Hacker News Reader

Comment by kennyloginz | Hacker News Reader

Honestly curious, what is the benefit of blockchain outside of providing evidence in court?

A blockchain is a distributed public ledger of immutable information. The use cases for that seem clear and obvious: consider all repositories of public information that are either not distributed, and therfore subject to single points of failure, or allow extant data to be modified, and therefore subject to reliability and trust issues. Consider how blockchains might improve all such use cases.

> A blockchain is a distributed public ledger of immutable information.

Is it immutable? Forks, 51% attacks, bugs. It it only immutable until consensus decides it isn't immutable, right? If something is immutable, but can be made immutable, is it ever really immutable?

You still have to trust whatever things you rely on upstreams, plus, if the consensus is against you, there's nothing you can do anyway? For example, you got scammed, its written to the ledger. The transaction is immutable and actually, actually did happen. What can you do now?

Large cryptocurrency networks like Bitcoin are extremely hard to execute a 51% attack upon due to their size. Though ultimately there's no perfect solution. As the saying goes, democracy is 2 wolves and 1 sheep deciding on what's for dinner.

But you can't use bitcoin or other blockchains with large cash flows as information storage at scale, since they use them to make transactions first and foremost and can't hold a lot of other data.

For many applications, it's possible to commit just a Merkle tree root hash to the blockchain and still get all the properties you care about, while only using O(1) blockchain storage.

Same thing happens when people get scammed in tradfi

I take the above comment as addressing a use case for blockchain that isn't currency.

The context I think they are proposing blockchain to be useful is in verifiable public information. For information to be verified or analyzed the blockchain can verify the source even offline.

Exactly. E.g. decentralized DNS, title transfers to real property, etc.

It's still extremely useful as currency as well, though, precisely because it actually is digital currency, and allows direct person-to-person transactions via the internet without requiring a proprietary middleman. The previous commenter's complaint about how it doesn't solve anything if you get scammed is a bit off-target, because dealing with frauds and scams isn't a feature inherent in the currency itself -- it applies equally to any payment solution, especially cash and checks -- and is something we deal with via the legal system regardless of how funds are transferred.

Blockchains facilitate trustless transactions enabling truly decentralized currencies not under the control of any government. Many people find this quite valuable, as evident by recent trends in authoritarian overreach, fiscal repression, and inflation. Privacy optimized cryptocurrencies like Monero also deal with the problem of their blockchain 'providing evidence in court.'

How can a currency exist without a state to insure it's value?

How can gold exist without a state to insure its value?

Simple: demand.

The value of Gold is based on scarcity dictated by the laws of Physics, and on people believing it has value. The fascination with that yellow gleam goes as far back as recorded time. The fact that it's easy to work with (malleability, ductility, etc.) probably played a part as well.

The value of Crypto products is based on scarcity dictated by the computationally intensive nature of certain algorithms, and on people believing those products have value.

> dictated by the computationally intensive nature of certain algorithms

You mean math?

Gold isn't a currency. Gold coins can be, but then you either have to trust the mint or you carry around a scale. The key is being fungible and it's the state that promises that a dollar bill is equal to any other dollar bill.

A state doesn’t insure the value of a currency. In order, the largest influences on currency value are:

1. Speculation / belief

2. Approx 10x less influential is trade, most currency transactions both by volume and by value are in speculation which is underpinned and driven by beliefs in a particular currency. Some estimates put trading as low as 2.5% of all forex. Trading does impact the price of a currency, but in miniscule proportions to speculation

3. We can fairly confidently say tax collection is a lower influence than trade because of so many examples (and extraordinarily rare counter examples) but I don’t know of any reasonable way to quantify how much less the effect is. The threat of incarceration and / or asset seizure drives demand for currency which influences its value.

Places like Argentina are fascinating (said while acknowledging the extreme hardship being placed on people who have to use Argentinian currency!). In recent history all of the above have had visible influence on their currency along with pegging / dollarization which attempts to introduce a control on all the above factors with various degrees of success.

> Privacy optimized cryptocurrencies like Monero also deal with the problem of their blockchain 'providing evidence in court.'

Apparently Monero has some weaknesses [0]. Time will tell how effective it is once the mask of parallel construction slips.

[0] https://www.wired.com/story/monero-privacy/

Reply on news.ycombinator.com