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Ask HN: Why don't I believe blockchain will change the world?

17 points by yehosef ↗ HN
I've been watching all the buzz surrounding blockchain and cryptocurrencies over the last few months. I can't say that I understand all the technical details of blockchain (why POW, how/why miners, how a 51% attack works, etc). But I think I'm a reasonably intelligent person and I have been reading about the merits and use cases.

The problem I have is that after reading and thinking about it, I'm mostly in agreement with this article: https://hackernoon.com/ten-years-in-nobody-has-come-up-with-a-use-case-for-blockchain-ee98c180100. I think it's a neat idea and does have some use cases (especially for illicit transactions), but nothing like the hype that is surrounding it.

It seems that everywhere I'm looking, people are talking about how blockchain is going to change the world and people are starting ICO's left and right. The problem is that most of the applications I see don't really seem like they need blockchain and have some built-in speculation component. I feel like it's the current solution to a lack of effective business model.

I also have technical doubts. Example a 51% attack - While this maybe hard with Bitcoin because of the network size and age, I don't know about the other currencies/tokens. I'm also not clear how the coming wave of quantum computers will affect this technology.

But I keep seeing the articles coming - how blockchain is going to change everything - and my doubts are eating at me. How can I be so blind? It seems like everyone sees this truth except me (and the the guy that wrote that article and Warren Buffet).

Can the HN community point me to some articles or explain it to me so I can see the light? Does anyone else here have this problem?

17 comments

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iagovar
I have an use case: Monero -> Currency for illegal activities where you can't be tracked.

From the perspective of a criminal, the only problem lies in the exchange side of the chain.

TokyoKid
Cryptocurrencies are extremely slow, have high fees and are destructive to the environment. They also eliminate many consumer protections in place for both banking and investing, leading many to financial ruin and suicide.
dglass
Ripple's cryptocurrency XRP solves a real world problem and they have real world customers already using it. I'm not saying it's going to change the world in some grand sense but it's quite possible Ripple's XRP will speed up the time it takes for banks to settle balances. No more waiting 3-5 business days for cash to hit your account. The money would show up almost instantly (3-4 seconds) because XRP + bank adoption enables instant transfer of value.
ebcode
I would suggest you take a step back and think about PayPal. Do you think PayPal changed the world?

What PayPal did was reduce the "friction" of online transactions. Suddenly you no longer needed a merchant account at a bank to accept credit cards online. That was huge, right?

Similarly, a blockchain (Bitcoin's, as the premiere example) allows you to sidestep the credit card companies and banks entirely. This reduces the "friction" even more. Now, all you need is a string of alphanumeric characters, no account, no verifiable identity.

PayPal was a first step in the direction of reducing online transaction friction, blockchains are a second step.

xstartup
PayPal is simply made is worse. We had transacted over 1million+ in net value with little to no chargeback. One day my developer deployed his API credentials in production on our server which got our accounts linked by their algorithm. The developer had some past chargeback, suspicious history. They banned our well-established account which has been operating over 2-3 years successful. I caution anyone who is looking to use PayPal for any serious startup.
nishantvyas
who will mange the per use-case blockchains (the distributed ledger for a given use-case)? I like decentralization... more power-to-all...but the reality is eventually there will be power-brokers (for example, miners in bitcoins or exchanges like coinbase) who has deep pockets to manage and scale these blockchains.... there will always be ripples and ethereums built blockchains which mostly maintained by single player... but then how is it any different than now... what am I missing?
ebcode
I think what you're missing is that the blockchains depend on network effects to function. They scale naturally with adoption, being decentralized. Facebook does not scale naturally with adoption, because it depends on its own private funds to purchase more servers and bandwidth to handle the scaling, whereas decentralized technologies do scale easily because each player pays for their own equipment.

So, no, they (blockchains) won't be "maintained by a single player". The code may be centrally maintained, but not the network, and it is the network that holds the value. The crowd is fickle, and bitcoin could turn to nothing tomorrow based on the whim of the crowd. Still, the internet has this same quality, and it's still going strong. It (the internet) is simply too useful to be discarded. It remains to be seen if bitcoin is that useful as well.

nishantvyas
When I buy/sell bitcoin on Coinbase, am I considered part of network? Yes the transaction will be part of the blockchain but I am not participating directly rather using proxy (in this case, coinbase for it). This is what I meant by powerbroker.

Second, to my scaling point, In order to be a part of a network one has to maintain a complete blockchain on local server/computer. This is something just not scalable in practice for 99% of people or the use-case... so regardless of the intent there will be an emergence of powerbrokers....

So using the internet analogy, yes internet is decentralized but who owns the backbone (att and few major players) will be the case for blockchain.

paulcole
>Now, all you need is a string of alphanumeric characters, no account, no verifiable identity

To the average person how are these features?

I don't want a string of alphanumeric characters, I want 16 numbers printed on a card I carry in my pocket. I want a company who maintains the account and secures it and handles all the hassle if something goes wrong.

cookiecaper
I'm a blockchain skeptic, but I do think there are some valid use cases. A great example was the Greek banking crisis a few years back. Bitcoin skyrocketed because with the banking system shut down, it became the most practical way to transfer money.

There are only a few limited cases when banking would be shut down and internet access would still be functioning and useful, so bitcoin may not be a good alternative very often, but at least until the collapse is complete, it will probably be a valuable asset. :)

Bitcoin is in fact among the worst of them when it comes to practicality. Litecoin's fast blocks are much better.

For the most part, though, I think you're right that bitcoin/blockchain is massively overhyped and not useful outside of a small niche, and that its technical limitations and vulnerabilities are massively underplayed.

lookACamel
It's staring you right in the face: blockchain is the perfect tool for speculation.
hkmurakami
I think there's a lot of noise in the ecosystem that masks a lot of the exciting stuff going on.

I heard about a blockchaim based system that trades energy credits/power via solar panels between neighbors. Maybe in most places a centralized system takes care of this, but surely there are areas where no one bothered to cover it. Imo that's pretty cool, and even in urban areas it's more efficient for the neighbors.

auganov
A global currency is big. A global economy is big. For citizens of poor and cut-off countries - it's huge. Which is why I think the SV has largely missed it. ICOs are big with Eastern Europeans for the same reason hacking was (hint: it's not the criminality).

The 51% attack is largely a boogeyman. Cryptos have no intrinsic value - if the 51% attacker gets too blatant the underlying crypto is going to crash.

Sure, you can have an attacker that isn't super-greedy - it's okay. We put up with insignificant manipulations in our current financial systems already.

As for quantum computers (or the romantic version thereof), well, they're going to affect many many many many technologies. It'd be a nuclear event.

matt_s
"For citizens of poor and cut-off countries - it's huge"

Can you explain this? How is a citizen of a poor country that doesn't have a personal computer, probably not even a smart phone, going to be able to do anything with a global currency like a cryptocurrency?

auganov
Citizens of poor countries, not necessarily very very poor people themselves[0]. Almost any country has a not-insignificant middle/upper-class that would love to compete on a level playing field with the world.

Which is most obvious with Internet entrepreneurs living in countries without good access to the US/West. Hence the Eastern European example.

[0] I do think you're underestimating smartphone ownership though

bsvalley
Don’t focus on the noise, %99 of the ICO’s are scams. Same goes for a bunch of alt-coins. There is a difference between changing the world and improving the world. Bitcoin is already changing the world, anything else is just about enabling blockchain technology to decentralize responsibilities. Like enabling AI to reduce human effort. In other words, it is just another buzz word that attracts a lot of investors (at the moment).

Welcome to the tech world.

jotjotzzz
I view BTC/cryptocurrencies made possible by blockchain as the modern electronic alternative to gold and silver as a store of value. Free from (for the most part) manipulations from the Central Banks. I think the excitement (at least for me) was knowing that we now have a technology that can lead to honest money. Satoshi Nakamoto's initial inspiration for blockchain sprang from this idea after the banking crisis.

Also, I recommend Mike Maloney's series "The Hidden Secrets of Money" which I think does an excellent job of explaining the fractional reserve banking and possible currency crisis.