I found that this article misrepresents the technical side of things in a way that I think would not give an uninitiated audience a good sense of the subject. I’m by no means an expert in...
Exemplary
I found that this article misrepresents the technical side of things in a way that I think would not give an uninitiated audience a good sense of the subject. I’m by no means an expert in cryptocurrencies or blockchain technology, but I understand the basic concept and what it is actually useful for, so here’s my reaction to some key pieces I think are misrepresentative.
And yet, bitcoin isn’t an unqualified success. There are very few shops that accept the digital currency – and rightly so. It’s very slow (sometimes a transaction takes nine minutes, sometimes nine days!), a lot of hassle (try it for yourself – cutting open hard plastic packaging with scissors is more user friendly), and very unstable (its price rose to €17,000 euros; dropped to €3,000; rose again to now €10,000).
Were the first tokens that traders historically used to represent commodities in the Middle East an unqualified success? Absolutely not. But you don’t see people writing articles saying how "money" is a solution for nothing. Bitcoin being slow and unstable are external problems that may have solutions, but since it is the first version of such a decentralized ledger implemented with a blockchain, it would be very surprising if it didn’t have any major issues. Some other cryptocurrencies can already perform faster transaction speeds and are more stable, so I feel like this is a straw man.
Not only that, but the decentralised utopia that Nakamoto dreamed about, namely avoiding trusted third parties, is still far out of reach. Ironically, there are now three mining pools – a type of company that builds rooms full of servers in Alaska and other locations way up above the Arctic circle – which are responsible for more than half of all the new bitcoin (and also for checking payment requests).
Three large pools is still better than a single government or corporation. Also, mining pools are not necessarily companies. And talking about the mining reward part as primary and the proof-of-work part as secondary is a bit backwards, in my opinion.
Councillors, managers and consultants read about a mysterious currency in the papers that turns people into millionaires. We need to get in on that, they think.
Just because public officials are ignorant and want to "get in on" things they don’t understand doesn’t mean the thing they don’t understand isn’t fit for the purpose it was intended for. To give a different example, just because Donald Trump hypes hydroxychloroquine as a treatment for COVID-19 (despite all evidence that it is not effective for that purpose), it doesn’t mean that it is and wasn’t an effective anti-malarial medication.
Meanwhile, Bloomberg estimates the worldwide blockchain industry at around $700m (over €600m).
What? This doesn’t make any sense. The concept of "<technology/protocol> industry" is nonsensical. What is the monetary value of the "TCP/IP industry"? What about the "SSH industry"?
“You could also use a forklift to put a six-pack of beer on your kitchen counter. But it’s just not very efficient.”
That’s true, but nobody sensible takes this as an indictment of forklifts, generally! Misapplication of tools is not the fault of those tools!
Firstly: the technology is at loggerheads with European privacy legislation, specifically the right to be forgotten. Once something is in the blockchain, it cannot be removed.
Also, in a blockchain you aren’t anonymous, but “pseudonymous”: your identity is linked to a number, and if someone can link your name to that number, you’re screwed. Everything you got up to on that blockchain is visible to everyone.
These are features, not bugs. As far as I know, you can’t have it both ways. You can’t have personal accountability and perfect anonymity. For those who value anonymity above accountability, cryptocurrencies are likely more appealing. It obviates certain kinds of fraud. On the other hand, if a centralized authority wants to have control and oversight, decentralized solutions don’t look very appealing at all. Like most difficult problems, there is no silver bullet, and you have to make some trade-offs based on your priorities.
Carrying out a payment with Visa requires about 0.002 kilowatt-hours; the same payment with bitcoin uses up 906 kilowatt-hours, more than half a million times as much, and enough to power a two-person household for about three months.
This is the first legitimate critique of the article. But, this is the cost of proof-of-work (or at least the current costs with current mining implementations).
And for what? This is actually the most important question: what problem does blockchain actually solve? OK, so with bitcoin, banks can’t just remove money from your account at their own discretion. But does this really happen? I have never heard of a bank simply taking money from someone’s account. If a bank did something like that, they would be hauled into court in no time and lose their license. Technically it’s possible; legally, it’s a death sentence.
If you attempt litigation with a bank, as an individual, in most jurisdictions, you are highly disfavored. Much less so if you are a political dissident in a jurisdiction that is hostile to you. Frederik seems incapable of imagining the situations where decentralized systems can favor individuals in the face of powerful institutions, but I personally see this as the single most beneficial feature of cryptocurrencies. No single authority has the ability to freeze your BTC wallet. (Obviously cryptocurrency exchanges could still deny you converting your BTC, but in terms of the Bitcoin ledger, your BTC is always good.)
Except a blockchain can’t do anything about that. A blockchain is a database – it’s not a self-regulating system that checks all data for correctness, let alone one that calls a halt to unauthorised building works.
Distributed ledgers as used by cryptocurrencies ARE self-regulating systems that check all the data for correctness. That is the whole point. It’s true that they don’t exist in the physical world, but applications like smart-contracts built on top of distributed ledgers are the kind of thing that could make resolving legal disputes in such cases pretty simple affairs.
My immutable unforgeable cryptographically secure blockchain record proving that I have 10,000 pounds of aluminium in a warehouse is not much use to a bank if I then smuggle the aluminium out of the warehouse through the back door.
I don’t see how this is relevant. You wouldn’t store "proof" that you possess a physical asset in a blockchain. You could store proof that you took possession of a token representing the physical asset, but nobody is claiming that the state of the physical world can somehow be perfectly encoded in a blockchain. (By the way, there is nothing about traditional monetary transactions that prevent you from smuggling your aluminum out of your warehouse either.)
There’s a market for magic, and that market is big
I totally agree, but rather than denigrating technologies that might actually provide solutions to problems, I’d rather journalists try to actually understand technologies they report on rather than perpetuate ignorance and possibly contribute to shrinking that market, and growing the market for non-magical solutions.
FWIW, as a technical person, I found this article a pretty good summary of blockchain and its hype. IMO, blockchain is a database with a few unique (though in most cases, undesirable) properties....
Exemplary
FWIW, as a technical person, I found this article a pretty good summary of blockchain and its hype.
IMO, blockchain is a database with a few unique (though in most cases, undesirable) properties. Most blockchain proposals are better solved with a simple database. That's pretty much the case being made in this article.
Right, but how does that motivate saying blockchains are bad, generally? It’s the unsound argument against forklifts that I have an issue with, not the argument about misusing forklifts.
Most blockchain proposals are better solved with a simple database.
Right, but how does that motivate saying blockchains are bad, generally?
It’s the unsound argument against forklifts that I have an issue with, not the argument about misusing forklifts.
I didn't say that blockchains are bad; I said they are usually not the right solution. I didn't write much, so it's hard for me to accept you're arguing in good faith. It's not worth me continuing...
Right, but how does that motivate saying blockchains are bad, generally?
I didn't say that blockchains are bad; I said they are usually not the right solution.
I didn't write much, so it's hard for me to accept you're arguing in good faith. It's not worth me continuing this discussion as a result.
Sorry, my rhetorical question was not directed at you, but rather the article. The whole reason I wrote my comment was because I interpreted the article as making the case blockchains are not...
Sorry, my rhetorical question was not directed at you, but rather the article. The whole reason I wrote my comment was because I interpreted the article as making the case blockchains are not useful, period.
I agree with you and Frederik that there is a lot of unwarranted hype around blockchains. I have no issue with attempts to deflate that hype. I just wish that such efforts would be technically correct and provide sound arguments.
I read both rkcr's posts and the original article as being very in line with your posts. Usually a DB will do, massively overhyped, etc. Note also the title of the blog article: "The amazing...
I read both rkcr's posts and the original article as being very in line with your posts. Usually a DB will do, massively overhyped, etc.
Note also the title of the blog article: "The amazing solution for almost nothing.". Amazing. almost nothing.
As I said, I think this is a misrepresentation. Or at least, it is a major difference in opinion from my own. IMO, blockchains are useful for more than almost nothing. Just because they are not...
almost nothing.
As I said, I think this is a misrepresentation. Or at least, it is a major difference in opinion from my own. IMO, blockchains are useful for more than almost nothing. Just because they are not being applied appropriately in practice doesn’t change that.
Okay. Name a situation in which block chain is being applied "appropriately". I have yet to see one. It's a stunningly inefficient tech that provides very little benefit past the spectre of...
Okay. Name a situation in which block chain is being applied "appropriately". I have yet to see one. It's a stunningly inefficient tech that provides very little benefit past the spectre of de-centralization and even that is basically just a lie especially when you look to Bitcoin as an example.
The obvious answer is cryptocurrencies. I have yet to see actual applications beyond cryptocurrencies, but automated escrow stuff as part of smart contracts would be another appropriate use. There...
The obvious answer is cryptocurrencies. I have yet to see actual applications beyond cryptocurrencies, but automated escrow stuff as part of smart contracts would be another appropriate use. There are also banks that are working on implementing their own private, decentralized, distributed ledgers.
Crypto is crap. The article itself goes to reasonable lengths to show that. Bitcoin currently uses the same energy as a small country and it still can't process transactions faster than ten...
Crypto is crap. The article itself goes to reasonable lengths to show that. Bitcoin currently uses the same energy as a small country and it still can't process transactions faster than ten minutes in a best case scenario. If crypto is the best case scenario for blockchain, then count me out. It's overrated garbage as best as I can tell.
For some purposes, I’d agree. For other purposes I’d disagree. This is the sort of uninformed, biased perspective that I disliked about the article. You know that Bitcoin is not the only...
Crypto is crap
For some purposes, I’d agree. For other purposes I’d disagree. This is the sort of uninformed, biased perspective that I disliked about the article.
You know that Bitcoin is not the only cryptocurrency, it’s just the first one right? Have you heard of Monero or Ethereum (or any of the other ones)? They have learned from the issues with Bitcoin and improved significantly.
If crypto is the best case scenario for blockchain, then count me out.
What do you mean the best case? And Bitcoin is literally the first cryptocoin. You’re basically saying, "I’ve tried driving a steam tractor and I can tell you this automobile idea isn’t going to work. I’m sticking with horses." You’re well within your right to personally reject blockchain technology, I just think you ought to consider it critically and not tilt at straw men.
Blockchain is a technology that flies in the face of reality. Climate change promises to change everything about our relationship with the environment around us. In short order the entire world...
Blockchain is a technology that flies in the face of reality. Climate change promises to change everything about our relationship with the environment around us. In short order the entire world will be forced to take energy and resource consumption much more seriously and guess what? Blockchain has no place in that world. It's inefficient and hence incompatible with the new reality that faces us as the population of planet Earth.
I don't know how I can put this any more plainly, but you're beating up a straw man so hard the straw stuffing is coming loose. Let me state your argument in simple terms: Premises: Bitcoin (the...
I don't know how I can put this any more plainly, but you're beating up a straw man so hard the straw stuffing is coming loose. Let me state your argument in simple terms:
Premises:
Bitcoin (the very first implementation of a cryptocurrency) is inefficient
Conclusion:
The underlying technology of Bitcoin, blockchain, has no place in this world.
If you don't see why this is a terrible, illogical argument, I don't think we can have a productive discussion.
Are you debating that the distributed nature of Bitcoin and blockchain in general incurs a larger than normal resource and energy requirement when compared to other direct alternatives? Stop...
Are you debating that the distributed nature of Bitcoin and blockchain in general incurs a larger than normal resource and energy requirement when compared to other direct alternatives? Stop beating around the bush. I'm bringing a specific and very real concern to light and all you are doing is attempting to handwave it away. I'm not the first person to raise this concern, nor is the article and I doubt either of us will be the last.
If you want to bury your head in the sand, fine. That's your business. But don't pretend that you are putting forth a cognizant argument when you are bending over backwards to avoid addressing this particular point.
What is your definition of normal? You mean non-cryptocurrencies? What criteria are we measuring this by? There was a figure presented in the article about kilowatt hours Visa ostensibly expends...
Bitcoin and blockchain in general incurs a larger than normal resource and energy requirement
What is your definition of normal? You mean non-cryptocurrencies? What criteria are we measuring this by? There was a figure presented in the article about kilowatt hours Visa ostensibly expends to verify a transaction. But, how much energy does Visa consume just by existing? How many offices where they are keeping the lights and air conditioning on? How many airplane flights does Visa send employees on? How many AWS instances are they standing up at any given time?
At that rate, how much work does it actually take to verify all monetary transactions going on across the globe per given unit of time, for all currencies, not just cryptocurrencies? I don’t know what that cost is exactly, but I imagine it’s very significant. Safe monetary transactions certainly don’t need to be as inefficient as Bitcoin’s implementation (and in fact we already have other cryptocoins that are more efficient today). You’re really misunderstanding me if you think I’m trying to defend Bitcoin in any way other than as a pioneer of the technology. I’m not defending Bitcoin, and I explicitly called out the current wastefulness of the Bitcoin miners in my original comment. It’s reprehensible precisely because it is unnecessary. But, I also believe that transactions run through private, centralized, corporate systems are equally problematic, just along different dimensions.
For what it's worth, after reading this chain, @jaylittle is correct. Blockchains are far less efficient than a simple database. It will always be so, as a database gets write request, writes data...
For what it's worth, after reading this chain, @jaylittle is correct. Blockchains are far less efficient than a simple database. It will always be so, as a database gets write request, writes data to disk. For a blockchain to do this, it requires vastly more computing power.
Blocmchains are dumb. Even the newer, better ones are still very inefficient as their computing resources required will continually increase with time. It will always be so, since the whole point is to prevent data change, so storage requirements grow too.
And this is compounded by the fact every cryptocurrency is an arms race. Whoever has the most computing power wins.
Do away with the lot of it and put that computing power to an actual use.
At the risk of inflaming this discussion further, I think @onyxleopard has a good point. There are currently many shortcomings with many of the block chains. However I think the comparison to ICE...
At the risk of inflaming this discussion further, I think @onyxleopard has a good point. There are currently many shortcomings with many of the block chains. However I think the comparison to ICE engines is apt. Early engines had many flaws (some of them potentially lethal). Over time they where addressed, and the technology improved, and now we have crazy engines like the ones in F1 super cars.
This is not to say that I think blockchain is going to change the world in the same way ICE did. It's still too early to tell, because I also agree with the general sentiment of the article, which is that the technology really hasn't found it's purpose yet beyond being a novelty for people who enjoy mixing gambling with their tech.
And this is compounded by the fact every cryptocurrency is an arms race. Whoever has the most computing power wins.
For this specific point I can offer something of a counter example. Having the majority of the computing power in a blockchain network (a 51% attack) is a known vulnerability of proof-of-work based crypto such as Bitcoin. There are alternative systems being explored such as proof-of-stake, however they have their own set of possible exploits. This article gives a fairly succinct explanation.
Point is, I think it's too early to completely dismiss the possibilities of blockchain. I also think it's foolish to say it will magically solve anything, or claiming that it's the answer to any particular problem, without first offering proof of a working real world implementation.
Proof of Stake is still an arms race, just a different one. If anybody can create as many nodes as they want, you've now just got an arms race to add nodes instead of just increasing hash power....
Proof of Stake is still an arms race, just a different one. If anybody can create as many nodes as they want, you've now just got an arms race to add nodes instead of just increasing hash power. These with the added bonus of pyramid-scheme like 'get in early, get rich!' elevator pitch. I have yet to see a cryptocurrency achieve enough adoption that it's used as an actual currency and not just an investment scheme.
And essentially, anything a non-cryptocurrency blockchain can do a database would do better with fewer resources. ICE are fundamentally different, as they were a major step in turning stored energy into power to do things.
Blockchains are a step backwards: 'Do things we already know how to do, but with more processing and perpetually consume more disk space.' Their main advantage goes away once there is a mutual trusted party (like say an escrow service for cash transactions).
Nobody in this thread claimed that blockchains are more efficient than non-cryptographically hashed databases. I’m not going to argue with that claim and I never made that claim. Blockchains have...
Nobody in this thread claimed that blockchains are more efficient than non-cryptographically hashed databases. I’m not going to argue with that claim and I never made that claim. Blockchains have different qualities that are desirable, and discounting them as “dumb” is pretty reductive if you ask me.
++ I just sent this article to my boss who is obsessed with AI and GPT-3 and keeps sending me articles about those things in an effort to convince me that its a world changing tech. I responded by...
++
I just sent this article to my boss who is obsessed with AI and GPT-3 and keeps sending me articles about those things in an effort to convince me that its a world changing tech. I responded by sending him a link to AI Dungeon and giving him a sample of a session of mine in which the AI forgets important details and revises history mid-paragraph.
I daresay that helped to bring him back down to earth, just a little. I don't like to shatter people's dreams but every once in awhile the rest of us benefit when the owner of a company is forced to come back down to Earth, if only for a little while ;)
I don't know if this is exactly what you mean, but Monero and Zcash both support transactions which don't reveal the address of either party. As I understand it, in each case the ledger is not...
You can’t have personal accountability and perfect anonymity.
I don't know if this is exactly what you mean, but Monero and Zcash both support transactions which don't reveal the address of either party. As I understand it, in each case the ledger is not exactly a list of wallets and transactions where anyone can trace funds, but rather a chain where each link is a zero-knowledge proof that "some address decreased in funds and another increased; and the first address isn't negative".
i read somewhere that monero and zcash aren't fully anonymous, where someone if they wanted could dig into it and extract transaction details. I don't know the exact details. Have you heard that...
i read somewhere that monero and zcash aren't fully anonymous, where someone if they wanted could dig into it and extract transaction details. I don't know the exact details. Have you heard that before?
I haven't heard that, but that doesn't mean it's not true. Also I haven't been paying attention and I basically don't know anything about this anyway. :-) I do believe that If the protocols...
I haven't heard that, but that doesn't mean it's not true. Also I haven't been paying attention and I basically don't know anything about this anyway. :-)
I do believe that
If the protocols allowed any old person to do that, the authors would consider that a bug, so it's probably not intentionally in the design.
Even if individual transactions are up to modern cryptographic standards, there are probably more sophisticated attacks that use multiple transactions to learn information. This stuff is all so new, and anyway people have been weakening strong cryptography forever.
I was assuming that by "personal accountability" you meant assurance for the parties of a transaction that the transaction is valid (no created currency, no double spending). That is, that the...
I was assuming that by "personal accountability" you meant assurance for the parties of a transaction that the transaction is valid (no created currency, no double spending). That is, that the sender is accountable to the receiver, and to the currency as a whole. But you mean something else? Accountability to some auditing authority?
Sorry for the confusion. By personal accountability, I meant things like legal systems being able to audit those in their jurisdiction for fraud, money laundering, etc.
I was assuming that by "personal accountability" you meant assurance for the parties of a transaction that the transaction is valid (no created currency, no double spending).
Sorry for the confusion. By personal accountability, I meant things like legal systems being able to audit those in their jurisdiction for fraud, money laundering, etc.
Okay, that makes sense! In that case yes, there might really be no way to have perfect anonymity and accountability. If you can plausibly deny that you made a transaction then it's hard to imagine...
Okay, that makes sense! In that case yes, there might really be no way to have perfect anonymity and accountability. If you can plausibly deny that you made a transaction then it's hard to imagine an authority auditing your actions directly in the currency's ledger.
I think you're kinda deliberately missing the point here. "Blockchain" is just the most recognisable term for all the business built on that technology (most of which is cryptocurrencies, but not...
Meanwhile, Bloomberg estimates the worldwide blockchain industry at around $700m (over €600m).
What? This doesn’t make any sense. The concept of "<technology/protocol> industry" is nonsensical. What is the monetary value of the "TCP/IP industry"? What about the "SSH industry"?
I think you're kinda deliberately missing the point here. "Blockchain" is just the most recognisable term for all the business built on that technology (most of which is cryptocurrencies, but not all, so 'cryptocurrency industry' might not have been suitable either). And it is an industry, it has large companies backing it and making a lot of money out of it, and it's relatively distinct from, say, the finance or tech industries. Obviously nobody reading this is going to think Bloomberg is assessing the value of purely the theory of blockchain.
My point is that it doesn’t make sense to talk about industries in terms of underlying technologies or protocols. Industries are typically divided up based on their economic function. I don’t...
"Blockchain" is just the most recognisable term for all the business built on that technology (most of which is cryptocurrencies, but not all, so 'cryptocurrency industry' might not have been suitable either).
My point is that it doesn’t make sense to talk about industries in terms of underlying technologies or protocols. Industries are typically divided up based on their economic function. I don’t understand the utility of talking about the "blockchain industry". The article introduces the statistic from Bloomberg, and as I found characteristic of the article, just leaves it hanging there without further dissection or critical unpacking. I guess it’s left for the reader to figure out the significance of this novel industrial typology without any sort of context or comparison? If we start dividing up the whole economy by underlying technology, what does that look like? Isn’t it highly overlapping/interrelated? How would you even gain any insight from this view? Hence, my reaction as to the lack of coherence.
Blockchain has of course been hyped in all sorts of silly ways. I think largely because people are motivated to talk about it in a way that will grow their investment. Writers who don't know tech...
Blockchain has of course been hyped in all sorts of silly ways. I think largely because people are motivated to talk about it in a way that will grow their investment. Writers who don't know tech well enough to tell it's hype pick up the stories, you get a spike in value. Which means for years people have been sitting around thinking "what's the next angle we can take to sell blockchain as a miracle".
Still, a way for individuals to transact that can't be (easily) controlled by oppressive governments is a pretty important option to have. That by itself makes blockchain an important solution that can't fairly be called "almost nothing". Private transactions (in the cryptocurrencies that support it, obviously Bitcoin isn't one of them) is also an important solution to a variety of problems.
The author makes valid points, and also it's a bit of hype in the opposite direction.
By that argument, we should all just learn to trust each other and then we don’t need encryption. Encryption is less efficient than not encrypting information, after all.
By that argument, we should all just learn to trust each other and then we don’t need encryption. Encryption is less efficient than not encrypting information, after all.
Encryption is still needed despite trust. Encryption protects privacy. I trust my neighbor in my house...doesn't mean I want them watching me in my bathroom. It also protects against others whom I...
Encryption is still needed despite trust. Encryption protects privacy. I trust my neighbor in my house...doesn't mean I want them watching me in my bathroom. It also protects against others whom I don't trust.
But any currency only needs 1 mutual trust connection to function. If everybody trusts the US government, but doesn't trust anybody else, cryptocurrencies are irrelevant.
I believe that given time, money should be abolished and the state withered away. I don't trust the US government. But all of my peers do, and that's what's important. The US government is the...
I believe that given time, money should be abolished and the state withered away. I don't trust the US government. But all of my peers do, and that's what's important. The US government is the lowest-common denominator for currency exchange between me and my peers.
There's a million other ways to do a peer-based trust system (PGP key servers come to mind) that are far less inefficient than blockchains. And once you have trust, the main 'draw' of blockchain becomes irrelevant.
I’m not sure you fully understand what money is good for if you think it somehow must be backed by a state. That goes to my whole point about cryptocurrencies as they are useful independent of any...
I believe that given time, money should be abolished and the state withered away.
I’m not sure you fully understand what money is good for if you think it somehow must be backed by a state. That goes to my whole point about cryptocurrencies as they are useful independent of any authorities such as state governments. Do you think that just because states might disappear one day that commerce will just up and stop and everyone will provide all the goods and services that are needed for society without remuneration?
I don't trust the US government. But all of my peers do, and that's what's important.
You realize that you and your peers are not the only group who may wish to make transactions, right?
There's a million other ways to do a peer-based trust system (PGP key servers come to mind) that are far less inefficient than blockchains.
Can you link to an implementation that allows for monetary transactions via PGP or other public-key based methods that provide similar guarantees such as no double-spending, fungibility, etc. as cryptocoins? I’m not claiming that such things don’t exist, I’m honestly curious as I haven’t heard of them and I couldn’t find them after searching a bit (but my queries may not be good enough).
I’ve been around Bitcoin from quite early on (first guy to sell vintage games for BTC, can also remember the bitcoin pizza actually happen), and I’ve developed a fairly simple rule of thumb: what...
I’ve been around Bitcoin from quite early on (first guy to sell vintage games for BTC, can also remember the bitcoin pizza actually happen), and I’ve developed a fairly simple rule of thumb:
what problem is your solution trying to solve?
how exactly does a blockchain solve this problem?
why is a blockchain the only/best possible solution to the problem?
who has the voting rights/power?
where is the source code?
Only if there are reasonable answers to all of the above, is it worth listening about the marketing fluff and business buzz around it.
This is the most important one. Speaking as someone who once had 40+ Bitcoins to my name, all of which I sold around the $2.00 mark to help pay an overdue bill. Bitcoin is no better than plain old...
why is a blockchain the only/best possible solution to the problem?
This is the most important one. Speaking as someone who once had 40+ Bitcoins to my name, all of which I sold around the $2.00 mark to help pay an overdue bill.
Bitcoin is no better than plain old cash stuffed in an envelope. Worse in some ways, as it's less anonymous than aforementioned envelope and P.O. Box.
Even when I was doing it, it was because I was young and dumb, and saw it as 'the currency of the future' but didn't see the downsides. I started mining (back when 1 GPU was still plenty to mine with) because I wagered (semi-correctly) that the deflationary aspect meant that if it did work out, I could buy a house with the money. My value guestimate wasn't too far off either.
But in the end, that bill needed to be paid, I had no other means, and it was a good idea at the time.
Of course, shortly before I went massively in debt to live in a house, Bitcoin hype shot past the $16,000 mark, stayed in there for long enough that I could have bought a house cash and basically retire. So yea, kinda bittersweet about it.
Had I not done what I did, I'd probably chaulk up my sudden wealth as a stroke of genius, and not just getting lucky on a hype wave of 'investment' in a currency that is helping destroy the planet.
Haha, yeah. My story is similar, only that I made 70+ BTC by selling old PC games to a Polish guy. But my laptop was too weak for actual mining (I did try though). Hehe, good times when we thought...
Haha, yeah. My story is similar, only that I made 70+ BTC by selling old PC games to a Polish guy. But my laptop was too weak for actual mining (I did try though).
Hehe, good times when we thought BTC will be actually used as currency.
I found that this article misrepresents the technical side of things in a way that I think would not give an uninitiated audience a good sense of the subject. I’m by no means an expert in cryptocurrencies or blockchain technology, but I understand the basic concept and what it is actually useful for, so here’s my reaction to some key pieces I think are misrepresentative.
Were the first tokens that traders historically used to represent commodities in the Middle East an unqualified success? Absolutely not. But you don’t see people writing articles saying how "money" is a solution for nothing. Bitcoin being slow and unstable are external problems that may have solutions, but since it is the first version of such a decentralized ledger implemented with a blockchain, it would be very surprising if it didn’t have any major issues. Some other cryptocurrencies can already perform faster transaction speeds and are more stable, so I feel like this is a straw man.
Three large pools is still better than a single government or corporation. Also, mining pools are not necessarily companies. And talking about the mining reward part as primary and the proof-of-work part as secondary is a bit backwards, in my opinion.
Just because public officials are ignorant and want to "get in on" things they don’t understand doesn’t mean the thing they don’t understand isn’t fit for the purpose it was intended for. To give a different example, just because Donald Trump hypes hydroxychloroquine as a treatment for COVID-19 (despite all evidence that it is not effective for that purpose), it doesn’t mean that it is and wasn’t an effective anti-malarial medication.
What? This doesn’t make any sense. The concept of "<technology/protocol> industry" is nonsensical. What is the monetary value of the "TCP/IP industry"? What about the "SSH industry"?
That’s true, but nobody sensible takes this as an indictment of forklifts, generally! Misapplication of tools is not the fault of those tools!
These are features, not bugs. As far as I know, you can’t have it both ways. You can’t have personal accountability and perfect anonymity. For those who value anonymity above accountability, cryptocurrencies are likely more appealing. It obviates certain kinds of fraud. On the other hand, if a centralized authority wants to have control and oversight, decentralized solutions don’t look very appealing at all. Like most difficult problems, there is no silver bullet, and you have to make some trade-offs based on your priorities.
This is the first legitimate critique of the article. But, this is the cost of proof-of-work (or at least the current costs with current mining implementations).
If you attempt litigation with a bank, as an individual, in most jurisdictions, you are highly disfavored. Much less so if you are a political dissident in a jurisdiction that is hostile to you. Frederik seems incapable of imagining the situations where decentralized systems can favor individuals in the face of powerful institutions, but I personally see this as the single most beneficial feature of cryptocurrencies. No single authority has the ability to freeze your BTC wallet. (Obviously cryptocurrency exchanges could still deny you converting your BTC, but in terms of the Bitcoin ledger, your BTC is always good.)
Distributed ledgers as used by cryptocurrencies ARE self-regulating systems that check all the data for correctness. That is the whole point. It’s true that they don’t exist in the physical world, but applications like smart-contracts built on top of distributed ledgers are the kind of thing that could make resolving legal disputes in such cases pretty simple affairs.
I don’t see how this is relevant. You wouldn’t store "proof" that you possess a physical asset in a blockchain. You could store proof that you took possession of a token representing the physical asset, but nobody is claiming that the state of the physical world can somehow be perfectly encoded in a blockchain. (By the way, there is nothing about traditional monetary transactions that prevent you from smuggling your aluminum out of your warehouse either.)
I totally agree, but rather than denigrating technologies that might actually provide solutions to problems, I’d rather journalists try to actually understand technologies they report on rather than perpetuate ignorance and possibly contribute to shrinking that market, and growing the market for non-magical solutions.
FWIW, as a technical person, I found this article a pretty good summary of blockchain and its hype.
IMO, blockchain is a database with a few unique (though in most cases, undesirable) properties. Most blockchain proposals are better solved with a simple database. That's pretty much the case being made in this article.
Right, but how does that motivate saying blockchains are bad, generally?
It’s the unsound argument against forklifts that I have an issue with, not the argument about misusing forklifts.
I didn't say that blockchains are bad; I said they are usually not the right solution.
I didn't write much, so it's hard for me to accept you're arguing in good faith. It's not worth me continuing this discussion as a result.
Sorry, my rhetorical question was not directed at you, but rather the article. The whole reason I wrote my comment was because I interpreted the article as making the case blockchains are not useful, period.
I agree with you and Frederik that there is a lot of unwarranted hype around blockchains. I have no issue with attempts to deflate that hype. I just wish that such efforts would be technically correct and provide sound arguments.
I read both rkcr's posts and the original article as being very in line with your posts. Usually a DB will do, massively overhyped, etc.
Note also the title of the blog article: "The amazing solution for almost nothing.". Amazing. almost nothing.
As I said, I think this is a misrepresentation. Or at least, it is a major difference in opinion from my own. IMO, blockchains are useful for more than almost nothing. Just because they are not being applied appropriately in practice doesn’t change that.
Okay. Name a situation in which block chain is being applied "appropriately". I have yet to see one. It's a stunningly inefficient tech that provides very little benefit past the spectre of de-centralization and even that is basically just a lie especially when you look to Bitcoin as an example.
The obvious answer is cryptocurrencies. I have yet to see actual applications beyond cryptocurrencies, but automated escrow stuff as part of smart contracts would be another appropriate use. There are also banks that are working on implementing their own private, decentralized, distributed ledgers.
Crypto is crap. The article itself goes to reasonable lengths to show that. Bitcoin currently uses the same energy as a small country and it still can't process transactions faster than ten minutes in a best case scenario. If crypto is the best case scenario for blockchain, then count me out. It's overrated garbage as best as I can tell.
For some purposes, I’d agree. For other purposes I’d disagree. This is the sort of uninformed, biased perspective that I disliked about the article.
You know that Bitcoin is not the only cryptocurrency, it’s just the first one right? Have you heard of Monero or Ethereum (or any of the other ones)? They have learned from the issues with Bitcoin and improved significantly.
What do you mean the best case? And Bitcoin is literally the first cryptocoin. You’re basically saying, "I’ve tried driving a steam tractor and I can tell you this automobile idea isn’t going to work. I’m sticking with horses." You’re well within your right to personally reject blockchain technology, I just think you ought to consider it critically and not tilt at straw men.
Blockchain is a technology that flies in the face of reality. Climate change promises to change everything about our relationship with the environment around us. In short order the entire world will be forced to take energy and resource consumption much more seriously and guess what? Blockchain has no place in that world. It's inefficient and hence incompatible with the new reality that faces us as the population of planet Earth.
I don't know how I can put this any more plainly, but you're beating up a straw man so hard the straw stuffing is coming loose. Let me state your argument in simple terms:
Premises:
Conclusion:
The underlying technology of Bitcoin, blockchain, has no place in this world.
If you don't see why this is a terrible, illogical argument, I don't think we can have a productive discussion.
Are you debating that the distributed nature of Bitcoin and blockchain in general incurs a larger than normal resource and energy requirement when compared to other direct alternatives? Stop beating around the bush. I'm bringing a specific and very real concern to light and all you are doing is attempting to handwave it away. I'm not the first person to raise this concern, nor is the article and I doubt either of us will be the last.
If you want to bury your head in the sand, fine. That's your business. But don't pretend that you are putting forth a cognizant argument when you are bending over backwards to avoid addressing this particular point.
What is your definition of normal? You mean non-cryptocurrencies? What criteria are we measuring this by? There was a figure presented in the article about kilowatt hours Visa ostensibly expends to verify a transaction. But, how much energy does Visa consume just by existing? How many offices where they are keeping the lights and air conditioning on? How many airplane flights does Visa send employees on? How many AWS instances are they standing up at any given time?
At that rate, how much work does it actually take to verify all monetary transactions going on across the globe per given unit of time, for all currencies, not just cryptocurrencies? I don’t know what that cost is exactly, but I imagine it’s very significant. Safe monetary transactions certainly don’t need to be as inefficient as Bitcoin’s implementation (and in fact we already have other cryptocoins that are more efficient today). You’re really misunderstanding me if you think I’m trying to defend Bitcoin in any way other than as a pioneer of the technology. I’m not defending Bitcoin, and I explicitly called out the current wastefulness of the Bitcoin miners in my original comment. It’s reprehensible precisely because it is unnecessary. But, I also believe that transactions run through private, centralized, corporate systems are equally problematic, just along different dimensions.
How have I been anything but frank with you?
For what it's worth, after reading this chain, @jaylittle is correct. Blockchains are far less efficient than a simple database. It will always be so, as a database gets write request, writes data to disk. For a blockchain to do this, it requires vastly more computing power.
Blocmchains are dumb. Even the newer, better ones are still very inefficient as their computing resources required will continually increase with time. It will always be so, since the whole point is to prevent data change, so storage requirements grow too.
And this is compounded by the fact every cryptocurrency is an arms race. Whoever has the most computing power wins.
Do away with the lot of it and put that computing power to an actual use.
At the risk of inflaming this discussion further, I think @onyxleopard has a good point. There are currently many shortcomings with many of the block chains. However I think the comparison to ICE engines is apt. Early engines had many flaws (some of them potentially lethal). Over time they where addressed, and the technology improved, and now we have crazy engines like the ones in F1 super cars.
This is not to say that I think blockchain is going to change the world in the same way ICE did. It's still too early to tell, because I also agree with the general sentiment of the article, which is that the technology really hasn't found it's purpose yet beyond being a novelty for people who enjoy mixing gambling with their tech.
For this specific point I can offer something of a counter example. Having the majority of the computing power in a blockchain network (a 51% attack) is a known vulnerability of proof-of-work based crypto such as Bitcoin. There are alternative systems being explored such as proof-of-stake, however they have their own set of possible exploits. This article gives a fairly succinct explanation.
Point is, I think it's too early to completely dismiss the possibilities of blockchain. I also think it's foolish to say it will magically solve anything, or claiming that it's the answer to any particular problem, without first offering proof of a working real world implementation.
Proof of Stake is still an arms race, just a different one. If anybody can create as many nodes as they want, you've now just got an arms race to add nodes instead of just increasing hash power. These with the added bonus of pyramid-scheme like 'get in early, get rich!' elevator pitch. I have yet to see a cryptocurrency achieve enough adoption that it's used as an actual currency and not just an investment scheme.
And essentially, anything a non-cryptocurrency blockchain can do a database would do better with fewer resources. ICE are fundamentally different, as they were a major step in turning stored energy into power to do things.
Blockchains are a step backwards: 'Do things we already know how to do, but with more processing and perpetually consume more disk space.' Their main advantage goes away once there is a mutual trusted party (like say an escrow service for cash transactions).
Nobody in this thread claimed that blockchains are more efficient than non-cryptographically hashed databases. I’m not going to argue with that claim and I never made that claim. Blockchains have different qualities that are desirable, and discounting them as “dumb” is pretty reductive if you ask me.
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I just sent this article to my boss who is obsessed with AI and GPT-3 and keeps sending me articles about those things in an effort to convince me that its a world changing tech. I responded by sending him a link to AI Dungeon and giving him a sample of a session of mine in which the AI forgets important details and revises history mid-paragraph.
I daresay that helped to bring him back down to earth, just a little. I don't like to shatter people's dreams but every once in awhile the rest of us benefit when the owner of a company is forced to come back down to Earth, if only for a little while ;)
I don't know if this is exactly what you mean, but Monero and Zcash both support transactions which don't reveal the address of either party. As I understand it, in each case the ledger is not exactly a list of wallets and transactions where anyone can trace funds, but rather a chain where each link is a zero-knowledge proof that "some address decreased in funds and another increased; and the first address isn't negative".
i read somewhere that monero and zcash aren't fully anonymous, where someone if they wanted could dig into it and extract transaction details. I don't know the exact details. Have you heard that before?
I haven't heard that, but that doesn't mean it's not true. Also I haven't been paying attention and I basically don't know anything about this anyway. :-)
I do believe that
If the protocols allowed any old person to do that, the authors would consider that a bug, so it's probably not intentionally in the design.
Even if individual transactions are up to modern cryptographic standards, there are probably more sophisticated attacks that use multiple transactions to learn information. This stuff is all so new, and anyway people have been weakening strong cryptography forever.
So then how do you use such a system and guarantee personal accountability?
I was assuming that by "personal accountability" you meant assurance for the parties of a transaction that the transaction is valid (no created currency, no double spending). That is, that the sender is accountable to the receiver, and to the currency as a whole. But you mean something else? Accountability to some auditing authority?
Sorry for the confusion. By personal accountability, I meant things like legal systems being able to audit those in their jurisdiction for fraud, money laundering, etc.
Okay, that makes sense! In that case yes, there might really be no way to have perfect anonymity and accountability. If you can plausibly deny that you made a transaction then it's hard to imagine an authority auditing your actions directly in the currency's ledger.
I think you're kinda deliberately missing the point here. "Blockchain" is just the most recognisable term for all the business built on that technology (most of which is cryptocurrencies, but not all, so 'cryptocurrency industry' might not have been suitable either). And it is an industry, it has large companies backing it and making a lot of money out of it, and it's relatively distinct from, say, the finance or tech industries. Obviously nobody reading this is going to think Bloomberg is assessing the value of purely the theory of blockchain.
My point is that it doesn’t make sense to talk about industries in terms of underlying technologies or protocols. Industries are typically divided up based on their economic function. I don’t understand the utility of talking about the "blockchain industry". The article introduces the statistic from Bloomberg, and as I found characteristic of the article, just leaves it hanging there without further dissection or critical unpacking. I guess it’s left for the reader to figure out the significance of this novel industrial typology without any sort of context or comparison? If we start dividing up the whole economy by underlying technology, what does that look like? Isn’t it highly overlapping/interrelated? How would you even gain any insight from this view? Hence, my reaction as to the lack of coherence.
Blockchain has of course been hyped in all sorts of silly ways. I think largely because people are motivated to talk about it in a way that will grow their investment. Writers who don't know tech well enough to tell it's hype pick up the stories, you get a spike in value. Which means for years people have been sitting around thinking "what's the next angle we can take to sell blockchain as a miracle".
Still, a way for individuals to transact that can't be (easily) controlled by oppressive governments is a pretty important option to have. That by itself makes blockchain an important solution that can't fairly be called "almost nothing". Private transactions (in the cryptocurrencies that support it, obviously Bitcoin isn't one of them) is also an important solution to a variety of problems.
The author makes valid points, and also it's a bit of hype in the opposite direction.
No individual stands alone. Especially when technology is involved.
Cryptocurrencies are a poor substitute for trust in your community.
By that argument, we should all just learn to trust each other and then we don’t need encryption. Encryption is less efficient than not encrypting information, after all.
Encryption is still needed despite trust. Encryption protects privacy. I trust my neighbor in my house...doesn't mean I want them watching me in my bathroom. It also protects against others whom I don't trust.
But any currency only needs 1 mutual trust connection to function. If everybody trusts the US government, but doesn't trust anybody else, cryptocurrencies are irrelevant.
You realize that this condition does not hold for many in the present, and will inevitably not hold for many in the future, right?
I believe that given time, money should be abolished and the state withered away. I don't trust the US government. But all of my peers do, and that's what's important. The US government is the lowest-common denominator for currency exchange between me and my peers.
There's a million other ways to do a peer-based trust system (PGP key servers come to mind) that are far less inefficient than blockchains. And once you have trust, the main 'draw' of blockchain becomes irrelevant.
I’m not sure you fully understand what money is good for if you think it somehow must be backed by a state. That goes to my whole point about cryptocurrencies as they are useful independent of any authorities such as state governments. Do you think that just because states might disappear one day that commerce will just up and stop and everyone will provide all the goods and services that are needed for society without remuneration?
You realize that you and your peers are not the only group who may wish to make transactions, right?
Can you link to an implementation that allows for monetary transactions via PGP or other public-key based methods that provide similar guarantees such as no double-spending, fungibility, etc. as cryptocoins? I’m not claiming that such things don’t exist, I’m honestly curious as I haven’t heard of them and I couldn’t find them after searching a bit (but my queries may not be good enough).
I’ve been around Bitcoin from quite early on (first guy to sell vintage games for BTC, can also remember the bitcoin pizza actually happen), and I’ve developed a fairly simple rule of thumb:
Only if there are reasonable answers to all of the above, is it worth listening about the marketing fluff and business buzz around it.
This is the most important one. Speaking as someone who once had 40+ Bitcoins to my name, all of which I sold around the $2.00 mark to help pay an overdue bill.
Bitcoin is no better than plain old cash stuffed in an envelope. Worse in some ways, as it's less anonymous than aforementioned envelope and P.O. Box.
Even when I was doing it, it was because I was young and dumb, and saw it as 'the currency of the future' but didn't see the downsides. I started mining (back when 1 GPU was still plenty to mine with) because I wagered (semi-correctly) that the deflationary aspect meant that if it did work out, I could buy a house with the money. My value guestimate wasn't too far off either.
But in the end, that bill needed to be paid, I had no other means, and it was a good idea at the time.
Of course, shortly before I went massively in debt to live in a house, Bitcoin hype shot past the $16,000 mark, stayed in there for long enough that I could have bought a house cash and basically retire. So yea, kinda bittersweet about it.
Had I not done what I did, I'd probably chaulk up my sudden wealth as a stroke of genius, and not just getting lucky on a hype wave of 'investment' in a currency that is helping destroy the planet.
Haha, yeah. My story is similar, only that I made 70+ BTC by selling old PC games to a Polish guy. But my laptop was too weak for actual mining (I did try though).
Hehe, good times when we thought BTC will be actually used as currency.