There's No Good Reason to Trust Blockchain Technology
wired.com
wired.com
VHS/betamax, for instance.
imo, blockchain as we know it today can't survive the wilding of these platforms, the stories around the cretins and thieves involved.
it'll have to evolve to something that doesn't resemble "blockchain" as we talk about it today (cloud versus devops versus sysadmins, etc).
a new keystone of this technology will have to carry it far away and make it kind of different for this to be the thing we're still talking about 10 years from now.
I also like quicksort and fibonacci numbers but would I try to start a business based on this? Probably not. I want to see legit tech being built that uses blockchains but as soon as it ends up being on a business plan or mentioned in marketing material my gagging reflex sets in.
For example, the recent BitTorrent ICO disappointed me, although it pumped 10x from ICO price in the past week which will keep the speculators interested, thanks to Binance supporting it.
I wasn't there during the dot-com era, but from what I read it was the same situation: lots of scammers and cool kids raising millions from investors driven by FOMO (fear of missing out), and lots of money ending up in the wrong hands.
The big difference is that with dot-coms the scams and shady characters were in a minority, whereas with blockchain they are the vast majority (so much so that it is hard to separate the signal, if there is indeed any, from the noise). Don't think anyone would debate that point. Another (albeit more debatable) difference is that dot-coms were pretty focussed on users, while blockchain development seems to put very little genuine thought into how ordinary people would benefit from any of it - it is mostly about "building out the ecosystem" (which sounds suspiciously like "recruiting new members to our multi-level marketing scheme"). In my view these differences are because the dot-coms were driven primarily by the technology and the exciting new things you could do with it, while blockchain development is driven primarily by money (to make matters worse, psuedo anonymised money which was originally used almost exclusively for illicit purposes) hence bringing out the worst elements of human nature.
As a human being, I would prefer the lottery winner though because they don't have as many false ideas about what kind of person they are and what kind of world we live in.
Don't sea lion.
I just note that you have no idea what you are talking about and therefore discount your opinion accordingly.
"You know nothing, your opinion is invalid" is a classic "crypto" talking point.
"You don't understand Bitcoin," they shriek while failing to comprehend the precarious position their beloved asset is in. "Bitcoin can't have bubbles, it's mathematically impossible," yell their cheerleaders.
And I question your claim about enthusiastic people being the least informed. I'd say the people who work on it and dedicate their lives to improving the infrastructure are both enthusiastic and informed. Of course there are also enthusiastic people who are misinformed.
The "Just Asking Questions" faux civility is sometimes referred to as JAQing off.
Is that some kind of hyper progressive safe space thing?
Please explain. I'd like to be a good citizen.
I hate it too for the same reason but at least I'm honest about it.
Reason being the ignorant hype, even greater inequality, and the support of criminals, terrorists, and bad actors built into the very nature of public blockchain.
Private blockchain is a different story, but I see that more like a choice between SQL and NoSQL. Just need to wait a decade or so for the tech to mature.
I'm currently in a bet with a friend.
- If you use a curse word, $1 to the other
- If you can convince someone the h#$@ should be one of the banned four letter words, $10 recoup
----------
h#$@ should be a banned for letter word! Do you agree?
Not sure if this setup was to easy, or you taking your bet too serious scanning the interwebs for such opportunities :-)
We don't go around preaching, rather bring it up when someone uses the "H-word." It's far more interesting IRL because it almost always sparks an inspiring conversation.
While it does have a shared, immutable ledger and chaincode, what is really interesting is the coordination and integration of business entities and processes. This is something a database does not facilitate like a blockchain.
I hate it because so many good people have been scammed and because it is dreadful for the environment. Wasting power for seemingly no purpose.
I agree though that further discussion would be necessary to find that nail for blockchain, but the elephant in the room (Bitcoin) has people who are personally and financially invested, leading to incessant noise being constantly generated around anything related to blockchain.
100% agree. If you look at all of the current blockchain "use-cases" you will find that many of them (e.g. Ripple and Corda) are simply centralized/semi-centralized solutions that have been around for years (in the distributed-systems literature) masquerading a blockchain solutions.
In a sense the blockchain craze is good as it's getting institutions such as banks to modernize their systems and make it so that a regional bank doesn't need to wait 5-7 days to transfer money, but examples like this are few and far between and for the most part people are using the idea to drain money from undereducated/uncritical people.
AFAIK this was a well-known problem for digital currencies. I think it was "eCash" that went the furthest ( https://en.wikipedia.org/wiki/Ecash ), with "blind signatures" to prevent transactions being linked to the same user, but couldn't solve the centralised trust problem.
BitCoin's "solution" is to share a ledger, pick the longest in case of forks, prevent spam using Hashcash and keep the hashcash barrier high by turning mining into a lottery.
This is a pretty cool hack, since it addresses not only technical security concerns, but also economic and social aspects. Yet I see it as a pathological, brute-force edge-case: technically a solution, but less "this problem is now solved" and more "ha, I hadn't thought of that; we'll need to specify the problem better".
The mentality that you need to have a problem to solve in order to justify your company has some real value to it. However, somehow this has expanded into the notion that every piece of tech that doesn't solve an explicit problem has no value. The existence of the gaming industry shows that this is not the case.
It was a quick introduction to 'how the world works' for a lot of us.
Adding insult to injury, some of us joined the marketers for the scraps and gave them undue legitimacy. This was on HN a few weeks ago, explains the whole phenomenon based on three types: Geeks, Mops, Sociopaths. https://meaningness.com/geeks-mops-sociopaths (And we're mostly all 'geeks' here, by his definition.)
And this is not sour grapes — I first heard of Bitcoin in 2010, when it was 3 cents. I didn't make any money out of it, but I've not 'missed out' in any real sense.
Much of the value of a cryptocurrency can be attributed to the fact that it's difficult to coordinate a large number of people to agree on changes. Also, because most blockchains are public ledgers; it's impossible to manipulate them behind the scenes without raising alarms.
On the other hand, fiat money is constantly being secretly manipulated. There is very little transparency and much of the new fiat money which flows into the system has to pass through big financial firms/gatekeepers who get their cut of the new money supply. Big finance firms have had many decades to figure out how to game the fiat system and there is no doubt that they've been successful at it.
Cryptocurrencies have the potential to greatly improve the financial system by making it simpler, fairer and more transparent. When anyone will be able to launch their own cryptocurrency, we will have a chance to free ourselves from the coercive influences of debt, venture capital and corporations.
That holds for Proof-of-work based currencies... It seems like it's trickier than that for proof-of-stake, as these have to be trustful systems.
[1]: https://z.cash/blog/zcash-counterfeiting-vulnerability-succe...
You can borrow cryptocurrency.
You can invest cryptocurrency with terms that are bad for the business you invest in.
Corporations can use cryptocurrency.
What, exactly, have you changed?
Not sure about investments, haven't done too much research into the benefits of ICOs and letting more people invest.
I think corporations are a good point though. If more companies became DAOs, we'd have much better checks and balances and transparency for corporations.
With a DAG based voting proxy, there may be interesting applications within a business. Like putting support behind higher ups or something like support for RFCs. I'd expect anything applied to the wide population to be manipulated.
Why on earth would any corporation ever want to become a DAO?
The transparency benefit there is roughly that a DAO must, by design, not be able to keep any secrets, since it's incapable of having nonpublic state. Similarly, the "checks and balances" benefit seems to be just "more literal enforcement of contracts".
Is there a positive advantage, something doable with a DAO that's not doable with just "a court system", besides doing illegal things where you can't rely on courts (which is, at least, a valid use case)?
And note, too, courts already exist, and there are plenty of folks with very exciting weapons eager to enforce their judgements. Your smart contract's bytecode may say you don't have to pay somebody, but if the sherriff's office shows up to start seizing your assets... Well!
Crypto can be secretly manipulated in the exact same way fiat can. The only thing different about crypto is that there's no central bank that can literally print money. Instead we get defacto authority with no legal framework in place.
Satoshi's pile of ~1 Million bitcoins disagrees with you.
The entire BTC economy innately trusts Satoshi to not ruin the fun for them. If Satoshi decides to liquidate his holdings of BTC, it would crash the market harder than the next 10-years worth of mining.
Satoshi's pile of 1-million bitcoins acts as a centralized bank, whether he likes it or not. Satoshi realizes this fact, and that's why Satoshi has ensured that his BTC has never moved.
There will be 657,000 BTC added to the system in the next year, or roughly 4.5%. Which means BTC is "inflating" more than USD right now (with your definition of 'inflation', which isn't very good IMO). The next halfening won't happen until 2020 or so.
Historically, I disagree. There was a big gold / silver crash that could only be described as inflation when the Conquistadors returned from the "New World" in the middle-ages.
https://en.wikipedia.org/wiki/Price_revolution
We're talking about a change in Gold / Silver prices which lasted for two CENTURIES. Yes, Gold / Silver is effectively finite on Earth. But it is wrong from an economics perspective to ignore the "short term" impact that can last centuries.
I'd argue that most people are probably concerned about time-scales roughly relating to one's life.
Speculation on cause is kind of stretching it. Satosh's identity is still unknown. Maybe that bitcoin is lost entirely, maybe "Satoshi" is going to liquidate as soon as he/she gets out of prison or maybe something else.
https://www.reuters.com/article/us-crypto-currencies-quadrig...
As an investor, it would make things more interesting because you will no longer be able to just sit around and wait for the capital to come to you through the same reliable fiat channels (e.g. interest, corporate dividends, index funds, ...); you will have to keep moving your investments across cryptocurrencies to follow the value and talent.
If any specific cryptocurrency becomes unfair, smart people will dump it for another one; the manipulated coin will lose its value.
There are crooks in every country and it's not fair that you should be forced to share a currency with them just because you live in a country which happens to have a lot of them.
Specific transactions can be verified but that does not translate in to full transparency. Transactions can be obfuscated and laundered. A Swiss bank could set up a wallet to perform all BTC transactions through.
And your not being forced to use fiat. If you were, investing in crypto wouldn't even be possible.
Imagine an employer saying "This week I'm paying you by dollars, but I don't like being forced to deal with dollars, so if I decide dollars aren't working for us we'll switch to Euros next month. And then maybe Pound the month after that."
I'm not sure how this is going to benefit cryptocurrency users.
And the average person is even more keen on being paid in something they can reliably exchange goods for or invest in productive businesses whose value rises when they make more profit rather than the money-printing scheme du jour whose future value rises are contingent on hype and exchange manipulation.
Not really. Just as an example, the only people who expect to verify encryption algorithms all on their own are those incompetent at it. The competent take the "best of breed", note what other experts say, keep an eye on bulletins and so-forth. If you think you can verify the functioning of bitcoin personally, you probably shouldn't be trusted for other things either.
On the other hand, fiat money is constantly being secretly manipulated.
The supply of fiat money can be increased. Markets can be manipulated too - but fiat money markets are many times more transparent than bitcoin markets.
When anyone will be able to launch their own cryptocurrency, we will have a chance to free ourselves from the coercive influences of debt, venture capital and corporations.
This claim makes no sense.
Absolutely not. USD is purposefully manipulated by an organization that doesn't want their decisions to be known too far in advance. If inflation is about to increase, only a small cabal is supposed to know before the official announcement. For a decision like this to be made in Bitcoin, it would take lengthy discussion to get enough nodes on board. Even segwit caused a fork, the old Bitcoin (BCH now) is still around. Inflation can't be manipulated by a central organization that makes secret plans in advance using special powers. Whether or not that's a desirable quality is up for debate, but to act like the USD market is more transparent is absurd.
How so? When the Fed creates money out of nothing and engages in so-called 'open market operations':
- Who brokers these deals?
- Do they get a commission on those deals? What percentage?
- When the Fed buys bonds/debt from the government through those brokers, who gets their hands on the credit when the government spends it? Is it the same corporations who get all the big government contracts (e.g. Palantir, IBM, Oracle...)?
- What do the corporations who get all the big government contracts and subsidies do with that money? Stock buybacks? If so, isn't this the same as if the government just gave the money to corporate shareholders directly?
I don't think I've ever met someone who could answer these questions. Certainly less than 0.1% of the holders of the currency can so how can we say that it's transparent?
The equivalent question with regard to crypto is who "mines" the BTC and what rate do they pay for electricity. Good luck getting systematic information on that...
I'm not sure why you decide to conflate the orthogonal issue of how the government spends funds it debt-finances, but government spending is unusually well documented, especially compared with "how crypto miners spend their profits". And corporations which get big government contracts use the funds they have paid to deliver the services paid for under the contract, with what is left over being profit for the firm to see fit (I thought cryptolibertarians liked capitalism!) Obviously giving the money to shareholders will not have the same effect as the shareholders do not have the capacity to deliver fighter jets, manpower, software or toiletries.
The intricacies of how money is created are is not widely understood, but I don't think many cryptocurrency users can audit blockchain code, name the largest actors in mining or evaluate whether rates on exchanges are being manipulated by wash trades either.
When "anyone will be able to launch their own cryptocurrency" it will become completely useless. This is what many technical folks who don't understand economics don't see. The utility of fiat is twofold - first of all, real guns, missiles, tanks, and planes are protecting your fiat dollars. Technical cryptobulls (and non-technical crypto mega-bulls) seem to miss this point entirely.
A corollary to this is a world with only cryptocurrency invites chaos. If we're all being paid in crypto, and crypto is anonymous, what incentive does one have to pay taxes to the government? No one will pay. Or some might, but others won't, and it will be the burden of the few taxpayers to subsidize the taxes of the many who skip out.
>chance to free ourselves from the coercive influences of debt, venture capital and corporations.
Yes, you'll also be freeing yourself from the influences of public roads, highways, and public schools. You'll free yourselves from the coercive influence of venture capital and corporations and governments/banks (latter is implied) and we'll free ourselves straight into an anarchic/chaotic society.
Second, a central entity (or a few entities) determining an agreed-upon exchange rate between various fiat currencies keeps the system running without severe loss of efficiency. We already see highly illiquid, inefficient markets in cryptospace. Sure, people should be able to launch their own toy cryptocurrencies for fun purposes, but it will have zero utility.
This will not be fixed by adding MORE cryptocurrencies - it will only exacerbate the problem. This will be fixed by adding more users to a basket of existing cryptocurrencies. Crypto/blockchain certainly have powerful use cases but to decry fiat as some extraordinary evil which should be 100% supplanted by cryptocurrency is, quite frankly, a display of a lack of understandings of economics, sociology, civics, and what have you.
Not only do I need to trust the blockchain technology, I also need to trust every piece of technology around it. Phones, emails, the Linux kernel, TLS, browsers ... and all the people building this technology. Look at the recent NPM exploit, or the Crypto exchange CEO who died without a plan for his password.
Because the blockchain doesn't get hacked, it's the tech and humans around it that gets exploited.
That's the goal with my side project https://coinpress.cc
Let's assume for a moment that this is both true and relevant.
Why should reinventing the wheel be the correct response?
I feel like this is simply yet another example of the rather common bias of tech folks (not excluding myself here) where we too easily believe that a social problem can be fixed with technology. You see this kind of logic all the time when it comes to surveillance and censorship overreach as well. We know technology, and believe we can control it, and so think that all these social issues can somehow be fixed with clever anti-censorship or surveillance-proof technology. More often than not, these attempts fail entirely or become last-resort fallbacks at best.
This has played out fairly well with Bitcoin as well. Over time, people realized that almost all the complex stuff that the fiat money system does is actually useful, and is damned hard or impossible to reproduce in a crypto currency pretty much by design. Meanwhile, the existing fiat money system could also be made transparent etc., if a political movement was formed to push for that. So now we're back where we started, with a social problem.
http://www.antipope.org/charlie/blog-static/2013/12/why-i-wa...
I may not be quite as strident as either of these takes, but I agree that the proponents are significantly overselling on a variety of axes... (while also believing that distributed append-only systems with consensus mechanisms can sometimes have value)
* you need to trust the paper behind the consensus mechanism
* you need to trust the people who have implemented the client, and trust them to maintain it
* you need to trust the TLS connection you use when you download the client. Meaning the whole CA system
* you need to trust your own machine, when running the client
* you need to trust the first peers you connect to when you join the network
* after you're connected to enough peers, you can usually feel safer. But you'll still have some out-of-band comparison to do between your chain and other people's chains.
2. supply-chain with blockchain = scam to me. I'd be interested in hearing about a real use-case, but when you're trying to bridge the gap between reality and the blockchain, then it usually doesn't work well.
3. Here is my mental model of consensus and why it can be useful: we have protocols that work well when everyone is honest. They mostly break when malicious peers start appearing. Consensus is the cryptography field of study that attempts to solve this issue. You need a good chunk of people to be honest when you run such a protocol in a "public" setting. We recently discovered, with bitcoin, that financial incentives work well. So now we have:
* financial incentives can help us make public consensus protocols work
* research brought us good consensus mechanisms that we can use in more private settings
The technology works well when you think of banking. Many banks want to cooperate in the way they exchange money between them, but they don't necessarily trust each other, or their security. So they form a protocol using a consensus mechanism.
Now, a cryptocurrency is exactly the same thing, but in a way where anyone can connect directly to the backbone of these banks' infrastructure. You will necessarily have plenty of issues stemming from that: what if you lose your money, get it stolen, what if the exchange you use get hacked, etc. But the benefits are still pretty awesome: you are not going through a bank, you are directly connected to the system.
Just my 2 cents.
What are your thoughts on stuff like the many blockchain real estate related projects? e.g. "tokenized real estate" "100% liquidity" etc etc.
This is usually where the bitcoin adherents start referring to corruption and the ilk to explain why government can't be trusted. But Schneier has the rebuttal: we know damned well from experience that you can't write bug-free, secure code. Bitcoin requires hidden trust in the programmers of the software, and in the community to move forward on decisions, and history has borne out that this trust is misplaced.
Blockchain isn't trustless, it just replaces trust in a system that is designed to efficiently enforce sanctions against those who violate trust with a system where every participant is responsible for policing trust individually.
Personally I put most of my money in my bank, because this is who I trust. I tend to trust European banks more than American banks as well because I've heard horror stories here of people being impersonated and banks refusing to refund such scams.
Ideally, if everyone's bank would work on a decentralized network (that works, is bug-free, scales, has high-throughput, etc.), banking throughout the world would be a simpler experience. Decentralized and centralized at the right places.
Although I can't say if it was just that or whether I simply exhausted the pool of those that harassed me by trolling them back. Here is some fun I had: I made an extra 400-600 every other month by emailing people who spammed me with ICO crap. They always first connected on LinkedIn then exported their data to mailchimp abusing the Mailchimp ToS (and back then upcoming GDPR too) I sent them a requests for immediate removal from their system and an invoice. This required a little research on my part on the type of spam e.g. by filtering for those in my legal jurisdiction and getting names of people involved in their scam ... The invoice was a modest fee just above €100,- to reimburse me for my time wasted. I also attached all smtp headers, accompanied by a strongly worded letter that it would be handed over to my lawyer if the money wasn't paid within 7 days. The invoice came from an EU based Ltd operating under the same jurisdiction (no point in going after companies weak EU jurisdictions with very long legal process, ... but France, Germany, Holland, etc worked well). Only 2 of the spammers didn't pay up immediately and they got referred to my lawyer which then ensured I got the money within a month and without further fights. It did cost me around ~30-40 mins in time spent (some considerably longer but this was on average) to prepare the invoice and do the actual research on the people behind the corp (little bit of social engineering with those that seemed to be faceless and dangle some investment did the trick). It wasn't really a way of earning money but I enjoyed the extra thrill and exposing these idiots. Good times and great fun to waste a little bit of my time with figuring out how they worked (or how big they were compared to how big they claimed their operation was on social media ...)
But if you look underneath, you will see that the academic community has been at work and a lot of research about byzantine agreements is coming out. It's quite the exciting field actually if you can segregate the noise from the actual good stuff.
This is wrong. You do not need to trust them, because you can verify their correctness yourself. You cannot similarly inspect the rectitude of your local bank manager's moral compass.
I find it very odd that someone like Schneier wouldn't recognize this obvious truth. Is there "no reason to trust AES" because you have to trust the implementation? What kind of silly argument is that?
I certainly cannot verify their correctness myself, and I'm a professional programmer! I don't touch cryptography with a thirteen-and-a-half foot pole. Most people wouldn't even know where to start. Only a tiny minority has the skills to singlehandedly verify the economic theory, cryptography, and implementation of a cryptocurrency.
Pretty much all the time, you're trusting other people to have caught bugs and malicious code for you. Many independent reviewers are far more trustworthy than a normal company (which is why I avoid proprietary software), but that doesn't mean you aren't taking someone else's word that the software works as advertised.
The article really frustrates me because it doesn't draw this distinction at all. To re-state you a little, I feel like one could make a similar article saying that end-to-end encryption is a worthless improvement over Facebook messages because you still have to "trust" something to keep your messages private, which is a false equivalence.
Just a quick example
> "The second element is the consensus algorithm, which is a way to ensure all the copies of the ledger are the same. This is generally called mining;" - except that is only applicable for (proof of work POW) consensus and does not apply to proof of stake (POS) and delegated proof of stack (DPOS) which several of the top blockchain projects are currently using (even Ethereum is moving to POS). Both of which are far more environmentally friendly and use asset ownership (stake) as the mechanism for consensus, which is much more reliable (in a trust sense).
Gosh there is so much that is conflated here. The article can be completely deconstructed but I just don't have the time. It's unfortunate this is coming from Wired. Tsk. Tsk.
Except that is only applicable for (proof of work POW) consensus and does not apply to proof of stake (POS) and delegated proof of stack (DPOS) which several of the top blockchain projects are currently using (even Ethereum is moving to POS)
The fact that while what you just said, in attempting to "clarify" the issue, might make sense to a technical practitioner -- but is sheer gobbledygook to a lay person -- lies at the heart of the disconnect between the Cult of the Blockchain, and the real human beings (and their needs) it purports to serve.
It's unfortunate this is coming from Wired.
It's written by one of the most respected analysts in the industry.
He may be a respected analyst, but he is providing a completely biased and uninformed view of Blockchain technology as it currently exists. That is a bad analyst in my opinion.
For POS, you have to trust the rich people and you have to trust that the disincentives to cheating actually work the way they’re supposed to. Neither of these have very compelling arguments right now. The fact that Etherium thinks POS is ready is utterly unconvincing — Ethereum also thought that Solidity and its VM design was ready, and that has withstood the test of time very well.
That's much harder to do with governments controlling fiat money. Or with banks. What is a person supposed to do, who is denied financial transactions by the established financial service providers (paypal, credit cards,...)? There have now been several cases where paypal and others have tried to silence people by cancelling their accounts. What can you do, in the traditional banking world?
And many complaints are not about things Bitcoin actually promises to do. It doesn't promise to make exchanges safe.
The environmental impact is a concern. Miner power perhaps not so much. For example mining hardware coming from one company doesn't seem that bad - you can simply verify the transactions the miners find before sending them out to the network.
What about government supported fiat money implemented with blockchain? The best way to implement that would be to preserve as many of the attributes of blockchain as possible. So the government could take coins in their possession out of circulation, or change mining parameters to print more money. Perhaps they could even print money just by signing it. However, they would not be able to make money disappear out of other party's accounts.
And many complaints are not about things Bitcoin actually promises to do. It doesn't promise to make exchanges safe.
Is it really viable not to have safe exchanges?
Not sure how that would supposedly work.
There is one interesting application of government, though: the distribution of the coins. That is what all the cryptocoins struggle with. A government could give every citizen an equal amount of coins, because they have a database of people.
"Is it really viable not to have safe exchanges?"
Some would say that they don't need exchanges, they want to be able to pay everything with Bitcoin. So they wouldn't need fiat money.
Apart from that, exchanges can be at least as safe as banks or traditional stock exchanges. I am mostly using one that is associated with a bank, in fact.
Fiat money rarely becomes utterly worthless. Even Zimbabwe currency, unbelievably inflated, is still worth a marginal amount as a collectible.
Blockchain currencies have gone from something to nothing in seconds.
The technology is obviously not a scam. At most it could turn out that it has technical flaws, like the crypto algorithms could be broken or whatever.
People selling you Bitcoin or making you promises about Bitoin might well be scammers. But that's not the same thing.
Worthless fiat money: it seems to happen a lot, actually. I have a couple of Billion Reichsmarks I could show you. I don't think Zimbabwe $ are worth enough to support your argument.
Of course to use Bitcoin, you have to trust that it will have or keep some value. In that sense, yes, you are back to trust.
When Zimbabwe blew up their money the bills themselves still had marginal utility as wallpaper or as collectibles. Collectively these bills are probably worth millions because there were so many of them.
If you have any Reichmarks around they're actually worth a fair bit considering they're not legal tender. Bills on eBay go for $5 or more depending on their condition, coins for far more. This is almost a hundred years after the implosion of the currency.
Zimbabwe and the Reichmark are extremely rare events. There are hundreds of countries in the world and every decade one or two might suffer from out of control inflation.
Bitcoin may well be a scam. We can't prove it isn't because the creator(s) remain unknown and their intent is based entirely on speculation.
I assure you that Bitcoin physical memorabilia will be worth infinitely more than Bitcoin itself within twenty years. A single shirt or mouse pad will be worth more than the entire market cap of Bitcoin.
I'll check the value of the Reichsmark, but again, I suspect the market is limited.
Network going down: in theory you could keep it up with a Raspberry Pie, so I suppose somebody will. Although I don't know if all the mining hardware out there would make it nonviable (as anybody could start a mining attack with such mining hardware, against a Pie).
As for proving Bitcoin isn't a scam: we don't need the inventor or their plans, we have the implementations of it. That can be validated, as much as possible. I'd argue that if it still has flaws, then they weren't because of scamming, but because of technical issues nobody could foresee.
Edit: they seem to be selling notes of one billion Reichsmark for 1€ on ebay (here in Germany). Not really worth the effort.
I don't mean it "goes offline", I mean that the blockchain is compromised by a 51% attack or something worse and the whole thing can't be trusted, so nobody cares about it at all.
Edit: For clarity, yes, I understand that there is a finite amount of Bitcoin that can be mined. I'm talking about the value of what's constantly being mined. The US would never use Bitcoin as a currency when other countries already have more of it than we do.
This may be a misplaced example but I think Star Trek is a decent analogy. Money becomes worthless once replicators are invented in that universe because you can just make more of whatever you need. If China can just mine more Bitcoin than the average citizen of any other country, then China starts to determine what the value of that currency is. It's one of the main reasons why I don't think Bitcoin will ever replace fiat currency. It's already being exploited.
With Bitcoin, the maximum number of Bitcoins that will ever exist is fixed.
It doesn't really matter who mines them. Of course at the moment, indeed, new Bitcoins are mined all the time, but the timeline for the future is clear.
Whether it is a good thing, I don't know. There are a lot of weird aspects about it.
As for China - sure, some miners will accumulate a lot of BTC. But they can only affect the price by selling or not selling it. If they wouldn't mine the BTC, somebody else would. It doesn't really give them that much more power, except for monetary power.
It's probably true that right now there are several people or entities who could crash the Bitcoin price by simply selling off all their BTC. That's not very reassuring.
On the other hand, such a crash could also be a chance to distribute BTC more evenly. It would actually be in the interest of the rich BTC people, too, as it would lead to more adaption and hence more value and stability.
Distribution is a hard problem.
There are several problems with crypto, but they are also interesting, and smart people are trying to solve them. At least it is fun, even if it is unclear if it will be worthwhile in the end.
So it is still people and institutions except abstracted into pieces that are more transparent than pre-existing options.
Also it is always hilarious to see the rehashed arguments over and over. First being that necessity of a blockchain is a requirement for successful implementation, and second the complete negation of systems where it actually is a necessity.
I don't entire agree with this. Yes, distributed systems and various consensus protocols have been studied for many years, but the cryptocurrency boom boosted public interest and applicational development in a way that would not have happened without it.
Private blockchain can have many benefits compared to centralized models. It's not necessarily better and it's more of a trade-off, but it does present solutions that's not otherwise possible. For example, in a distributed system, we can use IoT devices as lightweight nodes for quick validations. This can give security to off-site locations with limited computation power and/or connectivity.
In addition, there's now many consensus protocols that tries to solve or amend the three elements the author mentioned. For example, Stellar-Lumen's implementation of Federated Byzantine Agreement creates the concept of reputation on top of trust. The ledger network is public, and is essentially a directed graph of trusts. Anyone can join but other nodes pre-existing on the network may not necessarily trust your validations, so this at least amends the first element the author mentioned.
In conclusion, blockchain technologies are over quoted for their finance applications. To quote a YouTube video I watched, look at blockchain technologies as the operating system, and cryptocurrency as one particular app on the operating system, like your browser. It surely is over hyped but shouldn't be hated upon solely due to the public's mistaking interest.
The problem isn't that banks and the government don't trust each other, it's that the people don't trust the banks and governments (see: crisis with the Bank of Cyprus).
If there's one thing I trust, it's that a bitcoin that I 'own' will stay mine (barring oversight on my own part). I have less trust that money in the bank will stay my own.
2) Schneier doesn't understand that some people choose to trust the cryptocurrency community more than the banking/government community. If he looked at the first block of bitcoin aka "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks" he'd understand why this seems reasonable to many.
I hope you get a chance to see Schneier directly challenged on those topics.
I'm no blockchain maximalist, and I understand the disgust at the hype around it, but it is an important tech, and Schneier obviously has done no real thinking on the subject. He doesn't even make a distinction between "coins" and ... blockchains. They're not the same!
This is only his misunderstanding of the technical aspects. As I said above, he also misunderstands the social aspects. Some people really trust the crypto community more than they trust banks/governments. It's at least a reasonable hedge, particularly in light of the events described in the bitcoin genesis block.
Those are widespread problems I even had bitcoin destroyed on a failed thumb drive.
Decentralization is a solution without a legally acceptable problem.
Therein lies the problem—asset forfeiture, genocide, and numerous other horrors have all been legal.
1. Many people don't encrypt their email (trust technology) and instead trust gmail and associated intelligence agencies to act in their best interest.
2. Many people encrypt their HTTP connections rather than trusting ISPs and internet providers.
An important difference between encrypting HTTP connections and encrypting email is that one is far more convenient than the other. However encrypting your email does make sense in certain situations and so does Bitcoin.
If you are aiming to reduce your institutional trust assumptions to me the question is why not use Bitcoin?
It's an open question as to whether public blockchains can provide for this trust and requirement.
I do like the idea of an internet where every action is traceable to a human, via public keys or sovereign identity.
How you'd retain and verify is an unknown for me.
So it is still people and institutions except abstracted into pieces that are more transparent than pre-existing options.
Also it is always hilarious to see the rehashed arguments over and over. First being that necessity of a blockchain is a requirement for successful implementation, and second the complete negation of systems where it actually is a necessity.