, without any need for middlemen or news agencies, using Smart Contracts.
But I think Block chain can succeed. It matters less that it works, as long as the rich and powerful believe it can help then sustain their status.
Yeah, they don't really though. They allow a few extremely specific applications requiring decentralized trust. The trust guarantees only hold if no single party can, even momentarily, control more hashing power than was collectively used to generate the last X blocks, where X is number of updates made since the data you want to tamper with was inserted.
To put it in concrete terms, pretend we have a blockchain for publishing PGP keys, and that your public key is 10 blocks down in the chain. If I want to maliciously replace your key with one of my own then all I need to do is rent a few dozen servers off of AWS for a day or two and use them to generate a modified chain that has my key instead of yours in the 11th block down and then rehash all ten blocks spending slightly more compute power each time than the original committers did. The network will recognize my fork as the authoritative one because it's got more proof of work. That's expensive, but it's certainly not infeasible.
This trust mechanism works out for cryptocurrencies because their only value is monetary. That means that people are incentivized to set up mining rigs to spend a lot of real resources on mining because they automatically get compensated. It also means that there's a bounded maximum amount of effort that a rational actor will spend to tamper with the chain, because there's a finite limit on the available profit to be gained.
Neither of these are true for PGP keys. Publishing a secure update to a PGP key database is not, in and of itself, a profit generating enterprise, meaning fewer miners and far less resources spent per mining rig. And the potential upside of successfully tampering with the right key is enormous.
The actual mechanism which produces the security guarantees in blockchains isn't cryptographic, it's economic. Tampering with a cryptocurrency's blockchain isn't actually impossible, or even difficult, it's just by definition more expensive than it's worth. When you try and move to an application other than financial assets the economics break down, the security guarantees go out the window, and all you're left with is an extremely inefficient git clone.
Consensus doesn't work like you're implying. If it did, I could spin up a peer on N+1 AWS servers, where N is the current number of peers on the network, and now my version has the majority of peers supporting it.
The whole idea behind proof of work is that it's impossible to fake. The version that took the most net computing power to generate is by definition authoritative. This means that the only way to make a malicious version of a chain is to actually, genuinely do more total work than the legitimate actors collectively did. The other side of this coin, though, is that it explicitly allows me to generate a malicious version of the chain by actually, genuinely doing more total work than the legitimate actors collectively did.
Or, since manufacturing an automobile is already centralized just use existing PKI.
(I can imagine some genuine uses, but I'm not interested in explaining them to people, especially not technical people with an axe to grind. So boring! Much quicker and easier just to say nothing, sit tight, see what happens, and find out that way whether I'm wrong or not. Most technical people are myopically technical anyway, and the technical side is just not the interesting bit here.)
Permissionless and trustless digital payments truly has the power to change the world.
It arguably already has with the rise of darknet markets and cryptojacking. Think of all the movies where a suitcase of cash must be delivered to a drop off spot, this now all goes away.
But the bigger picture includes making it much easier and safer for business which cannot take credit cards to accept payments. Think donations to wikileaks, porn and marijuana businesses.
Think about what it means for people to control their own money in case of a crisis. In places like Venezuela people are already using cryptocurrencies to avoid inflation, a corrupt government and to cross the border with their wealth intact. Charities like eatBCH uses cryptocurrency to send people money into the country in order to buy food.
Yet another step back, if cryptocurrencies would truly catch on and replace government backed fiat for general use, then it's not as easy to simply "print more money" to get away from financial troubles. Banks might then have to take responsibility for their actions instead of getting bailout after bailout.
Is it simply brute-forcing hashes, looking for matching patterns that are not yet known?
That way we can make small adjustments to the difficulty. If we actually used a rule like "this many zeros in hex", the difficulty bumps would have to be rather large.
And yeah, but it also requires valid transactions if you want to collect fees, as well as the knowledge of the valid previous block.
What I like most about cryptocurrency is the fact that it financially incentivizes massive collaborative behaviour without requiring participants to actually own any capital at the beginning. It lets you create financial incentives out of nothing. Before cryptocurrency, this kind of collaborative game-rigging behaviour was only accessible to people who owned a lot of capital (e.g. 'activist' investors).
For example, I could launch my own cryptocurrency tomorrow and then use it to air-drop (aka bribe) journalists to write about my project in a positive way - This is pretty standard behaviour among Silicon Valley startups but now you can do it without VC money.
It sounds bad but it's much better than what we have now.
It levels the playing field for everyone. For the first time ever, regular people have the power to change the world together through incentivised collaboration.
It's like if you could give some shares of your startup to a journalist in exchange for writing an article about your startup. Cryptocurrency can act like shares without central authority. If enough software services rely on a specific cryptocurrency as payment, then it has actual intrinsic value
I wish I'd seen this earlier. Pretty sure this is false, but it is an excellent summation of the thought behind what's run up digital currencies.
Then ultimately a chain that is consistent might have been manipulated, but you can check it against other copies. At this point you could be just comparing plain text ledgers (but blockchain comparison could be easier by just comparing hashes.)
The difficulty can be adjusted to ensure that finding such a number is very hard. Obviously in the demo, it was not so very difficult - your machine was able to work out a value for the nonce very quickly by itself, but in the real network, the difficult is set so that this is hard. So hard that the whole network of miners working together will only find one, on average every x minutes (configurable depending on how you update the difficulty). This means that creating another block is difficult.
The whole network has the rule that longer chains of blocks are preferred over shorter ones, so as more blocks are added to a chain, the amount of computation required to overtake the main chain and have your modified chain accepted as the truth becomes very large. To rewrite history, you don't just need to modify the data and recalculate the hash for each subsequent block, you need to find a nonce that works for each of the subsequent blocks, and you need to be doing this faster than the main chain is adding new blocks, or your chain will never be as long as the main chain, and it will never be considered the 'truth'.
That's why people talk about 51% attacks - the idea is that you need to have a majority of the hash power of the network working on your dodgy chain if you want it to overtake the main chain. Now there are things you can do with less than 51% of the network hash power, but for the naive approach, you're going to need a phenomenal amount of computing power to stand a chance of having people accept your version of history. For alt-coin chains with very few participants, there have been real attacks along these lines. It's hard to imagine attacks like this succeeding against any of the main blockchains though.
And yes, comparing two blockchains for equality is very easy - the hash of a block includes the hash of the previous block, as you can see in the demo, so the hash represents the entire history. If two blockchains have a different hash for the top block, they have different histories.
I think that distinction needs to be made (centralized vs distributed).
Is there only one of its kind?
Is "How Internet Works" grammatically correct?
EDIT: I didn't see this was already asked in another comment.
Blockchain is here being used in reference to the technology itself, not the collection of its manifestations. Just like you might say "how the internal combustion engine works" or "how insertion sort works"
Like asking someone "can you grab a couple waters while you're in the kitchen?"
"*Oh hey look, I found a sand"
"Oh hey look, I found a blockchain"
It doesn't fail the test, so it must be a count noun.
(PS: water is a bad example, because "a water" is a common abbreviation for "a glass of water" that's old enough it's probably lexicalized in a lot of people's heads. "sand", "salt", "bread", "wood", or "rice" are better examples)
Blockchains are countable, so it does seem to be incorrect to use it as the title does.
https://medium.com/@ryanshea/blockchain-terminology-a-gramma...
(It grates on my ears to hear blockchain used the way it is here. I'm not sure when it started, but certainly doesn't sound like it should.)
But it's how financial/business people are typically abbreviating "blockchain technology". It's like Brexit: there are many possible implementations, but one concept.
It's just a short-handed title given to a concept by people who need to talk about it but don't fully understand it. Like the way politicians talk about "cyber"
Edit: The use of "blockchain" in this article rather than "a blockchain" or "blockchains" seems to be just to conform to the broader discussion. The linked page does seem to demonstrate a clear understanding of how blockchains work.
Blockchain is both the descriptive label for distributed ledgers and the pronoun for Bitcoin’s Blockchain.
It could have been “how blockchains work” if talking about blockchains generally but “how Blockchain works” would seem to be the title of an article discussing how Bitcoin’s Blockchain works specifically.