Blockchain 101: The Simplest Guide You Will Ever Read
velotio.com
velotio.com
Blockchain is fundamentally a very simple technology, but the market for it is based on making it sound like some panacea for every problem. Obfuscating the technology, and convincing the reader that "this is really complicated, but I can dumb it down for you" is a sure fire way to get them to trust you as "the expert" when you try to pitch them on some distributed ledger. The fact that all these articles come out of consulting firms (this one too) just drives that point home even further.
The goal isn't to show you what blockchain is. The goal is to convince you the writer knows a lot about this complex, spooky but oh so lucrative technology. And that the writer can help you use it for $50,000 USD base consulting fee, extra for non-standard features. It's worth it, trust me. You can put Powered by Blockchain on your website!
What I would really like to see is a paper/article/study where Blockchain based solution is demonstrably superior, or ideally the only solution, when compared to traditional, AKA non-blockchain based, solution. I have yet to see one of those.
That's because a lot of the supposed benefits are ideological, as opposed to technological. You end up having to sacrifice a superior technological solution for one which better aligns with some specific ideological goal (eg: decentralization, non-state money, censorship-resilience). Really though, for any serious use case, efficacy trumps ideology every time.
What's that mean? If efficacy trumps ideology, then why do cryptos exist?
Cryptocurrencies are superior to fiat money only if you accept the ideological basis for them. The advantage of fiat money now massively outweighs the advantages offered by crypto by orders of magnitude. For now, having actual cash in my hand trumps having tokens in a wallet in at least 99% of cases. You can't buy airline tickets with bitcoins, but with USD, or EUR, or any other fiat, you can. Even if you could buy one or two, with fiat you can buy any.
That is what I’m asking, being leveraged to do what exactly.
Abstract doesn’t work for me, I’m asking for real world use case.
> globally decentralized compute infrastructure that executes programs
What is the benefit of this? Who needs this, and where does this add value over not-this? Where does this provide a superior solution over a solution based on not-this?
That is my question above, that is yet to be answered.
Think a pitch deck: What is it, What is the Problem, What is the solution, How is the technology solving the problem, Why now, Competition and so on ...
I'd love to see the pitch deck of Etherium, or any blockchain technology really..
For money, they are solving the problem of user accounts being integrated top to bottom. For example, on a blockchain I can perform a Flash Loan. I can instantly take out and pay back a loan of a sum I would usually never have access to with zero collateral down. I can have zero dollars in my bank account but instantly borrow $1,000,000 (literally), spend that $1,000,000, and pay it back with interest, keeping any profit. The transaction does not get executed unless it is automatically verified that the lender has the funds, and the resulting sum after the transaction is complete will be enough to pay back the interest on the loan. Then the virtual machine executes it. It is instant, and requires no collateral because it is paid back as part of the transaction.
They are also solving problems for financial exchanges. Most exchanges are centralized and opaque. A small group makes the rules, and they make rules that favor some firms over others (special order types, data feeds). A decentralized exchange like Uniswapv2 is completely visible and has no requirement for maintenance by a single group. And in the end, the entire exchange is just another smart-contract. The potential for integration with the other programs running on the chain is huge.
These are two of the strongest use cases I've seen come out of cryptocurrencies. Consensus without centralized authority, immutable lambda execution paid for directly by the user, transparency, deep integration (wallets, other contracts). These things combine to produce value. This is less something you have a pitch deck for and more like an open standard. Rather than a chain of firms each with their own APIs, managing their own infrastructure, the function served by a whole company is replaced by a series of lambdas anyone can see in their entirety. This is so fundamentally different to how we think about tech companies today that I think our culture is still processing it.
Hmm, ask the people who depend on the Turkish Lira, Argentine Peso, Venezuelan Bolivar, Lebanese pound, etc. if the ideological basis of cryptocurrencies delivers enough utility for them.
Cryptos have only existed for ~12 years.
> it's always just a more stable fiat.
What happens when there are no longer any stable fiats in the world? Do you see whats happening with negative interests rates across the developed world? Debt grows perpetually, the cost of borrowing is zero, and everyone thinks this is normal.
Central bank fiat currency is simply an idea that is doomed to fail eventually.
I'm refuting your speculations of stable fiat with evidence shown in the macroeconomics, and of countries whose currencies have entered hyperinflation.
Can you show me where I said that? This is nowhere in my comment, or any comment I've ever written here. You're completely making things up at this point.
I said nothing about inflation, value, or stability. All I have said is that nobody is adopting crypto when their currency fails. They're adopting USD, a more stable fiat. Relative to failing states' fiat, the USD is significantly more stable, and more widely accepted. That's simply a fact.
Platform | Per transaction (kW h/tx)
Eth. 2.0 | 0.00009 – 0.00286 (High throughput projection)
Eth. 2.0 | 0.01823 – 0.55713 (Low throughput projection)
Algorand | 0.00017 – 0.00534
Cardano | 0.01239 – 0.37854
Polkadot | 0.00378 – 0.11556
Tezos | 0.00036 – 0.01096
Hedera | 0.00002 – 0.00004
Bitcoin | 360.39300 – 3691.40700
VisaNet | 0.00358
I work for a company called Balancer. On it you can invest in/create an index fund of your favorite currencies, then traders use it to arbitrage and pay you fees for doing so. So instead of having an index fund you pay someone else to maintain, you get paid for it.
Or take Alchemix - You can get a loan that pays itself back over time, rather than you pay interest. Can think of it like a term deposit account where you get the payout up front instead of at the end.
Or Pool Together - a no loss lottery - you can use it as a savings account which is used to generate yield, then that yield is paid out as a prize every week.
Even just providing liquidity and earning a good return on that, or using something like Aave to get leverage, are things that very few people have access to in traditional finance.
There's a rabbithole of super interesting innovation going on in Decentralized Finance right now that you'll never hear about from mainstream publications because it's so hard to comprehend + explain for most people. This will go mainstream over the next decade.
Alchemix and Pook Together sound like scams.
You can literally read the source code of these apps if you're skeptical. Almost everything in this world is open source.
Hint: It's not about literal storage of bytes, it's about trust.
Why does alchemix have billions of dollars invested in it while your MySQL version would have precisely 0 investors?
The merkle tree part is fairly simple, agreed.
The decentralized consensus part is anything but.
By bringing up Ethereum smart contracts and not Bitcoin smart contracts, the article implies that Bitcoin does not support smart contracts. But it has done so since its launch in 2009. The term "smart contract" was coined by Nick Szabo. From Wikipedia:
> Smart contracts were first proposed in the early 1990s by Nick Szabo, who coined the term, using it to refer to "a set of promises, specified in digital form, including protocols within which the parties perform on these promises".
https://en.wikipedia.org/wiki/Smart_contract
Bitcoin implements smart contracts in part through "Script," the custom Forth-like language:
https://en.bitcoin.it/wiki/Script
No doubt for marketing purposes, the myth that "Bitcoin doesn't do smart contracts" continues to be propagated. Reading the two Wikipedia articles clearly demonstrates the fallacy of this idea.
> "What if one wins the bet saying 10000$ and at the time of payment, he doesn't respond."
Why not contact the next bidder, or redo the auction?
> "online games like tic-tac-toe, where both players will deposit `X` amount in the smart contract"
> No one controls your game
> There is no way one can cheat
> No frauds, the winner always gets a reward.
Are these actually issues in real life? Online gambling has been a successful business for decades.
Centralized authorities have plenty of problems. The Fed supported financial markets over the last twenty years using "quantitative easing", printing money, and that money has tended to go to the wealthiest sector.
But bitcoin tends to help not "the little guy" but a sufficiently powerful medium-sized-guy who aims to be even more unfettered than large financial capital is now.
It's not like bitcoin can't be regulated by governments.
That said, I think there's a relationship between the "blockchain as application" question and the "bitcoin as economic/political system" question.
Without the cryptographic and consensus parts, blockchain is just a ledger and obviously could be more easily. The only advantage that a ledger coming from a blockchain has over a conventional ledger is that you know the blockchain was (probably) obtained with this ongoing voting/consensus protocol and the main impact is you know the result is correct and wasn't imposed by some central authority.
Things that I didn't realize until I watched the video:
* "Mining" bitcoin means processing transactions for other people. Miners do time consuming operations to process transactions.
I had never heard of 3Blue1Brown before someone showed me that video, but he has a bunch of other good math videos. I liked the one about pi showing up in weird places.