Blockchains aren’t new, they’re over a decade old at this point.
And in what applications are blockchains superior to centralized applications?
And in what applications are blockchains superior to centralized applications?
How are blockchain transactions confirmed to match the real world? You have to make sure that physical assets or financial instruments are properly cleared. Not everything can live on the blockchain.
Miners spend a ton of money on electricity, and this is necessary to protect the network from a 50% attack. What systems are in place to incentivize miners to spend the electricity to verify blocks?
Also, your previous criticism of blockchain being worthless because “it’s 10 years old” is meaningless. The first email was sent in the 1970’s. Technology takes time.
I’m not sure I’d go with stablecoins, since the main one appears to be a massive fraud. It’s still unclear why you would want a “decentralized” stablecoin that’s actually managed by a central trusted authority that, pinky swear, has the backing cash.
The assertion was made that blockchains are new, and I pointed out that’s nonsense. I never said that old=worthless, you made that up.
That is exactly the opposite of what most software vendors and similar want. They want more control over the assets they release, not less.
If the asset is financial in nature, this is basically illegal. KYC and AML laws still apply, even to crypto, as do other related securities law.
If the asset is physical, you have to solve the issue of making the blockchain match reality. I know you said there's a ton of work being done in that space, but I have yet to see a lot of solutions.
> Essentially we now have programmable money with no middlemen.
Given the rate of bugs in "smart" contracts, that is not an appealing pitch.
I also find that the people angriest at the middlemen often know the least about why the middlemen exist. Hint: they often provide a service to match their fees.
> What comes from this innovation is anyone’s guess, but if you are an entrepreneur, this is a very intriguing technology in which to start new ventures.
It's also a fantastic way to lose your shirt.
> It may remain niche, or it may fundamentally alter the financial industry (currencies, securities, payments...) and perhaps many others.
You basically said "anything could happen". If your prediction is basically "anything", why bother prognosticating?
Maybe? The ability for something like this didn't exist before, maybe an entrepreneur will come up with something new and valuable around the licensing use-case. I also don't know if such a blanket statement about "most software vendors" can be asserted.
> If the asset is financial in nature, this is basically illegal. KYC and AML laws still apply, even to crypto, as do other related securities law.
Major companies like Coinbase and Circle are not violating any laws. They have lawyers, licenses, and so on. Just because something is regulated, doesn't mean an entrepreneur can't invent a new and innovative product - they just comply with the laws and regulations.
> If the asset is physical, you have to solve the issue of making the blockchain match reality. I know you said there's a ton of work being done in that space, but I have yet to see a lot of solutions.
Time will tell, I agree.
> Given the rate of bugs in "smart" contracts, that is not an appealing pitch.
Active area of research and development, such as formally verified computation. I would bet that technologists are more likely to solve this issue than not.
> I also find that the people angriest at the middlemen often know the least about why the middlemen exist. Hint: they often provide a service to match their fees.
Sure, but if the same service can be provided at drastically reduced cost, then it's a win, and blockchain may be able to do this. Middlemen exist for reasons, but that doesn't mean they can't be disrupted.
> It's also a fantastic way to lose your shirt.
Investing in anything is risky, let alone seed-stage startups on unproven technology, but luckily there is an industry that funds such risky endeavors.
> You basically said "anything could happen". If your prediction is basically "anything", why bother prognosticating?
You are making the bear-case for crypto and blockchain, while I am an optimist making the bull-case. I'm basically saying that a huge amount of potential is there, and writing it all off as worthless or barely useful at best in October 2018 is very premature.
There are no solutions. The perfect oracle does not exist and any such system is going to have all of the same problems that any non-digital, non-blockchain based system could have.
Any token held in the blockchain is only valuable if the token in itself has inherent value. A token which is merely a proxy for some external value is a waste of time.
The only use I see for the blockchain beyond money is for fraud-proof timestamps, since the ledger is also a distributed timestamp server, but even that has limited applicability because there's no way to prove that something did not happen earlier, for which someone just copy-pasted into the blockchain afterwards.
It’s highly entertaining to me how many issues with cryptocurrencies have to be resolved with classical financial instruments and regulatory processes. It’s almosf as if these systems were slowly built over a few centuries and are actually pretty good at what they do, and that you can’t just throw computers at the problem and pretend that you know better.
Check out this blog post for a few ways companies are trying to solve private validation - http://sammantics.com/blog/2016/3/6/how-transactions-are-val...
Well, with these new investments you can buy into the Bitcoin goodness much like how our forefathers could have their wealth backed by gold.
With a bank backed by gold the actual gold does not leave the vault very often. It was theoretical that you could go to the bank and get your paper notes changed for actual gold.
In this brave new world of Bitcoin backed investments your transactions to and from the fund do not involve anything being added or removed from the blockchain. There is just a wallet there, in the bank cold storage with however many bitcoins on it. The bank does not have one wallet for its bitcoins it has thousands of the things, so the account is sharded this way.
The difference is that rather than gold being the real backing it is a Bitcoin wallet. If you get out of the fund then the bank won't be selling the contents of that wallet on Coinbase, it will just sit there in the fund ready for the next punter to buy into.
An investment fund that has gold as the backing store of wealth is able to track the value of the gold, same with Bitcoin. If Bitcoin goes up then your investment is worth more, the fund takes its percentage and it all works fine.
This is what Bitcoin has come to, if you strip away all the 'fintech' mumbo-jumbo buzzword legalese this is all it is, a variant on 'Banking 1.0'.
Question was:
"And in what applications are blockchains superior to centralized applications?"
You really did not answer the question. What is the application where it is superior to track the asset without central authority? (I come up with criminal money transfers. I hope someone comes up with something else because I do not think that is too solid a foundation to build a sustainable technology...)
Everyone immediately jumps to the criminal aspects. The existing financial system has absolutely no problem handling all the crime, the blockchain did not invent money laundering.[0]
[0] https://www.theguardian.com/business/2018/sep/19/danske-bank...
Except for all the fees to middlemen?
People, myself included, jump to the criminal aspects because those are the only real world applications that are currently creating value for Bitcoin "users" (vs. speculators). Getting around borders/currency controls is valuable because it's hard to do/illegal, and Bitcoin makes it easier.
The rest of the things you listed such as "highest density of wealth storage every invented" and "completely different threat model" are not use cases, and are not inherently good/bad, just different (and actually usually bad when optimizing for verification speed/efficiency and transaction clearance over chargebacks/fraud)
PS did you get hired into the crypto/blockchain world, or just more optimistic after doing research? I remember us being in agreement / you being skeptical about it before
As I said, the fee issue is being worked on (scaling, layer 2 networks) but that's a potential of the technology.
> People, myself included, jump to the criminal aspects because those are the only real world applications that are currently creating value for Bitcoin "users"
I simply disagree, if you want me to enumerate all the use cases that aren't criminal I can, but google can help.
> The rest of the things you listed such as "highest density of wealth storage every invented" and "completely different threat model" are not use cases, and are not inherently good/bad, just different (and actually usually bad when optimizing for verification speed/efficiency and transaction clearance over chargebacks/fraud)
Yes, it is a different sort of tradeoff, that may be useful in some cases. It's novel.
> PS did you get hired into the crypto/blockchain world, or just more optimistic after doing research? I remember us being in agreement / you being skeptical about it before
I have posted a lot on cryptocurrency, I have been in the industry for a while, but I am not universally optimistic about all things crypto. But overall I am bullish.
Could you start with one? And I mean one that is obviously superior to centralized solutions? What are the measures that make blockchain superior in this use case and why a centralized solution can't achieve those measures? Why the tradeoffs in other measures are insignificant? Let's further assume that decentralization itself is not an acceptable measure.
Do you not see the value of censorship resistance?
There are billions of people in the world currently living under repressive governments. The world does not revolve around the western world with all of our privileged freedoms.
This is definitely false. I buy a lot of things that are completely legal using cryptocurrency and find it to be pretty painless. I am a small-time miner and use the profits to buy computer gear from Newegg or resellers who want BTC and get a pretty huge discount on Amazon gear. I have zero problem spending all of my cryptocurrency on valid electronics if I desire.
2) This is false if you understand that Visa/MC do not settle instantly, rather 24-48 hours down the line and their instantaneous consumer network is not identical to that settlement layer. Similar to BTC's blockchain + Lightning network.
3) This is not really a thing outside of Ethereum, but yes, it was a very bad decision.
4) There are plenty of frauds using USD. Way more than BTC. Like, a lot.
5) I'm not sure what this random bit of racism against China has anything to do with anything, but the network's locations of nodes doesn't have much to do with nationality preference.
More hilariously is that there is a branch of Ethereum that still contains the DAO hack transactions, Ethereum Classic . It’s generally assumed that that branch is run by the DAO hacker, which is kind of hilarious to me.
Deflation brings its own problems.
In the end, people still need to eat and drink, and they're going to pay to meet those needs no matter how much it costs them.
Most of the complaints about deflation are from the Keynesian economists, who for them, it is a major problem. How are they going to pay back all that interest they keep accumulating if people aren't continuously spending?
So if you want to be safe from censorship, a decentralized Leger is better.
If you do not care about censorship resistance, then you should count yourself lucky and very privileged. There are billions of people in the world who are currently living under repressive governments.
If you’re worried about your government, then you can’t beat physical cash.