Comment by panarky | Hacker News Reader

Comment by panarky | Hacker News Reader

The article makes three main arguments that have been debated endlessly the last few years.

1) Blockchains are not as fast as centralized databases.

This is true in the same way that a democracy can't act as fast as a dictatorship. Blockchains are important because they allow a large number of strangers to trade with each other, to exchange value, free from centralized control, corruption and skimming. Millisecond response times would be nice, but that's a secondary feature.

2) The first people to mine or invest in a new cryptocurrency can be far wealthier than those who come later.

How is this different or worse than the status quo? Those who invest their time, money and ingenuity in a risky project reap rewards if it succeeds.

3) Centralized authority is required for arbitration and reversing transactions.

This assumption is exactly what blockchains and cryptocurrencies are testing. Can people exchange value freely, without a central authority that skims unearned value for itself? Can we enforce complex agreements without submitting to a power that stifles innovation?

The final chapter hasn't yet been written, but the experiment looks very promising so far.

1. Usually it takes a 10x improvement to make a switch from status quo to something new. To see a switch when the performance is much worse forces the benefits of blockchain to be extraordinarily compelling. And some of the benefits are not as rosy as initially conceived.

2. Agreed. This is status quo. I see a lot of arguments where folks claim that the blockchain creates a more egalitarian system. I wanted to explain why this wasn't necessarily the case here.

3. Agreed. However, the most important transactions are the ones most prone to arbitration, and arbitration requires authorities. Outside of valuable transactions is there really a need for such a complex database?

Thanks for the thoughtful response.

1. One use case for this is trade settlement. Instead of the DTCC's status quo of T+3(days), if there are trades that can be settled on a blockchain, that can be reduced to T+1(hr) or less. Same with payment/transfer - ACH T+3 sucks, blockchain T+1hr or less is much better. A lot of research into both right now.

3. This one is interesting as there are some areas of law that computational law researchers have decided are uncomputable, hence requiring judges, arbitration, etc. Those probably won't be represented blockchains for the foreseeable future, at least until strong AI is perfected.

There's definitely a lot of noise about moving everything onto blockchains, but as you point not all of it makes sense. The name of the game, especially for startups and companies in this space, is to find what does.

Arbitration requires authority, not authorities. Authority can be granted with limited scope, for a limited time, after which the authority vanishes. Authorities eventually must be bribed or defeated in battle due to scope creep.

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