,,Unfortunately for this central value proposition of blockchain, there is no lack of trusted enough intermediaries in the financial/accounting sector.''
Writes a person living in Finland, the 3rd least corrupt country in the world. He should probably move to a country somewhere down in the list (like North Korea, Afghanistan or Lybia, Venezuela) for a year.
"As it stands, public blockchain is very much a kludgy solution looking for non-existent problem, namely lack of trusted intermediaries in finance and accounting."
Had to stop here.. The reason of blockchain is to remove intermediaries AND still have trusted transactions.
The author asserts that removing intermediaries (with blockchain) is a solution to a non-existent problem, as there are a lot of trusted intermediaries.
I'm not knowledgeable in this area but isn't the problem "trust"? Trust is a risk. Probably a safe one but a risk nonetheless. If you have the ability to remove trust from the equation, why not pursue it?
I think the point is that its a cost/benefit analysis. The cost of removing trust from the equation is much higher than the cost of just trusting a intermediary.
In simple terms even if my bank was evil and occasionally abused my trust to steal my money it would still be cheaper to me than trying to use Bitcoin as money and paying the high transaction fees and suffering the long transaction wait times.
Sure perhaps if there was no one I could trust as an intermediary and everyone was evil and would steal large amounts of money from me then a decentralized blockchain based monetary system would be worth using. But as it is the potential risk of an intermediary abusing my trust is minimal to nonexistent compared to the very real expense and wastefulness of the blockchain based systems.
The same thing applies to almost all usage of blockchain. Sure it works, but trusting an intermediary just works better, and cheaper.
We have the ability to remove it, yes, but not for free. Decentralized systems based on proof-of-work are inherently less efficient than centralized, trust-based systems.
The question is, do the costs and downsides of cryptocurrencies outweigh the benefits of not having to trust a third-party intermediary? The author is arguing no, and for the overwhelming majority of real-world cases, I would tend to agree.
I understand the trade off a little better now. Thanks. It leads me to a follow up question - is this universally true of all blockchain implementations or is it due to the structure of cryptocurrency (mining, etc.)?
Mining is part of how the Blockchain remains decentralized; you can't remove it.
In the original paper, the way mining worked was by Proof-of-Work (PoW), which wastes a bunch of energy to make sure it's unprofitable to attack it.
There is research into mining without wasting energy by using alternatives to PoW, like Proof-of-Stake (PoS). I don't think there's consensus about whether any of them actually work.
If one could remove the need for trust with no other costs, sure, why not? But in practice, using something shaped like bitcoin asks for very hard things: The financial system started with very little trust, but it expanded because trust solved problems, like money being stolen on route, an associate running away and leaving and bank runs. Trust makes those problems mostly go away. Bitcoin has digital equivalents: 51% attacks, someone duplicating a private key, someone losing their private key and the money disappearing, exchanges becoming insolvent, getting hacked, or downright stealing, low transaction throughput, high costs per transaction, and high volatility. If you study the history of banking and finance, the blockchain is in 1700-1800 or so, and we solved those problems through more trust and faster communication. Our best solutions to both the blockchain and old finance problems? More trust, as it lowered overall risk. We can't just improve the fact that the current system requires a lot of trust with a new system that just happens to still need trust to work efficiently.
Now, maybe we'll solve those problems in ways that don't requite more trust, but until then, cryptocurrencies will we far riskier than the existing financial system.
I just mentioned, elsewhere in this thread, a couple major players in the cryptocurrency space who have proved to be untrustworthy. And a lot of people got burned in part because they believed the hype that removing the need for trust from the management of the "physical" currency is equivalent to removing the need for trust from the financial system itself.
That might have been true thousands of years ago, before the birth of finance, when everything really did run on just cash. Things are more complicated than that nowadays, though. Cash is such a small corner of the money supply in a modern economy. A few percent of the bits that people bother to try and count, and there's a lot more that goes uncounted. A distributed trustless public ledger for the cash doesn't really help with the trust issues for that stuff. Frankly, it only helps with the small subset of money for which I'm least worried about trust.
Yes, there are a lot of trusted intermediaries if you live in the US, Europe, or otherwise sufficiently developed countries. However, there are few if any truly trusted intermediaries in the developing world (and countries that have regressed significantly), including India, Venezuela, Zimbabwe.
Perhaps blockchain is superior to a trusted intermediary, perhaps not. But it isn't gonna take off in the developed world until it proves its utility in the undeveloped world.
We've been automating middlemen away for years, don't see whats different here?
Blockchain lets us do some stuff now that was impossible before (single ownership of digital assets jumps out), but a big chunk of the economic benefit is going to come from reduced transaction costs.
The author makes the point that the proof-of-work is expensive enough to have the transaction costs still too high to compete with the current financial environment.
I do not send money to my wife on bitcoin, I use venmo or bank accounts and it is free and immediate.
Bitcoin, the only "proven" crypto coin thus far, totally failed as a usable currency because of the high transaction costs.
Other cryptocoins including BTC, Ethereum, Litecoin or whatever do not have lower transaction cost than traditional currency. In fact I would argue that since public blockchain require mining transaction costs can never be that much lower than traditional currency.
And blockchains achieve that at an immense cost, which is the point of the discussion. Decentralised systems are less efficient (orders of magnitude less for proof of work) and it's debatable whether that is necessary in the real world, where trust exists for the majority of applications.
We've been reducing middlemen to few, not to zero. e.g. Amazon, Whatsapp, Facebook, Airbnb etc. Hell, even peer-to-peer systems have some kind of middlemen.
If that middleman is in a big enough market with low barriers to entry and lots of competition, and is able to drive cost down with smart tech, it doesn't really matter to most users whether he exists or not.
Decentralised systems never promised low transaction costs. A private party running a database can do it cheaper and faster than a set of decentralised actors working for some incentive to establish the same database. That seems pretty much inevitable.
They did promise something else. Trustless-systems. But it hasn't been shown yet that consumers value this. (e.g. see our most valued companies like Facebook to which we routinely trust data (from secrets to nudes) we'd never, ever share with anyone else)
Blockchain's value proposition, as I've always interpreted it, isn't 'material' in the sense that transaction costs or speed are, but more based on the culture and the relationships of the 'value network'. i.e., the relationships aren't based on trust+laws, but on code+math. And it doesn't appear to me that the market values these relationships/culture, but it seems that the market does value the material aspects. hence there being no real blockchain users of blockchain applications. (except for the whole store of value thing, which drives basically all the price changes, but nobody envisioned the blockchain to solely be digital gold and nothing else).
Bitcoin has simply anonymized the middle man. You're still expected to pay a transaction fee to miners. It'll never be cheaper than a centralized solution so there will never be a cost reduction.
A reason in search of a problem. Intermediaries in finance exist the same way that lawyers exist - to translate technical gibberish for you, and to bear some burden of the risk if they do so negligently.
As pointed out in the main text, the blockchain doesn't truly remove the intermediary, it just switches it from the previous intermediary to the underlying blockchain code + governance structure, which is subjectively a higher risk intermediary, at least right now.
Not to mention that since people aren't actually conducting business exclusively in bitcoin they are forced to transfer back to fiat currency constantly which is a transaction that has all the same risks.
It's possible to exchange between cryptocurrencies without trust by utilizing time-bound multi-signature transactions. You can't do that when there's a non-cryptocurrency involved.
The fact that the latter is riskier says a lot more about non-cryptocurrencies than it does about cryptocurrencies.
Another way to thinking about this is that the intermediaries exist for an economically efficient reason and aren't just a "tax" on transactions to be routed around.
In traditional institutions these are things like fraud prevention / detection, convenience in matching both sides of a transaction, etc.
You're maybe taking an overly simplistic view of the needs of financial institutions.
In finance, the trustworthiness of the transactions themselves is pretty much a non-issue. The real issues are much more subtle. What's the likelihood that a counterparty actually has or can acquire the goods they're selling me? If I'm selling them a futures contract, what's the likelihood that they will have enough cash to make good on that deal at a future date? Does my bank have a healthy enough balance sheet that I will be able to get at my money when I need it?
These are all problems that the financial industry has solutions for. They are admittedly imperfect and of varying quality. But what's there is a far sight better than what blockchain has been able to offer, which is approximately nothing. Hopefully I shouldn't have to do more than mention the names MtGox and Tether to drive this point home.
> The reason of blockchain is to remove intermediaries
Not correct. Blockchain has intermediaries. They are just semi-anonymous and unaccountable.
The paradox of this is that if you don't trust any particular intermediary (evil corp, gov, boogeyman, etc) then how do you know they are not the anonymous party running your anonymous unaccountable blockchain? You can't and so the whole thing is foolish to the core.
Yeah, I would say he's not. It seems that he's got an interest, but it doesn't look like he's actively doing anything in terms of actual research. The big give away is the vagueness of his argument; heavy in fallacy and opinion on cryptocurrencies but light in actual content on blockchain.
That really depends on how you define "blockchain researcher" and, in particular, how close the research must be to hard science (as opposed to engineering implementation) to satisfy your definition. The researchers I personally know working on blockchain technology are all scientists in either cryptography or distributed systems. The author's background is economics, which provides a plausible reason for interest in blockchain technology, but not nearly enough of an academic grounding in the subject on its own for research purposes. I also don't see any actual publications or experience on his public CV that indicates particular expertise in the subject.
That said, he certainly could have an out of date CV and brought himself up to speed in the subject on his own, which wouldn't surprise me since he's a PhD student. More to the point, what he wrote in the article should probably be considered on its own weight since its content isn't so specialized and complex that we have to defer to academic expertise for confirmation. He probably shouldn't have made such an easy target of his title, but the salient points of his post can be reviewed independent of the title's merit.
When I first read Satoshi's paper [1], I read it as a solution to the Two Generals' Problem [2]. The problem concerns itself with multiple parties coördinating and communicating over an untrusted channel.
The blockchain got distracted by finance. Modern settlement and clearing is efficient. It's perhaps the most efficient part of the financial system; it is certainly the easiest to upgrade. The difficult stuff, the messy institutional knowledge, customs and tendencies, are unaffected by protocol choice. That's why the same behaviors which plagued the unregulated banking system plague cryptocurrency markets today. People are still people.
There are many systems which require a trusted group of people to reach a consensus in public. (Libor is an example [1]. Notaries appear, prima facie, to be in a similar category.) Immutability is of dubious benefit. But a simple, public consensus mechanism beats checking sundry private APIs and blog posts (how a lot of this is done today). Unfortunately, this class of use cases is negated by a "currency-like" token value.
No, it was about finance right from the start, says so right there in the title of the paper ("cash").
It got distracted by politics and greed. What I mean with greed is obvious, and I guess it was kinda inevitable.
Politics is a more interesting angle: many blockchain/bitcoin afficionados seem to be of the Libertarian persuasion who think the main point is to prevent government interference, especially inflation. And they seem to thik this was Satoshi's primary goal as well.
And here I'm a bit baffled: I can't find that in the original paper. Did Satoshi state any political goals in other communications? I gather that he was actively involved in the early Bitcoin community for some time.
On the other hand this helped attract early investment and is a reason Bitcoin initially rose to such heights.
There is nothing wrong with a deflationary currency once the rate of supply side deflation becomes small. Worthy investments will still be worthy investments and it helps the wealth of technological progress be distributed to the working class. Federal Reserve Notes are themselves arguably deflationary in nature except that remittance payments to citizens are taxed at 100%.
I don't think bitcoin "rose to such heights" in terms of success. It appreciated in value arguably due to a speculation despite having no legitimate use (as of yet) due to its deflationary nature. So everyone wanted a piece of the pie before it ran out, the perceived scarcity drove people to get some and hoard. Hoard something that had no use.
In my opinion, a future successful digital decentralised currency should find a way to prevent itself from being seen as an "investment opportunity". That is not what money is for. That attitude creates bubbles, and "get rich quick" types. You can't have functional money without price stability. The deflationary property of bitcoin works against that.
So IMO bitcoin appreciating in value and creating bubbles along the way is not a good thing for bitcoin itself. You shouldn't need to "invest" in a currency, you need to use it. It needs to be trusted and accepted.
Many people remember the million dollar pizza now. No one wants to be that guy. Even if BTC was universally accepted now, not many holders would dare to use it to buy things. Because in their mind, BTC is poised to appreciate in value whereas fiat will collapse, so they'd use their fiat instead. If you have $5 in one hand, and a lottery ticket with perceived high odds you bought for $5, and the store accepts both as payment, why would you use the lottery ticket to buy things?
I agree that bitcoins problems include not having relatively fixed-rate use cases in the future, like paying taxes and your salary.
And you make a good point that it will be socially easier for society to adopt a new currency if early investors aren't getting 10x returns for being first.
But any new currency is going to offer the opportunity for capital gains as long as it's competition includes the U.S. Dollar, because almost by definition a better alternative to the dollar would be deflationary relative to the dollar.
My point is that small rates of deflation aren't bad in a currency and bitcoins fixed size is not really a problem as long as you can trade small enough increments.
Also fixed size is not even deflationary, it's just fixed unless something beneficial happens on the demand side like manufacturing cars with less materials.
At the same time fixed size is not really a feature though either. You have the whole number line available why not use it?
Bitcoins real problem is that it's not a "victory against entropy" like gold coins were in ancient times or reserve notes which can appease Uncle Sam in the future are today. Bitcoin is quite the opposite in fact, because we are dissipaiting so much concentrated energy to maintain the system. It's ironic because bitcoins greatest success is making us imagine currencies that don't dissipate value.
I'm pessimistic that there is a distributed solution to this beside just electricity or energy itself, and we're obviously not quite at that point technologically yet.
It does have legitimate use cases transferring value digitally being the primary case and also providing means to accept digital payments with little to no fees. Also you invest in whatever your countries currency is via time, so buying BTC with fiat is no different. Deflationary currencies also don’t contribute anymore to hoarding than high savings rates. Bitcoins main issue here is that it’s not a country’s main currency.
>It does have legitimate use cases transferring value digitally being the primary case
I am not convinced that what is being transferred here is value. It's transferring data, but I am not convinced that it is valuable. If it was out only option, then I guess I'd see the value in that, but in the current landscape, I'm not convinced that it is an efficient and sensible way of doing what it is trying to do.
>also providing means to accept digital payments with little to no fees.
Fees are variable. In real world volume (which it can't touch or sustain yet), the network cannot sustain the volume and the fees are exorbitant. I know, you'll say "it will get better, infancy" etc. but I'm not convinced. I don't see the value of decentralisation here so the overhead looks massive to me. And in the end, if bitcoin takes off as a successful alternative for high volume low fee transactions, the centralised industry can compete and they have the upper hand: Centralised version has orders of magnitude less overhead so they can make the fees cheaper than BTC always if it came to that. So that advantage is moot.
>Also you invest in whatever your countries currency is via time, so buying BTC with fiat is no different.
No, it is different. When I earn money, I intend to use it or invest it. I don't see my money as an investment which will appreciate in value if I "hodl" it. Money itself is not an investment. You invest with it.
>Deflationary currencies also don’t contribute anymore to hoarding than high savings rates.
[Citation needed.] Deflation literally is economic crisis where people hoard and refuse to spend which brings economy to a halt. Central banks use their policy to encourage people to spend. Deflation is our "crisis" state.
>Bitcoins main issue here is that it’s not a country’s main currency.
It is an issue but IMO it is quite a bit far from being the main issue. Bitcoin is technologically incapable of being any country's currency right now, the throughput alone is not even close to enough.
Yeah but it was for speculative trading (and gambling, lots and lots of gambling sites), not for "using it" (to buy goods, exchange value). There is nothing to do with all those cryptocoins other than trading them between each other.
> No, it was about finance right from the start, says so right there in the title of the paper ("cash").
I agree with you that Bitcoin was originally conceived to solve digital cash problems (like double spending). But I think the parent's point (which I also agree with) is that the actual utility of modern blockchains, regardless of original intentions, is in strong fault-tolerant systems.
By any reasonable standard, Bitcoin itself has not matured into a strong currency usable for day to day cash payments. It has extremely high volatility, slow transaction verification and very high transaction fees. I think it's good that it was developed (it inspired a lot of follow-up R&D), and you can make a case for it as a store of value, but it's not really suitable as a payments platform whatsoever. But that failure doesn't diminish its main contribution, which is thermodynamically guaranteed cryptographic resilience and fault tolerance.
I think that the area where you want fault-tolerance the most is decentralized cash. If you are going to take control of your money you better do it in a fault-tolerant system. Many people don't care about it today but there are those who do. That's why cryptocurrency is the real killer app for blockchain, like it or not.
To your comments re bitcoin, it sounds to me like somebody complaining that Internet is slow back in the 90s/00s.
EDIT:
I am not pontificating in favor of bitcoin. It's just that the technology is still immature but there is a lot of great and promising work happening today.
> I think that the area where you want fault-tolerance the most is decentralized cash.
...Really? That's one application, sure, but I hardly think it compares to the generalizable usage of cryptographic fault-tolerance assurance in distributed systems. I would consider the elimination of trusted third parties in more well-established and widely used cryptographic protocols (like CAa) or improvements to e.g. NTP node fault-tolerance to be more presently and practically useful than decentralized payments (in particular, because blockchains are much more useful for the former examples than the latter in the present day).
> Many people don't care about it today but there are those who do. That's why cryptocurrency is the real killer app for blockchain, like it or not.
I don't have an emotional investment in what use case becomes the most successful for blockchains in perpetuity, so it isn't a matter of "liking" or "not liking" any particular application. Rather, I'm speaking in terms of present facts, and purposely not making any points about the future.
Sure, people could become passionate en masse about seizing control of their assets in a decentralized, trustless, permissionless, etc systems. I'm not discounting that possibility. But in the present case, blockchains exhibit far more utility for resolving hard problems in domains of computer science than they do for cryptocurrencies.
> To your comments re bitcoin, it sounds to me like somebody complaining that Internet is slow back in the 90s/00s.
I never considered the internet slow in either of those decades because it was all I knew. More to the point, I think you mistake me for someone who is bearish on cryptocurrencies or blockchains in general - I'm emphatically not. I just think that Bitcoin is not going to be the actual winner for that use case, and regardless of future innovations, it is pretty clearly not succeeding now, either, for the reasons I've already outlined.
> To your comments re bitcoin, it sounds to me like somebody complaining that Internet is slow back in the 90s/00s.
To their point though, dial-up modems are (by and large) a relic of the past and have been replaced by better (i.e. faster) methods of internet access.
Depends on your definition of slow. The fact that I can send hundreds of thousands of USD across the world in about an hour seems to beat any other method easily available to me.
> very high transaction fees
A month or two ago, sure - TX congestion had driven up fees to ridiculous levels. Now that the congestion has cleared, I can once again send hundreds of thousands of USD across the world for less than a dollar.
> A month or two ago, sure - TX congestion had driven up fees to ridiculous levels. Now that the congestion has cleared, I can once again send hundreds of thousands of USD across the world for less than a dollar.
Congestion has only cleared because the transaction volume has fallen to a two-year low:
Ah, that leads me to the https://en.bitcoin.it/wiki/Genesis_block which can certainly be interpreted as indication of political intent from Satoshi. Are there any others?
>>The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.
>>Yes, but we can win a major battle in the arms race and gain a new territory of
freedom for several years.
>>Governments are good at cutting off the heads of a centrally controlled
networks like Napster, but pure P2P networks like Gnutella and Tor seem to be
holding their own.
> Did Satoshi state any political goals in other communications?
The genesis block contains, among other data, a reference to the front page of the January 3rd 2009 edition of The Times;
The Times 03/Jan/2009 Chancellor on brink of second bailout for banks
Whether this was simply to prove that the genesis block was mined no sooner than January 3rd 2009, or if additionally that date and that news paper was chosen for the headline of that day one cannot know but a lot of people choose to interpret it as a comment on the instability caused by fractional-reserve banking.
Yes, I strongly agree with you. In my opinion, blockchains have a lot of legitimate utility, but their applications are mostly the purview of cryptography and traditional Byzantine fault-tolerance. Contrary to popular belief, blockchains (in the abstract) are capable of resolving difficult problems in cryptographic protocols that would otherwise be impossible or rely on trusted third parties. In the context of state machines and distributed systems, they can be used to design exceptionally provable fault-tolerant architectures.
All of that gets dragged in the mud with the giant financial sideshow running rampant through the industry. It's become enough at this point to overshadow the (very legitimate) academic research and engineering work put into blockchains for the last several years.
few things can do as much harm as an untrustworthy money system or say a damaged "rule of law" - both of which the western world struggles with right now.
we are plenty inefficient with many things (subsidies, war) but inefficiency isn't even in the same league as a broken (fraudulent) money system.
It's not really a solution to the Two Generals Problem.
The Two Generals Problem, as stated, implies that a failure to reach consensus about a future decision would be catastrophic and ought to be considered as a failure of the protocol.
By contrast, in blockchains a failure to reach consensus about a future decision is not catastrophic, instead we have a very strong guarantee that we do reach consensus for the whole of the past up to some reasonable time close enough to the present. This is rather "eventual consistency".
I really dislike how many academic and non-academic papers lump all of these difference types of "byzantine generals problem" all into the same phrase. Another aspect is protecting against attacks. Some papers "defend" against attacks by modelling random errors that they also call "byzantine", this is bullshit and sort of like saying Error Correction Codes are equivalent to cryptography.
> It's not really a solution to the Two Generals Problem.
The Two Generals Problem, as stated, implies that a failure to reach consensus about a future decision would be catastrophic and ought to be considered as a failure of the protocol.
Strictly speaking, sure. But I still agree with the parent's point. Bitcoin was the original innovation that inspired later research in proof-of-stake based blockchains. PoS consensus systems do allow for blockchains to be used to resolve consensus for future decisions in the context of deterministic state machines (ironically, somewhat at the expense of strong eventual consistency guarantees provided by proof of work consensus).
> I really dislike how many academic and non-academic papers lump all of these difference types of "byzantine generals problem" all into the same phrase. Another aspect is protecting against attacks. Some papers "defend" against attacks by modelling random errors that they also call "byzantine", this is bullshit and sort of like saying Error Correction Codes are equivalent to cryptography.
Interesting - do you mind providing an exemplary paper or two? I'd like to read them.
> PoS consensus systems do allow for blockchains to be used to resolve consensus for future decisions
I suppose you mean that someone (out of a group G) can commit an instruction saying "the future decision is Y" into the blockchain, and at some time later everyone will be convinced this is the future decision. This is not related to PoS, this will work for pretty much any system that supports smart contracts.
In this situation the decision is not executed in a shared manner - even if one of G gets disconnected from the network, the decision still gets executed by the blockchain. So it is still different from the Two Generals Problem (as stated), where everyone in the group G must participate in executing the decision.
So blockchains still don't solve the Two General Problem. Nor should this be a goal. I think the Two Generals Problem is stupidly strong and really unnecessary in the vast majority of real computing scenarios, including the blockchain.
> Interesting - do you mind providing an exemplary paper or two? I'd like to read them.
It's basically all of them, and I don't think many are worth reading so I don't remember the titles. Search for papers that try to solve the Sybil or Eclipse attacks. (Quite a lot of them rely on trusted authorities, these are not relevant here, I mean the other ones.)
> I suppose you mean that someone (out of a group G) can commit an instruction saying "the future decision is Y" into the blockchain, and at some time later everyone will be convinced this is the future decision. This is not related to PoS, this will work for pretty much any system that supports smart contracts.
No, I specifically mean a voting protocol in which the "round" will not proceed ("the generals will not attack") unless all voters v in the voting set V come to consensus about the values t in the set of transactions T at the next block height ("the city to be attacked", "the time to attack", etc). Then the voting protocol asserts a proof of stake, such that Byzantine voters are penalized and honest/correct voters are rewarded. Then future decision resolution is provably guaranteed, so long as all activity remains deterministic, the cryptography is secure, all voters in the set V are online and active, and proof of stake is a plausible economic incentive.
The caveat here is - pretty obviously - that it's possible for the consensus system to enter an infinite loop if it fails to reach consensus (just like the original problem). So no, it's not perfect, but it is modeling the Two Generals Problem and compartmentalizing it somewhat, though it can't completely resolve it.
Otherwise, I agree with you - the classical Two Generals problem is an inordinate fault-tolerance ideal.
> [..] Then the voting protocol asserts a proof of stake, such that Byzantine voters are penalized and honest/correct voters are rewarded.
How do you decide which one is a "Byzantine" voter? A minority is not necessarily dishonest. If you penalise a minority, at each step at most ceil(n/2-1) of the group will lose their stake, even if they were honest. That sounds overly-harsh.
I believe this is a terminological mistake. In the original formulation, all of the generals are "Byzantine" because they all work for the Byzantine Empire.
In the original paper by Lamport, Shostak, and Pease, the problem is described this way: "We imagine that several divisions of the Byzantine army are camped outside an enemy city, each division commanded by its own general. The generals can communicate with one another only by messenger. After observing the enemy, they must decide upon a common plan of action. However, some of the generals may be traitors, trying to prevent the loyal generals from reaching agreement."
A common way to describe the participants in such a scenario is simply "honest" and "dishonest". The term "Byzantine" has become used in distributed systems research to refer to situations in which we can't be sure of participants' honesty and intentions. However, it doesn't correctly refer only to the dishonest participants.
My point still stands - are you going to punish people simply because you're "not sure" of their honesty? That is what the parent post (to my previous post) was implying.
The Two Generals Problem is a specific problem, separate from the Byzantine Generals Problem, which is an extension of the Dining Philosophers Problem. There are other papers which advertise "Byzantine" solutions or problems, due to the references to qualities of similar problems. They are all concurrency problems, but they all have different specific criteria and solutions. You can find the related papers under each problem on Wikipedia (they are officially behind paywalls, but you can find the PDFs indexed on search engines)
I understand, however my whole point is that these different other qualities change the shape of the problem (and necessary solutions or impossibilities) completely, often in ways that make it unrealistic for the real-world problems that the paper appeals to in its abstract as motivation. The word "byzantine" is so over-used as well as abused in this field of research, that for a random paper that mentions that word I can't really tell what actual problem it's solving unless I read through it fully in detail. I suggest that a wider more systematic set of terms would help to avoid this problem. e.g. instead of saying "secure" say "unforgeable against a chosen-message adversary" etc.
Lamport's original paper does seem to treat adversaries appropriately, but I've seen many worse papers from recently failing to consider what happens if a malicious peer specifically tries to exploit your "defence" mechanism.
> The word "byzantine" is so over-used as well as abused in this field of research, that for a random paper that mentions that word I can't really tell what actual problem it's solving unless I read through it fully in detail
I wouldn't say this is a problem. It's a useful red flag that you should stop reading this paper, or at the very least question the competency of the authors. Could save hours of your life!
It is a massive problem because it wastes a lot of people's time doing research in this area, trying to read up on previously-done work most of which is uninsightful and useless.
The whole point is that I can't tell if it's a red flag simply by reading the abstract, I have to read the entire paper. The good papers also use the same vague terminology!
Right, it's not solvable. But as I stated in the other reply, it's also unnecessary in the vast majority of systems - either failure is not catastrophic, or you only need consensus about the past, or the decision is not executed in a shared synchronised matter, or some other property that means you don't actually need to solve the actual Two Generals Problem.
I really think we need to stop citing it as a "thing", it's like the Halting Problem, stupidly strong and not necessary most of the time. Saying that something "solves" Two Generals is diverting the conversation into pointless impossibilities.
Bitcoin isn't meant to be efficient. It's meant to solve problems that (Satoshi believes) are vastly more important: decentralization, trustlessness, & inflation.
«The blockchain got distracted by finance.»
Payments are the perfect application found, so far, for the blockchain.
> Payments are the perfect application found, so far, for the blockchain.
That statement really needs to be tempered with context.
For some relatively recent blockchains, and for particular tradeoffs that enhance transaction throughput over raw security guarantees, payments are a practical use case, yes. But of course, the parent was talking about Bitcoin, and Bitcoin is a miserable payments protocol.
There really shouldn't be any sentimentality to that second assertion. It's simply a poor currency according to the metrics of price volatility, transaction verification speed and transaction fees. If you redefine the ideal parameters of a payments protocol as trustlessness, permissionlessness and decentralization, then sure, it seems better. But then we're disagreeing on what constitutes a robust payments protocol according to normative statements, not positive ones. I think the only people who would agree Bitcoin constitutes a robust, practical payments protocol are those who really want its qualities in a payments protocol. But in the real world, companies like Stripe have very specifically and publicly abandoned it for their own alternatives.
I do think blockchains can be used as a payments platform, with the caveat that I think proof-of-stake based consensus and various throughput improvements (not lightning network) in other blockchains are the way forward for that use case. Stripe has invested in Stellar, Tendermint/Cosmos can scale up dramatically, etc. I also regard Bitcoin as a cultural landmark of exceptional importance because it inspired many follow-on innovations in research and engineering. However, for most practical applications, I consider Bitcoin to have failed (thus far) in its original goal as a payments protocol, and to be largely superseded in practice by various alternatives.
As you said: Bitcoin isn't designed to be efficient. But if payments were actually the "perfect" application for it, it would actually be efficient, because the utility of a currency becomes higher the more efficient it becomes (e.g. higher liquidity, higher stability, etc). As for blockchains in general, I don't think payments are really the perfect application for any of them, because I disagree that decentralization, permissionlessness or trustlessness are desirable qualities in a payments platform - each of those reduces efficiency, which leaves you with private blockchains that tradeoff one or more of those security guarantees. They can be used for this purpose, but I don't consider them ideal at the moment.
Rather, I think blockchains map well to solutions for hard cryptographic problems and fault-tolerant distributed systems.
«It's simply a poor currency according to the metrics of price volatility, transaction verification speed and transaction fees.»
Bitcoin critics like you always focus on temporary issues. All the points you list are either being solved or fundamentally solvable. It's like criticizing cars from the early 1900s and missing the point that, obviously, they, like Bitcoin, will improve over time. For example:
• Transaction verification speed: new technologies like Lightning Network make them instant; even a 0-conf non-RBF transaction is relatively safe to accept instantly for most use cases (eg. certainly safer than a CC transaction which can be fraudulently charged back.)
• Transaction fees: solvable by off-chain technologies like Lightning, or by increasing the block size (Graphene or UTXO set commitments make this scalable).
It is not obvious that those problems are solvable, nor is it obvious that they're solvable in a way that doesn't simply recreate existing systems. And even if they are solvable, there's no lower bound on when that will occur.
And cars from the early 1900s may very well have been unsuitable to to the purposes for which they were employed in the early 1900s. You can't ask people to build their businesses and trust on a foundation that will "maybe" be poured "sometime" in the future.
You cherry-pick cars in the 1900s while failing to ignore all of the early 1900s technology that didn't succeed because there was no way to improve it. None of that was obvious then, either.
> why oh why does it take 3 days (in the US) to transfer funds between my own accounts in two different banks?
Wire transfers are instantaneous [1]. They cost pennies a transaction, a fee banks often cover if you have more than ~$15,000 with them. For smaller transfers, real-time P2P was recently rolled out across most American banks [2]. This was a result of competition from Venmo, which one could think of as a lightning network over ACH [3]. (The latter being Fedwire's net settled and thus slower but cheaper cousin.)
> When he does an inter-bank transfer, why does it take 3 days for to clear?
They chose the cheap, safe option over the fast, risky one. I talked about the difference between net and real-time gross settlement in an earlier comment [1]. TL; DR There is a fundamental trade-off between mutability, speed and cost.
You can certainly have instant funds transfers, if you are comfortable with a single security lapse instantly leading to the loss of your life savings.
I'd imagine international transfers are slower proportional to the risk of security lapses when working with disparate organizations (and the difficulty in reversing mistakes.)
Blockchains might be more secure in principle than traditional banks, but blockchains are pretty much all designed so that a single key compromise amounts to a catastrophic failure. Now you can manage this by having manu wallets and many keys to some extent, but at the end of the day it's still much less reliable than just having a bunch of bankers who are paid to take their time and ensure sure all transfers are authorized.
Agreed. Bitcoin solves some problems with current forms of payment that shouldn't be unique to blockchain. Credit cards and checks are the equivalent of giving vendors your wallet's private key.
In my native Sweden people can send money to each other directly from their own bank accounts via a mobile app instantaneously for free over the Swish network. The limits are up to a temporary maximum amount of approx. 18 535 USD (150 000 SEK) and down to a minimum amount of approx. 12 cents equivalent (1 SEK). More than half the population are using it already [1].
Bank wire transfers within the entire EU is regulated by the SEPA framework which basically means that banks are not allowed to charge more for a intra-EU transfer than a transfer within the same country. This allows me to send money between my EU bank accounts for a fee that is usually between 1-3 EUR and never more than that. The transactions take one bank day to clear in my experience.
Currently, the EU equivalent of Swish is being rolled out. It's called "SEPA Instant credit transfer" [2] and will work pretty much the same as Swish, except with coverage over the entire EU.
The money is insured [3] and faulty transactions can be reversed with due process in many cases. [4]
It's unfortunate you have to have these experiences with your banking system - it does not work like that all over the world, however.
Also: Can someone please enlighten me on what we need "the blockchain" here for?
One thing I dislike about wire transfers in Finland (and I would assume similar regulation applies in EU) is that banks will ask the purpose of transactions over certain amount, or the origin of cash when depositing it. I want to use my money however I see fit and I shouldn't need to disclose anything to the bank. This is something that a blockchain could offer me.
Try scaling that model the whole world. How do you get some random country to join it? The costs of maintaining all that regulation framework are astronomical and depend on political circumstances that might change quite quickly (Brexit for an instance).
There's just no way that the whole world will have something like that in the next 25 years.
So, if you love your banking system, don't switch to bitcoin.
It doesn't mean blockchain doesn't have any value for other people/use cases.
Because the USA has an antiquated banking system, resistant to change.
My bank in New Zealand has instant clearing to accounts within the same bank, and hourly clearing to other banks. I can transfer money from my Australian account to my New Zealand account using TransferWise within 3 hours, or 2 working days if I use the international transfer service offered by my bank.
One problem with America is that you have so many small banks and credit unions, a small town might have its own bank, that nobody is willing to standardise and agree on new standards. This is why Americans still use cheques, and why adoption of contactless payment using debit/credit cards, as well as chip+PIN (or even swipe+PIN) has been so slow.
Contactless payment is so ubiquitous in Australia and New Zealand that I've had to insert my card literally once all year.
Australia only has half a dozen main banks, which service >90% of the population. For whatever economic implications that has (too big to fail etc.), it has been great for encouraging innovation.
It is also a service culture where they have extra people to help you pack your bags. Meanwhile, Japan, Scandinavian countries and plenty of other first world places are going big on automation. You don't even get bags or a checkout assistant, it is all self-scan and pay by chip and pin (or contactless).
Against this back drop of US service culture the idea is to make it as easy as possible for the customer - they don't have to enter a complicated four digit pin number, they can just sign their signature and if the cashier thinks it looks like the scrawl on the back of the card then the sale is done.
I currently do not have millions of credit card details from a client database on my computer but that has happened before now. If I was criminally minded then I would have been able to sift off a lot of money, however, I have yet to steal a penny, despite also knowing some flaws in the 'double entry system' that I could have hacked to cover my tracks. I am sure that there are many millions of developers out there that have had such data on their laptop at some time. How many go rogue and steal? Not many. But in crypto-land it seems that this situation is reversed, everywhere there is a scam. The good actors are as rare as the bad actors in regular accounting/book-keeping.
So ten years ago when I did have many millions of credit card numbers that could be used (no 3D secure back then), I was trusted but not expressly by a single one of those named in that 'Sybase' database (as it was then). The system then very much worked entirely on trust and generally all those in the chain were trustworthy. I don't feel that banking has moved on in the USA from this trust way of working, things are much more locked down in the rest of the world. This is good for many reasons, I prefer today's customer databases where all the bits you would want to hack are hashed and salted if at all present.
This flakiness of banking in the USA - where a bank is not really any more likely to stick around than a company - means people do flock to the crypto coins precisely because of the 'store of value', there is chance of getting more than 2% return and the perceived risk is not much 'worse'.
Hopefully the net result of this fantasy blockchain nonsense is that we do build out better banking systems that do have a better 'trust model'.
The article does point out the absurdity of pushing around a whole copy of the database to every user and keeping it synced...
We leapfrogged contactless and went directly to mobile payments authorized by a fingerprint or PIN to a user-controlled device, a much better security model.
> Modern settlement and clearing is efficient. It's perhaps the most efficient part of the financial system; it is certainly the easiest to upgrade.
This isn't really right. Pre-trade (price discovery and trade matching) are about the most efficient parts around today - in equities in no small measure due to HFT. Post-trade (clearing & settlement) is pretty messy and error prone. Something like $50bn a year is spent on reconciliation processes, mostly in manual operations work. It's certainly reliable, but it isn't especially efficient.
It's also far from being the easiest to upgrade. See the incredible pain most markets go through when they face a mandatory move from T+3 to T+2 settlement. Making changes to post-trade procedures pretty much means a wholesale, industry wide change.
(As an aside, a shared database actually goes quite a long way towards alleviating some of the problems in clearing & settlement - the author makes it clear they see quite a bit of potential in private blockchains, just not public ones. And clearing & settlement is an area well served by private blockchains.)
What is the point of a private blockchain? I thought the appeal of the blockchain was its validity in spite of malicious actors? If your use case is private why is it so hard to have an accurate ledger?
'Private' just means 'limited'. We are still talking about multiple distinct counterparties transacting with each other.
Public blockchains replace the need for trust with, essentially, energy usage. That's what gets you your validity, despite operating in a hostile environment. They give you a shared, single source of truth about the state of whatever system you've embodied on that blockchain. The problem they are solving is the undesirability (or impossibility) of trusting an intermediary.
Private blockchains replace the need for reconciliation between parties who minimally trust* one another with a method for provably ensuring everybody has and will get the same information. They also give you a shared, single source of truth about the state of your particular market, but you get that in an environment where parties on the network are assumed to be behaving well. The problem these solve is the cost and complexity in establishing a trusted third party. It isn't hard technically to have a reliable ledger, but it is hard structurally and operationally.
The point of a private blockchain is to mutualize the infrastructure required to form that single source of truth. You could do it with a trusted intermediary operating a big shared database, but you'd have to set one up in a market where that doesn't exist and assign to them complete responsibility for your record keeping. Private blockchains are a way for parties with a shared problem - the cost of reconciling their independent books - to construct a solution that doesn't require forming and staffing some new industry utility, or abrogating control over their own records (so they can maintain secrecy of trade data, for example.)
*I mean by this, they have stronger economic and legal incentives to cooperate in doing business with each other than they do in ripping off the other guy. Put another way, their horizon for trusting a counterparty extends beyond the immediate transaction on the table at any given moment. This isn't the case in anonymous individual peer-to-peer transactions.
The finite property of Bitcoin and the fact that you can trust said property and the fact that control of that property is decentralized is reason enough for blockchain my friend.
Even with Bitcoin we don't know the exact scarcity because private keys get lost.
A wallet to which the private key has been lost is indistinguishable from the wallet of someone who is holding their funds because they want to save them for the future.
But is this really true? Honest question: the recent BTC/BCH split effectively doubled the supply in one single instant. Can't this happen again and again whenever the pressure of demand grows too high?
It's called PoW. Go for the highest total work in the chain. If you go for anything else you are either allowing your self to be attacked by a malicious branch, or you are yourself attacking the network.
There's at any given moment exactly one chain that has the most PoW (by definition).
That's the reason why Ethereum is switching to PoS, because they know they can't just take over Bitcoin on total PoW.
Be advised that PoS means it's not really a public ledger, but a private chain set up by a very large private club.
I totally, 100% agree with his central point: I don't see the need for untrusted intermediaries, with the essential caveat of "yet."
One place where blockchain clearly makes sense is Bitcoin. Or Bitcoin did make sense to me until the developers kneecapped future development and transactions fees soared and there are too few transactions allowed for it to become a useful ledger for everyday use of a large number of people.
Other cryptocurrencies solve that weakness.
But the spate of blockchain startups don't make much sense to me. In particular, in energy, I see it as a bunch of clear snakeoil. The startups that are most honest about this use less-competent executives' FOMO on blockchain to get their foot in the door, then say more honest things like "Ethereum doesn't make much sense for energy trading with your neighbor."
Because with energy, like with most things, there is already a trusted intermediary, and trying to cut them out of the deal doesn't actually mean you trust them any less. They still have control, and power, and you still are giving them your trust.
Blockchain may be useful in other situations, but it really remains to be seen. It's very interesting tech that seems like it could have applications all over the economy beyond currencies, but I think we may just be at the peak of the hype cycle and all these will come crashing down in a big dose of reality soon.
> there is no lack of trusted enough intermediaries in the financial/accounting sector.
Define "trusted enough". Now imagine you are a Chinese millionaire willing to take your money to a safe port, a Venezuelan/Somali that doesn't trust anything government, a Russian/Brazilian/Italian middle class practicing the so much loved national game of tax evasion...
"Trusted" can mean a lot of different things all around the world.
Do we have a list of successful, not-scam-y ICOs, where the investors/crowd funders actually got what they wanted in the end? (And I don't mean the tokens, but rather the thing that was crowdfunded).
I invite you to try to raise money for your company with VCs and then try with an ICO. Then choose which one was better for both your company and the society as a whole. Just as the NYSE exists along with penny stocks, so will the blockchain-based assets. With the time, there will be less scams, but never zero, just like non-blockchain-based assets.
"If no data needs to be stored, no database is required at all, i.e. a blockchain, as a form of database, is of no use. Similarly, if only one writer exists, a blockchain does not provide additional guarantees and a regular database is better suited, because it provides better performance in terms of throughput and latency. If a trusted third party (TTP) is available, there are two options. First, if the TTP is always online, write operations can be delegated to it and it can function as verifier for state transitions. Second, if the TTP is usually offline, it can function as a certificate authority in the setting of a permissioned blockchain, i.e. where all writers of the system are known. If the writers all mutually trust each other, i.e. they assume that no participant is malicious, a database with shared write access is likely the best solution. If they do not trust each other, using a permissioned blockchain makes sense. Depending on whether public verifiability is required, anyone can be allowed to read the state (public permissioned blockchain) or the set of readers may also be restricted (private permissioned blockchain). If the set of writers is not fixed and known to the participants, as is the case for many cryptocurrencies such as Bitcoin, an [sic] permissionless blockchain is a suitable solution."
Isn't public blockchain good for money laundering and ransomware? I don't know of any better methods to collect illicit funds that aren't more problematic than current methods to identify the parties in bitcoin transactions
Also, cryptocurrency has seen a surge of use in Venezuela, where the currency is thousands of times less valuable than the paper it's printed on. Credit cards and cryptocurrencies are used wherever people have access to them (which is a very small subset, admittedly).
Basically, cryptocurrencies are useful wherever normal currencies are unavailable, unlawful, or in order to subvert their regulatory practices.
That's a good point. Crypto could definitely serve a purpose in areas where there is runaway inflation or instability, if they are easier to get ahold of than another currency.
I find the article a bit too focused on the financial aspect of blockchain technologies. Yes, Bitcoin is a payment system but the underlying technology goes way beyond the financial sector.
I would not say that having a safe ledger that we all can trust without question for our democracies around the world a solution to a "non existant problem", just look at recent elections.
Scalability/Performance issues should not be taken too much into account today, as we're still in the infancy of these technologies and can be pretty sure that they will radically improve over time.
I see a point in trustless records of ownership. There is already a market for it in things like shipping, where transporting container ownership claims (a few pieces of paper) is more expensive than transporting the containers themselves.
There is also a huge potential in corruption rich governments, where proof of ownership can suddenly disappear. Though implementation may be hard. :)
Even in non (or ver little) corrupt countries like my own I see a point. Not so much because we need it right now, but because we might need it in the future.
Why wouldn’t you build your anti-corruption government tech while you have the chance because your political leadership and the bureaucrats aren’t yet going to have a vested interest in stopping it?
Maybe that’s a little pessimistic, and it’s certainly not how you should sell it, but it’s not like our current record keeping tech couldn’t need an overhaul anyway because it’s really, really, awful. Adding Blockchain tech to make it trustless wouldn’t be cost-inefficient if you’re down under the hood anyway.
> So we will inevitably end up with some variation of Proof of Stake protocol – where we will simply have to trust some users more than others
Doesn't this defeat the point? I can't imagine a scenario in which a proof of stake system does not become centralized. The average person will want to stake the extra money they have but won't want to maintain a dedicated machine with adequate storage and zero downtime. They will entrust a third party to earn money by staking on their behalf. Thus, you have created a centralized system with a whole bunch of extra complication.
I studied the source of the bitcoin blockchain a couple of years ago when the whole "blockchain will change the world" movement began. Although I really liked the elegance of the blockchain, I never understood what the blockchain would solve in a real-world application.
How I see it: blockchaining is an arms race in computing power. In order to sufficiently 'secure' your chain you need to spend more value (electricity) than an attacker is willing (or capable) of spending. This makes blockchains very expensive, slow and an environmental disaster.
Unless a blockchain has tremendous value (like cryptocurrencies currenly have) there is no way to sustain them.
In theory, the value of the blockchain is proportional to the value of attacking it; if a particular chain is not very valuable, it doesn't need to have much power securing it.
That is correct, but a non-distributed blockchain (i.e. something you use locally) sounds like a something that can also be solved by using a database or even your filesystem.
I'm not saying blockchains are bad technology, non-distributed blockchains can be a very good solution to certain problems, but it's not the "world changing" revolution many claim it to be.
What? What would be the point of a non-distributed blockchain? Fundamentally, blockchains are a solution to the distributed consensus problem, where you're not guaranteed anything on the length of time it takes to communicate between two nodes. Also known as asynchronous consensus.
If you're local (or within a small network with bounded, you don't really need asynchronous consensus. Dolev-Strong or any number of other synchronous/semi-synchronous protocols would work fine.
I think LeonM's point WAS that it's unnecessary to qualify "blockchain" with distributed, because as you say, it would be relaively pointless otherwise.
Expensive and slow seems to be the point. An attacker would need to spend an inordinate amount to change just the most recent transactions - this provides high confidence that the chain is immutable and secure. Maybe digital scarcity with trustless, secure transactions is not valuable to you (or the author), but many people do see promise there.
Additionally, the "environmental disaster" claims have always seemed shallow to me. Yes, it is a serious issue if everyone is mining with coal powered electricity, but how did it get so cheap? Isn't it on the government to not subsidize coal? The largest mining companies are finding super cheap energy in renewables (1). In the long run, I feel like mining is what can pay for further investment in renewables. For instance, see the article below about Germany paying customers to use electricity (2). Seems like government level mining might be a good investment.
This. Replacing the term "intermediary" with the term "institution" is an exercise worthwhile. For one will realize that institutions serve various important social functions that go far beyond middleman style profit and rent skimming.
Proponents of blockchain revolutions need to come to terms with existing institutions, working with them rather than against.
>>For one will realize that institutions serve various important social functions that go far beyond middleman style profit and rent skimming.
Monitoring transactions? Preventing people from transacting?
I think people should be able to do peer-to-peer electronic transactions the same way they can do peer-to-peer physical transactions with cash.
It would empower individuals and serve as a guard against encroachments of their liberty.
If cryptocurrency were never invented, people would have had no way to donate to Wikileaks when the financial blockade was imposed on it by major payment intermediaries. And that's in the West. Imagine what the situation is like in countries like China.
Organisations on the fringes like Wikileaks are important guarantors against centralized tyranny. Without a payment system outside the control of centralized authorities they can be more easily snuffed out.
In other words, cash is an institution as well, and is important.
Empirically speaking there's already four verticals where blockchain is dominating (in terms of market share growth YoY):
1- Illegal goods [The deep web]
2- Fundraising (both good for individuals who previously could not act as angel investors and rip the xx,xxx% returns because of wealthy discrepancies and good for companies who do not need to drink 75 coffees with VCs) [Companies: Ethereum]
3- From fundraising thru blockchain-based assets came out a new speculative open 24/7 international market [Companies: Exchanges]
4- As an additional form to store of value (Like 1-digit % of your belongings). A blockchain-based asset it's divisible, easily transportable, encrypted and finite. Possibly it also serves an use like gold in the aerospace and electronic industry.
There's also one more vertical that will eventually be dominated by the blockchain:
Micro Transactions. If a transaction costs 0.00001 cent, then you can easily buy data for 1 cent a piece. Something akin to IOTA (or a working version of IOTA itself) will inevitably be built with a trillion devices connected to the internet. Banks wont ever be able to process 0.00001 transactions.
> Banks wont ever be able to process 0.00001 transactions
Why not? Nobody processes at that quantum because no demand has been shown for the service. Blockchains are inherently less efficient than the databases modern financial systems run on. That tradeoff is core to the technology.
There's yet not enough devices connected to the internet wiling to share their data. There's a whole lot of companies that need to be created and things to happen (which might never do) for something like a data marketplace to exist. If that ever happens, any company that has the resources to make sense of additional -targeted- streams of data (as they already effectively do) should be able to turn a significant profit from the acquisition of said data.
Either for product customization or advertising - or both.
For every transaction a bank processes there's obviously a fixed cost. Once you account for all the costs relative to them in a given year and divide that number with the number of transactions in that same year, I doubt, given the margins of a given transaction, that a bank can break even on 1 cents transactions. That's assuming that the tech the banks use as of now does not improve by magnitudes in a couple years.
> Once you account for all the costs relative to them in a given year and divide that number with the number of transactions in that same year, I doubt, given the margins of a given transaction, that a bank can break even on 1 cents transactions
This is a strange argument. Visa's costs, per transaction, are demonstrably lower than Bitcoin's. Specific banks and systems may be more or less efficient. But fundamentally, the trustlessness that is a blockchain's selling point comes at the cost--by definition in proof of work systems--of efficiency.
intermediaries fees are often more than operational expenses. In some industries, the fees might be significantly high especially when competition is low.
With blockchains it's mostly about operational expenses. Now, bitcoin transaction fee might be currently high but it is a problem of this blockchain implementation and not with blockchain per se.
>Banks wont ever be able to process 0.00001 transactions.
My bank is processing 0 cent transactions and IIRC in Q3 they're going to support SCT Instant, meaning the bank transfers will take under a minute within the SEPA area while still being 0 cent cost.
Well, that's interesting. I wasn't aware of that. I'll look into it. With that said, my theory is that unless most banks of the world adopt a similar technology within a reasonable timeframe (which is unlikely), a blockchain-solution will likely dominate.
If banks can't process 0.00001 transactions, then how in the world would cryptocurrencies be able to as cryptocurrencies are easily thousands of times less efficient than centralized servers?
Many investment opportunities are closed off to willing participants by government regulation, investment minimums, transaction costs and other factors.
Looking at most (not all) of the non-currency alt coins, there is clearly demand for cheap access to new investment opportunities. Yes, a lot of people are going to lose to scams, some have already. At the same time distributed ledgers do solve a very real "access" problem.
Similarly, contracts and banking have not integrated well with the technologies most business uses. Yes, Stripe has reduced payments friction beautifully, and Paypal has brought credit applications and approvals to the checkout process. But big dollar transactions that use Letters of Credit, structured loans, milestone payments, etc... these areas have few programmatic solutions.
Smart contracts are a fast approaching solution to this need, they have no analog in the conventional commercial world, and yes - they will be a game changer.
If my customers can issue an irrevocable L/C, denominated in Etherium for example, that is self executing based on terms mutually agreed in advance, then my business will chose that route over lengthy and expensive bank L/C's. It also means we'd probably choose Quantstamp for contract security, and perhaps SALT Lending to fund the Ether, and possibly expend BNB to covert the currency into Litecoin for storage until such time as we convert to fiat.
That is the promised ecosystem. It is no more expensive or complex than the universe that surrounded EDI, or that describes most business process integrations in common use today.
Its just difficult to look at all this from both a business and programmatic point-of-view simultaneously.
I’m a PhD student at Aalto School of Economics in Helsinki, Finland. In general, I’m interested in evolution – specifically, how complex entities evolve over time.
FWIW, those who are shut out of centrally managed payment systems most definitely understand the point of Bitcoin. For example, see this recent article on Sci-Hub:
He finished his PhD thesis last year, and it's not unreasonable for him to have spent the past 15 months doing research on blockchain technologies, give the areas he works in.
I'm not sure how you conclude that the PhD has been earned. The about page uses the future tense, there has been a lot of time to update it, and there's this:
With luck, my thesis will be complete in late 2017 – only three years later than I planned! The extra years have been well spent in researching and writing about environmental issues, particularly energy/environment nexus. This has resulted to two books in collaboration with Rauli Partanen: Climate Gamble and Musta hevonen.
When an author puts credentials in the title of an article, then credentials are on the table as a point of discussion.
>I'm not sure how you conclude that the PhD has been earned.
I didn't say it was. I stated the thesis was finished. These are distinct.
The latter requires a defense of the thesis before a committee, and in pretty much every decent PhD program, is merely a formality since the advisor should not let the student defend until he/she is ready. I had my thesis finished long before I did my defense, and I passed that months before the PhD was conferred, which happens at graduation.
Here's [1] a speech given before his thesis defense, so I suspect he has passed his thesis defense. So either he got his actual PhD at the end of the term or is waiting to get it at the next term end.
>When an author puts credentials in the title of an article, then credentials are on the table as a point of discussion.
Neither PhD nor Doctor appear in the title or in the article. You brought up the PhD silliness. A PhD is neither required nor implied in this post.
You're still stuck on ad hominem. If you want to criticize, do so on the merits of the article, not strawmen you dig up.
Ad hominem is wrong, but so is argument from authority.
My professional opinion as a blockchain researcherI’ve spent the last 15 months researching the implications and possibilities of blockchains and related “distributed trust technologies” from a business and societal point of view.
And dirtyaura's comment consolidates the author is some figure we can trust mantra.
In the end, the article states that people should not put their savings into coins but smart contracts are nice. Something others have said before but it's more clickbaity to state that it's coming from a professional blockchain researcher.
Claiming it's an argument from authority is the fallacy fallacy.
An argument from authority goes: "I am an authority therefore the following is correct." This is nowhere near that.
He correctly stated it was his professional opinion that..... He didn't claim the argument is correct because he's a professional. And he is a professional, doing this work in a professional context for 15 months.
So it is absolutely correct to state "my professional opinion is...". He has likely put far more work into this, and certainly with better background and training, than probably anyone on this thread questioning his credentials instead of addressing his message.
It's not a fallacy fallacy since I point out one weakness in the article but do not assume the proposition is wrong for that reason. Actually, if you read my last paragraph, it's obvious that I even agree with the author's argument to some extent. I only attack him for making a boring claim more clickbaity through his credentials.
From my quick skimming, mostly apo questioned the credentials. Yes, you are using ad hominem against the one you accused (rightly of doing so).
I quoted the author's about page, which says nothing about block chain research. That quote happened to mention a PhD, which I could not care less about. Much more important is the fact that the bio page says nothing about block chain research.
It is you who seems intent on discussing the author's PhD, which you demonstrated in your first response - and your second.
I brought up the author's about page because the author implicitly appeals to authority in the title of the piece by claiming to be a "professional" "blockchain researcher." The article itself says nothing about this research other than it supposedly happened. Nor does it contain anything that I found novel or insightful.
The second part of my original comment speaks to the substance of the article.
A PhD is neither required nor implied in this post.
I never said this, nor do I care what letters appear after a person's name. But when that person tries to claim the mantle of authority in the title of an essay, looking into the author's background is fair game.
Neither the article nor the bio provide evidence that that the author is a "professional" blockchain researcher. The content of the article is mediocre at best, suggesting the author has a weak understanding of the topic at hand. I provided a specific example in my first response.
It's just the nature of things and it transcends blockchain. Get an episilon ahead of the general public (waaaay easier in a young field like blockchain), promote yourself, and there you go. I got deeply interesting in Bitcoin in 2012. It was interested seeing all of these self-proclaimed experts in the field pop up--giving talks at conferences, etc. At first I was frustrated by such "charlatans" ("Hey! I don't think of myself as an expert and I know way more than that person..."), but then I realized that these are people who are passionate about subject, have learned a bit more than the average joe, and kudos to them for putting themselves out there and spreading their thoughts/learnings.
With PayPal now closed to her, she [Elbakyan] simply turned to bitcoin donations to keep feeding Sci-Hub’s growth.
...
One 2017 PeerJ study estimated that Sci-Hub owned $268,000 in unspent bitcoin as of August 2017. (Though Elbakyan has publicly disagreed with that estimate, she hasn’t said how much she owns in bitcoin. She claims the exact amount is confidential.)
He has worked as a researcher on a research project by Aalto University (leading technical university in Finland), Ministry of Finance and a few companies that is researching blockchains and their potential effects on society (see e.g. https://medium.com/blockchain-reconnaissance/what-is-project...)
So yes - he is a professional blockchain researcher.
> Unfortunately for this central value proposition of blockchain, there is no lack of trusted enough intermediaries in the financial/accounting sector.
I am not sure if _lack_ of trusted intermediaries is the issue here. The problem is with their current form and shape, not with the lack of trust.
Blockchain is trying to reshape how the trust _works_ not its lack or abundance.
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[ 1.5 ms ] story [ 253 ms ] threadWrites a person living in Finland, the 3rd least corrupt country in the world. He should probably move to a country somewhere down in the list (like North Korea, Afghanistan or Lybia, Venezuela) for a year.
Had to stop here.. The reason of blockchain is to remove intermediaries AND still have trusted transactions.
In simple terms even if my bank was evil and occasionally abused my trust to steal my money it would still be cheaper to me than trying to use Bitcoin as money and paying the high transaction fees and suffering the long transaction wait times.
Sure perhaps if there was no one I could trust as an intermediary and everyone was evil and would steal large amounts of money from me then a decentralized blockchain based monetary system would be worth using. But as it is the potential risk of an intermediary abusing my trust is minimal to nonexistent compared to the very real expense and wastefulness of the blockchain based systems.
The same thing applies to almost all usage of blockchain. Sure it works, but trusting an intermediary just works better, and cheaper.
Effort vs reward. Maybe the reward is low, and the cost (e.g. in electricity to do the proof of work) is getting out of hand.
The question is, do the costs and downsides of cryptocurrencies outweigh the benefits of not having to trust a third-party intermediary? The author is arguing no, and for the overwhelming majority of real-world cases, I would tend to agree.
In the original paper, the way mining worked was by Proof-of-Work (PoW), which wastes a bunch of energy to make sure it's unprofitable to attack it.
There is research into mining without wasting energy by using alternatives to PoW, like Proof-of-Stake (PoS). I don't think there's consensus about whether any of them actually work.
Now, maybe we'll solve those problems in ways that don't requite more trust, but until then, cryptocurrencies will we far riskier than the existing financial system.
That cannot happen with a bank account.
It's a moot point anyway - as has been said, bitcoin's a commodity not a currency.
I just mentioned, elsewhere in this thread, a couple major players in the cryptocurrency space who have proved to be untrustworthy. And a lot of people got burned in part because they believed the hype that removing the need for trust from the management of the "physical" currency is equivalent to removing the need for trust from the financial system itself.
That might have been true thousands of years ago, before the birth of finance, when everything really did run on just cash. Things are more complicated than that nowadays, though. Cash is such a small corner of the money supply in a modern economy. A few percent of the bits that people bother to try and count, and there's a lot more that goes uncounted. A distributed trustless public ledger for the cash doesn't really help with the trust issues for that stuff. Frankly, it only helps with the small subset of money for which I'm least worried about trust.
Perhaps blockchain is superior to a trusted intermediary, perhaps not. But it isn't gonna take off in the developed world until it proves its utility in the undeveloped world.
Blockchain lets us do some stuff now that was impossible before (single ownership of digital assets jumps out), but a big chunk of the economic benefit is going to come from reduced transaction costs.
I do not send money to my wife on bitcoin, I use venmo or bank accounts and it is free and immediate.
Other cryptocoins including BTC, Ethereum, Litecoin or whatever do not have lower transaction cost than traditional currency. In fact I would argue that since public blockchain require mining transaction costs can never be that much lower than traditional currency.
If that middleman is in a big enough market with low barriers to entry and lots of competition, and is able to drive cost down with smart tech, it doesn't really matter to most users whether he exists or not.
Decentralised systems never promised low transaction costs. A private party running a database can do it cheaper and faster than a set of decentralised actors working for some incentive to establish the same database. That seems pretty much inevitable.
They did promise something else. Trustless-systems. But it hasn't been shown yet that consumers value this. (e.g. see our most valued companies like Facebook to which we routinely trust data (from secrets to nudes) we'd never, ever share with anyone else)
Blockchain's value proposition, as I've always interpreted it, isn't 'material' in the sense that transaction costs or speed are, but more based on the culture and the relationships of the 'value network'. i.e., the relationships aren't based on trust+laws, but on code+math. And it doesn't appear to me that the market values these relationships/culture, but it seems that the market does value the material aspects. hence there being no real blockchain users of blockchain applications. (except for the whole store of value thing, which drives basically all the price changes, but nobody envisioned the blockchain to solely be digital gold and nothing else).
And the miners who do the proof of work are not intermediaries in any sense? Do you trust them?
At least in the traditional banking system you know who the middlemen are.
For reference: https://www.extremetech.com/extreme/184427-one-bitcoin-group...
Edit: read the response wrong
As pointed out in the main text, the blockchain doesn't truly remove the intermediary, it just switches it from the previous intermediary to the underlying blockchain code + governance structure, which is subjectively a higher risk intermediary, at least right now.
The fact that the latter is riskier says a lot more about non-cryptocurrencies than it does about cryptocurrencies.
You aren't supposed to have to trust blockchain, it's verifiable all the way down.
In traditional institutions these are things like fraud prevention / detection, convenience in matching both sides of a transaction, etc.
In finance, the trustworthiness of the transactions themselves is pretty much a non-issue. The real issues are much more subtle. What's the likelihood that a counterparty actually has or can acquire the goods they're selling me? If I'm selling them a futures contract, what's the likelihood that they will have enough cash to make good on that deal at a future date? Does my bank have a healthy enough balance sheet that I will be able to get at my money when I need it?
These are all problems that the financial industry has solutions for. They are admittedly imperfect and of varying quality. But what's there is a far sight better than what blockchain has been able to offer, which is approximately nothing. Hopefully I shouldn't have to do more than mention the names MtGox and Tether to drive this point home.
Not correct. Blockchain has intermediaries. They are just semi-anonymous and unaccountable.
The paradox of this is that if you don't trust any particular intermediary (evil corp, gov, boogeyman, etc) then how do you know they are not the anonymous party running your anonymous unaccountable blockchain? You can't and so the whole thing is foolish to the core.
That is, does the person get paid by someone to be a blockchain researcher? I am curious who that someone might be.
That said, he certainly could have an out of date CV and brought himself up to speed in the subject on his own, which wouldn't surprise me since he's a PhD student. More to the point, what he wrote in the article should probably be considered on its own weight since its content isn't so specialized and complex that we have to defer to academic expertise for confirmation. He probably shouldn't have made such an easy target of his title, but the salient points of his post can be reviewed independent of the title's merit.
The blockchain got distracted by finance. Modern settlement and clearing is efficient. It's perhaps the most efficient part of the financial system; it is certainly the easiest to upgrade. The difficult stuff, the messy institutional knowledge, customs and tendencies, are unaffected by protocol choice. That's why the same behaviors which plagued the unregulated banking system plague cryptocurrency markets today. People are still people.
There are many systems which require a trusted group of people to reach a consensus in public. (Libor is an example [1]. Notaries appear, prima facie, to be in a similar category.) Immutability is of dubious benefit. But a simple, public consensus mechanism beats checking sundry private APIs and blog posts (how a lot of this is done today). Unfortunately, this class of use cases is negated by a "currency-like" token value.
[1] https://bitcoin.org/bitcoin.pdf
[2] https://en.wikipedia.org/wiki/Two_Generals%27_Problem
[3] https://www.investopedia.com/terms/l/libor.asp
No, it was about finance right from the start, says so right there in the title of the paper ("cash").
It got distracted by politics and greed. What I mean with greed is obvious, and I guess it was kinda inevitable.
Politics is a more interesting angle: many blockchain/bitcoin afficionados seem to be of the Libertarian persuasion who think the main point is to prevent government interference, especially inflation. And they seem to thik this was Satoshi's primary goal as well.
And here I'm a bit baffled: I can't find that in the original paper. Did Satoshi state any political goals in other communications? I gather that he was actively involved in the early Bitcoin community for some time.
Making incentives to not spend 'cash'.
There is nothing wrong with a deflationary currency once the rate of supply side deflation becomes small. Worthy investments will still be worthy investments and it helps the wealth of technological progress be distributed to the working class. Federal Reserve Notes are themselves arguably deflationary in nature except that remittance payments to citizens are taxed at 100%.
Bitcoin has other problems though.
In my opinion, a future successful digital decentralised currency should find a way to prevent itself from being seen as an "investment opportunity". That is not what money is for. That attitude creates bubbles, and "get rich quick" types. You can't have functional money without price stability. The deflationary property of bitcoin works against that.
So IMO bitcoin appreciating in value and creating bubbles along the way is not a good thing for bitcoin itself. You shouldn't need to "invest" in a currency, you need to use it. It needs to be trusted and accepted.
Many people remember the million dollar pizza now. No one wants to be that guy. Even if BTC was universally accepted now, not many holders would dare to use it to buy things. Because in their mind, BTC is poised to appreciate in value whereas fiat will collapse, so they'd use their fiat instead. If you have $5 in one hand, and a lottery ticket with perceived high odds you bought for $5, and the store accepts both as payment, why would you use the lottery ticket to buy things?
But any new currency is going to offer the opportunity for capital gains as long as it's competition includes the U.S. Dollar, because almost by definition a better alternative to the dollar would be deflationary relative to the dollar.
My point is that small rates of deflation aren't bad in a currency and bitcoins fixed size is not really a problem as long as you can trade small enough increments. Also fixed size is not even deflationary, it's just fixed unless something beneficial happens on the demand side like manufacturing cars with less materials.
At the same time fixed size is not really a feature though either. You have the whole number line available why not use it?
Bitcoins real problem is that it's not a "victory against entropy" like gold coins were in ancient times or reserve notes which can appease Uncle Sam in the future are today. Bitcoin is quite the opposite in fact, because we are dissipaiting so much concentrated energy to maintain the system. It's ironic because bitcoins greatest success is making us imagine currencies that don't dissipate value.
I'm pessimistic that there is a distributed solution to this beside just electricity or energy itself, and we're obviously not quite at that point technologically yet.
I am not convinced that what is being transferred here is value. It's transferring data, but I am not convinced that it is valuable. If it was out only option, then I guess I'd see the value in that, but in the current landscape, I'm not convinced that it is an efficient and sensible way of doing what it is trying to do.
>also providing means to accept digital payments with little to no fees.
Fees are variable. In real world volume (which it can't touch or sustain yet), the network cannot sustain the volume and the fees are exorbitant. I know, you'll say "it will get better, infancy" etc. but I'm not convinced. I don't see the value of decentralisation here so the overhead looks massive to me. And in the end, if bitcoin takes off as a successful alternative for high volume low fee transactions, the centralised industry can compete and they have the upper hand: Centralised version has orders of magnitude less overhead so they can make the fees cheaper than BTC always if it came to that. So that advantage is moot.
>Also you invest in whatever your countries currency is via time, so buying BTC with fiat is no different.
No, it is different. When I earn money, I intend to use it or invest it. I don't see my money as an investment which will appreciate in value if I "hodl" it. Money itself is not an investment. You invest with it.
>Deflationary currencies also don’t contribute anymore to hoarding than high savings rates.
[Citation needed.] Deflation literally is economic crisis where people hoard and refuse to spend which brings economy to a halt. Central banks use their policy to encourage people to spend. Deflation is our "crisis" state.
>Bitcoins main issue here is that it’s not a country’s main currency.
It is an issue but IMO it is quite a bit far from being the main issue. Bitcoin is technologically incapable of being any country's currency right now, the throughput alone is not even close to enough.
I agree with you that Bitcoin was originally conceived to solve digital cash problems (like double spending). But I think the parent's point (which I also agree with) is that the actual utility of modern blockchains, regardless of original intentions, is in strong fault-tolerant systems.
By any reasonable standard, Bitcoin itself has not matured into a strong currency usable for day to day cash payments. It has extremely high volatility, slow transaction verification and very high transaction fees. I think it's good that it was developed (it inspired a lot of follow-up R&D), and you can make a case for it as a store of value, but it's not really suitable as a payments platform whatsoever. But that failure doesn't diminish its main contribution, which is thermodynamically guaranteed cryptographic resilience and fault tolerance.
To your comments re bitcoin, it sounds to me like somebody complaining that Internet is slow back in the 90s/00s.
EDIT:
I am not pontificating in favor of bitcoin. It's just that the technology is still immature but there is a lot of great and promising work happening today.
...Really? That's one application, sure, but I hardly think it compares to the generalizable usage of cryptographic fault-tolerance assurance in distributed systems. I would consider the elimination of trusted third parties in more well-established and widely used cryptographic protocols (like CAa) or improvements to e.g. NTP node fault-tolerance to be more presently and practically useful than decentralized payments (in particular, because blockchains are much more useful for the former examples than the latter in the present day).
> Many people don't care about it today but there are those who do. That's why cryptocurrency is the real killer app for blockchain, like it or not.
I don't have an emotional investment in what use case becomes the most successful for blockchains in perpetuity, so it isn't a matter of "liking" or "not liking" any particular application. Rather, I'm speaking in terms of present facts, and purposely not making any points about the future.
Sure, people could become passionate en masse about seizing control of their assets in a decentralized, trustless, permissionless, etc systems. I'm not discounting that possibility. But in the present case, blockchains exhibit far more utility for resolving hard problems in domains of computer science than they do for cryptocurrencies.
> To your comments re bitcoin, it sounds to me like somebody complaining that Internet is slow back in the 90s/00s.
I never considered the internet slow in either of those decades because it was all I knew. More to the point, I think you mistake me for someone who is bearish on cryptocurrencies or blockchains in general - I'm emphatically not. I just think that Bitcoin is not going to be the actual winner for that use case, and regardless of future innovations, it is pretty clearly not succeeding now, either, for the reasons I've already outlined.
To their point though, dial-up modems are (by and large) a relic of the past and have been replaced by better (i.e. faster) methods of internet access.
Definitely
> Slow transaction verification
Depends on your definition of slow. The fact that I can send hundreds of thousands of USD across the world in about an hour seems to beat any other method easily available to me.
> very high transaction fees
A month or two ago, sure - TX congestion had driven up fees to ridiculous levels. Now that the congestion has cleared, I can once again send hundreds of thousands of USD across the world for less than a dollar.
Congestion has only cleared because the transaction volume has fallen to a two-year low:
https://bitinfocharts.com/comparison/transactions-btc-sma3.h...
The bubble is deflating, in case you haven't noticed.
Whoever Satoshi is, he's probably not a Keynesian.
http://p2pfoundation.ning.com/m/discussion?id=2003008%3ATopi...
>>The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.
https://www.mail-archive.com/cryptography@metzdowd.com/msg09...
>>Yes, but we can win a major battle in the arms race and gain a new territory of freedom for several years.
>>Governments are good at cutting off the heads of a centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own.
The genesis block contains, among other data, a reference to the front page of the January 3rd 2009 edition of The Times;
The Times 03/Jan/2009 Chancellor on brink of second bailout for banks
Whether this was simply to prove that the genesis block was mined no sooner than January 3rd 2009, or if additionally that date and that news paper was chosen for the headline of that day one cannot know but a lot of people choose to interpret it as a comment on the instability caused by fractional-reserve banking.
https://en.bitcoin.it/wiki/Genesis_block
Edit: Between the time that I opened this tab and when I got around to writing my comment someone else already said it. Oh well.
All of that gets dragged in the mud with the giant financial sideshow running rampant through the industry. It's become enough at this point to overshadow the (very legitimate) academic research and engineering work put into blockchains for the last several years.
few things can do as much harm as an untrustworthy money system or say a damaged "rule of law" - both of which the western world struggles with right now.
we are plenty inefficient with many things (subsidies, war) but inefficiency isn't even in the same league as a broken (fraudulent) money system.
The Two Generals Problem, as stated, implies that a failure to reach consensus about a future decision would be catastrophic and ought to be considered as a failure of the protocol.
By contrast, in blockchains a failure to reach consensus about a future decision is not catastrophic, instead we have a very strong guarantee that we do reach consensus for the whole of the past up to some reasonable time close enough to the present. This is rather "eventual consistency".
I really dislike how many academic and non-academic papers lump all of these difference types of "byzantine generals problem" all into the same phrase. Another aspect is protecting against attacks. Some papers "defend" against attacks by modelling random errors that they also call "byzantine", this is bullshit and sort of like saying Error Correction Codes are equivalent to cryptography.
The Two Generals Problem, as stated, implies that a failure to reach consensus about a future decision would be catastrophic and ought to be considered as a failure of the protocol.
Strictly speaking, sure. But I still agree with the parent's point. Bitcoin was the original innovation that inspired later research in proof-of-stake based blockchains. PoS consensus systems do allow for blockchains to be used to resolve consensus for future decisions in the context of deterministic state machines (ironically, somewhat at the expense of strong eventual consistency guarantees provided by proof of work consensus).
> I really dislike how many academic and non-academic papers lump all of these difference types of "byzantine generals problem" all into the same phrase. Another aspect is protecting against attacks. Some papers "defend" against attacks by modelling random errors that they also call "byzantine", this is bullshit and sort of like saying Error Correction Codes are equivalent to cryptography.
Interesting - do you mind providing an exemplary paper or two? I'd like to read them.
I suppose you mean that someone (out of a group G) can commit an instruction saying "the future decision is Y" into the blockchain, and at some time later everyone will be convinced this is the future decision. This is not related to PoS, this will work for pretty much any system that supports smart contracts.
In this situation the decision is not executed in a shared manner - even if one of G gets disconnected from the network, the decision still gets executed by the blockchain. So it is still different from the Two Generals Problem (as stated), where everyone in the group G must participate in executing the decision.
So blockchains still don't solve the Two General Problem. Nor should this be a goal. I think the Two Generals Problem is stupidly strong and really unnecessary in the vast majority of real computing scenarios, including the blockchain.
> Interesting - do you mind providing an exemplary paper or two? I'd like to read them.
It's basically all of them, and I don't think many are worth reading so I don't remember the titles. Search for papers that try to solve the Sybil or Eclipse attacks. (Quite a lot of them rely on trusted authorities, these are not relevant here, I mean the other ones.)
No, I specifically mean a voting protocol in which the "round" will not proceed ("the generals will not attack") unless all voters v in the voting set V come to consensus about the values t in the set of transactions T at the next block height ("the city to be attacked", "the time to attack", etc). Then the voting protocol asserts a proof of stake, such that Byzantine voters are penalized and honest/correct voters are rewarded. Then future decision resolution is provably guaranteed, so long as all activity remains deterministic, the cryptography is secure, all voters in the set V are online and active, and proof of stake is a plausible economic incentive.
The caveat here is - pretty obviously - that it's possible for the consensus system to enter an infinite loop if it fails to reach consensus (just like the original problem). So no, it's not perfect, but it is modeling the Two Generals Problem and compartmentalizing it somewhat, though it can't completely resolve it.
Otherwise, I agree with you - the classical Two Generals problem is an inordinate fault-tolerance ideal.
How do you decide which one is a "Byzantine" voter? A minority is not necessarily dishonest. If you penalise a minority, at each step at most ceil(n/2-1) of the group will lose their stake, even if they were honest. That sounds overly-harsh.
In the original paper by Lamport, Shostak, and Pease, the problem is described this way: "We imagine that several divisions of the Byzantine army are camped outside an enemy city, each division commanded by its own general. The generals can communicate with one another only by messenger. After observing the enemy, they must decide upon a common plan of action. However, some of the generals may be traitors, trying to prevent the loyal generals from reaching agreement."
A common way to describe the participants in such a scenario is simply "honest" and "dishonest". The term "Byzantine" has become used in distributed systems research to refer to situations in which we can't be sure of participants' honesty and intentions. However, it doesn't correctly refer only to the dishonest participants.
Lamport's original paper does seem to treat adversaries appropriately, but I've seen many worse papers from recently failing to consider what happens if a malicious peer specifically tries to exploit your "defence" mechanism.
I wouldn't say this is a problem. It's a useful red flag that you should stop reading this paper, or at the very least question the competency of the authors. Could save hours of your life!
The whole point is that I can't tell if it's a red flag simply by reading the abstract, I have to read the entire paper. The good papers also use the same vague terminology!
I really think we need to stop citing it as a "thing", it's like the Halting Problem, stupidly strong and not necessary most of the time. Saying that something "solves" Two Generals is diverting the conversation into pointless impossibilities.
Bitcoin isn't meant to be efficient. It's meant to solve problems that (Satoshi believes) are vastly more important: decentralization, trustlessness, & inflation.
«The blockchain got distracted by finance.»
Payments are the perfect application found, so far, for the blockchain.
That statement really needs to be tempered with context.
For some relatively recent blockchains, and for particular tradeoffs that enhance transaction throughput over raw security guarantees, payments are a practical use case, yes. But of course, the parent was talking about Bitcoin, and Bitcoin is a miserable payments protocol.
There really shouldn't be any sentimentality to that second assertion. It's simply a poor currency according to the metrics of price volatility, transaction verification speed and transaction fees. If you redefine the ideal parameters of a payments protocol as trustlessness, permissionlessness and decentralization, then sure, it seems better. But then we're disagreeing on what constitutes a robust payments protocol according to normative statements, not positive ones. I think the only people who would agree Bitcoin constitutes a robust, practical payments protocol are those who really want its qualities in a payments protocol. But in the real world, companies like Stripe have very specifically and publicly abandoned it for their own alternatives.
I do think blockchains can be used as a payments platform, with the caveat that I think proof-of-stake based consensus and various throughput improvements (not lightning network) in other blockchains are the way forward for that use case. Stripe has invested in Stellar, Tendermint/Cosmos can scale up dramatically, etc. I also regard Bitcoin as a cultural landmark of exceptional importance because it inspired many follow-on innovations in research and engineering. However, for most practical applications, I consider Bitcoin to have failed (thus far) in its original goal as a payments protocol, and to be largely superseded in practice by various alternatives.
As you said: Bitcoin isn't designed to be efficient. But if payments were actually the "perfect" application for it, it would actually be efficient, because the utility of a currency becomes higher the more efficient it becomes (e.g. higher liquidity, higher stability, etc). As for blockchains in general, I don't think payments are really the perfect application for any of them, because I disagree that decentralization, permissionlessness or trustlessness are desirable qualities in a payments platform - each of those reduces efficiency, which leaves you with private blockchains that tradeoff one or more of those security guarantees. They can be used for this purpose, but I don't consider them ideal at the moment.
Rather, I think blockchains map well to solutions for hard cryptographic problems and fault-tolerant distributed systems.
Bitcoin critics like you always focus on temporary issues. All the points you list are either being solved or fundamentally solvable. It's like criticizing cars from the early 1900s and missing the point that, obviously, they, like Bitcoin, will improve over time. For example:
• Volatility: on the long term it's declining because markets are getting deeper https://mobile.twitter.com/lsukernik/status/8649208737189519...
• Transaction verification speed: new technologies like Lightning Network make them instant; even a 0-conf non-RBF transaction is relatively safe to accept instantly for most use cases (eg. certainly safer than a CC transaction which can be fraudulently charged back.)
• Transaction fees: solvable by off-chain technologies like Lightning, or by increasing the block size (Graphene or UTXO set commitments make this scalable).
And cars from the early 1900s may very well have been unsuitable to to the purposes for which they were employed in the early 1900s. You can't ask people to build their businesses and trust on a foundation that will "maybe" be poured "sometime" in the future.
You cherry-pick cars in the 1900s while failing to ignore all of the early 1900s technology that didn't succeed because there was no way to improve it. None of that was obvious then, either.
If this is true, why oh why does it take 3 days (in the US) to transfer funds between my own accounts in two different banks?
Why does it take 5-15 days (including multiple "fraud" verification emails, calls etc) to send money from the US to my Indian bank account?
>> ...it is certainly the easiest to upgrade.
It is 2018... why are these systems not upgraded yet?
Wire transfers are instantaneous [1]. They cost pennies a transaction, a fee banks often cover if you have more than ~$15,000 with them. For smaller transfers, real-time P2P was recently rolled out across most American banks [2]. This was a result of competition from Venmo, which one could think of as a lightning network over ACH [3]. (The latter being Fedwire's net settled and thus slower but cheaper cousin.)
[1] https://en.wikipedia.org/wiki/Fedwire
[2] https://www.zellepay.com
[3] https://en.wikipedia.org/wiki/Automated_Clearing_House
I did something similar a few days ago, and while it didn't take 3 days, it did take over a day.
They chose the cheap, safe option over the fast, risky one. I talked about the difference between net and real-time gross settlement in an earlier comment [1]. TL; DR There is a fundamental trade-off between mutability, speed and cost.
[1] https://news.ycombinator.com/item?id=16154956#16155708
This is not a technology problem. Blockchain won't change either of these.
I'd imagine international transfers are slower proportional to the risk of security lapses when working with disparate organizations (and the difficulty in reversing mistakes.)
Blockchains might be more secure in principle than traditional banks, but blockchains are pretty much all designed so that a single key compromise amounts to a catastrophic failure. Now you can manage this by having manu wallets and many keys to some extent, but at the end of the day it's still much less reliable than just having a bunch of bankers who are paid to take their time and ensure sure all transfers are authorized.
Bank wire transfers within the entire EU is regulated by the SEPA framework which basically means that banks are not allowed to charge more for a intra-EU transfer than a transfer within the same country. This allows me to send money between my EU bank accounts for a fee that is usually between 1-3 EUR and never more than that. The transactions take one bank day to clear in my experience.
Currently, the EU equivalent of Swish is being rolled out. It's called "SEPA Instant credit transfer" [2] and will work pretty much the same as Swish, except with coverage over the entire EU.
The money is insured [3] and faulty transactions can be reversed with due process in many cases. [4]
It's unfortunate you have to have these experiences with your banking system - it does not work like that all over the world, however.
Also: Can someone please enlighten me on what we need "the blockchain" here for?
[1]: https://medium.com/@etiennebr/swish-the-secret-swedish-finte...
[2]: https://www.europeanpaymentscouncil.eu/what-we-do/sepa-insta...
[3]: https://ec.europa.eu/info/business-economy-euro/banking-and-...
[4]: https://www.metro.se/artikel/det-h%C3%A4r-g%C3%A4ller-om-du-...
My bank in New Zealand has instant clearing to accounts within the same bank, and hourly clearing to other banks. I can transfer money from my Australian account to my New Zealand account using TransferWise within 3 hours, or 2 working days if I use the international transfer service offered by my bank.
One problem with America is that you have so many small banks and credit unions, a small town might have its own bank, that nobody is willing to standardise and agree on new standards. This is why Americans still use cheques, and why adoption of contactless payment using debit/credit cards, as well as chip+PIN (or even swipe+PIN) has been so slow.
Contactless payment is so ubiquitous in Australia and New Zealand that I've had to insert my card literally once all year.
Australia only has half a dozen main banks, which service >90% of the population. For whatever economic implications that has (too big to fail etc.), it has been great for encouraging innovation.
Against this back drop of US service culture the idea is to make it as easy as possible for the customer - they don't have to enter a complicated four digit pin number, they can just sign their signature and if the cashier thinks it looks like the scrawl on the back of the card then the sale is done.
I currently do not have millions of credit card details from a client database on my computer but that has happened before now. If I was criminally minded then I would have been able to sift off a lot of money, however, I have yet to steal a penny, despite also knowing some flaws in the 'double entry system' that I could have hacked to cover my tracks. I am sure that there are many millions of developers out there that have had such data on their laptop at some time. How many go rogue and steal? Not many. But in crypto-land it seems that this situation is reversed, everywhere there is a scam. The good actors are as rare as the bad actors in regular accounting/book-keeping.
So ten years ago when I did have many millions of credit card numbers that could be used (no 3D secure back then), I was trusted but not expressly by a single one of those named in that 'Sybase' database (as it was then). The system then very much worked entirely on trust and generally all those in the chain were trustworthy. I don't feel that banking has moved on in the USA from this trust way of working, things are much more locked down in the rest of the world. This is good for many reasons, I prefer today's customer databases where all the bits you would want to hack are hashed and salted if at all present.
This flakiness of banking in the USA - where a bank is not really any more likely to stick around than a company - means people do flock to the crypto coins precisely because of the 'store of value', there is chance of getting more than 2% return and the perceived risk is not much 'worse'.
Hopefully the net result of this fantasy blockchain nonsense is that we do build out better banking systems that do have a better 'trust model'.
The article does point out the absurdity of pushing around a whole copy of the database to every user and keeping it synced...
https://www.npr.org/sections/money/2018/01/10/576879734/epis...
There’s an effort to modernize ACH, but it’s still years away from wide rollout.
[0] https://payment21.com/blog/paper-check%E2%80%99s-death-began...
This isn't really right. Pre-trade (price discovery and trade matching) are about the most efficient parts around today - in equities in no small measure due to HFT. Post-trade (clearing & settlement) is pretty messy and error prone. Something like $50bn a year is spent on reconciliation processes, mostly in manual operations work. It's certainly reliable, but it isn't especially efficient.
It's also far from being the easiest to upgrade. See the incredible pain most markets go through when they face a mandatory move from T+3 to T+2 settlement. Making changes to post-trade procedures pretty much means a wholesale, industry wide change.
(As an aside, a shared database actually goes quite a long way towards alleviating some of the problems in clearing & settlement - the author makes it clear they see quite a bit of potential in private blockchains, just not public ones. And clearing & settlement is an area well served by private blockchains.)
Public blockchains replace the need for trust with, essentially, energy usage. That's what gets you your validity, despite operating in a hostile environment. They give you a shared, single source of truth about the state of whatever system you've embodied on that blockchain. The problem they are solving is the undesirability (or impossibility) of trusting an intermediary.
Private blockchains replace the need for reconciliation between parties who minimally trust* one another with a method for provably ensuring everybody has and will get the same information. They also give you a shared, single source of truth about the state of your particular market, but you get that in an environment where parties on the network are assumed to be behaving well. The problem these solve is the cost and complexity in establishing a trusted third party. It isn't hard technically to have a reliable ledger, but it is hard structurally and operationally.
The point of a private blockchain is to mutualize the infrastructure required to form that single source of truth. You could do it with a trusted intermediary operating a big shared database, but you'd have to set one up in a market where that doesn't exist and assign to them complete responsibility for your record keeping. Private blockchains are a way for parties with a shared problem - the cost of reconciling their independent books - to construct a solution that doesn't require forming and staffing some new industry utility, or abrogating control over their own records (so they can maintain secrecy of trade data, for example.)
*I mean by this, they have stronger economic and legal incentives to cooperate in doing business with each other than they do in ripping off the other guy. Put another way, their horizon for trusting a counterparty extends beyond the immediate transaction on the table at any given moment. This isn't the case in anonymous individual peer-to-peer transactions.
I am no fan of bitcoin, but here's some anecdata for you:
It takes five full business days for an ACH transfer to clear and become available between my bank and my brokerage.
BTC, for all its faults, can give you sufficient confirmation in about an hour. Many other cryptocurrencies, much faster than even this.
Gold will never be as measurably scarce.
Even with Bitcoin we don't know the exact scarcity because private keys get lost.
A wallet to which the private key has been lost is indistinguishable from the wallet of someone who is holding their funds because they want to save them for the future.
Can't do that with gold.
One place where blockchain clearly makes sense is Bitcoin. Or Bitcoin did make sense to me until the developers kneecapped future development and transactions fees soared and there are too few transactions allowed for it to become a useful ledger for everyday use of a large number of people.
Other cryptocurrencies solve that weakness.
But the spate of blockchain startups don't make much sense to me. In particular, in energy, I see it as a bunch of clear snakeoil. The startups that are most honest about this use less-competent executives' FOMO on blockchain to get their foot in the door, then say more honest things like "Ethereum doesn't make much sense for energy trading with your neighbor."
Because with energy, like with most things, there is already a trusted intermediary, and trying to cut them out of the deal doesn't actually mean you trust them any less. They still have control, and power, and you still are giving them your trust.
Blockchain may be useful in other situations, but it really remains to be seen. It's very interesting tech that seems like it could have applications all over the economy beyond currencies, but I think we may just be at the peak of the hype cycle and all these will come crashing down in a big dose of reality soon.
Define "trusted enough". Now imagine you are a Chinese millionaire willing to take your money to a safe port, a Venezuelan/Somali that doesn't trust anything government, a Russian/Brazilian/Italian middle class practicing the so much loved national game of tax evasion...
"Trusted" can mean a lot of different things all around the world.
Do we have a list of successful, not-scam-y ICOs, where the investors/crowd funders actually got what they wanted in the end? (And I don't mean the tokens, but rather the thing that was crowdfunded).
Where could I read more about this? I assumed most of the benefits of blockchain came from the distributed aspect.
"If no data needs to be stored, no database is required at all, i.e. a blockchain, as a form of database, is of no use. Similarly, if only one writer exists, a blockchain does not provide additional guarantees and a regular database is better suited, because it provides better performance in terms of throughput and latency. If a trusted third party (TTP) is available, there are two options. First, if the TTP is always online, write operations can be delegated to it and it can function as verifier for state transitions. Second, if the TTP is usually offline, it can function as a certificate authority in the setting of a permissioned blockchain, i.e. where all writers of the system are known. If the writers all mutually trust each other, i.e. they assume that no participant is malicious, a database with shared write access is likely the best solution. If they do not trust each other, using a permissioned blockchain makes sense. Depending on whether public verifiability is required, anyone can be allowed to read the state (public permissioned blockchain) or the set of readers may also be restricted (private permissioned blockchain). If the set of writers is not fixed and known to the participants, as is the case for many cryptocurrencies such as Bitcoin, an [sic] permissionless blockchain is a suitable solution."
https://eprint.iacr.org/2017/375.pdf
Interesting, I think that private blockchains are very nearly useless!
> Feel free to call me a luddite or whatever.
Yes, you are a luddite.
Also, cryptocurrency has seen a surge of use in Venezuela, where the currency is thousands of times less valuable than the paper it's printed on. Credit cards and cryptocurrencies are used wherever people have access to them (which is a very small subset, admittedly).
Basically, cryptocurrencies are useful wherever normal currencies are unavailable, unlawful, or in order to subvert their regulatory practices.
I would not say that having a safe ledger that we all can trust without question for our democracies around the world a solution to a "non existant problem", just look at recent elections.
Scalability/Performance issues should not be taken too much into account today, as we're still in the infancy of these technologies and can be pretty sure that they will radically improve over time.
There is also a huge potential in corruption rich governments, where proof of ownership can suddenly disappear. Though implementation may be hard. :)
Even in non (or ver little) corrupt countries like my own I see a point. Not so much because we need it right now, but because we might need it in the future.
Why wouldn’t you build your anti-corruption government tech while you have the chance because your political leadership and the bureaucrats aren’t yet going to have a vested interest in stopping it?
Maybe that’s a little pessimistic, and it’s certainly not how you should sell it, but it’s not like our current record keeping tech couldn’t need an overhaul anyway because it’s really, really, awful. Adding Blockchain tech to make it trustless wouldn’t be cost-inefficient if you’re down under the hood anyway.
Doesn't this defeat the point? I can't imagine a scenario in which a proof of stake system does not become centralized. The average person will want to stake the extra money they have but won't want to maintain a dedicated machine with adequate storage and zero downtime. They will entrust a third party to earn money by staking on their behalf. Thus, you have created a centralized system with a whole bunch of extra complication.
How I see it: blockchaining is an arms race in computing power. In order to sufficiently 'secure' your chain you need to spend more value (electricity) than an attacker is willing (or capable) of spending. This makes blockchains very expensive, slow and an environmental disaster.
Unless a blockchain has tremendous value (like cryptocurrencies currenly have) there is no way to sustain them.
Distributed blockchains.
I'm not saying blockchains are bad technology, non-distributed blockchains can be a very good solution to certain problems, but it's not the "world changing" revolution many claim it to be.
If you're local (or within a small network with bounded, you don't really need asynchronous consensus. Dolev-Strong or any number of other synchronous/semi-synchronous protocols would work fine.
> non-distributed blockchains can be a very good solution to certain problems
This is not true, value is arbitrary.
Additionally, the "environmental disaster" claims have always seemed shallow to me. Yes, it is a serious issue if everyone is mining with coal powered electricity, but how did it get so cheap? Isn't it on the government to not subsidize coal? The largest mining companies are finding super cheap energy in renewables (1). In the long run, I feel like mining is what can pay for further investment in renewables. For instance, see the article below about Germany paying customers to use electricity (2). Seems like government level mining might be a good investment.
1. https://globalnews.ca/news/3974083/bitcoin-mining-quebec-can...
2. https://www.independent.co.uk/environment/germany-grids-payi...
Proponents of blockchain revolutions need to come to terms with existing institutions, working with them rather than against.
Monitoring transactions? Preventing people from transacting?
I think people should be able to do peer-to-peer electronic transactions the same way they can do peer-to-peer physical transactions with cash.
It would empower individuals and serve as a guard against encroachments of their liberty.
If cryptocurrency were never invented, people would have had no way to donate to Wikileaks when the financial blockade was imposed on it by major payment intermediaries. And that's in the West. Imagine what the situation is like in countries like China.
Organisations on the fringes like Wikileaks are important guarantors against centralized tyranny. Without a payment system outside the control of centralized authorities they can be more easily snuffed out.
In other words, cash is an institution as well, and is important.
1- Illegal goods [The deep web] 2- Fundraising (both good for individuals who previously could not act as angel investors and rip the xx,xxx% returns because of wealthy discrepancies and good for companies who do not need to drink 75 coffees with VCs) [Companies: Ethereum] 3- From fundraising thru blockchain-based assets came out a new speculative open 24/7 international market [Companies: Exchanges] 4- As an additional form to store of value (Like 1-digit % of your belongings). A blockchain-based asset it's divisible, easily transportable, encrypted and finite. Possibly it also serves an use like gold in the aerospace and electronic industry.
There's also one more vertical that will eventually be dominated by the blockchain: Micro Transactions. If a transaction costs 0.00001 cent, then you can easily buy data for 1 cent a piece. Something akin to IOTA (or a working version of IOTA itself) will inevitably be built with a trillion devices connected to the internet. Banks wont ever be able to process 0.00001 transactions.
Why not? Nobody processes at that quantum because no demand has been shown for the service. Blockchains are inherently less efficient than the databases modern financial systems run on. That tradeoff is core to the technology.
For every transaction a bank processes there's obviously a fixed cost. Once you account for all the costs relative to them in a given year and divide that number with the number of transactions in that same year, I doubt, given the margins of a given transaction, that a bank can break even on 1 cents transactions. That's assuming that the tech the banks use as of now does not improve by magnitudes in a couple years.
This is a strange argument. Visa's costs, per transaction, are demonstrably lower than Bitcoin's. Specific banks and systems may be more or less efficient. But fundamentally, the trustlessness that is a blockchain's selling point comes at the cost--by definition in proof of work systems--of efficiency.
With blockchains it's mostly about operational expenses. Now, bitcoin transaction fee might be currently high but it is a problem of this blockchain implementation and not with blockchain per se.
My bank is processing 0 cent transactions and IIRC in Q3 they're going to support SCT Instant, meaning the bank transfers will take under a minute within the SEPA area while still being 0 cent cost.
Looking at most (not all) of the non-currency alt coins, there is clearly demand for cheap access to new investment opportunities. Yes, a lot of people are going to lose to scams, some have already. At the same time distributed ledgers do solve a very real "access" problem.
Similarly, contracts and banking have not integrated well with the technologies most business uses. Yes, Stripe has reduced payments friction beautifully, and Paypal has brought credit applications and approvals to the checkout process. But big dollar transactions that use Letters of Credit, structured loans, milestone payments, etc... these areas have few programmatic solutions.
Smart contracts are a fast approaching solution to this need, they have no analog in the conventional commercial world, and yes - they will be a game changer.
If my customers can issue an irrevocable L/C, denominated in Etherium for example, that is self executing based on terms mutually agreed in advance, then my business will chose that route over lengthy and expensive bank L/C's. It also means we'd probably choose Quantstamp for contract security, and perhaps SALT Lending to fund the Ether, and possibly expend BNB to covert the currency into Litecoin for storage until such time as we convert to fiat.
That is the promised ecosystem. It is no more expensive or complex than the universe that surrounded EDI, or that describes most business process integrations in common use today.
Its just difficult to look at all this from both a business and programmatic point-of-view simultaneously.
From the witer's bio:
I’m a PhD student at Aalto School of Economics in Helsinki, Finland. In general, I’m interested in evolution – specifically, how complex entities evolve over time.
FWIW, those who are shut out of centrally managed payment systems most definitely understand the point of Bitcoin. For example, see this recent article on Sci-Hub:
https://www.theverge.com/2018/2/8/16985666/alexandra-elbakya...
He finished his PhD thesis last year, and it's not unreasonable for him to have spent the past 15 months doing research on blockchain technologies, give the areas he works in.
With luck, my thesis will be complete in late 2017 – only three years later than I planned! The extra years have been well spent in researching and writing about environmental issues, particularly energy/environment nexus. This has resulted to two books in collaboration with Rauli Partanen: Climate Gamble and Musta hevonen.
When an author puts credentials in the title of an article, then credentials are on the table as a point of discussion.
I didn't say it was. I stated the thesis was finished. These are distinct.
The latter requires a defense of the thesis before a committee, and in pretty much every decent PhD program, is merely a formality since the advisor should not let the student defend until he/she is ready. I had my thesis finished long before I did my defense, and I passed that months before the PhD was conferred, which happens at graduation.
Here's [1] a speech given before his thesis defense, so I suspect he has passed his thesis defense. So either he got his actual PhD at the end of the term or is waiting to get it at the next term end.
>When an author puts credentials in the title of an article, then credentials are on the table as a point of discussion.
Neither PhD nor Doctor appear in the title or in the article. You brought up the PhD silliness. A PhD is neither required nor implied in this post.
You're still stuck on ad hominem. If you want to criticize, do so on the merits of the article, not strawmen you dig up.
[1] https://jmkorhonen.net/2017/12/15/necessity-is-the-mother-of...
My professional opinion as a blockchain researcher I’ve spent the last 15 months researching the implications and possibilities of blockchains and related “distributed trust technologies” from a business and societal point of view.
And dirtyaura's comment consolidates the author is some figure we can trust mantra.
In the end, the article states that people should not put their savings into coins but smart contracts are nice. Something others have said before but it's more clickbaity to state that it's coming from a professional blockchain researcher.
An argument from authority goes: "I am an authority therefore the following is correct." This is nowhere near that.
He correctly stated it was his professional opinion that..... He didn't claim the argument is correct because he's a professional. And he is a professional, doing this work in a professional context for 15 months.
So it is absolutely correct to state "my professional opinion is...". He has likely put far more work into this, and certainly with better background and training, than probably anyone on this thread questioning his credentials instead of addressing his message.
From my quick skimming, mostly apo questioned the credentials. Yes, you are using ad hominem against the one you accused (rightly of doing so).
I quoted the author's about page, which says nothing about block chain research. That quote happened to mention a PhD, which I could not care less about. Much more important is the fact that the bio page says nothing about block chain research.
It is you who seems intent on discussing the author's PhD, which you demonstrated in your first response - and your second.
I brought up the author's about page because the author implicitly appeals to authority in the title of the piece by claiming to be a "professional" "blockchain researcher." The article itself says nothing about this research other than it supposedly happened. Nor does it contain anything that I found novel or insightful.
The second part of my original comment speaks to the substance of the article.
A PhD is neither required nor implied in this post.
I never said this, nor do I care what letters appear after a person's name. But when that person tries to claim the mantle of authority in the title of an essay, looking into the author's background is fair game.
Neither the article nor the bio provide evidence that that the author is a "professional" blockchain researcher. The content of the article is mediocre at best, suggesting the author has a weak understanding of the topic at hand. I provided a specific example in my first response.
...
One 2017 PeerJ study estimated that Sci-Hub owned $268,000 in unspent bitcoin as of August 2017. (Though Elbakyan has publicly disagreed with that estimate, she hasn’t said how much she owns in bitcoin. She claims the exact amount is confidential.)
So yes - he is a professional blockchain researcher.
I am not sure if _lack_ of trusted intermediaries is the issue here. The problem is with their current form and shape, not with the lack of trust.
Blockchain is trying to reshape how the trust _works_ not its lack or abundance.