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Comment by darkFunction | Hacker News Reader

> (1) has no I/O functions

Input: User identity, money.

Output: Digital services, site subscriptions, digital assets, in-game items, NFT's representing real world assets held by trusted companies (wine, event tickets, tokenized securities).

None of this requires oracles and exists today.

Your mistake is thinking that just because the base layer is decentralised that we're somehow not allowed to connect to companies we choose to trust, just like we all already do.

Then it becomes interesting because there's a programmable market for these assets/services that didn't previously exist because the underlying value was not represented in an exchangable form. The outputs are also inputs.

Ethereum is the trustless, standardised substrate on which trusting parties can interact.

HackerNews will continue to fail to see the utility of this system for years to come until it's mature and undeniable. It will be an interesting case study into how experts missed the potential of emergent technology in the same way we look back on yesterday's commentators not realising the disruption of Amazon or the internet.

As to your second point, it's unlikely the end user will ever want to transact on layer 1. Layer 2 technology is making steady progress. See l2beat.com for examples.

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> Output: Digital services, site subscriptions, digital assets, in-game items, NFT's representing real world assets held by trusted companies (wine, event tickets, tokenized securities).

> None of this requires oracles and exists today.

While I only mentioned oracles specifically, I should have clarified: I'm referring both to oracles (making queries to external data sources and providing the results to the blockchain), and to external code that interprets data stored on the blockchain and acts on it. I'm not sure if there's a name for it in common use (I'd call it something like a "performer"). Either way, the issue is the same as that with oracles; whatever decentralization or smart contract guarantees you had on the blockchain disappear as soon as you have external code interpreting blockchain data to then make decisions in external systems (digital services, site subscriptions, digital assets, in-game items, NFT's, etc). If oracles provide inputs to the blockchain, these non-blockchain pieces of code provide the real-world outputs.

Example: even if somewhere in the blockchain I can prove that I should own something in the real world, it's still up to your site/service/app/whatever to honor that through external code. If it doesn't honor it, I'm stuck relying on traditional legal means to intervene, just as with any other standard contract. That legal system – as flawed as it is – tends to work for contracts written on the back of a napkin, stored in a SQL database, or coded in a smart contract (though that's probably the most questionable at the moment).

If I'm wrong, please correct me, but I've been interested in this stuff for a while, and I haven't found anything that actually solves the fundamental problem of oracles and the interpretation of blockchain data. That problem is important because it undermines many of the primary selling points of smart contracts.

> Your mistake is thinking that just because the base layer is decentralised that we're somehow not allowed to connect to companies we choose to trust

So, honest question: why care about the base layer being decentralized if in the end, you choose to trust those companies? What did the decentralization do for you in that interaction?

Yep. Blockchain says I own this case of wine... but the other guy wont give me my wine! Who do I call? The physical, centralized police and the centralized legal system that back it. Without that legal system recognizing and honoring it, it's worthless. And if it all depends on my centralized legal system, then who cares about the decentralized blockchain. Might as well put it in a table in a database instance running on AWS, or in a written contract.

You could say the same thing about property deeds, contracts, etc. The fact that the laws of physics still apply in the world and thus people can still physically take things from you, harm you, etc. is hardly an argument against any specific method for establishing and recording ownership or contracts.

> This <legally enforceable contract> says I (should) own this case of wine... but the other guy wont give me my wine! Who do I call?

Answer: You have a cause of action for breach of contract. In UK/US/Aus/Canada/etc, you can "call" / take it to a court, and they may grant you the remedy known as specific performance, which is essentially a court order to do the thing that was promised. This remedy is available because the thing to be done was the transfer of property. The remedy is part of the law of Equity, a set of doctrines and principles that has been in development since the 13th century. It got its big break with people complaining to the King of England that "the law is too harsh, it should be fair!!!" and went from there, eventually becoming a huge body of law about exactly what it means to make the law fair, what principles to follow when doing that, and how to deal with the many categories of unfairness that come up regularly.

You might look at the DAO hack in this context and think, the Ethereum folks really threw out the baby with the bathwater when they decided to invent a new financial system that didn't have to play by the existing rules. Many people talk about ICOs etc taking us back to the 19th century and the Wild West, but smart contracts take us back hundreds of years further back, with echoes of literally the first people to complain to the King demanding a writ to remedy the injustice of the Common Law. If since then blockchain enthusiasts have come up with something better than Equity, I would ask that they let us know.

Main message from the people in The System to you: We have thought of all of these problems before, and we have solved them all before, and if ye who have spurned the legal system come running for help, ... we will actually welcome you with open arms, like we aspire to do for everyone else.

> You could say the same thing about property deeds, contracts, etc. The fact that the laws of physics still apply in the world and thus people can still physically take things from you, harm you, etc. is hardly an argument against any specific method for establishing and recording ownership or contracts.

On the contrary, it's a strong argument for using those methods of establishing and recording ownership that are blessed by the relevant local legal system (or, sure, ultimately by those who control local violence, if you want to go all the way down). It's the reason why you get lawyers still insisting on using faxes rather than emails.

It is an argument against unnecessarily elaborate and complex methods of recording contracts like crypto.

A lot of important, trusted systems often don't have particularly sophisticated security in every single layer. Homes and mailboxes have simple locks. Online transactions have fairly basic digital integrity checks (ie. you connected to a bank's server using HTTPS with a secret cookie). Credit card chips and card readers are riddled with vulnerabilities. We still sign legal documents with like, pen and paper and a scribble that even children can forge.

These systems are still trusted because trust isn't established by infallible recordkeeping processes, it's the humans and the organizations and the written/spoken promises we make that matter. A legally recognized scribble is as trustworthy and useful as a foolproof NFT. Crypto's complexity adds very little in practice.

No, the basic problem is ownership rights over physical objects can't be enforced without coercive power, but blockchains and smart contracts can't use coercive power, therefore they would have to rely on an external entity to enforce such rights. But then the system is no longer "trustless", "permissionless", or "censorship-resistant", and therefore we have none of the supposed benefits of blockchains but we do have all of the inconveniences, which means at this point we're better off with a centrally-managed registry which at least is cost-effective.

Blockchain governs the DIGITAL sphere and in there can actually enforce. People who are trying to combine crypto with physical assets are a shrinking number. Focus on digital and its absolutely enforcable, to an extent not even governments can accomplish.

Not at all, blockchains can't enforce intellectual property rights either. For example, how is a blockchain going to stop an individual from using unlicensed content on their website?

Thats not what is meant by it being enforcable.

You are confusing things here.

With enforcable, what is meant is anything that can be programmed into a contract and be executed will be executed (enforced).

That can as an example be someone raising a million dollars for a crypto game by offering 10000 tokens for 100$ each. The million dollars are going to be unlocked in phases. 50k for proof of concept, 250k for alpha etc. Each phase have to be approved by the toke holders. If they dont agree that the proof of concept is good enough they can vote the unlocking down and there is nothing the game developers can do about that. That is what is meant by enforable.

We already know what "enforce" means. You said blockchains can enforce "digital" whatever that means. The only thing blockchains can "enforce" is that data are added to the chain according to some rules. There isn't any type of property right, digital or real, that can be enforced in this way.

I already explained what enforcement means in this context giving you a very concrete example. Why don't you show how that example is not what I claim it is. Instead of just repeating what you already said.

I can't help you see something you don't want to see.

> Why don't you show how that example is not what I claim it is.

Because, quite honestly, I don't what your claim is. You're saying that a blockchain can "enforce DIGITAL" which is a meaningless sentence. Are you claiming that you can write a program and execute it on a blockchain? Sure. I can do the same on my computer. This is not an example of enforcing property rights, which was what we were talking about.

I am not talking about property rights and I am not sure where you are getting that from. So maybe you were thinking of someone else.

You replied to a comment where I argued that property rights cannot be enforced with blockchain technology. So, yeah, it's pretty obvious that we were talking about enforcement of property rights.

> Blockchain governs the DIGITAL sphere and in there can actually enforce.

how?

it's all based on cryptographic keys, if I stole the keys, how can blockchain block me, without someone intervening?

You are answering your own question by asking the wrong one.

This is only a problem if it's in fact enforcable. There are many ways to solve the stealing among others multisig.

you're not answering the question though.

the only thing the system can do is ask more and more from their users, but there is no way to know if the transaction is good: if it looks good, it is good.

so it can't enforce anything on its own.

a CC payment can look good, but it can be reversed because there other other channels, outside of the CC circuit, to prove those transactions are to be considered fraudulent.

There is no such mechanism in the crypto space, so basically they are good unless you have an issue that can't be solved by the chain itself.

Because the chain can't enforce anything.

p.s. note that I wrote the keys (plural) not the key (singular)

basically your answer is "have a multifactor authentication" but if that is broken by some malevolent actor, I can go to the police.

There's not true fro Cryptos, if they are stolen they are lost.

nothing you can do about it, except begging

https://www.vice.com/en/article/v7dv4a/hacked-cryptocurrency...

I have answered it and again you are answering it ex. here:

"A CC payment can look good, but it can be reversed because there other other channels, outside of the CC circuit, to prove those transactions are to be considered fraudulent.

There is no such mechanism in the crypto space, so basically they are good unless you have an issue that can't be solved by the chain itself."

This is a feature NOT a bug. It comes with it's own consequences of course but that's exactly what makes it enforceable just like physics enforce its laws.

This is a complete FAILURE to enforce property rights. If by stealing your car, I automatically own it, that means there are no property rights whatsoever.

No it's not. You are assuming that the entry on the ledger is a person it's not. It's a thing. I can steal all sorts of things from you in real life and if you don't know I stole them, then they will be gone forever.

You are still not understanding what is meant by enforcing.

> I can steal all sorts of things from you in real life and if you don't know I stole them, then they will be gone forever.

You seem unable to form coherent ideas.

So ad hominem is your argument? Got it.

> Focus on digital and its absolutely enforcable, to an extent not even governments can accomplish.

The Winklevosses came up with an elaborate system to store and secure their own private keys. They cut up printouts of their private keys into pieces and then distributed them in envelopes to safe deposit boxes around the country, so if one envelope were stolen the thief would not have the entire key.

https://www.nytimes.com/2017/12/19/technology/bitcoin-winkle...

What if they could have that power?

Imagine something like Robocop hooked up to the EVM, if you put your RealID in the escrow contract and then the ubiquitous camera network is unable to verify that you honored the transaction, well then you have 15 seconds to comply…

I worry that this is the endgame; you say "distributed organisation", I say "autonomous cyberweapon".

We're not that far from having a DAO that can bid on zero-days and use them against a list of targets of its choice. If a DAO can make POST requests it can launch exploits. A script kiddie without the kiddie.

Sure, but if you had a sufficiently powerful robot you could also circumvent traditional means of enforcing ownership and contracts.

This is a strawman. The entire ecosystem does not have to be 100% decentralised. There is massive utility in a trustless, permissionless, censorship-resistant contract layer connecting disparate centralised entities. A centrally managed registry would never be suitable for this task for a multitude of obvious reasons.

> There is massive utility in a trustless, permissionless, censorship-resistant contract layer connecting disparate centralised entities.

No, there's no utility in that, if ultimately enforcement relies on an entity that needs to be trusted and can override the blockchain.

> A centrally managed registry would never be suitable for this task for a multitude of obvious reasons.

Centrally-managed registries are already in use and have been in use for a long time, they exist in every single country, and entire markets depends upon them, but somehow they "would never be suitable for obvious reasons"? They have already been shown to be suitable, what on earth are you talking about?

> what on earth are you talking about?

I'm talking about a global, universal API layer supporting standardised contract enforcement and value transfer between applications. A centralised implementation of this would clearly be a bad idea.

If you don't see utility in this I don't know what to tell you.

> I'm talking about a global, universal API layer supporting standardised contract enforcement and value transfer between applications.

What does that even mean? How is a global API going to support the enforcement of a rental agreement? Or of a bond indenture? Who is actually going to enforce the contract? And what is the role of a global API in that? And what do you mean value transfer between applications? You want to transfer "value" (like a bag of rice?) between computer programs??? None of that makes the slightest sense. Meaningless gibberish intended to fool gullible idiots into thinking that blockchains are some kind of disruptive technology that is going to turn everything upside down. Nonsense. It's a pump & dump scheme, and little else.

Ignoring the condescending tone, value is already being transferred between computer programs. Trillions of dollars per year on Ethereum alone. A lot of the volume is undeniably speculation but denying that value can be transferred on blockchain is denying reality at this point.

Ethereum allows you to transfer digital tokens from one address to another. This is what it does. Calling this "transferring value between computer programs" is both inaccurate and pompous. It's like a truck driver insisting that you call them a "transporter of value". Nobody speaks like that. Your comments consist entirely of marketing buzzwords, which is unfortunate because this is a technology site and we're trying to have an honest discussion about technology.

I'm having an honest discussion. You have accused me of being "a gullible idiot", "pompous" and of using "marketing buzzwords" (which words?). You come across as being very emotionally attached to your negative opinion of the space.

Value can be transferred between programs through Ethereum. The tokens you mentioned have value, because people are willing to exchange them for money. So it's not an inaccurate statement. Web3 provides the standardised API through which these programs can communicate.

Don't twist my words, I never said that you were a gullible idiot. I said that using the term "transferring value" is inaccurate and pompous, and that you are using marketing buzzwords. And I stand by that, "transferring value" is an example of a marketing buzzword. It's not a descriptive term, because what is being transferred is digital tokens, which may or may not have value. Whether they have value is irrelevant as far as the technology itself is concerned. I don't have anything against you personally, but this is the way I see it.

If it helps you can read 'transferring value' to 'transferring digital tokens which have value on the market', the distinction is irrelevant to the point.

> Whether they have value is irrelevant as far as the technology itself is concerned.

I'd argue that it's not irrelevant. The whole point of the technology is, at risk of more 'marketing buzzwords', a decentralised way of moving value around (moving digitised tokens which have value on the market, around).

I had a look at your post/comment history. It's almost exclusively cryptocurrency focussed. I'm curious why you spend so much time discussing a technology you clearly don't think has a future.

It is irrelevant. An automobile engineer would not describe a truck as a "vehicle that transports value", despite the fact that most of the time trucks are used to transport valuable things. It's ridiculous. Nobody in finance refers to financial assets as "value" either.

Why are my comments focused on cryptocurrency? Because I like to discuss cryptocurrencies. I have thought a lot about them, and I think it's an interesting phenomenon from an sociological point of view. Plus, I like arguing with people who I think are wrong.

Sure. You need a state to enforce property rights.

But the point is that the centralized system that managed property deeds does not require an absolutely gargantuan amount of computation to be performed to do a basic transaction. And since I already need the state to enforce property rights, why not have the state also be involved in the recognition of who owns what?

> So, honest question: why care about the base layer being decentralized if in the end, you choose to trust those companies? What did the decentralization do for you in that interaction?

My trust extended only as far as a single interaction/asset. The rest of my wallet and the assets within are completely unaffected. A company might rip me off, and I might have legal recourse, or I might not. Such is life. We won't ever be able to decentralise away all trust. A single entity isn't able to manipulate all my assets, or print more tokens, or confiscate my money. The network is solid even if all the 'performers' are not.

To build a centralised 'universal API' on which applications can communicate and exchange value is a terrible idea. Who would own it? But such an API is surely a useful technology.

We do need reliable oracles for external data feeds- prices, weather, news... can all feed into contracts for extra utility. This is a hard problem being tackled by ChainLink and others.

Let's say everyone on the planet is Ethereum enabled tomorrow. What is the business case for the winery to use it in your example? I get that Ethereum or any other crypto can be another payment option for their customers. Beyond that what use does a winery have for a programmable substrate underlying its transactions with customers or suppliers? I'm not saying there is none but if you're going to rip on HN users, frankly it's hard to parse what this language even means.

I’ll bite. A winery could sell ownership of wine stored or wine yet to be made. The purchaser, if sold via an NFT, could resell that ownership with no interaction with the winery until claiming the wine at a later date.

This means both parties no longer need any relationship between the initial sale and claiming the eventual goods. The winery will simply be able to wait for someone to return with proof of ownership at a later date.

If the winery gave out certificates or built some app it would need to verify and maintain that. With an NFT there is very little work on their end.

Ultimately this turns these type of products into highly liquid assets. This will greatly increase their value to a potential customer and the initial purchase price. Which will make the winery more money for the wine it sells.

This can effectively be done with anything that can be claimed at a later date after initial purchase.

If you rely on a trusted entity (winery) you don't need a blockchain to do anything you just described.

How are you going to transfer the right to have a wine bottle? By continuously signing legal documents?

Yes, this is probably what you'd do in this hypothetical case, and it's hardly unheard of for contracts to be written up with transferability clauses. Given that we exist in a world where digital signatures also exist, it's unlikely to be particularly onerous.

("Continuously" is probably not the right word, unless you are envisioning the rather unlikely case of this transfer happening on an annual basis!)

Stock brokers track perfectly the transfer of people rights to stocks millions of times a day without any decentralized ledger. In fact, a SQL DB has worked quite well for many years now.

If the wine cellar wants their customers to trade wine, I'm sure a centralized ledger based on a SQL DB would be much easier and cheaper to implement and scale to millions of transactions.

Can I trade my wine in the weekend? Ah no, sorry, stock market is closed then.

Can I trade my wine at 5pm? Ah no, European wine stock market is closed then.

When you really 'own' the ticket, you can trade it anywhere you want, without being dependent on some exchange that's only open whenever and takes some fixed cut without any competition.

The fact that you can't trade on weekends is not because some technological problem, it's because there's no demand for trading on weekends. Do you think the technology suddenly stops working on weekends?

I own both stocks and crypto. I would LOVE to trade stocks in weekends!

people love heroin too.

that's why rules around potentially addictive things are needed.

Yeah, that's surely trustless. And I totally trust the wine company to perpetually maintain and pay for such a thing, and totally not restrict the secondary market as has happened all the time.

> In fact, a SQL DB has worked quite well for many years now.

When you allow people to write their own smart contracts, bugs will happen. This can't be fixed, only dampened with a weakened interface to the blockchain.

When a bug in a smart contract happens you may now have a dispute, across borders, over the intent of the smart contract and the actual behavior.

Who handles this situation?

Sure, or if you're willing to trust an electronic database you can put it in an electronic database. How do you think wholesalers buy and sell wine at the moment?

The question is can you really make it simultaneously cheap to trade and decentralized and always on. Or is the overhead of all that just make blockchain tech very awkward and suboptimal (especially since ultimately there's a centralized winery that honors the "claim" with actual wine - so no real need for decentralization). Instead why not just have a little centralized company that lets companies create ledgers of asset ownership for $300/month. If it's a real use case, any winery can sign up, etc.

Issue is blockchain tech doesn't actually solve anything

Transactions on most L2 chains these days are less than a penny.

There are dozens of popular mobile wallets that make viewing, sending, receiving coins / nfts trivial.

The problem that it solves is that there is no need for you imaginary ledger company to exist at all in a blockchain model, the winery cuts out a rent seeking service and the user gets a more secure and portable product.

Automation isn't just going to hit manual labor, blockchain and web3 will allow for the emergence of fully autonomous "companies" that operate via smart contracts.

Excuse my ignorance, how does the buyer of the token know it hasn't been redeemed yet?

Embedded expiry, it can't be redeemed before the wine is ready anyway.

What happens if the wine goes bad? Who/what arbitrates in that scenario? Because from the winery's perspective, whoever currently holds that contract owes them money for the wine at a fixed price that was determined and sold in the past.

If I hold that contract and have to take delivery of rancid wine instead of fresh wine like I imagined, what's my recourse?

Basically how do you ensure the state of the real-world asset remains fixed throughout the duration of the contract?

In the case of wine, the real-world version of “going bad” is just that it’s not very good. When you bought the future wine, you were betting that it would be very good wine and you could resell it for more. The winery was selling it to you for “cheap(er)” because you assumed that risk.

So for actual wine, right now, you have no recourse: you bought the risk. I don’t think this would be any different with NFT-wine. Now and in the NFT case you already paid the winery, you owe them nothing more.

Now if they cheat and give you water instead of wine… I guess whatever real-world contract says you can exchange this token for wine would say which wine?

Most likely the first N wineries to do this would do it as a publicity stunt, and if it proved useful then there would be some precedent. Much of the wine world operates on reputation and trust.

For the vast majority of physical products that are not like wine: you’d need real-world contracts to back your smart contracts and the latter would only be useful for decentralization of the secondary market.

So the "trustless" system still relies on you to trust the reputation of the winemaker.

What are we actually inventing here?

You burn the token to redeem it.

> A winery could sell ownership of wine stored or wine yet to be made.

Ah. You mean "a centralized entity creates a centralized way of providing and verifying ownership of wine"?

1. How does blockchain factor into this?

2. As always, descriptions like this betray how little crypto-peddlers know about real world. Buying future wine has been a thing as long as there has been wine https://www.winespectator.com/articles/buying-futures-3495

That's great! Hey look I would like to send you the rights to my crate of wine. You're the 1000th customer to my site. Or maybe you want to trade it for your in-game weapon. Or I just like you and it's a gift, anonymous internet user.

Of course I could just transfer directly to your Ethereum wallet. But why do that when I could explain you need to sign up to 'winespectator.com', I'll email them to arrange the ownership transfer, and if you're trading that weapon let's both sign up for a pre-agreed escrow service online and pay them a commission to arbitrage. How many forms do we need to fill in, and who is processing that data? I currently own my crate anonymously- only the person who eventually burns the token will need to provide details to the company for delivery.

As always, descriptions like this betray how little engine-peddlers know about horse breeding. Managing a stable has been a thing as long as there's been horses.

> Hey look I would like to send you the rights to my crate of wine.

You truly believe this can't be done without blockchain?

> You're the 1000th customer to my site.

You truly believe you can't track customers without blockchain?

> Or maybe you want to trade me for that in-game weapon.

You truly believe it's impossible to implement in-game trading without blockchain?

> Of course I could just transfer directly to your Ethereum wallet.

The only thing you could transfer is some meaningless numbers. What makes them meaningful is some central, trusted authority that will accept these numbers as proof of something. But then, since you depend on that authority to verify this... you don't need blockchain.

You can do all those things without a blockchain. It's just more practical using a blockchain.

I used to survive without a cellphone. It wasn't hard. You just called your friends when you and they were at home.

> It's just more practical using a blockchain.

The popularity of centralised exchanges vis-a-vis blockchain wallets suggests the opposite is true.

Here lies the problem: you live in the present, I live in the future. And right now, I don't see any reason why that can't be fixed in the future.

You said blockchains are more practical, in the present tense. The evidence strongly suggests that's not true. And there are plenty of reasons to think they will continue to be impractical in the future.

There is also no central winery exchange system.

> It's just more practical using a blockchain.

In which shape, way, or form is it more practical with a blockchain?

Are you saying it's not more practical for me to pay $100 for a bottle of wine that will be made sometime in the future plus $60 in transition fees!?

I think instead of reading what I wrote, you read "you need a blockchain to do this".

The anti-blockchain narrative on here is constantly attacking the strawman of "literally everything must be decentralised".

I'm arguing that a decentralised medium of exchange through which separate points of centralisation can interact is still a useful construct.

You're comfortable with your assets being codified in a thousand different databases in a thousand different representations but the concept of having a common database representing them as "meaningless numbers" is suddenly unacceptable.

So... Why did you write it? Of course you don't need blockchains to do this.

To reiterate: The only thing you could transfer is some meaningless numbers. What makes them meaningful is some central, trusted authority that will accept these numbers as proof of something. But then, since you depend on that authority to verify this... you don't need blockchain.

The blockchain facilities standardised transfer across a decentralised medium. I'm not sure how much clearer I can make my point. You could code alternatives to all the use-cases mentioned, but when you have an existing platform on which to interact, why bother? You want the game developers to implement the winery's API?

> The blockchain facilities standardised transfer across a decentralised medium.

It hasn't. It standardised the transfer of otherwise meaningless numbers, that's true.

In order for your winde order to work, a centralised, trusted party has to verify and accept those numbers, and say that, yes, they represent something meaningful to them.

The same goes for every other example. "Want to trade something for an in-game weapon": This only works if that game a) provides means of trading in-game items, b) can verify that a number in the blockchain actually represents an in-game item etc.

Without countless external entities agreeing to and cooperating on the meaning of this data this "standardised transfer" is literally meaningless. And these agreements will go as well as they already do in reality. How does blockchain factor into this?

> if you're trading that weapon let's both sign up for a pre-agreed escrow service online and pay them a commission to arbitrage.

Now who's attacking straw men.

You may continue to consider the numbers meaningless but the market for on-chain assets disagrees with you.

> the market for on-chain assets

Ah yes. The market of on-chain assets. Self-reinforcing, self-congratulatory mass speculation and scams. There's an abyss between this, and even wine futures.

>> The blockchain facilities standardised transfer across a decentralised medium.

>It hasn't. It standardised the transfer of otherwise meaningless numbers, that's true.

Sure, but that alone can have value. The idea being that people have already built entire trading platforms around tokens, fungible or not. Somebody who wants to enable easy trading of some asset (or futures contract or whatever), hoping for improved liquidity, could see using the platforms built for crypto token trading as much easier than trying to build their own exchange. Especially if it is anticipated that physical settlement demands will not be especially common.

To be more concrete: It might be simpler to get your single-vineyard wine futures up and running on crypto than trying to get it listed as a new contract type in a traditional futures exchange.

Now sure, nothing about getting your weird futures contract into some form of widely used exchange requires blockchain technology. It is merely leveraging the existing infrastructure others have already built around crypto.

This is not too dissimilar from the various ways people have found to get say precious metals as listed items on stock exchanges, despite traditional commodity exchanges or brokered OTC trades also existing. Obviously nothing about speculating on (or maintaining market liquidity for) precious metals requires a stock exchange, since we have those other ways of trading. However people have found getting access to the stock trading market to be worthwhile.

Obviously settlement for physical goods is a centralized processes (or possibly a somewhat decentralized process relying on courts and contracts). This is equally true for any exchange, crypto-based or not. The actual order matching process somewhat separate from the settlement process in traditional exchanges too.

I certainly would not argue that similar platforms could be set up not reliant on crypto in any way, and those could be superior (although network effect problem tend to plague attempts to set such things up if any sort of scale is desired). Most crypto stuff is still extremely overhyped, and a lot of interest in crypto seems to stem from crazy speculation, or people trying to avoid their government in some manner. (The latter is not just things like drugs, arm sales, or money laundering. It also includes more innocent reasons like people in countries with failing economies being terrified that their government can just seize the contents of forex accounts, stock exchanges etc, making their attempts to hedge against local economic collapse potentially futile. But governments cannot readily seize crypto wallets the same way, at least not unless you leave your holdings at some exchange.)

> Sure, but that alone can have value.

Yes. It may have perceived value. I mean, people spend money on useless skins in games, and perceive those as having value.

> Especially if it is anticipated that physical settlement demands will not be especially common.

Of course, you're buying wine futures and you're hoping that no one will demand the actual physical settlement of, you know, delivering you the actual wine. Sure. That's what NFT scam is all about.

> It might be simpler to get your single-vineyard wine futures up and running on crypto than trying to get it listed as a new contract type in a traditional futures exchange.

Call me when

1. might becomes is, and

2. it actually requires blockchain, and

3. has any applicability on the real world (like enforcement of contracts)

> Obviously settlement for physical goods is a centralized processes (or possibly a somewhat decentralized process relying on courts and contracts). This is equally true for any exchange, crypto-based or not.

Your so close to getting it.

> like people in countries with failing economies

I wish crypto-peddlers would stop pushing this extremely stupid narrative.

I don't quite agree with everything the person you are responding to is saying, but it's clear you aren't really reading what they have wrote.

The interesting thing is not that you would need a blockchain to trade wine futures — obviously you don’t.

The interesting thing is that if you can sell the futures as (for example) NFTs then you put them into this Wild West of crypto enthusiasts where

1) All kinds of unpredictable things might happen to the token between sale and redemption! And

2) The culture of crypto enthusiasts might very well lead to much higher prices for your wine than people who actually know about wine think it’s worth, cf. Beeple.

Either or both of these things might motivate a winery to give it a shot, tokenize a few thousand future cases of their weakest plonk, and see what happens.

Just because your market works fine without the blockchain doesn’t mean there’s nothing to be gained by trying.

On the other hand, it might be illegal because: alcohol.

> tokenize a few thousand future cases of their weakest plonk, and see what happens.

What's the wine equivalent of apes and punks? :)

Is this secondary market of goods yet to be produced something that people actually want to have?

Today the way this works is usually with a ticket or a receipt. The guy with the email receipt on his phone gets the food he ordered. The guy with the ticket gets into the concert.

There IS a secondary market for event tickets. Legitimate transfers frequently happen everywhere else e-commerce happens. Questionable transfers happen on the street in what I assume is low volume.

People buy unbottled wine all the time, so maybe?

https://www.winemag.com/2019/10/01/a-beginners-guide-to-wine...

I’m not saying blockchain makes this any better, except in one sense: a lot of people with a lot of money are enthusiastic participants. If I had a winery you bet I’d be selling wine future NFTs, just to try and get the price bid up.

Are you seriously claiming Ethereum has invented futures contracts? Futures contracts have been around for decades, maybe even centuries.

The problem with this type of thing (to me) is always what happens when reality meets the blockchain?

What is someone steals my NFT? I would expect a court would say the wine is still mine, so the NFT doesn't represent ownership any more.

What is someone loses the private key to their NFT? Do we just throw the wine down the drain? Again no.

The NFT is supposed to work like a bearer bond. You have to trust the issuing entity to honor it, but beyond that, possession is 10 tenths of the law.

https://en.wikipedia.org/wiki/Bearer_bond

IIRC with wine futures you have to either collect your wine or pay for its storage, if you abandon it then at some point (per the contract) it belongs to the winery. At least with wine I think there is a lot of precedent here, there are norms you’d want to fit your crypto doings around.

Thanks, that's a solid reply.

Personally, I don't want the world to go back to "Bearer Bonds", and given they were banned I'm guessing the US government (and I imagine other countries) doesn't either. However, I'm glad to hear a basis for NFTs.

A winery could assign a token to each physical bottle, and lets its customers freely buy (winery is involved) and then exchange their tokens based on the supposed bottle value ups and downs (winery is not involved any more). Then, from time to time, they come to the winery to take back a real bottle from a token.

Admittedly, there is little to program, but we can imagine all sorts of auctions, games (tokens becoming playable items in a virtual world, but still exchangeable for real bottles), etc., around those tokens.

Why would any of this need cryto? If you trust the winery to hold the wine you could trust them to rule the exchange. Each bottle could still have a token. Values could still rise and fall. All stored on a central exchange. These tokens issued by a trusted entity could perform the same function and can be cashed out.

The key feature of cryto is around connecting trustless entities. Once you centralize on a physical product stored in a trusted location by a trusted party you lose point involving cryto. Who cares how secure the token is when the winery can switch labels?

> Why would any of this need cryto? If you trust the winery to hold the wine you could trust them to rule the exchange.

That’s a little like saying “why would the winery need Apple to make computers for them, the winery could just develop their own computer hardware and software.” It doesn’t make sense for most wineries to develop its own online exchange system, and the fact that it’s technically possible for a winery to develop its own exchange system doesn’t mean that all existing exchange systems are pointless.

The point is that there are multitudes of other technological solutions readily available which solve the stated problem far more simply then a blockchain.

Of course there are alternatives, and some alternatives may be better or worse depending on the features and qualities you desire. Again, there’s nothing unique about blockchains here. You could say the same thing about any random pick out of the top 50 CSS frameworks.

The critique being made in the original article, I think, is that it's extremely hard to find a hypothetical use case for blockchain technology that can't be done without blockchain technology. A wine exchange seems to pretty clearly fall into the "things we can do pretty well without crypto" category, so one needs to explain what crypto is bringing to the party that makes it a marked improvement. In this particular example, both "trustlessness" and "decentralization" are off the table (e.g., there is only one winery and you are trusting them to hold the physical goods).

The difference is that you can pick the exchange where you trade your token. Because the ownership of the token is really yours.

If the central party charges 1% transaction fee, it's a 1% transaction fee. If they only open on weekdays, you can't trade in the weekend, etc.

When it's your token, you can trade it wherever you want.

You might want to avoid mentioning transaction fees when trying to promote the benefits of crypto...

For example Nano has 0 fee, sub-second transactions, so no, I'll keep mentioning it.

Maybe, but there's some assumptions buried in here, I think:

- first, the token has to be usable by any exchange it's traded on. Different blockchain technologies may not be compatible. (For instance, you can't move an NBA Top Shot NFT from Flow to Ethereum.) This is a solvable problem from a technical standpoint, but given how fiercely ideological different blockchains are, there may be non-technical stumbling blocks that arise here.

- second, there has to be an "off-the-blockchain" legal connection between the token and the object the token represents, something that's recognized legally as a "bill of sale." This isn't a huge hurdle and I'd assume the purchase of the token includes language that covers this, but that legal language might include arbitrary limitations, such as stipulating that if you don't use their preferred exchange they'll charge you extra fees, or even restricting the token to specific exchanges entirely.

This is an issue that I think a lot of "smart contract" proponents just haven't come to grips with yet: when you read "contract" in terms of a blockchain, think "API contract" rather than "legal contract". A cursory search suggests there are Flow to Ethereum NFT converters out there, but if you run your NBA Top Shot NFT through one, does the NBA still consider it valid?

- third, this example is specifically tying the token to a physical object, which adds other complications. You may be able to successfully trade your token on Sunday, but the wine store may still only be open on weekdays.

What does facebook give it? A free marketing page and limited discussion board and the ability for anyone to find it.

Ethereum would give it another payment option for customers. But also another payment option for suppliers. Could open a new hidden supply chain where a middlemen is not required.

It doesn't solve physically shipping but it does resolve one problem. Prompt payment resolution. A check can take 7 years to bounce.

> A check can take 7 years to bounce.

The longer I live the more insane the current system feels. I really don't understand why we put up with this stuff.

HN users only see an inferior tech stack, but fail to understand that an inferior tech stack might have Greater Utility for the common people.

HN users earn their living by being the best at what they do and choosing the best tech stack is a part of it, which is why they don’t understand blockchain. It’s an inferior tech stack, but it beats every other stack on game theory, which is not the usual purview of the average developer. Hence they reject it as “inefficient” because they keep looking at it through the prism of tech instead of society.

For society trustless distributed systems are better, but if you keep looking at it from a tech/throughout perspective, you’ll never get it.

HN mostly doesn’t think NFTs work or have a purpose, even though they have 1 million+ users or so. They’re denying gravity after Newton at this point.

All the arguments here are tech stack obsessions instead of looking at real world use.

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