“A database and a contract”... but who owns the database? And who enforces the contract? And who owns the actual data?
Blockchain provides satisfactory answers to all those problems.
I agree 100% with the article in that blockchain is being ‘applied’ to a whole bunch of places that don’t need it. That doesn’t mean that it can’t work well in many other (legal!) scenarios.
> Blockchain provides satisfactory answers to all those problems.
What problems? I mean your arguing like something like public transportation is an impossibility without blockchain backing because: "Who owns the stations, who enforces the schedules and who owns the actual busses?"
Those are not problems. They are all just questions that are always insanely easy to answer in the specific case.
With your banking credits, who owns the database? the bank, who enforces the contracts? the legal system? And who owns the actual data? Depending on law, there's ownership relations between yourself and the bank.
You an way to many crypto proponents are arguing like ownership rights, legal systems and databases don't exist outside of blockchain based solutions.
Ain't no judge gonna throw up is hands and go "well, the smart contract says so, my hands are tied!". Blockchain doesn't solve anything where there is a functioning legal framework.
You can't use technology to solve a problem that isn't a technology problem.
You still have to trust the other party will abide by the results of the smart contract.
If there is no legal framework they could just shoot you and have done with it, if they didn’t like the result.
Smart contracts and blockchains are still laws, just laws for people who don’t like some of the existing ones. Numerical rather than societal.
If there’s no rule of law, then blockchain laws can’t exist either.
https://en.wikipedia.org/wiki/Society_for_Worldwide_Interban...
See also:
https://en.wikipedia.org/wiki/Clearing_House_Interbank_Payme...
I worked on a payment system using the UK's Faster Payment Scheme a while ago. The SLA for latency is two seconds end-to-end, and is usually much faster than that, was simple enough for a gang of underpaid COBOL programmers to implement it successfully, and didn't have a mechanical error rate worth bothering about. In January it moved 186.1 million payments and 161 billion pounds:
http://www.fasterpayments.org.uk/statistics
FPS is UK-only, but there's nothing about the technology or the commercial and legal machinery that wouldn't work internationally. If SWIFT is really as bad as you say, it could be replaced with a better instance of the same technology; it doesn't require a haunted git repository to fix it.
lol, thanks for that.
All the big players have got real-time feeds they're sharing with each other to keep track of who's made what transactions, and they're constantly reconciling them against each other, to make sure that everyone's looking at the same picture. There are also daily reports summarizing the previous day's activity, and they are also reconciled as a second check. The proactive parties work together to sort out any discrepancies they find as soon as they find them.
None of this is strictly necessary, because there is a central source of truth that you can rely on. But it tends to operate much too slowly for a lot of people's needs, and mistakes do happen, and they can be costly, so it pays to be proactive. Meaning that, in general, nobody's actually relying on the central authority to keep this organized.
The actual real-time feeds are log-structured: You can add new records, but not delete old ones. If you want to reverse a transaction, you just add a new entry to the ledger to back it out.
In that sense, it works a lot like how a blockchain would work. The only difference is, nobody's bothering with all that crypto stuff, because all it would do is make the whole thing more expensive. Like, literally, that's the only impact I can see. It won't help with preventing errors - when mistakes happen, it's invariably because of an error at the boundary of the system, and fiddling around with hashes of the previous message when sending new ones does nothing to guard against that. All it would do is slow both the throughput and latency of transactions by introducing more spots where synchronization must occur together with a bunch of ancillary computational load.
In a world where time is money, that sure sounds to me like a $100 solution to a 1¢ problem.
That is exactly what blockchain is. It is literally doing that.
> None of this is strictly necessary, because there is a central source of truth that you can rely on.
But who is running that? And why do you trust them not to change things around every so often?
> it works a lot like how a blockchain would work
Except there's no central source of truth because no one trusts anyone. Which is why its so strong. There's no need to trust.
> The only difference is, nobody's bothering with all that crypto stuff, because all it would do is make the whole thing more expensive
That's what makes blockchain immutable. You can't alter it without an enormous amount of resources. And even then, the actions of the rest of the network work to discourage that sort of thing. In PoW, everyone else is checking the non-altered data, and in consensus, everyone else has already agreed on non-altered data.
It isn't: it's a chain of hashes with signature. Those predate blockchains that do things like wasteful mining. An example was Surety's timestamping service. A hashchain using standard primitives is way less wasteful, supports higher transaction volume, is cheaper, and can take advantage of hardware acceleration in client and server devices.
One of reasons I oppose blockchain tech is that you get better cost-benefit ratio out of high-performance, centralized protocols with decentralized checking. We also have some of that mathematically verified for correctness down to assembly. So, they will be more secure than complex, decentralized protocols.
Blockchain does exactly this without everybody having to sort out discrepancies. Everybody getting the same picture is built in. Just the possibility of there being discrepancies in the ledgers you described would have me looking for a better way.
I would much rather have the option of connecting to a decentralized feed that is the same for everybody regardless of resources.
It's all pretty highly regulated, and you'd need a license before you're allowed to even think about hooking directly into an exchange. If you've got lowly peasant money to work with, it would be much more cost effective to go through the retail channels, just like every other person who isn't a corporation.
> Blockchain does exactly this without everybody having to sort out discrepancies.
No, it doesn't. The nature of the discrepancies that cause trouble in practice, and the ways they sneak in, are simply not things you can solve by chaining hashes and throwing a proof-of-work algorithm into the mix. The very suggestion puts you one blue suit and some pointy hair away from being able to star in a Dilbert strip about trying to use buzzwords to solve problems you don't understand.
Financial markets are heavily regulated for a good reason, Bitcoin need to find a good way to "clone" that if it want to be used for actual finance.
Errors can come from outside the system, any kind of consensus protocol cannot solve that. So cryptocoins do not have any particular advantage here.
https://en.wikipedia.org/wiki/Real-time_gross_settlement
For euros, there's TARGET2:
https://en.wikipedia.org/wiki/TARGET2
Daily average of 342008 payments, value 1.7 trillion euros:
https://www.ecb.europa.eu/paym/target/target2/facts/html/ind...
Central bank?
> Why should the other bank trust that database?
Because if that database fails, it is likely that the failure is one of the smaller problems of the bank?
Goodwill is an asset that companies care about.
If you own a house, where's the record? The title is with an insurance company. Why? Because your ownership of this house can be questioned at any time since there's no equivocal record. It's recorded in a bunch of "databases", some of which you and your insurance company may not know exist.
I cannot understand how at the same time lots of people are worried about "superintelligent machines eating the world" and proposing to remove humans from all important decisions in our lives.
Next step is to build a social graph on blockchain?
No, it doesn't, not if the contract touches on anything outside the blockchain. At the very least this includes anything physical (physical objects or physical services) and currencies not based on that particalur blockchain.
Because, if a court decides that a transaction was illegal and orders you to reverse it, answering, "But the blockchain. . . !" is a great way to land yourself in jail.
Which, granted, plenty of anarchists and criminals have moral or practical reasons why they would rather operate in an extra-legal environment. But here we come to the reason why skipping the "as a..." line in your user stories is such an anti-practice: Those are two very specific user profiles. Most the rest of us would like to see QuadrigaCX's clients get their money back.
Sort of:
> who owns the database?
Whoever has the most computational resources, in most implementations.
> who enforces the contract?
Depends on the contract. If I sell my house via a blockchain contract, a computer isn't going to come and evict me. If I sell you some heroin, or an action figure, or a rare in-game skin, it's still not going to help.
> who owns the actual data?
Nobody, and that's a problem when data needs to be removed.
I would argue that there is potentially a use case when it comes to things that can be completely represented digitally e.g. money.
But it still adds new problems. Electricity use, the irrecoverability of data/auth if you lose a key, the inability to erase problematic data.
1. On Electricity - It needs to be expensive to try to cheat or steal from the system. Currently with gold you would need to hire a private army to steal from and break into vaults - that's so expensive and crazy that I don't think most people are willing to undertake that risk. Currently I think electricity is the best way to make digital native things expensive. I'm not sold on anything else yet (definitely open to new solutions, but I'm not convinced think PoS is a viable one).
2-3. I think this is an interesting tradeoff. The way I look at it you pick 1 of 2. Either you trust someone or some people to return lost funds/remove "problematic" data or you trust the system in which case those things can never be recovered/removed.
I think calling those "problems" might be premature as they could actually be "benefits" depending on how you look at them.
Re 2-3: Tell that to customers of Quadriga and MtGox and the countless scammed, those who paid ransom to kidnappers. Everyone who lost their keys. It's a problem, let's face some reality here.
The comment above says that the blockchain provides a satisfactory answer to enforcement of contracts. People really do seem to think that contracts made on the blockchain will magically enforce themselves in the real world.
The contracts don't, and can't, concern themselves with anything that is off the blockchain. Once the ether is in your account, the contract is complete.
As an example, fradulent fish is a huge problem in the fisheries and food industry. At every step of the supply chain, there is temptation to substitute expensive for cheap fish. Most Chilean sea bass you buy isn't actually Chilean sea bass, for example.
A lot of people are hyping blockchain as a solution to this serious problem, not appreciating the fact that the technology cannot actually tell different types of whitefish apart. I really would like a solid counterexample where blockchain actually would help, but I've never heard one.
You say that, and then look at the number of companies selling blockchain based services promising exactly that, and enterprises paying for projects...
It's understandable why as well. Pure "digital world" businesses that blockchain can deliver like provably actuarially fair gambling exist, but they're pretty niche.
I'd question whether money can be completely represented without recourse to the outside world - what gives money relatively stable value is the real world enforcement of contracts, debt obligations and taxes. Take those away and whilst your blockchain can validate the integrity of some numbers you hold, you can't guarantee anyone actually exchanges it for anything actually useful in future.
From my understanding, blockchain is essentially "cheap trust" . You can pay the system a fee to trust math rather than a human. Once I learned that, I realized there are very few scenarios where cheap trust is needed.
So perhaps I should adjust my first statement with "people who understand blockchain" - although even that's not necessarily fair as it assumes that I "understand" it.
I suppose what I'm getting at is that I think it's unfair to look at the number of scammers/people selling "blockchain" services and make an assumption on the industry as a whole. Most of the developers in the space that I know completely write off those people and don't even consider them in the industry.
On whether money can be completely represented without recourse to the outside world -> Agreed, I should again amend my statement to say "value". There is no doubt that 1 Bitcoin represents a certain amount of "value" right now and that value has so far proven to be un-censorable. Whether it will be successful money is a different question.
No, not people in the sense of end user customers. The industry is selling snake oil and some investors have bought into it and subsequently promote it.
10 years down the road and they're still trying to find a mainstream use case, but they won't find it because in the end using a blockchain makes everything harder if you are a legal enterprise.
So what you're saying is, blockchains can't determine whether or not you really have skin in the game?
:-)
A trusted authority with legal obligations of honesty.
> And who enforces the contract?
The court system.
> And who owns the actual data?
Ownership of data is a very ill-defined concept and not well-specified by a blockchain system either.
It doesn't even need to be that trusted. You can stipulate in the contract that they must stream the log to you and then scream bloody murder if they try to monkey with anything. A blockchain is just a trendy write-ahead-log.
You could do this on pretty much any database I know of, but it's a kind of dumb idea.
The answer is the same to all three questions: the Chinese government.
Lawyers and judges enforce the contracts.
Data ownership is stipulated by statute or contract.
Why do you (and others) call the technology itself 'blockchain', singular? The Bitcoin blockchain and the Ethereum blockchain are fully separate so to describe a set containing both I'd say 'blockchains'. If someone asked my what technology they used, I'd say 'a blockchain'. But my usage is not what I see from advocates.