“In 2018 the blockchain/decentralization story fell apart”
twitter.com
twitter.com
I also wanted to add a couple of points that I didn't get to in the Twitter thread.
Economics. Blockchain technologists seem to overestimate the extent to which new insights in economics are needed to understand cryptocurrencies and blockchains, as opposed to applying basic principles from economics and game theory. For example, a recent paper shows that thinking about miners and attackers in terms of stock and flow exposes important limitations of the security of Proof of Work. [1] I learnt of many other such examples at a recent conference on the economics of blockchains. [2] So I think a lot of the "cryptoeconomics" hype is misplaced.
Privacy. It's often taken for granted that decentralized architectures will improve privacy. This seems obvious given everything we've learnt about Facebook, but a better way to think about it is that decentralized systems exchange one set of privacy problems with another. I coauthored a paper a few years ago skeptical of the "decentralization ==> privacy" story in the context of social networks [3], but I think many of the arguments in that paper apply to blockchain/dApps that are being built today.
[1] http://faculty.chicagobooth.edu/eric.budish/research/Economi...
[2] https://bfi.uchicago.edu/events/cryptocurrencies-and-blockch...
[3] http://randomwalker.info/publications/critical-look-at-decen...
The discussions about economics applied here focus too much on microeconomic rather than macroeconomic arguments. So they end up missing the point entirely which is this:
Money isn't a neutral instrument and it's not something that can be decoupled from societal/political concepts and structures.
You can evaluate it as though it is neutral, but it has not ever been and will never be a neutral instrument because of the historical tendency for resources to pool and therefore become power centers, among other things.
Therefore if you view cryptocurrency as having the primary intention to de-couple commerce from coercive power structures [1], then you'll see immediately the historical problem. Namely, history doesn't favor distributed power, especially not when it can easily be co-opted by the powerful systems in which they rely.
In the best case scenario for crypto-utopians, millions of people transact and do commerce on a decentralized currency. In that case, whatever sovereign is most impacted, will then either outlaw commerce by crypto by force or require parity with the sovereign currency and control of the crypto currency through tax payments. This has happened multiple times over the centuries with alt-currencies and they are killed off by the most powerful (see: Most powerful economy/military) organization.
Politically, there is nothing different about Bitcoin than there was with the confederate states dollar for example.
[1] From the original whitepaper: "What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party." https://bitcoin.org/bitcoin.pdf
That's not possible. Even if all the governments of the developed world coordinated to ban cryptocurrencies or impose taxes on them, this will be an opportunity for developing countries to use cryptocurrencies as a competitive advantage to catch up financially.
As smartphones spread across developing countries, hypothetical non-minable cryptocurrencies that works well on intermittent or local networking might become relevant.
In that case, why do we have ~200 nations instead of a single world government? Clearly, sovereignty matters to groups of people.
"Sovereignty of money does not matter to LARGE groups of people" - might be a more defensible argument.
The correct starting question is "why do we have 200 nations, instead of millions of individuals and families living autonomously?" and the answer is: human beings are basically tribal people, and military conquest.
And then the answer to your question about why 200 is that military conquest never got any farther before the atom bomb eliminated direct warfare between major nations.
My point is that sovereignty, innovation etc. are valuables which centralization can't deliver. "Monopolies will maximize profits and therefore, under-supply the product" is Economics 101. So, yes, economics of scale and network effects do encourage centralization but there are counter-balancing forces.
What we need is protocols that allow a sliding scale as opposed to non-interoperable silos. DNS, TCP/IP, Git delivered exactly that. While GitHub has the scale and network effects, plenty of people are happily using GitLab, BitBucket etc.
The long run trend is very obviously toward a single government. Consider that until the Sumerians established cities less than 7000 years ago, humanity was just thousands small traveling groups of nomads with no defined borders.
Sovereignty gets a lot of lip service, but in practice most people don't really want it. It's a lot of work.
Is it? I believe there are far more countries now than 30 years ago.
We seem to have some more powerful international organisations now than a century ago, but earlier than that we had world spanning empires, and Europe was less than 10 countries before WW1.
I want to believe that we're heading towards a star trek like unified post scarcity planet, but I'm unsure we're not just seeing a local trend.
Much how King Arthur, Lord of the Britains was not known to the members of the anarcho-syndicalist commune.
Hmm, I think you will have to justify that statement, rather than simply claim it is a very obvious fact. Generally, there were fewer governments in the past as compared to the modern day.
If the answer is no then your point stands. However I tend to think that the answer is in fact yes and the trend does indeed seem to be toward centralized world government given a long enough time period.
all we need is an event that demonstrates the need for a world government - for eg a massive asteroid headed at earth or a planetary scale food drought to see these systems implemented.
the world is stagnating
Deltas in space and time plus the fact face to face conversations give you a better idea of the sender's mental state. Comms over the Internet are untrustworthy, if you don't have prior experience with the sender.
Also, language, which is related to deltas in time and space.
It's easier for powerful central organizations to influence smaller countries which are divided against each other, while believing that they are relatively independent.
Also: latency of information transfer and the speed of light, which lead to local variance and central filtering of changes which are allowed to diffuse elsewhere.
Italy alone used to be a dozen+ independent city states. Divided the world 200 ways seems like a lot unless you look at how much it's been divided historically. And in comparison, that's extremely centralized.
Stealth, space supremacy, global surveillance, carrier groups, strike wings, nuclear arsenals, reaper drones and all the other crazy battlefield robot tech in service or development can cut to pieces any obsolete nation state military, let alone some rebels armed with cheap 3d-printed guns.
So why isn't the US (which has all this tech) winning in Afghanistan over some rebels with AK 47s? Likewise Vietnam after literally a decade of fighting.
Weapons superiority is one factor in winning wars. Likewise, to address the gp's point, the history of political organization is partly driven by military technology.
And the current struggles of the American military only result in hundreds or maybe thousands of American deaths, which historically, would be a mere rounding error. Afghanistan, Iraq, Syria, et. al. are a mess, but they don't come to a significant human cost to America.
The United States and its voting populace doesn't really care about whether or not developing countries are wartorn, and quality of life is decimated—America and other states have completely destroyed the backbone of several societies in the Middle East and caused the deaths and relocation of hundreds of thousands of innocents, but you don't feel the pain of that when you live states-side. So the country has little incentive to quickly resolve these conflicts besides the bad PR; ongoing conflicts mostly buy time for protracted, proxy diplomacy with other major powers to lay claim to natural resources, and aren't viewed as conflict with a tangible human cost.
What's interesting is to consider that while the world is very centralized in the sense you described, "day-to-day" operations are even more decentralized than ever. That is, (very generally speaking) order is established and maintained, and people go about their lives without huge, burdensome micro-management from "above" in the important aspects of their daily life.
It probably turns out that the most consequential decision-making affecting the modern person's daily life is happening very locally in the social & spatial/temporal sense. So, in that way, authority is effectively decentralized.
The number of states waxes and wanes throughout history, there's not a clear trend.
It's more likely that the cities will become the dominant form of a citizen's home sovereignty rather than a nation, with only a few national boundaries around the world. People are inherently tribal and human behavior isn't changing anytime soon but countries are quickly becoming stretched too thin to keep up with all the varied and changing populations and their needs.
Coase won a Nobel Prize for this. Simply, the trade-off between bureaucratic inefficiency and economies of scale.
From my study of it, it's closer to a ratchet. So while dissolution might happen at the highest organizational level, the hierarchies trend toward growing over successive cycles.
The big political difference is that Bitcoin transcends borders and national governments.
While the United States could have outlawed the Confederate dollar, the United States cannot outlaw Bitcoin because it can be sustained by miners globally.
Interestingly, the United States didn't have to outlaw the Confederate dollar, or the Texas dollar, because both of them were destroyed by their creators through over-printing.
On the one extreme, you've got the evangelicals who insist that everybody will benefit from cryptocurrency today and the only reason it hasn't replaced all of modern finance is because of a conspiracy. These people ignore anyone's attempt at a rational counterargument.
On the other extreme you've got people who are very strongly against the idea of cryptocurrencies. They see that tremendous harm can come to individuals who jump into this system unprepared and who aren't aware of the security or privacy implications (for example), because the previous group doesn't admit that there are any. They are also able to see through the greed and the overhype and as a result dismiss Bitcoin for being nothing.
The thing to recognize is that these are both extremes. They both contain some truth, but it feels that the public discourse is largely just a fight between the extremes rather than any meaningful discussion.
If you want to contribute something meaningful to the discussion, be honest. You have some good points in this followup and in your twitter comments, but your opening line is just blatantly dishonest.
> For example, a study of 43 use cases found a 0% success rate
So, apparently nobody is buying drugs with cryptocurrency anymore. Seriously! This line is demonstrated to be blatantly misleading if you give it TEN SECONDS of thought. Did you? In truth, I think you did give it thought, and then you dismissed it because it's a good line that supports the way you want things to be and supports the message you want to push.
> but I merely cited it as an example of why I think the hype is calming down.
You said a misleading thing; own up. Don't downplay it. Nobody expects an apology or anything, but just admit to yourself that it was to some degree dishonest, and think about whether that's really an attribute you want to preserve in your writing and in the way you present yourself, and whether exaggeration which doesn't present itself as such really does anything to advance the discourse.
I find it interesting that OP says public crypto failed because of both fundamental misunderstandings and immature tech (internet trying to compete with newspapers in the 80s). Eventually, the internet was able to compete with newspapers and I think eventually public blockchain will compete with centralized companies.
Networks can benefit from economies of scale without the rent seeking bottlenecks of centralized agents. I agree with op that in some cases centralization naturally happens but it doesn't follow that this is true in all cases.
On a diff note, has anyone read the Master Switch that OP recommended? Worth reading?
In fact I think this is the Big Lie of Disruption. The reality is that instead of breaking up existing monopolies, "disruption" simply creates new, bigger, even more centralised and powerful monopolies.
Economic systems are rather like cellular automata. They either splutter around for a while and die out, or they take over the board and assimilate everything.
Although it claims to solve this problem, blockchain doesn't - not even close. You can only solve it by consciously moving entropy around the system to keep it in a permanently metastable state - supporting smaller structures that generate new information, and splitting up large structures that threaten to engulf everything around them.
The banking system? Sure it ends up a bit centralised but still most countries have their own ones.
This metaphor is amazing. I wanted to reply that cellular automata can in fact produce highly-localized, stable systems (like glider cannons in Conway's GoL). Then I realized that while those systems are stable, they are also so brittle that a single flipped bit will destroy them incredibly fast. That sounds a lot like economics.
Keep in mind that both of those technologies took years. TCP started development in 1973. It didn't fully mature for another decade, and then it wasn't mainstream until 1994-1996.
And even then it was the web that drove the adoption of the internet, not the other way around. Until the web, the internet was more of an academic curiosity.
> Networks can benefit from economies of scale without the rent seeking bottlenecks of centralized agents.
But there are side effects of non-centralized agents -- everyone needs to agree upon running the same algorithm (forking, security holes, etc). And immature networks can suffer a majority attack.
Meanwhile from a security perspective, there's greater efficiency with a centralized system. One security hole can be fixed for everyone on the network in one spot.
The privacy use case in blockchain has trade-offs and is not a panacea. There are some situations where the centralized efficiency outweighs the risks
It's a dishonest line to come out with and people on Hacker News should know better.
I'm partial to this comment I made recently.
https://news.ycombinator.com/item?id=18538733
The point wasn't to defend bitcoin and blockchain, but just the opposite, to point out how immature the technology is to something vastly simpler, moving data from point A to B on the internet. And TCP took years to get right.
Wu also has a new book "The Curse of Bigness" that I recommend: https://www.amazon.com/gp/product/B07HRLQSLG/ref=dbs_a_def_r...
Extremism is ruining the discourse in the public sphere. It happens in politics, but now more in tech too. Everybody seems to have an opinion and their goal is to push that opinion at all costs, including blatantly disregarding truths. How is this possibly a good thing for communication? Increasingly if I want to have any meaningful conversation -- one where I might get something from it (e.g. one where I will understand more sides to an argument, one where I might change my opinions, one where I might improve my philosophies), I have to go hunt down the people who I know are truthful. That almost always takes me offline, or at least out of the public sphere. And it seems like an oversight that all the real discussion of a thing has to happen in private. It feels like so many lost opportunities that could have benefited more people.
The fact you're able to imagine two different positions and label them both "extreme" does not in fact mean the truth lies as you'd prefer somewhere in the middle.
"Four is an odd number" and "Four is an even number"
... can be portrayed as two extremes with the option to take some vague bullshit middle ground position like "Maybe four is sometimes an odd number" but actually the situation is just that one of them is right and the other is wrong.
How on earth is this a good metaphor for the positions being discussed here?
How about "all integers are odd" and "all integers are even"? That's much more similar to the views being discussed above, roughly "all blockchain applications are bullshit" v.s. "all blockchain applications are beneficial".
Is the statement, "some blockchain applications are bullshit" or "some blockchain applications are beneficial [to some group]" really a "bullshit middle ground"?
If your answer is "yes", then what you're doing is exercising willful ignorance -- there are examples of both bullshit and beneficial applications in this thread and that proves both extremes false.
If the answer is "no", then take a break from the ill-fitting metaphors. A metaphor should preserve the novel properties of the thing it mirrors while illustrating things in a way the reader can more easily understand. If it doesn't preserve the properties being emphasized -- say, if it reduces a continuum of possibilities down to a binary option -- then it's not a good metaphor. It's misleading; its author is pursuing some goal other than the truth.
Are people suggesting that new economics are needed? I don't think most people are suggesting that. They are suggesting that blockchains allow you to implement economic incentive schemes that weren't previously feasible.
> Privacy. It's often taken for granted that decentralized architectures will improve privacy. This seems obvious given everything we've learnt about Facebook, but a better way to think about it is that decentralized systems exchange one set of privacy problems with another. I coauthored a paper a few years ago skeptical of the "decentralization ==> privacy" story in the context of social networks [3], but I think many of the arguments in that paper apply to blockchain/dApps that are being built today.
Nobody serious says that decentralization == privacy. However, decentralization does allow you to to implement strong privacy systems, like Monero/Zcash.
In particular, re: "Nobody serious says that decentralization == privacy" -- this is presented as tautology on regular basis, by people that certainly hold themselves as serious and I'm willing to take as such, on Hacker News and other IT-related forums, as well as many other venues.
"Are people suggesting that new economics are needed? I don't think most people are suggesting that" - a lot of more zealous cryptocurrency supporters are very much on the "this is like nothing we've ever seen before" bandwagon, and/or are explicitly desiring as a goal/hope a massive disruption of economic and financial systems.
Just like, if there are N Christians, there are in my experience N+1 Christian belief systems, so it appears to be the case for cryptocurrencies. People more patient than myself are trying to make a dent by tackling those N+1 arguments, hopefully cognizant that for any set of believes P, they'll be presented with those exclaiming set of beliefs Q which obviously has nothing to do with P, those people into P are deluded/irrelevant, and they would never agree with them (unless it offered them temporary advantage:).
I think maybe you're reading them uncharitably. Decentralization does enable privacy. But it isn't identical and equivalent to it.
That's a mantra I've heard non-stop for as long as I've been paying attention to cryptos.
To be fair, though, I hear it almost exclusively from the evangelists and traders, who have an economic interest in pushing that narrative.
There have been very interesting PARALLELIZABLE distributed byzantine fault tolerant systems being built, like MaidSAFE and Holochain. They are based around Distributed Hash Tables and have no centralized bottlenecks unlike the miners in proof of work. This is much older than cryptocurrency, we are talking 2002 - Kademlia and Merkle Trees, used in eg BitTorrent.
That is the key. Any technology, like a blockchain, where the entire network has to store all the data, scales ridiculously poorly. To coin a phrase, it’s EMBARASSINGLY UNSCALABLE.
You can call the opposite of that sharding, but I will call it PARALLELIZABLE. The good news is future is simply to take EXISTING systems (eg the Web) and INCREMENTALLY make them end to end encrypted and make the backend into a DHT where each activity or token is watched by SOME but not all computers.
The current Web topology is scalable but TERRIBLE for security, as evidenced by the steady stream of hacks and leaks and untrustworthy behavior by platforms. We throw up our hands like after every school shooting, as if there is nothing we can do. We can, and blockchains are not necessary.
More details can be found here, including mathematical results from 2009 on the probability of a successful double-spend attack as a function of how many computers watch each token. The results are perhaps surprising: https://forum.intercoin.org/t/intercoin-technology-the-ledge...
Debates about consensus: https://forum.intercoin.org/t/intercoin-technology-consensus
If you want to discuss architecture of DLTs in detail, you are welcome to post in our forum. (The guy arguing in that particular thread is the chief crytographer of Ripple, he signed up to debate ideas of the architecture.)
Anyway the short story is that any “blockchain” system with global consensus simply can’t scale, not enough to support actual transactions. Has a single ETHEREUM token been used for its intended purpose in daily transactions? (Cryptokitties is the closest and it nearly brought the whole system to a halt.) It’s all been relegated to speculation on upcoming things, and this is what killed the dream. The exchanges are centralized databases. The actual ledger they post to when you cash out can handle 10 transactions per second regardless of the number of computers on the network. The same is NOT true of almost any other distributed protocol (email, web, etc.)
Thanks Arvind for all your work. You're doing some of my favorite work in CS. Every time I hear about an awesome project in privacy/security it turns out you're involved.
> Your typical architecture astronaut will take a fact like “Napster is a peer-to-peer service for downloading music” and ignore everything but the architecture, thinking it’s interesting because it’s peer to peer, completely missing the point that it’s interesting because you can type the name of a song and listen to it right away.
> All they’ll talk about is peer-to-peer this, that, and the other thing. Suddenly you have peer-to-peer conferences, peer-to-peer venture capital funds, and even peer-to-peer backlash with the imbecile business journalists dripping with glee as they copy each other’s stories: “Peer To Peer: Dead!”
> The Architecture Astronauts will say things like: “Can you imagine a program like Napster where you can download anything, not just songs?” Then they’ll build applications like Groove that they think are more general than Napster, but which seem to have neglected that wee little feature that lets you type the name of a song and then listen to it — the feature we wanted in the first place. Talk about missing the point. If Napster wasn’t peer-to-peer but it did let you type the name of a song and then listen to it, it would have been just as popular.
I've thought about that essay a lot in the past couple of years. For all of the merits of ＢＬＯＣＫＣＨＡＩＮ I never found it very useful for conducting transactions. Sure, that's the machinations of the federal deep state lizard illuminati, but also it always felt like architecture and ideology were the point, and serving an actual need was an afterthought.
The Silk Road, which kickstarted Bitcoin adoption, brought a much more interesting improvement over the status-quo. Suddenly, acquiring illegal drugs was easy and safe(r). That was the Napster of blockchain.
We will talk about blockchain again when a similarly disruptive use case is found/created. We're missing a couple of crucial pieces of infrastructure before the "people's money" use case can even be put to the test (decentralized fiat on ramps, convenient wallets, scalable price stability, fast confirmations).
I think the distinction between “decentralised” (i.e. federated) and “distributed” is important (as decentralised is often used as an umbrella term to cover both).[0] There are tons of federated projects out there from Matrix to Mastodon, and there are initiatives to make federated networks more decentralised (such as the integration of Kademlia DHT in BitTorrent).
No need for pessimism I think. :)
[0]: https://www.researchgate.net/profile/Jason_Hoelscher/publica...
So is internet. Most people use centralized services but no one prevents you from setting up your DNS servers, with your own domains, servers, website etc.
It’s like saying bitcoin is centralized because there’s only a single blockchain.
Sure there’s a single DNS root, but not all countries and network follow it. And the assignment of names is not centralized.
The DNS is centralized, even if domain names are used in conjunction with decentralized protocols like TCP/IP, and even if anyone is free to create their own instance of a DNS.
The only sense in which it's decentralized is in relation to the legal right to operate one. It is a free market institution, instead of government-instituted monopoly.
Because of that and other reasons, it is in practice impossible to make your own paper currency.
Anyone can build a different, distributed search engine where things are looked up on a DHT by their hash.
I have come to the conclusion, and have since then ofted said, that URLs do NOT need to be human-readable, and the idea of hostnames and domains tied to IP ranges will eventually give way to far lighter weight things
Disclaimer: building a company on top of Handshake
In the last week or two I went back and downloaded all of my years worth of Humble Bundle ebooks/videos. I downloaded the torrent versions as they were easier to track failures with and the HB store does limit simultaneous downloads.
I'm still wondering if I'm going to get an automated scaremail letter about using torrents from my ISP. I already received one for downloading Ubuntu years back, though IIRC that was a different provider.
Regardless of the cause, they've been successful don't they? :)
I think partially it was because you had to download a separate piece of software -a BitTorrent client- to utilise the network. This is also changing thanks to WebTorrent[0] and IPFS.js[1] which works right in our web browsers without even requiring an add-on! They enable initiatives such as PeerTube[2] -a decentralised video-hosting platform- and distributed (NoSQL) databases such as OrbitDB[3].
Convenience is the key and huge advancements have been made in that direction!
[0]: https://github.com/webtorrent/webtorrent
[1]: https://github.com/ipfs/js-ipfs
> > I already received one for downloading Ubuntu years back
That the word 'decentralised' is tacked onto the idea is really a red herring.
Before blockchain was a thing much less a hyped one cloud computing used it and before that some databases practiced 'tombstones' for databases. The easiest way to maintain absolute consistency has been known to be not really deleting things but marking them as 'deleted' and leaving them to be ignored by default until consistency can be achieved. That was the approach when cloud computing dawned to make things scaleable and avoid the bottlenecks and load-balancing server overhead.
Transaction based databases are logically equivalent to an append only database. If you have a list of transactions that add up to the same resulting database state - with the option of more versatility if you don't constrain things to be operational order insensitive.
It makes me realize that git is probably some kind of append-only database too (and used for decentralization too).
I guess I can still thank blockchain for having introduced the idea to me.
Some good discussion here: https://stackoverflow.com/questions/46192377/why-is-git-not-...
I think the water gets muddied by people who know very little and yet have an opinion as well as by people who know so much they can't see the forest for the trees (if you'll allow the pun).
The ideas of a write-ahead log, appended event identifiers as analogous to a monotonic clock, and of state/integrity checking by having log items "check" (-sum, usually) each other have underpinned the most popular databases for decades.
Cryptocurrencies is about divorcing money and state. Seems pretty clear to me.
Is it though? I used to think that, but over the past couple years I've seen plenty of politics around governance of the future of cryptocurrency. Seems like everyone tried divorcing the two and ended up just creating a new state.
No, they don't. There is no technological or cryptographic answer to the state's monopoly on legitimate force, its duty to execute the law, or any of its other functions that create and maintain the business environment.
It occurs to me that much of what crypto-lovers want is actually radically undemocratic. Vestigial states that can't do the bidding of the electorate because they're unable to hold companies to account and so on. People of this inclination are the death throes of the globalist dream: it is a fine thing indeed that the nation state looks to be reasserting itself in the face of one of California's more embarrassing wet dreams.
It's just the latest iteration of the libertarian fallacy, embodied in code - that a market can exist without a governing body to make sure it doesn't get sold.
People love to talk about how many miners are in China without mentioning that they really can't do much, even if they get over 51%.
I think markets are amazing, and have a lot of sympathy for the more thoughtful sort of libertarian and their concerns about state power. But there's what I think of as fundamentalist libertarians, who seem to worship an abstract idea of "market" that has very little to do with my real-life experience of markets, financial or otherwise.
* Rob Reich, _Saving Capitalism_ [1]
* Steven K Vogel, _Marketcraft_ [2]
What kinds of contracts can be enforced? How much personal liability people should have? Is bankruptcy allowed? and so on. All trade-offs between different groups, and there’s no one “free market” answer to any of them.
[1] https://www.penguinrandomhouse.com/books/227780/saving-capit...
[2] https://global.oup.com/academic/product/marketcraft-97801906...
How so?
Despite the misleading term cryptocurrency is a type of commodity, not money. A heavily speculated one. It's really quite terrible at being a money substitute. With the exception of some very fringe use cases.
Decentralized software decentralized world
The leap of logic is not unexplained, it's called libertarian ideology: government policies that work relatively well (healthcare, social security, Central Banks,...) are the most dangerous because they might (and do) give people the wrong idea. Bitcoin is an incredibly wasteful technology compared to the supposed obsolete paradigm, so you need the ideological element to understand why some take this "leap of logic".
Personal opinion: the crypto currency/Blockchain movement is no less ideologue than say the Free software foundation. But Stallman has the merit to be very explicit about it, instead of hiding it under a tech logorrhea.
The first computer was also incredibly wasteful. Subsequent iterations proved to be less wasteful and more usefull.
But blockchains have their uses, and those where they do work well will hopefully be done better without the lunacy. Decentralisation isn't dead/falling apart either, and in that sense... well I think its time is still coming.
After all, privacy is a hot topic now. Facebook and Google are getting lots of bad press. Mastodon is (somewhat slowly) taking off. The ingredients are there for change, and at the end of the day, it's really just UI + network effect holding it back now. If someone made a good decentralised Facebook/Reddit/YouTube alternative, I definitely feel it could capture the market. Anger is building up with these sites, and the more they force ideologies/censor/shut down people and groups for corporations the more popular an alternative will be. Heck, I feel the time may be right for a decentralised Patreon competitor right now. Imagine a way to support creators which VISA/Mastercard have no easy way to stop, which makes PayPal and co irrelevant and cannot be shut down by angry Twitter posts. That may come up in a few years or so.
But yeah, blockchain hype fell apart, some decentralisation hype fell apart, but blockchain as a concept still has its uses and decentralisation could still have its time to shine.
> Open platforms can’t win by directly appealing to users on philosophical grounds, or even cost (see Linux on the desktop). Mainstream users have no good reason to directly interact with blockchain technology—or any piece of code—without intermediaries involved. Openness and decentralization matter to _developers_.
I think both centralization and decentralization can appealing to consumers, depending on the case and on zeitgeist.
For instance, personal computers were decentralization of computing power, back in the days when the Mainframe (centralization) was dominating. Apple is a decentralized computing company. Often decentralization can become businesses through products, read more https://staltz.com/layers-of-the-internet-economy.html
There are also other "stealth" success examples of decentralized software and protocols that are directly appealing to consumers, such as the Camera and Gallery apps on smartphones and the use of JPEG (open standard) and Bluetooth (open protocol) to create (offline-first) and socially share pictures.
The problem with "decentralization" in 2018 is that it was a buzzword related mostly to blockchain technologies, and software built with those were often shadowing and imitating the recent success that tech giants have accumulated. But decentralization goes way back and its success cases are so ubiquitous that we take them for granted and leave them out of the discussion.
This "decentralized" computing power as an accidental side effect. Personal computers (and open protocols) caught on because they were thought, by consumers, to fulfill a need. The number of people for whom that need was "decentralize $x" is a rounding error.
> The purpose of this blog was NOT to address the use of blockchain, or any DLT, for digital crypto-currency or even financial applications, nor was it to disparage, debunk, or dispel ANYTHING. We were, and remain, technology neutral. If anything, we would say that more testing is warranted, but would advocate that the results of those tests be publicly and fully available.
> There is no report. The only product that resulted from our research process is this blog, as Linda Raftree correctly pointed out.
> A “use-case” is very different from a “case-study”, the former being more conceptual and the latter requiring significant data for research purposes.
> Regarding sharing the list of the 43 use cases, Linda was also correct that the purpose of the this blog was not to “name and shame” and doing so risks distracting from the work we felt has achieved its goal, to motivate conversation around these issues.
Two projects are linked from the blog post:
I have not heard of either before.
This tells us nothing. Basically they have randomly picked 43 out of thousands of projects and won't even publicize which these projects are, or the methodology they used.
But it is not for the reasons listed; there are no parallels to airlines or gold mining and so on.
Decentralization for cryptocurrency is about making them resistant to legislation: With properly decentralized cc you can pay your druglord, terrorist, launder money, gamble, insider trade, hype pump and dump a scam ... and the government can't shut it down or prove that you own any.
That is the killer use case. And the only one.
Israel has a very centralized market controlled by just a handful of oligarch families. The same guys control the insurance companies, pension, the fuel supply, the banks, etc. The prices are too high and the service isn't great not because that's what people want, but because competition is stifled, in cooperation with the politicians, who need the oligarchs to keep funding them.
I don't think a decentralized currency would be a magic trick which would instantly solve this larger problem of economic centralization, which people most certainly do not want - but it could certainly help break the existing cycle by taking away power from the politicians.
The cryptocurrency boom was greed driven with the fig leaf of 'smash the Fed and fiat currency'. The people that got into it were not that smart, a case of 'fools rush in'. Nowhere in the cryptocurrency discussion was there any appreciation of the history of capitalism, which requires considerable study to get any meaningful knowledge of. If you are studying graphs of alt-coin fluctuations all day and gambling on these things then you aren't going to take time to read all the required texts (or even the 'white papers' on how these silly coins are supposed to work).
There are ways to address the evils of capitalism, for instance we haven't heard of the 'Tobin Tax' in a long, long time and discussion of how much capital banks should have in reserve hasn't happened even though the crash of 2008 revealed problems in that area.
Despite everyone working so hard for this money stuff we, as a society, are remarkably unconcerned with figuring out how it all works and how we can build a currency system that works for everyone with liquidity to make money work for us instead of us working for money.
I would be very interested in further reading on how the economy of Israel works, if you have any links then do share. I am detecting more antisemitism going on in the world at the moment with the polarised views that have not served us well historically. People muttering about international finance being a Jewish conspiracy tend to have no idea about Jewish history or how we got here. Hence I would quite like to know more about the story of the rich getting richer in modern day Israel.
This is false. I recommend listening to Trace Mayer, for example.
> I would be very interested in further reading on how the economy of Israel works, if you have any links then do share.
I recommend Guy Rolnik[1] and Yaron Zelekha[2].
[1] https://www.haaretz.com/misc/writers/WRITER-1.4968179 [2] https://www.haaretz.com/.premium-yaron-zelekha-s-crusade-to-...
I keep forgetting about Haaretz, again thanks for the quality reading material.
I'm just a random guy on the internet but who is this guy to talk about these subjects in such broad terms? Lay off the misused hyped up tech, please.
He's a Princeton professor who's written a book about blockchain technology and taught several university courses about it. And he's been studying decentralization issues for a long time.
I don't think that Prof. Narayanan means to say here that decentralization requires blockchains, but rather than the optimism that blockchains provide a comprehensive solution to incentive, coordination, and scalability problems in decentralized systems has run up against very serious problems and counterexamples.
If you want to see some of his broader concerns about the tradeoffs of decentralization in other contexts, you should ask him, since he's reading this HN thread. :-) (edit: and he posted it himself)
The technology trudges along, a lot slower than the hype beasts would like you to believe.
What are the equivalent real-world use cases for blockchain tech that are a) delivering economic value not achievable by other technologies, and b) are paying for sustained innovation?
I don't think that means public crypto has failed or will go away. It just needs time to mature as a technology.
Fwiw, I find it interesting that OP says public crypto failed because of both fundamental misunderstandings and immature tech (internet trying to compete with newspapers in the 80s). Eventually, the internet was able to compete with newspapers and I think eventually public blockchain will compete with centralized companies.
Networks can benefit from economies of scale without the rent seeking bottlenecks.
Sorry if I wasn't clear. I understand that's the claim. What I'm asking for is not general areas, but specific examples of where a blockchain is actually in use and delivering value.
As far as I've seen, all of the examples in those areas are at best pilot projects. Actual utility seems to be somewhere close to zero. E.g.: https://www.theregister.co.uk/2018/11/30/blockchain_study_fi...
It should be viewed as a specialized tool and not a golden hammer like many of its proponents think.
It seems to me that for anything involving a central authority, there are much better technologies.
Primary use case currently: moving money/value to somewhere or someone that some centralized entity doesn’t want you to move it to.
That covers real world uses from skirting high remittance fees to the infamous dark net markets.
Regarding remittances, I don't believe any blockchain technology has made a significant dent in the market. If you have data otherwise, I'd be interested to see it. But I live in a neighborhood where there are a lot of money transfer places, and all of them seem to be conventional.
As to the rest, I think we're talking about light financial crime. (Light because the heavier sort isn't big on having a permanent public record.) It's hard to know, of course, but is this usage going up or down? I had the impression that KYC/AML efforts were putting a big crimp in it. Either way, it seems self-limiting to me, in that significant success invites more attention from various authorities, which strongly discourages participation from people who would like to remain on the right side of the law.
Gambling is another big one, trust is a problem with online gambling but with blockchain it is possible to make it provably fair by basing randomization seeds on blockchain data. There are many sites running similar setups, and these sites cause a large number of on-chain txns, arguably already paying for sustained innovation.
Smart contracts have a lot of potential but are still in their infancy, and bugs have caused significant financial losses, however, those problems are solvable.
You can't say that decentralization as a whole is a failure or, worse, that blockchain is synonymous to decentralization; saying so would be an insult to e.g. the original World Wide Web.
Critical mass adoption of blockchain will just trigger major capital investments by existing centralized agencies.
[1]: https://bitsblocks.github.io/bitcoin-maximalist [2]: https://bitsblocks.github.io/crypto-facts
For example, OpenBazaar is a decentralized marketplace but if people search for products in the GoogleBazaar site, GoogleBazaar can sort or hide the items as they wish not matter how perfect the decentralization protocol is.
If the blockchain issues 1000 BTC to various miners who sell them to 1000 people for USD$1 each, and then some time later 100 of those people are able to sell their coins for USD$100, then the total amount of money that's been moved out of other investments is USD$11,000, but the total market cap of Bitcoin is USD$100,000 so can't I say that USD$89,000 was "generated"?
Although really none of that USD ever disappeared, it's ostensibly still going into USD denominated assets, so... well I don't know what to say about any of this.
The reason it hasn't "generated" wealth and has merely "moved" it, is because it doesn't allow everyone to succeed. Say in your case, person A bought at $1 and sold at $100, so he is up $99. But someone else had to buy the bitcoin he sold, so that person is currently sitting at -$100. For one person to profit, another necessarily has to lose.
The price of bitcoin could increase almost indefinitely, since the whole "hodl" meme is about reducing the supply and reducing the float, which allows it to continue to pump upwards and for people to get rich on paper. But it will never be possible for all of them to actually cash out, there isn't enough real USD in the crypto economy to allow that.
Properly conceived, currency is a proxy for genuine economic value. Bitcoin mining generates nothing but bitcoins, which then are valuable because... other people say they’re valuable? I fail to see how this differs from a pyramid scheme.
So, there was no “told you so” moment for me at least. If you're apt to invest in new technologies and don't invest in crypto soon, there will be a big “I told you so” moment for yourself I think.
(imo people being forced to admit they were wrong and missed a golden opportunity is part of the reason for the extreme hatred of cryptocurrencies. As a counterexample, there isn't any hatred of Linux, for not conquering the desktop, which is a technology which also failed to meet expectations. The funny part of it is, is that the negative feelings towards themselves for not investing get projected onto the technology itself, meaning they are blind to the positive sides of it. This manifests as the boom/crash cycle as we see it, since most people are blind to the progress of the technology until it is in their face. Then everyone rushes in, and due to the rapid increase in price, the “buy because it's going up, fast” mentality springs up, recreating the same bubble for the 8th time, the same crash, the same outwardly projected self hatred and the same cycle repeats, yet again. And people never see their own role in it... It amazes me how this human trait manifests itself and plainly laid out for everybody and yet no one is able to see it.)
Centralisation is an inevitable outcome of human groups. I wrote more on this on my blog https://invertedpassion.com/decentralization-continuum/
ActualMoney sucks for a lot of reasons, crypto is addressing very few of them and adding several problems on top of it
Blockchain was the first serious attempt at solving the problem of distributed concensus without centralisation. One application of this outside of cryptocurrency is to DNS (see Namecoin).
Cryptocurrencies at the very least make black market trading more efficient. See Silk Road.
Also, the analogy to alchemy needs a lot more explaining. I don't see any connections.
Gold is a very apt comparison given the gold-bug rhetoric they were in pushing deflationary currency despite its history of failures resulting in fiat currency. The gold standard resulted in /many/ wars for the sake of gold just so that they wouldn't have their economy size capped by lack of currency - leading to considerable loss of /real/ value and massive suffering. Ironically having too much gold also created inflation issue. Having currency that can inflate with the economy instead of something else arbitrary is what the strength of fiat currency is.
Wow, this is such a wrong statement.
Consensus in general has been in CS since its dawn... How childish a person would think CS scientists wont consider this problem without centralization...
The internet itself is a big movement toward consensus. Just look at tcp/ip and Ethernet and dns and lots of other protocols that reach consensus without centralization. But it’s more of a wet consensus than a dry consensus because the negotiation over routing tables happens between users and admins.
DNS and IP have roots, but there are multiple roots and methods for negotiating.
None are perfect, as blockchain isn’t perfect, but are certainly serious attempts.
Maybe the most successful is the IETF RFC process for decentralized consensus.
There are also good examples like the Apache Foundation for distributed consensus.
We detached this subthread from https://news.ycombinator.com/item?id=18802222 and marked it off-topic.
Yep, supply and demand. Currently there's no demand for crypto/blockchain as appropriate substitutes already exist.
“No demand”. Isn’t Bitcoin still trading for several thousand dollars? Maybe you, and maybe most people, don’t have any want for cryptocurrency, but don’t let that make you think that nobody has demand for it.
https://www.bloomberg.com/news/articles/2017-01-16/high-spee...
That doesn't mean the whole market can be traded at that price, especially for something as volatile as Bitcoin.
Some people have made money through speculating on cryptocurrencies or tokens. A similar, if not larger, number of people have also lost money this way. More importantly, the "success" of these traders has nothing to do with the underlying technology -- they could have been similarly successful in trading any other financial instrument.
> Many people use cryptocurrencies actively.
Like who? And for what? Mainstream merchants have generally been moving away from accepting cryptocurrencies, often due to price volatility or long transaction times. Some people still use cryptocurrencies to make illegal transactions online, but certainly not "many people", and in any case I'm not sure that's a success...
Illegal ≠ evil. Some countries introduce and enforce ridiculous laws that only benefit the ruling regime and their oligarchy and not the people. AFAIK in countries with crazy governments like Russia and Venezuela cryptocurrencies are considered a relatively reliable (and accessible) investment instrument letting people to save their money when the government does some bullshit to ruin the national currency rate.
There also are legitimate things (e.g. porn sites subscriptions) that people don't want to show up in their official credit card statements as that would be a shame in the context of their society's dominant culture.
It also feels kind of hypocritical to consider whoever smokes weed in e.g. Canada a normal person but whoever does this in Korea (where it's outlawed) a wicked one.