As soon as you have a trusted central authority (monitoring and reversing payment transactions, interacting with government agencies to execute real estate transaction, etc.) I’m lost on why you need a blockchain.
It's technically possible to replace any blockchain with a database but where are you going to host it and who is the trusted central authority?
Blockchain might not the solution but it shows us an alternative to trusting some middlemen that have too much power, instead we trust code that is emotionless, non-judgemental and consistent.
A distributed ledger is more than just a database, it's a technology that can orchestrated trust online without a central authority. That's a huge deal, compared to a sql database that is owned by someone, who is the singularity that administrates the whole thing.
Yes. Because that code just appeared out of nowhere, and it's perfect, and devoid of issues.
For e.g., you could literally send NFTs to any address (including a smart contract address) which make things stuck forever. Now there's a safe way to transfer things which check whether or not it is a valid address. And this became the de facto standard for almost any NFT smart contract.
All these didn't came out of nowhere.
The trust in put on the code itself which not one but all of us agreed upon. Today, we don't have the tools to allow people to actually understand it but it doesn't mean that we won't in the future. Abstraction layers will be built.
Of course this is an optimistic speculation. I'm personally not attached to crypto in anyways but I'm excited about innovative opportunities that it enabled.
There are ponies and magical unicorns that grant you wishes.
> Abstraction layers will be built.
And those abstractions will definitely be built and will be different from any existing ones because? And once again we will have to trust people building them that they are built correctly.
> I'm excited about innovative opportunities that it enabled.
And those innovative opportunities are what exactly?
Blockchain present us with a new way to coordinate online activities and transactions. It's the right path forward? We don't know, at least not until we exhaust all the possible options and therein lies a lot of opportunities for technical breakthroughs that could possible solve all the concerns we had, technically.
Demagoguery
> Blockchain present us with a new way to coordinate online activities and transactions.
No it doesn't. Blockchain is a distributed spend-only log. There are very few if any applications for it.
> therein lies a lot of opportunities for technical breakthroughs that could possible solve all the concerns we had, technically.
Yeah, yeah, magical blockchain will solve all the issues, we just have to believe hard enough.
Who is hosting the blockchain? Who is the trusted authority over the maintenance of the protocol that implements the blockchain, that all miners must use if they want to participate in the system? Who is it you're trusting not to organize a malicious 51% attack against the system, when it has already happened several times to quite a few blockchains? It is a blatant falsehood that blockchains don't have any trusted authorities. They actually require trusted authorities to function. You're not trusting "emotionless code" as the code is well known to have these flaws even by the admission of its own designers; what you're actually trusting is some game theory laid out by programmers you trust, that says the miners won't do bad things because they're getting paid. But in several cases we've seen that they actually will do bad things! And that's not even considering all the other bad things like fraud and ransomware that happens on blockchains that the operators seemingly just throw their hands up and don't do anything about. They don't even consider that to be their problem.
I hate, hate, hate that this line is used so often in discussion of cryptocurrency. It makes no sense at all. In order to have any kind of real discussion around this, the crypto community needs to move past these thought-terminating cliches.
Miners/Stakers who is incentivize to validate the network and maintain the collective consensus.
All your points are valid and universally known but the more important here is whether or not those vulnerabilities are inherently caused by the nature of blockchain or tehcnical problems that we can/need to solve.
A good blockchain is not owned by anyone, any changes made need to go through multiple layers of peer review.
We are still very rooted in our current ways of doing things hence we are seeing phenomenon where companies are trying to take control by either building their own blockchain or centralised service on top of a blockchain. But if I travel back to the 70's and told you that someday you can run an Internet company, would you believe it?
We are no where near endgame but if you dig deep enough, you will see many exciting technical breakthroughs. One of the fascinating one is zero-knowledge validation. Blockchain could be the solution or maybe not, I don't care, I'm excited about the innovative opportunities that it brought upon.
If I understood what you were talking about, I would probably idly wonder how I could fit it in between being President of the United States, a firefighter, an astronaut, and a professional soccer player, but I wouldn't actually disbelieve it.
(Hey, in the part of the 1970s where I was alive at all, I was pretty young.)
> monitoring and reversing payment transactions
I disagree with the article on this point. No reasonable person expects to be able to reverse a cash transaction; that the same applies to an electronic equivalent ain't the fatal flaw that critics seem to regularly insist without real basis. Transaction reversal is indeed outright harmful to honest vendors, and is only really necessary for the legacy systems because the legacy systems have borderline zero protection against dishonest vendors retaining customers' payment information and pulling money from it (and/or giving it to others who will do so, be it voluntarily through some shady dealmaking or involuntarily through card skimmers and database breaches and what have you).
> interacting with government agencies to execute real estate transaction
You wouldn't need a central authority for this. Local governments are fully capable of putting real estate NFTs or whatever on something like Ethereum or Cardano and publishing public keys such that people can verify their authenticity. They're much more likely to do that than to try to run an equivalently fault-tolerant and accessible-to-the-public SQL database themselves (and absolutely more likely to do even that than to trust some entity outside their legal jurisdiction to do that, barring outright state/federal mandates to do so).
This isn’t the only form of dishonesty. There’s cases where you initiate an honest transaction, the vendor ships you something you didn’t ask for because they are trying to clear inventory, and then refuses to refund or exchange. Then you file a claim with Amex and get your transaction reversed in about a week.
The flipside is there are times I've been unable to pay with cards because the processors deem it to be too large of a risk, despite me being happy risking my own money. Or, see the risks people take running businesses on PayPal - large companies able to reverse transactions / hold your money solves some issues but raises others.
Technically true, but also completely pointless. An organisation running an SQL database doesn't need hundreds or thousands of redundant SQL nodes/copies to reach the level of robustness required.
Not every usecase requires that sort of resiliency, of course, nor does every use case prioritize it above latency and throughput; nobody except the truly deranged are asserting that a blockchain could or should replace every SQL database out there. For those who do need that sort of resiliency, though, a public blockchain is much more cost-effective.
Are there any extant proof-of-stake blockchains that achieve the security guarantees necessary to make a currency viable? Last I heard proof-of-stake was still a hypothetical idea, not something that someone had actually managed to make a working currency with, and that all of the cryptocurrencies in common use were still using proof-of-work (which is of course much more resource intensive).
If you want to eliminate Sybil attacks in PoS, there is no way of externally validating which branch of a split chain is legitimate. Each of them has a majority of stake backing it.
As for PoW however, you can just look at the total work proven.
Which is itself possible by penalizing stake pools that go offline, thus motivating them to maximize uptime. That's how Ouroboros-based chains (Cardano, Polkadot) do it (among other mitigations against various attacks).
> If you want to eliminate Sybil attacks in PoS, there is no way of externally validating which branch of a split chain is legitimate. Each of them has a majority of stake backing it.
Which is why Ouroboros-based chains consider the "pledged stake" (put simply: an upfront collateral) of each pool when selecting one to control the next block and receive the corresponding rewards. This has its own implications (in particular, the pledge needs to be high enough to deter would-be Sybil attackers but not so high that it's unattainable to honest pool operators), but it seems to be effective in practice.
This is still unfair to stakers that legitimately have infra disruptions. I have not seen any design for PoS that is actually fair and reasonable and I doubt it will ever happen because this is simply not something you want to just put in an algorithm. The problem space fundamentally requires human intervention at a high level.
I'd hardly characterize that as "unfair"; it's no more unfair than any other perceived correlation between uptime and trustworthiness.
> The problem space fundamentally requires human intervention at a high level.
It fundamentally requires the opposite. The more human intervention possible, the more room for exploitation and corruption and unfairness. This is evident both within the crypto space (Safemoon comes to mind) and outside of it (the legacy financial system comes to mind).
I am saying that correlation inherently makes no sense. Uptime isn't the same as trustworthiness, that assumption is only made because designers of blockchain algorithms have bizarrely decided that "trustworthiness" is not a real thing so they need to continuously look for other things to use as a substitute for it, instead of just using what most people (including many promoters of cryptocurrencies in their real, physical lives) use: trustworthiness.
>It fundamentally requires the opposite.
No, this is extremely, extremely, extremely wrong on every possible level. Even from the perspective of a cryptocurrency, this is extremely wrong. I can't stress this enough. You are creating a system for humans to use for human purposes. The entire point of it is human intervention. When designing these blockchain algorithms (which I should remind you are designed and maintained by humans as code that needs to be continuously maintained by humans) all that happens is you encode that particular form of exploitation and corruption and unfairness into the system itself. Even within your example it's wrong; discriminating against those with bad uptime enables exploitation and corruption towards areas that have bad infra. And remember since this is code that can be updated and changed by humans it will be vulnerable to the same level of corruption that you see anywhere else. You might trust the maintainers not to do this but now you're back to the same old trustworthiness again.
The former is pretty darn important for the latter. How can I trust something that is prone to outages?
> You are creating a system for humans to use for human purposes. The entire point of it is human intervention.
One does not follow from the other.
> When designing these blockchain algorithms (which I should remind you are designed and maintained by humans as code that needs to be continuously maintained by humans) all that happens is you encode that particular form of exploitation and corruption and unfairness into the system itself.
Well then it's a good thing that code is available to the general public and can be audited by the general public.
> Even within your example it's wrong; discriminating against those with bad uptime enables exploitation and corruption towards areas that have bad infra.
The correct response would be to improve infra in those areas, or for people in those areas to use one of the umpteen gajillion VPS providers in the world to run their stake pools instead of trying to do so from their closets.
> And remember since this is code that can be updated and changed by humans it will be vulnerable to the same level of corruption that you see anywhere else. You might trust the maintainers not to do this but now you're back to the same old trustworthiness again.
Then it's a good thing that the code in question is open to audit by the general public and that new versions of the code require consent from the network before they actually go "live" in any meaningful sense.
Cardano, Solana, and Polkadot seem to be doing quite alright.
What gave you this idea? If I have proof that I paid you cash for a service, and then proof you didn't provide that service, I absolutely expect to be able to reverse that transaction, via the legal system.
> A blockchain is much more resilient; the equivalent would be to have hundreds or thousands of redundant SQL databases around the world and somehow keep them all in sync.
That level of resilience is completely unnecessary and is part of why blockchain is such an extraordinarily wasteful technology.
> Local governments are fully capable of putting real estate NFTs or whatever on something like Ethereum or Cardano and publishing public keys such that people can verify their authenticity.
And who will hold these NFTs? And where will the data the NFTs sign be stored? If the government holds the NFTs, then nothing will change for you: you will have to bring the exact same kind of proof after you bought a house to the government so that they can update the blockchain record.
If they want to distribute the NFTs to the current owners of the houses, than they now need to establish an Ethereum/Cardano/[...] wallet for each person who owns a house in their district - a decade-long project in the best case, involving a level of bureaucracy to ascertain that no house NFT was incorrectly transferred to the wrong owner that will blow your mind (or, more likely, a process which will cause massive fraud and property disputes for decades to come).
And of course, the NFTs don't solve the problem of actually storing the data (physical scans of the documents that were used before the move to digital, at the very least, since the chain of ownership of each piece of property is an extremely important part of how you can settle disputes). Who will hold these records, and update them as needed? If it's still the county clerk, the problem of bureaucracy flies back in. If they want to make them part of the NFTs and store them on-chain, then minting the NFTs will be exorbitant, and it's doubtful the Ethereum blockchain would survive having the entire archives of home ownership in the USA on-chain.
That's very different from what's meant by "reversible transactions" in the context of other payment systems. If the legal system can dictate the reversal of a cash transaction, then it can do so for a crypto transaction - without either needing to have some explicit protocol to do so.
> That level of resilience is completely unnecessary
That's just, like, your opinion, man.
> And who will hold these NFTs?
The owners of the properties they represent.
> And where will the data the NFTs sign be stored?
NFTs can store arbitrary data.
> If they want to distribute the NFTs to the current owners of the houses, than they now need to establish an Ethereum/Cardano/[...] wallet for each person who owns a house in their district
Which is many orders of magnitude easier than the current system.
Besides, it doesn't have to be all or nothing; a gradual opt-in transition would be perfectly doable.
> If they want to make them part of the NFTs and store them on-chain, then minting the NFTs will be exorbitant
On just about anything noteworthy that's not Ethereum, the cost is on the scale of cents. Wow, such unaffordable, many expensive.
And no, you don't need physical scans of the original documents. A transcription will do fine.
Mine and everyone else's who holds important information in databases. The whole financial system for one.
> NFTs can store arbitrary data.
Up to some size.
> Which is many orders of magnitude easier than the current system.
It is not. The current system scales with the number of home transactions. Your proposal scales with the number of homes - a much bigger number.
> Besides, it doesn't have to be all or nothing; a gradual opt-in transition would be perfectly doable.
Sure, but then it's just a whole bunch of extra work for no benefits for 10-20 years. Not just for the county clerk, but also for home owners and buyers: not only will they still need to process the existing requirements, they would also have new requirements to obtain and prove ownership of their ETH/other crypto wallet. And they wouldn't see any advantage at all until the next time they sell their home (hopefully they will still remember their wallet address and private key by then!).
> On just about anything noteworthy that's not Ethereum, the cost is on the scale of cents. Wow, such unaffordable, many expensive.
Well, there are exactly two block chains that are somewhat noteworthy outside the crypto bubble: Bitcoin and Ethereum. And Bitocin doesn't support NFTs.
And any other block gain that becomes even mildly popular quickly explodes in values and transaction fees just like the other two. Turns out that storing hundreds of thousands of copies of the same data, and writing every single transaction to hundreds of thousands of systems before it is considered settled, without any kind of permission system, is actually very costly.
Note: you're right on the cash transaction statement, to some extent. There are still some important differences I feel, mainly related to the fact that today's systems enforce knowing the legal identity of parties to a transaction for something like a house, even if the sale is done in cash - which wouldn't be guaranteed if the house could be traded by selling an NFT on a chain.
If your opinion is that your information warrants less redundancy and resiliency than what Zoomer cryptobros get with their sad monkey NFTs, then maybe your information ain't all that important?
> Up to some size.
That size being more than sufficient to store a land parcel's coordinates, address, and other identifying data.
> The current system scales with the number of home transactions. Your proposal scales with the number of homes - a much bigger number.
They both scale with both. Or do you propose that the current system instantaneously sprung into existence without spending centuries distributing paper deeds beforehand?
> Sure, but then it's just a whole bunch of extra work for no benefits for 10-20 years.
If you don't consider the greatly improved auditability and resiliency to be a benefit then that's further reason to question whether your opinion is actually representative of people with important information needing stored.
> not only will they still need to process the existing requirements, they would also have new requirements to obtain and prove ownership of their ETH/other crypto wallet
That doesn't logically follow. It's quite possible for it to be a "one or the other" deal.
And ownership is pretty trivial to prove: you either can initiate transactions with that wallet's private key or you can't.
> Well, there are exactly two block chains that are somewhat noteworthy outside the crypto bubble: Bitcoin and Ethereum.
There are a lot more than only two which are noteworthy. That you believe otherwise is itself reason enough to disregard your comment as thoroughly misinformed...
> And any other block gain that becomes even mildly popular quickly explodes in values and transaction fees just like the other two.
...as is this. There are multiple NFT-capable blockchains that have demonstrated better scalability both in theory and practice by virtue of them using a consensus method more sane than burning energy on useless SHA256 hashes.
> There are still some important differences I feel, mainly related to the fact that today's systems enforce knowing the legal identity of parties to a transaction for something like a house, even if the sale is done in cash - which wouldn't be guaranteed if the house could be traded by selling an NFT on a chain.
It wouldn't necessarily need to be guaranteed, because the information is already in a public ledger. If you want to get fancy you could address that further with NFTs representing personal identification (which has other applications, like tracking licenses and certifications and other endorsements, but I digress).
Maintaining read replicas and coordinating writes across all of them starts to look a lot like one after a certain point.
> it is much cheaper than the wasteful process of crypto mining.
It almost as if not all blockchains involve mining.
No they aren't. They are already running public SQL databases (with limited query access) for managing property changes. And they already have a set of processes and employees to manage real estate transactions and taxes. If a blockchain startup wants to try to get a local government office to let them run it on a blockchain, they will need to prove that the taxes always settle, and that fraud can be reversed. These are both important parts of the system for the local government.
I suspect that there is a granule of use in the idea, and that's that you can farm off the infrastructure for your real-estate management onto third parties and ensure they give you your taxes and respect your authority. But that's not really what people think of when they say "blockchain" with dollar signs in their eyes. The incentives for the people running the infrastructure go out the window too, because the profits are modulated by the government, and it's way easier to just sell them software directly that only has to claim to be effective, and rarely has to deliver on it.
Not a single county I've lived in has offered that, to my knowledge. If they did, then if other online county services are any indication, the uptime would be horrendous and the interface would be 90's era garbage.
> If a blockchain startup wants to try to get a local government office to let them run it on a blockchain, they will need to prove that the taxes always settle, and that fraud can be reversed.
The former is baked into any cryptocurrency worth its salt, and the latter can be done by minting a new record of ownership invalidating the previous one. Better yet, time-limiting parcel NFTs and issuing them in exchange for tax payments would directly tackle both rather cleanly and would work just as well for land leases as it would for traditional real estate.
You might have missed the entire point of cryptocurrency. The idea is that it is not centralized and a single entity can't "reverse" transactions.
FWIW, in my own usage of crypto, the lack of central authority is exactly why it is used. I don't really care that other people are just hodl-ing their funny money in someone else's wallet. Crypto, outside of an exchange, means I can send money to anyone I want, and no other entity can prevent that.
The thing is, users define the market. If we were talking about a traditional "product", if 99% of users used a product wrong, that product would be considered an abject failure, at least from a UX / messaging standpoint with a clear mismatch between user wants/needs and product capabilities.
The average crypto buyer buys crypto because they want to make money. The average crypto buyer doesn't give a shit about decentralization or removal of bureaucracy. The average crypto buyer is getting exactly what they came for.
The way it's actually used completely destroys that part of its value, but don't let reality get in the way of a good investment opportunity. I think if you set up a coin that doesn't use a distributed ledger, and instead uses an SQL database, you wouldn't get buy-in from the ~tulip~crypto fanatics because it doesn't line up with aforementioned mythos.
I would go so far as to argue it's the entire aspect of the value proposition. Take away decentralization and all you've got is a poorly architected, inefficient, unwieldy PayPal.
The people in this thread understand this value prop, but for a significant portion of crypto investors, the value prop is gains.
It may be true that some casual crypto investors are interested because of the decentralization aspect, but that same user wants a PayPal-like experience. Most are not willing to deal with the complexity of doing it "right", and most of the non-technical people I know who buy crypto do it for the gains, not for the defi.
In effect, this makes decentralization nothing more than a marketing promise, and the reality is exactly what you said - a poorly architected, inefficient, unwieldy PayPal. Sure, this system is capable of much more, and realizing the "true" value prop of decentralization, but that doesn't matter much if users are in it for other reasons.
If users were doing it "right", or for sake of argument, let's say users are forced to do it right, I suspect they would just stop participating, bringing valuation down with them.
Yes it would.
There is a chance (in my estimate, negligible) that my anecdote is an extreme outlier, but I still dare state with confidence that most forks today are designed in a way that less than 99% of users end up sticking them in their eyeballs.
People using forks for the unconventional and usually unintended purpose of impaling their eyes* are a tiny minority of fork users and thus changing fork designs to encourage the intended method of use is not considered a high priority. Most people are naturally disinclined to pierce themselves, particularly in such a delicate part of their face, and as such the design of a typical fork with its pointy tines directs users to avoid this particular usage mistake.
The thesis stated above in the thread was, that cryptocurrencies are very commonly used in a way that defeats their intended purpose of decentralization. It seems reasonable to assume there is a flaw in contemporary cryptocurrency implementations that encourages this kind of use, or at the very least, doesn't discourage it very strongly.
* Excluding specialized forks for non-mainstream audiences such as very young children
This is basically it. Crypto-currencies are essentially tool to evade financial regulations. The price that you pay for that is a high operational risk and a lack of property rights.
No, this is extremely false. The miners/stakers can prevent that by blacklisting your wallet address. You might be thinking of privacy coins which are a very small subset of cryptocurrencies that are hard to use because of the security requirements, and are extremely impractical for most people who aren't criminals, and they only really work correctly if everyone using them has perfect opsec which currently they don't. And also a powerful entity who really wants to stop you can still prevent your transactions just by attacking and disabling the network itself through traditional or non-technical means, such as infiltrating the foundation that manages the project.
Do you mean 99% of transactions occur on centralized exchanges without going on-chain? I would like to see the numbers you are using.
But there is a very significant amount of crypto trading occurring on-chain, to the tune of multiple billions of dollars per day.
One way to avoid this lock-in is to change the underlying incentive structure. That's what the blockchain does. The fundamental difference is not about centralized vs. decentralized, it's about the incentives that are a result of centralization vs decentralization.
The major point is to not have this. No central authority, or government, will be able to alter the value of the currency.
With a blockchain architecture, the app can't go down unless the entire blockchain goes down. And apps can be built piecemeal by many teams/hackers who add small bits of functionality here and there through standardized interfaces, rather than top-down by trusted agencies - "money legos".
When serving data, I often use HTTP pulling from a Postgres DB. Both of those are massively over engineered for the problems I want to solve but I use them because:
* They're already built so it's not my engineering time.
* Others can interact with them easily.
This is more strongly the case, and becoming more so over time, in crypto work.
I can make something with key based auth that I can uniquely identify such that a user can prove they own it to integrate in my "real world" systems, while letting them sell it, trade it, auction it or whatever.
To build this I do a starter tutorial, load a common library and publish. After I can just use already existing APIs for integration. That's it and it works because the data and APIs and Auth are all common and standardised now (either inherently for Auth or by convention for the data).
Most corps now have proven that they act for their own shareholders and can't be trusted to look after all users.
Gov agencies while are a potential candidate for establishing trustworthy data owners are too beaurocratic to ever allow for permissionaless building on top.
Blockchains sort of allow both trust yourself (by owning private keys) & build permissionlessly on top .
By the time you build a system with historical "proofs" with enough replication, you'll basically have invented a Blockchain with more complexity.
In any case, "write-once" media can still be rewritten; the same lasers that etch data into a CD-R can do so to destroy the same data. You're going to want redundancy/backups and you're going to want each new row in the table to cryptographically reference the previous (such that any data destruction invalidates all subsequent rows) - by which point you've reinvented most of what constitutes a blockchain anyway.
I do believe Write-Once was actually a thing with the banking mainframe I was acquainted with in my youth. It wasn't a CD-R thing, it was just an IBM thing which enforced write-only at the BIOS/Hardware level. Honestly, I'm not sure, I was young and impressionable :D. IOW, I might have been misled.
Anyway... All you need is logically write-once with proper signing, audits, etc. and you'll be just as close to unforgeable, etc. etc. as reality demands.
Heck, even journald on Linux provides unforgeable log entries. It is vulnerable to a destruction attack, so whatevs. Everything is. Even a blockchain -- witness the rugpulls.
> by which point you've reinvented most of what constitutes a blockchain anyway.
I love that.
Anyway, I'm here to dissuade you. Do whatever you want. Just be aware of the potential consequences.
This is both a good and a bad thing.
This is the only advantage of bitcoin I see.
That's just one example - sometimes you need technology which is out of hands of authorities. Cash or Gold bars have similar properties but you literally have to physically take it with you if you want to send it somewhere.
Leaving payments aside - ENS domains, exchanges, insurance, lending borrowing and bunch of other products which are equally accessible to a farmer in Nigeria as it is to a Wall Street suit. You don't see a value in that?