There aren't that many uses for blockchains
calpaterson.com
calpaterson.com
Trust is still required because I need to trust the seller that the car isn't a lemon and he didn't put explosives into the back seat.
The blockchain solves none of that.
We have Yelp, Google reviews, Amazon reviews… how would something like that work on a blockchain/ledger and not be gamed just like the review systems we have now?
What about blockchains would make them an effective stand-in for building trust over time? One is a ledger, the other is an interpersonal relationship, and the two really are not the same.
If I'm going to take a risk, I'd rather take a risk where there's some human expectation of managing bumps in the road, and which has some means of redress if sufficient malice is involved, instead of one where a smart contract bug means that I've lost a lot of money.
How would you express any of this stuff on a blockchain in a useful way? We could have “blockchain yelp” but it’s hard to protect that against fake reviews. And seeing a mix of reviews isn’t enough to know if you should go into business with someone.
This isn't the case for digital only assets though. There are certainly much fewer digital assets people use than physical ones, but they're there. Domain names, forum membership, entry gates, game skins, etc. How many times have you entered a community and thought it would be great to have a tiny bar to contribution, like a small membership fee, enough to weed out spammers and young children?
This is aside from enterprise oriented chains like Ripple that just use chains help facilitate regular business.
Codifying ANY logic is doable, but especially simple logic like that has it's upsides in how many middle men it can help eliminate, and the TONS of human error that comes with it.
In the examples you're giving, you could have codified "here's what happens if the supplier cannot complete the transaction" or "here's what happens if parties cannot agree on the quality of the work" or a zillion other things that already exist.
You did, however, hit on the big one, that when something goes wrong or something is misunderstood or somehow someone needs to talk to a human...well good fucking luck.
The obvious downside of all the decentralization mantra is that of course it means you're liable for your own mistakes, which is just NOT a business model that ever works. That said, the crypto space has gotten massively more centralized (because it turns out market forces still don't give a fuck about your philosophy), and I think the future of the tech lies somewhere else entirely, where end users functionally never interact with it.
The validity of any transaction can only be determined and guaranteed by the state, so honestly just having the state host a central database seems much easier
It could be used for notarising contracts, recording crop yields, declaring bankruptcies, listing property sales - you name it. Pay $1/kb and your data will be stored forever.
Anyone can replicate the changes to their own computer to validate the hashes and prove the government isn’t changing anything.
I think that would capture 90% of the value of a blockchain with almost none of blockchain’s downsides and it would be trivially easy to implement.
You seem to be arguing that blockchain has to magically solve real world physical problems, but paper contracts don't do that either. You still end up in court. Its just a question of how you are substantiating they really signed the contract.
If the problem was about enforcing a signature, you do not need a blockchain, each party to a contract can just store the cryptographic signature themselves or with one or more trusted custodians. That is a fundamental feature of cryptographic signatures not blockchains. And then you need some mapping from legal entities to public keys, but this might as well be a centralized database run by the government (potentially outsourced to a private contractor), after all in many jurisdictions the government already keeps a list of legal entities and metadata about them.
If they have to trust me to pay them, do my job, fulfill my contract anyways, what value is there in some sort of digital system that technically decentralizes trust, but where the other side still has to trust me I did nothing malicious with it?
If anything all that the developments in cryptocurrencies show is that a technically trustworthy infrastructure can (and will) be used for nefarious means. That means even if you were to use such an infrastructure you'd still have some interface to the real world, where people cannot pay, not do their job, do their job in a way you did not agree, etc. So you still would have to protect your interest in the traditional way and you'd still have to trust the other side.
So using a blockchain is just like using a database and giving up a certain amount of control over it.
EDIT: replaced "cryptoscammer" with "crypto provider" for generality.
Reminds me of how GWB said that it would be much easier to be president if he were a dictator.
Yeah, I bet! But despite that it's a terrible idea.
Banks don't cause delays because they want to. And it's not a technical problem. Worth repeating: Delays in bank transfers is NOT a technical problem.
All these cryptocurrency "solutions" are trying to tear down a fence they have no idea why it's there. Turns out it was put up over centuries to solve actual societal problems.
People should work on improving the fence instead of thinking it should be torn down to be replaced by nothing.
Often they are, but they also already have practical and common solutions
And Europe isn't perfect either. E.g. in Sweden bank transfers are only quick and easy on weekdays. But then again nobody uses bank transfers because Swish is instant and 24/7, and all banks support it.
So yes, it's a technical problem that a transfer is not instant, but the "surprising delays" mentioned by previous commenters are not due to any of that.
Or do you have in mind technical solutions for improving AML/KYC handling that would reduce legit transfers getting delayed?
Sure, systems (legal and technical) can always be improved, but "surprising delay" is a problem from law, not technology. So bypassing it with technology just means (de facto) breaking the law.
The most common complaint I hear is that bank transfers take a long time to settle as a default at a protocol level, not that law enforcement manually interferes with them.
The second most common complaint I hear is that sometimes the transfer is impossible.
For the first there are solutions, newer SEPA transfer can complete in seconds because fraud checking is done faster; this requires some kind of widespread cooperation between banks and governments. For the second complaint there are often no (legal) solutions.
Then you would need to add some constraints over it for security, but the key difference would be that it's an open market: you can invent one solution, I can invent another and people will be free to choose between them or nothing at all.
When your money comes with some regulatory framework built-in, there is no much room for any choices in that respect and more temptation for all kinds of bureaucrats to abuse their power.
It's not really, though.
Banking is also an open market. You could already start a bank, and some people do. But it comes with a bunch of red tape.
But you can't just say "this is blockchain, so red tape is not required". That's up to the government of the countries you operate in.
And if it looks like a bank (or financial institution), quacks like a monetary transfer or financial product, then why would it not get customers like one, and not be regulated as one?
> people will be free to choose between them or nothing at all.
This was already the case. Wall street invents financial products all the time. Credit default swaps, anyone?
But then you only need a mini-blockchain along the lines of what IBM calls blockchain, you may have a few industry players and say a customs agency agree to sign the entries and then there will be no dispute about whether an entry was signed on a particular day. Energy cost of that is negligible. (and you don't need to put the actual transaction info into the ledger... just the signature is enough so everyone on the chain can confirm later that it wasn't modified).
All of this is also pretty ancient tech by now... IBM just basically jumped on the blockchain branding bandwagon I'd say...
If I create a leger that requires basic crypto-signing, I would need everyone to agree to use the system, perhaps try and make it the only system so there is an incentive to use it - and that is the difficult part.
Have some blockchain doesn't solve the problem of how you try and get people to adopt it.
Why not just have event payloads signed by a neutral fiduciary?
From the frontend doing what it really says, through intricacies of how the smart contracts work, manual control over wallets, and trusting the business logic.
Transaction security is kind of the last thing to worry about.
A better way to understand blockchains is as a base settlement layer: they are a shared, permissionless and open source protocol that is resistant to takeover by a single entity.
What this means is that a company, like Meta or Coinbase or even a US bank, can build a centralized platform that lets users manage their crypto assets. But as long as users can still withdraw into a non custodial address, they have the option to escape to that neutral base layer.
This is a different design than what we see currently in the web and banking sector. You can hold ETH or an ENS domain with nothing but a private key. But with a .com domain, if you want to withdraw from GoDaddy, you will be forced to transfer that into another centralized service like Namecheap that will also extract rent. There is no “neutral base layer” with traditional digital assets.
By deploying such an immutable contract to be the custodian of customer funds, such an entity is essentially making a hard/inescapable precommitment to doing for users, whatever the contract happens to do. In a sense, the central entity's owner is not the true custodian of people's locked funds; rather, the contract itself is, and the contract can be independently audited by anyone who cares, before anyone begins using it, to prove that it will only ever be able to act in the public interest, rather than in the corporation's interest.
The central entity get to initially craft those rules however they like, and so can certainly design the contract to act favorably to them; but then the contract gets (immutably) deployed, and everyone else then gets the opportunity to look at the rules of the contract-as-deployed, to decide for themselves if they're equitable. If they're not, nobody will bother to interact with the contract.
But crucially, this "community of node operators" consists of a multilateral coalition of people and companies operating under every different society / government jurisdiction on the planet, with no single government that can compel enough operators at once to actually get the majority required to compel the state of the blockchain to change.
In other words, blockchains are systems with democratic recourse, but not authoritarian recourse. They can be altered from the bottom up to fix problems caused by immutability, if basically "a referendum run against a representative sampling of the population of Earth" agrees with the alteration; but they cannot be commanded to change from the top down, just because some individual entity with a conflux of power wants it to happen. No legal system can force a smart contract to do what you like; but common sense and human empathy can still override bad machine decisions when necessary.
I vote for rule of law, 100%.
> In other words, blockchains are systems with democratic recourse, but not authoritarian recourse.
No, "lawful" and "authoritarian" are not synonyms. No, letting people "vote" with their money is not democracy.
You pervert the meanings of the words sufficiently that you have literally reversed their meanings. Laws are created by the people's representatives, who are elected democratically.
I didn't say they were. But laws that the majority of the public agree with / would enforce themselves if given the chance, don't really need to be laws; in such cases, bottom-up action (not in a lynch-mob sense, but in a "petition that literally everyone signs, so people just agree amongst themselves to make it happen" sense) will correspond 1:1 with what any government optimizing for "the public good" would institute top-down as law. You can ignore the existence of bottom-up-supported top-down laws when speaking about the interface between "law" and decentralized technology, because regardless of whether the law can influence the decentralized system, the cultural zeitgeist of societal pressure that underlies the law, still can.
As such, it's only laws that the majority don't agree with — i.e. top-down dictated laws in authoritarian societies, un-audited regulations from corrupt bureaucracies, etc — where things behave differently in a decentralized system than they would under rule of law.
(Good secondary example of this: BitTorrent trackers. The majority of people seemingly don't agree with the sort of corporate IP "use rights" that underlie the illegality of media piracy; so most/all BitTorrent trackers do nothing to prevent the sharing of copyrighted materials. But the majority of people do generally agree that CSAM is unethical to distribute; and so public BitTorrent tracker operators do bother to prevent their nodes from enabling the sharing of such files.)
Also, I think you're potentially forgetting that there are multiple "rules of law" to talk about here. A decentralized system is inherently a single system shared across participants who exist under multiple countries — i.e., a multilateral system. If you want "rule of law" to pertain to such a system's logic, then whose rule of law would that be? Do you want China, Russia, and Saudi Arabia to all have a say in what transactions you're allowed to do?
(To be very pedantic, a world government could easily dictate what happens on a blockchain, because they would have authority over every single node operator. So one could technically say that blockchains aren't abandoning the rule of law per se... but rather are just holding "the rule of law" to a very high standard — ignoring any law that everyone on earth can't all agree on.)
> No, letting people "vote" with their money is not democracy.
Nobody said anything about voting, or money. Blockchains exist on a lower level than the abstractions they enact. Fundamentally, changes are made to how a blockchain works not because people vote, or stake, or whatever else; but rather because blockchain-node-software operators voluntarily opt in to upgrading their nodes to versions/variants that have a given feature, and then to enabling a proposed hard-fork upgrade point that makes that feature happen.
These blockchain node operators are peers in a network, and the "democracy" they participate in is one of voluntarism — i.e. choosing to run a piece of node software that encodes particular rules, or not; choosing to validate/mine for a particular network, or not. Networks that people don't care for, die, because people voluntarily stop running the nodes. Network changes (which really means "node software changes") that people don't like, don't get adopted by node operators, because doing so is always an explicitly opt-in process.
This isn't representative democracy. This is direct democracy. Each software change is a default-deny referendum, "proposed" by coding it into a piece of node-software, which operators "sign" by upgrading+configuring their node software. The network only changes if enough people actually do upgrade+configure their node software, for the fork block that was created using the novel code to reach fixation in the network over the fork block that would be created by anyone in the network still running the old code.
If you store a lot of cash in your home safe, eventually you will need more space - this is one reason banks exist. If you try to move a lot of cash quickly from one person or location to another, you will have a hard time - this is another reason banks and money transfer exists. If somebody breaks into your home safe, they probably will have immediate access to your cash - see smart contract wallets[1] and social recovery wallets[2] as an example of a more secure "crypto safe."
I agree that a concern in blockchain is that regulation and services may restrict users ability to withdraw to the base layer, see my other comment[3]. To me this is not a failing of the blockchain. It would be like governments restricting the use of internet or E2EE chat protocols - which is happening in some parts of the world - this does not mean the protocols have failed to meet their goals.
[1] https://www.argent.xyz/learn/what-is-a-smart-contract-wallet...
Using blockchains for money is just about the most absurd solution a society can come up to the problems of financial centralization. Money is a form of power and the solutions to power problems are always political.
We need a financial system that protects individual privacy while reducing the options for money laundering, tax evasion, bribes, fraud and all the types of crimes motivated by money. There is a inherent contradiction in these requirements, the hope that a private actor or some non-accountable peer to peer algorithm can find a good political compromise is an ideological pipe dream.
Sure, but what’s an actual real world use where that’s a good thing? For domain names it’s exceptionally useful that a stolen, infringing, or fraudulent domain can be recovered through the legal system.
Useful for who? It is often useful for large companies with powerful legal teams who will try to exert control over domain name registrars as they see fit.[1]
The nice thing with the blockchain is that you have the choice. If you want your asset to be recoverable through the legal system and courtroom decisions, it can be put into a centralized custodian. If you want to maintain complete ownership of that asset even though you risk not being able to recover it if somebody steals it from you, you might like to hold it non-custodially.
It is very possible that laws end up being defined around ownership of blockchain assets to give them a stronger degree of legal and intellectual property.
[1] https://domainnamewire.com/2022/03/08/meta-platforms-and-nam...
People who use DNS to resolve any service they rely on and expect to end up at that service, rather than on some hijacked version, which is essentially everyone who uses the DNS system.
Your linked examples are of companies attempting to put themselves beyond the reach of the legal system, which doesn't really counter the pervasive idea that crypto is only useful for breaking the law and for speculation.
1. ENS ownership is held by a 5-of-7 multisig. Attacker would need to socially engineer 5 entities instead of just one, Namecheap. Users can also clearly see when ENS ownership changes as it’s broadcast to the network.
2. ENS is set to a 100 year expiry and ownership records are then set to the burn address. Now, short of faulty RPC or frontends, there is no way that the domain can point to a different address.
My previously linked example was that of Meta entering into a court battle with a domain name registrar, who has full control over these records and may decide to alter them to avoid paying the cost of defending themselves in court. See [2] which is loosely related to this discussion of centralized services exerting control over name aliases. In a hypothetical blockchain application where usernames are secured with ENS or another smart contract, there would be limited recourse for anybody except the owner of these aliases to be able to transfer ownership.
[1] https://coingape.com/crv-tanks-over-10-as-attackers-stole-57...
[2] https://www.nytimes.com/2021/12/13/technology/instagram-hand...
Uh, that’s a pretty big “if”, right? It’s completely up to the custodian whether you can withdraw or not, and we’ve seen several large platforms freeze withdrawals recently (and then fold). To an average individual, the hypothetical possibility of withdrawing to the “base layer” is at best a marginal improvement over the existing financial system; hardly a revolution.
Many advocates of decentralization and blockchain do not want to support centralized services like Celsius.
This is an area that laws and regulation could be added to protect users. If a service is holding user funds, there should be recourse to allow those users to withdraw the funds to a base layer, or if the funds are at risk of being frozen as we see with Celsius, this should be more clearly indicated. FDIC style insurance could be addressed in some hypothetical future crypto banks, giving users further protection.
From that, additional applications can also be built on top - multi signatory accounts, a social graph, ownership of digital property, decentralized exchange and lending services, escrow, crowdfunding, and more.
q.e.d.
The DAO is a more interesting scenario. Users deposited into a smart contract that had a bug. This happens often in DeFi - see all the recent bridge hacks. The difference with the DAO is that the users were able to withdraw their assets because of a blockchain hard fork.
Until the government decides to blacklist your account.
Ethereum is only decentralised until it isn't.
To compare, imagine an E2EE chat app built on Matrix protocol is blacklisted in your country. Anybody attempting to use it is treated as criminal, and the app will not be accepted into your country's App Stores. Does this mean the Matrix protocol has failed to deliver on its goals of end-to-end encryption?
In practical terms, it is very possible that a government can "shut down" the usefulness of a blockchain for many people. They could go as far as to criminalize any person who is found to be hosting their own blockchain nodes, or sending or receiving message packets to an RPC without first going through a centralized and permissioned service. If this were to happen, people would not willingly be using a blockchain out of fear of prosecution. Some countries like China and Russia seem to be moving in that direction, and some might argue the US too with their strong-arm censorship of Tornado Cash and all things related to it.
That's what decentralised means.
And to prevent that takeover by a single entity (AKA 51% attack) it uses a very expensive (as in processing power) mechanism - proof-of-work to delegate the right of adding new transactions to the chain. And that makes is unscalable because as the network grows, you need more processing power. It flies in the face of economies of scale. It's a feature not a bug but that also makes it unsuitable for any business use cases.
Like any other market, consolidation will eventually lead to 2-3 whales will end up controlling majority of the nodes and can control an entire chain. In fact some of the new age blockchain startups are straight up centralized. What they are peddling is anything but a shared, permission-less and trust-less blockchain.
Ethereum has successfully merged Proof of Stake on all of its test networks, and is aiming for a complete merge on the main network some time next month.
You can read about the economics of it here:
The problem is how to be able to synchronize an ever-growing database across an unlimited number of peers, and the answer is "through chunks we call blocks".
There are however extremely few use cases for an immutable distributed ledger, which is sadly the other property blockchains have.
There are simply too many cases when there are legal requirements to be able to delete data. DMCA, GDPR, Right-to-be-forgotten, anti-terror-laws, anti-libel laws, and so on.
If you think a distributed mutually-distrustful ledger is useful but shouldn’t be used for money, the statement “we like blockchain but not Bitcoin” makes sense.
Also, I found you online, you work for crypto, pretty dishonest of you to not disclose that before commenting.
Markets are capable of staying irrational a very long time
Crypto actually works kind of great as a speculative casino. If you think that isn't a real world use case then you may have a rather rose tinted view of the world.
for everyone else, the killer app is bitcoin.
The one thing that gives me a ray of hope about blockchain is git. A git repo is a very similar to a blockchain. It has blocks, and each block has a payload, and they're all chained together in a way that allows distributed additions. git looks, walks, and quacks like a blockchain. It's just lacking the consensus bit really. As someone who would gladly apply git to practically every problem in tech it makes me think that blockchains could be really damn useful if only people would stop trying to pretend they're the future of money.
What a really strange idea. Of course you can. What better way is there to judge a technology other than its failures and successes?
> It just means no one has found a use that you think is appropriate yet,
It's been 14 years. Cryptocurrencies are only eighteen months younger than the cell phone.
We've had 14 years of promises and so far, nothing. Why would any rational person believe you?
You presumably meant (modern) smartphone, rather than cell phone.
You reserve judging until you're sure that there's no possible route to success left, and for a reasonably general tech that's a really, really long time. You can judge the attempts along the way, so saying things like cryptocurrencies are stupid is fine, but to write off the entire technology as invalid and useless is going too far. Besides, you don't need to. It doesn't add anything to the conversation. You can just say "no one has found a good use for it" and leave it at that. Saying "no one will find a use" is pointlessly negative.
We've had 14 years of promises and so far, nothing. Why would any rational person believe you?
14 years is a very, very short amount of time.
- HN: "There aren't that many uses for blockchain"
- Is privacy considered not a use case anymore? Who here is still following PG advice? Has anyone talked to *their users* recently? Because privacy is a pretty good use case!
People always focus on the speculative trading of the assets, but the real killer use case is stuff making calls to other stuff to do more stuff. AI models paid for with micro transactions is going to be a thing. It's just going to take time to get there.
It does however solve key logistics issues with distributed inventory ownership transfer involving 3rd parties. For example, Walmart has successfully deployed a blockchain system, and reported good performance of the technology under high-volume stress.
This is one of those edge cases most will never encounter unless they are handling millions of transactions an hour. It's a good problem to have though... =)
They don't need trustlessness, they have a root source of trust.
My suspicion is that all these benefits were just from traditional process improvements, but the suits only approved the expense once someone slapped "blockchain" on the Powerpoint slide to sufficiently bamboozle them.
I know nothing about this, but my guess is that the "blockchain" Walmart uses is more or less that: a distributed database (not everyone online all the time) with some signatures and eventual consistency.
My SO used to work in factoring. She and others would spend every day reconciling invoices and shipping information in order to allow the company she worked for to supply freight haulers with short term business loans. Not only would a lack of reconciliation result in not getting paid immediately, but if enough of these pile up (see the 70% number for manual reconciliations), then you're not going to be able to get a factoring loan either and you're dead in the water until something happens. Because it worked so well, everyone jumped on board almost immediately. Freight carriers are spending 20% less to haul the same goods, and Walmart is spending less trying to reconcile invoices.
Could they have used something else? I guess. But blockchains are pretty much just immutable lists of receipts anyway. They're perfect for the use case.
The main problem with third party inventories is always the question is the reported inventory levels and movements are actually correct. The real world answer to that is counting, together with the third party if so desired. Blockchain doesn't help with that since in itself it cannot guarantee that the physical movements and the dogital information flow are always in sync.
I've been working more than seven years in this tech and don't let yourself be deceived - wide scale PKI and immutability of storage is very useful for lots of things.
Sure, 99% of all projects are shitcoins. But it changes nothing about the core tech.
E.g. there are people building quietly the new software supply chain package managers with fully content-addressable and re-producible builds where all hashes are stored onchain to be immutable. But yeah, it's not a VC funded milliondollar project so people can't be happy/angry about it
C. Muratori puts it more elegantly than I do: https://www.youtube.com/watch?v=kbYutOsrpvs
If you have a better solution, please let us know. If not, then I guess crypto does have a use-case.
Blockchain enables digital peer to peer trustless exchange of money (and various other things of which the utility can be debated, many of which are low value) but that's enough. That's a lot
Saying that blockchain is bad at being a database for all of these other things is like saying a cpu is bad at heating your home. Again, technically true and not particularly insightful, because they happen to be really good at manipulating 1s and 0s
Governments don't really care much about laundering money.
It seems to me that block chains will win at the things they are good for a bit the way git won at version control: decentralised systems just require lower overheads and less barrier to entry in general, so people just automatically use them.
It's fine to point at legacy use cases where all the trust relationships are already established. Those are living off fully amortised costs. But new systems do not have that benefit and for that context, you are faced with a proposition of having to set up a whole lot of new trust infrastructure and associated processes.
So for example, if you were setting up a library today and there were no pre-existing library systems out there. You might want to maintain a history of who borrowed each book, so you know who last had it. You will either have to establish a whole legal entity to become the owner of the books, electronic systems to track them and administer everything, and everyone will have to agree on its governance, who controls it and most importantly, trust them implicitly not to tamper with the transactions.
It'll be a whole lot of work. So why would you do all that work when you can opt for a block chain with literally no overheads?
Git really only had an inflection point of adoption when Github came out and offered a really compelling centralized service. Before Github, there wasn't a huge drive to move away from SVN (there was some but it was more because the new decentralized ones were better in other ways besides being decentralized and fixed some annoying bugs that SVN had) and it was much less certain that git would win out over mercurial or bazaar or one of the others.
My experience at the time was also that the decentralized nature of git/hg/etc was arguably a barrier to their adoption. Existing teams were used to a workflow with a central repository and it wasn't clear how you would replace that with these decentralized tools. You had to do a lot of work to come up with a new workflow for your team or you made a central server somewhere and tried to make them work as similarly as possible to a centralized system. I remember a lot of pushback on moving to git from people who didn't understand the whole decentralized thing and found it more confusing than what they were used to. And with Github, that seems to be the approach that the vast majority of the world has gone with. Yeah, you can use git as a fully decentralized tool and there are people who prefer that to using Github, but that's pretty uncommon compared to how many teams just centralize with Github.
I do believe that "there aren't many uses" for blockchains, but this sound more like an inaccurate, unoriginal and badly researched opinion piece.
My understanding is that a blockchain is just a data structure. Saying there aren't that many uses for blockchains is like saying there aren't that many uses for tries or red-black trees.
Blockchains don't have to be decentralized for example.
Decentralized in my mind means there is not one single source of truth.
Places where bitcoin is rarely accepted as currency (like Norway where I'm living), does not make it "unpopular" for ransomware (or other anonymous digital payments). As long as someone accepts it as payment, it will always be popular in that type of scenario.
I dislike the idea that anonymous digital payments are inherently bad; since they can be used for criminal transactions; which I often see here at HN. Being anonymous should not be a crime.
Which is good enough for me.
This perfectly describes how I have felt about VR since the late nineties.
[0] About $3.5B daily for Bitcoin.
While Visa doesn't give a daily transaction amounts, going off of sources online, in 2018, it looks like they processed around or slightly more than 1B credit and debit transactions with an average value of $80.
$3.5B in daily transactions is nothing to sneeze at, but it's a relatively (very) small slice of the monetary system.
I wrote a list of other use cases where blockchain-based systems are clearly more efficient than centralized ones:
https://news.ycombinator.com/item?id=32393892
With respect to stocks, yes companies can maintain their own list of shareholders, but publishing that list to the blockchain standardizes the process of third party verification. The ERC20 token standard is widely adopted with tens of millions of installed wallets, and major blockchain explorers, that can interact with any ERC20 token contract. The activity the author briefly touches upon - trading - can also be made massively more efficient with a public blockchain. Being able to swap between any two tokens in the world using nothing more than Uniswap and your browser-based MetaMask wallet, is in most aspects a major UX improvement over the status quo, and thus it's perhaps not surprising that Uniswap has overtaken the top centralized exhanges in liquidity depth for several major trading pairs:
https://uniswap.org/blog/uniswap-v3-dominance
I suspect the author has never used stablecoins, or Uniswap, and if they had, they would come away with a completely different take on the potential utility of blockchain-based systems.
The big risk for blockchain based systems right now is the prospect of governments massively restricting internet freedoms to stop end users from transacting freely and privately without intermediaries.
The US Treasury placing an autonomous software program - Tornado Cash - on its list of sanctioned entities (a list intended to comprise people and organizations, not software), and thereby making it illegal for any American to interact with this smart contract, was the dramatic opening salvo in such a war on internet freedoms. To think that any US based person sending ETH to the TC smart contract from their MetaMask wallet, to gain privacy for their blockchain activity, now potentially faces years in the US prison system for that action, is extremely disturbing.
And this sort of draconianism is ultimately what the large public sector entities need to resort to keep their income-tax-dependent system alive in the age of distributed financial systems. The question is whether the public will accept their argument that crypto is so evil, that these sorts of curtailments of internet freedom are a price worth paying to stop it.
Maybe diplomacy and mutually beneficial settlements are a way to go.
Edit: Happy to see the case made for why TC or similar should be there given the externalities. Maybe it is a good case, but I have not seen it.
Some example applications:
- User wants to anonymously donate to another country that their current regime is currently at war with.
- User wants to pay for an abortion without it being easily traceable.
- User with a public ENS identity wants to hold ETH on a private account that is not linked to their public identity. This might be for safety reasons, or another reason such as wanting to make investments that are not broadcast to the entire world.
The attack against TC is the US government saying "you are not entitled to privacy here, and if you even so much as try to seek privacy, you will be treated as a criminal and have all of your assets frozen."
If that is the society you want to have, I think you'll face an uphill battle. If you want no or very little policing of money, need to make probably some proposal to prevent certain things in other ways.
[1] https://twitter.com/vitalikbuterin/status/155692560223356928...
Is this an uniquely American angle? For all my needs, Wise is very fast, cheaper than blockchain, and I’m less likely to lose money by fat-fingering a transaction.
Who knows. Financial transactions seems to be a solved issue in most countries, so maybe there's a relationship.
Ultimately, blockchain-based financial systems are open in ways that centralized finance can't be.
So how do you envision a public sector to be funded, if at all?
Land value taxes not only are evasion-proof - which means they are extremely fair in applying to all equally - but they require very little administration, and no invasions of privacy, to enforce (a consequence of a person needing to include their land in the government maintained land title registry in order to enforce their ownership over it).
They are also considered by many economists as the "perfect tax" due to their economic efficiency:
https://en.wikipedia.org/wiki/Land_value_tax
Ultimately though the public sector will need to shrink as a share of GDP, as the LVT alone cannot support current spending levels. In other words, the trend seen in this graph will have to reverse:
https://ourworldindata.org/grapher/social-spending-oecd-long...
Two interest groups stand to lose from the change I describe:
Those who own real estate, and those whose income derives from government spending.
I would suggest the constructive path forward is to propose a multi-trillion dollar settlement package for both groups, to compensate them for the losses they would incur from transitioning to the new system I describe, which has much less government spending, and much higher taxes on land ownership.
The settlement can be paid for over subsequent decades, similar to the bonds the UK issued to pay former owners of slaves as part of its Slavery Abolition Act of 1833.
As costly as all of this sounds, it would probably actually be much less costly than perpetuating an increasingly inefficient system, which leads to escalating culture wars, and growing repression.
1. the taxes are more just, and thus cause much less collateral damage (like enforcement actions related to prohibiting Americans from using financial privacy software on their computer) that elicits hostility/acrimony from a broad cross-section of the population toward governing institutions, and
2. by offering a settlement to those negatively affected by reduced government spending and the introduction of a LVT, we are not threatening to deprive major interest groups of their livelihoods, which would create avowed opponents of the reform plan in whose interest it is to vilify the reformers and their plan.
The goal is to align interests so that all major groups support reform toward a more just and efficient economic system.
With respect to sanctions, I think targeting financial transactions would be less appealing to policy makers if it didn't align with broader income tax enforcement goals and couldn't utilize the controls set up for that purpose.
I think this is the underlying issue.
Anonymity is good and all, but the moment a known intermediary comes into the picture, it becomes a target for government enforcement.
If you need a service like Tornado Cash to preserve anonymity, as long as there is a physical name attached to that service, government regulation becomes enforceable.
In other words, there's still a long way to go before salary payments or other forms of taxable money transfers become evasive enough that they're unenforceable. The small number of exceptions (e.g., tech-savvy remote workers taking payments through blockchain) are not large enough to set the rule.
since, that failed, or became impractical it seems people now trying to come up with contrived use-cases as a means to dump a bunch of shitty tokens on greedy retail investors
if vitalik wanted he could create a new chain buterinchain, press a single keystroke to mint 1,000,000 tokens and those tokens would instantly be worth 10s or 100s of $, without any use-case. it's just a joke.
The OP makes a very valid point with satire which, in this case, is relevant.
Proof of work blockchain is horribly energy-inefficient. It's hard to justify it - on a number of grounds - as a solution for a large majority of legitimate use cases.
I hope you get my satire as well.
We should, in fact, consider phasing out coal power generation.
Which is what almost every OECD country has been doing for more than a decade: https://ukcop26.org/end-of-coal-in-sight-at-cop26/.
It seems you didn't get my point.
Outside of speculation and regulatory evasion, has there been a sufficient use-case for Bitcoin and other proof of work chains that justify the costs, inconvenience, and disruptive impacts that go along with it?
Attacking crypto because of PoW is a bit silly when there are other solutions that are way more efficient.
That's like attacking electricity because there are coal generators. My initial point.
I was explicitly clear that I was commenting on proof of work blockchains. Crypto has a whole host of other issues, but I agree that there are other blockchain/crypto-like solutions that fit - some - of the touted use cases (e.g., GNU Thaler for digital currencies and currency-backed transactions).
The issue, however, is that for good or bad, crypto is currently dominated by Bitcoin. The parent comment is relevant and meaningful in this context, and should not have been flagged.
Yes, because demand doesn't drive supply...
https://eurasianet.org/kazakhstan-energy-operator-cuts-crypt...
Regardless of one's position is on the underlying issue, that's off topic for HN. We're not here to repeat the same talking points over and over; that's the opposite of what we're here for.
https://news.ycombinator.com/newsguidelines.html
https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...
And the most popular usable of merkle tree? Git.
I don't know why it's so special now.
Please do not use authoritative use of git as a proof for the value of "crypto."
And the most popular use of digital signatures? Application integrity and authenticity.
Git is a perfect answer why blockchain is almost never the answer. It implements an immutable distributed log, just without the mutually distrusting part, and does it for a millionth of the computational resources.