> To understand why this is the case, let’s work from the practical to the theoretical. For example, let’s consider a widely-proposed use case for blockchain: buying an e-book with a “smart” contract. The goal of the blockchain is, you don’t trust an e-book vendor and they don’t trust you (because you’re just two individuals on the internet), but, because it’s on blockchain, you’ll be able to trust the transaction.
No. Nobody trusts an exchange because it's on the blockchain. The idea of a smart contract is to decentralize high-friction transactions such as insurance (which is essentially what Amazon or PayPal is providing). The whole point is to not have to trust anybody to ensure a transaction is carried out, which it does accomplish to a reasonable extent.
The author also confuses peer-to-peer trustworthiness such as making a purchase, with trustworthiness that data or transaction executions will not be tampered with. The blockchain backs up the latter with mining, whereas it does not back up the former.
Smart contracts don't even work for insurance. Smart contracts require the insuring party to tie up capital to make sure they can satisfy the claim in the event that a claim is made. The problem is that each insurance smart contract may pay out large amounts but only rarely. Typical insurance policies often have maximum payouts north of $1 million. If every insurance company had to hold $1 million in smart coins for every insurance smart contract they produce, they'd quickly run out of capital. And if you allow capital to be pooled together where claims are payed out from one large pool for multiple insurance contracts (as is used in insurance today) then you have to trust that the insurer will have enough capital available when you want to make a claim. In this case the smart contract element is pretty useless because it doesn't guarantee you anything.
Leverage doesn't make the blockchain aspect useless- in fact, the chain means the consumer can choose their insurance provider based on backing asset characteristics and how leveraged the risk pool is. Similar to what we had before, but with more democratic capital allocation.
That allows an unscrupulous insurer to use a sybil attack to create insurance contracts with itself that it then pays out against emptying the smart contract pot.
Yes, I read the article because I always try to be a skeptic, but smart contracts is where the author goes off the rails.
Then he ties in crypto currency volatility and Mt Gox as part of its “trust” failures. Being able to trust the results of a block chain does not mean that people will value any currency based at the same price from day to day, or that people who offer to trade and store that currency got you will be competent and honest.
Smart contracts rely on a trusted ledger. The original smart-contract discussions in the 90s were in the context of a contract between various users in virtual open-world games, enforced by the trusted game server. This setting also meant that many of the lame parts of EVM, like the inability to represent capabilities or to protect cryptographic secrets, were supplanted by the game server's encapsulated backend logic and database.
Blockchains and smart contracts don't have to be related at all.
I generally agree with most of the article, but sorry, this big quote here (that the author apparently thinks of being a good punchline) is just plain wrong:
> There is no single person in existence who had a problem they wanted to solve, discovered that an available blockchain solution was the best way to solve it, and therefore became a blockchain enthusiast.
Anyone who was trying to buy drugs/penis-pills/whatever-other-illegal-substance online and wanted to pay in an anonymous form would disagree. Anyone who had a bit of money in a country with restrictive international money transfer laws and who wanted to get that money out of said country would disagree.
For both of these groups, available blockchains provided a good solution to a real problem. And especially in the first group, which is generally underestimated in size I think, a lot of people genuinely got enthusiastic about blockchains and jumped on the cryptocurrency train relatively early - first to buy some weed or whatever, and later also to make more money out of less money. But the problem-seeking-a-solution situation was first!
The article is exaggerating, there must be someone who has problems that are solved by Bitcoin.
However, one of Bitcoin's features is that it has a completely public permanent ledger showing all transactions assigned to everyone. It is a wildly inappropriate technology for doing illegal things or skirting the law (which cross-country transfers outside the system could well be). It has more downsides than cash in a duffle bag.
I feel like we confuse bitcoin and blockchain. People's problems have been solved by a globally available currency that can handle simple transactions but that all happens incredibly inefficiently and despite of all the failings of he underlying blockchain tech.
> If Ripple, Silk Road, Slush Pool, and the DAO all prefer “old way” systems of creating and enforcing trust, it’s no wonder that the outside world had not adopted trustless systems either!
CHECK MATE ATHEISTS. Actually the article is pretty moronic. Besides being written by a person named "Kai" who supports "Whatever the opposite of a futurist is", it's obvious that the crypto crowd is trying to decentralize All The Things. Slush Pool as p2p alternatives, as does silk road.
Trust systems have trade-offs. Decentralization is hard. Nothing of interest was revealed here, besides HN has a hard-on for centralized authority.
Cryptocurrency is so decentralized that most of it is held in a hand full of exchanges (aka, centralized).
It seems the crypto community also does not care about the obvious centralization, but who would've ever thought major contradictions would come out of cryptocurrency?
With Bitcoin or ether, I can hold the currency on paper wallets without Central storage, and immediately spend it if needed.
Not as easy with cash, and impossible with checking/credit accounts.
the decentralization of cryptos like bitcoin refers to the source of the money (the miners), not its end location. most of the "contradictions" come down to misunderstandings like this. there's nothing that forces me to use a particular exchange and if the exchange crashes it will not affect my personal wallet, and i can feel safe knowing no 3rd party can come bail out the failed exchange at my indirect expense.
"... i can feel safe knowing no 3rd party can come bail out the failed exchange at my indirect expense."
Er, well, no. You can feel pretty safe that no 3rd party will come bail out the failed exchange, but I'm not sure how you could conclude that they could not. At least, until all the bitcoins have been irrevocably lost.
> Again, more lies. Where did you get this information?
97% of Bitcoin is held by 4% of addresses - textbook centralization. (http://www.businessinsider.com/bitcoin-97-are-held-by-4-of-a...) Now that can be whales, or it can be exchanges, which isn't clear. However, calling someone a liar for stating the fact that Bitcoin isn't the decentralized utopia you've dreamed of is uncalled for.
> Everyone in crypto knows the biggest risk are the exchanges.
Alot of crypto is purchased and held by people who aren't "in crypto" but are just normal people who have a FOMO.
It should be possible to separate whales from exchanges since the ledger is public, no? The latter would seem likely to have many more transactions with many more counter-parties.
(I've been mildly interested in this question for a while, since it seems like them as got into bitcoin early ought to be whales, right? First come, first served and all.)
Was there a poll of the community? We're lumping in early adopters of "the web" with promoters of the dot com bubble. The position is uneducated at best and disingenuous at worst. I suspect "Kai" benefits from click bait.
There may have been countless ways of doing money laundering, but give me another way of paying for drugs online anonymously. There's a reason the darknets markets are so popular.
Add to the solution of paying anonymously or globally that transfers are generally shorter than bank account transfers.
With banks and checking/savings accounts you have 3-5 business days, mainly due to the ACH and for fraud protection. But some transactions don't need fraud protection or are low enough that it might not matter. In that case bitcoin can transfer funds, verify it within an hour and many times around 20 minutes or so, that is much faster than transferring some money that settles 3-5 days later.
A real world use case for bitcoin is to transfer money into it then buy from third party small products vendors or donations that one may or may not trust with credit card or to maintain privacy on purchases. Paypal usually fills that type of role but some don't use that. In those cases bitcoin and solutions like Bitpay work nicely.
One can use bitcoin (or other alts you like) like a wallet/cash by having a smaller amount in there for transactions that you don't want to share your credit/payment processor information with similar to Paypal. Some might even trust bitcoin wallets more than Paypal and competition is always good. Credit card companies correlate your data through your card email/id to sell your ad data i.e. you order food out you might get competitive food ads. Privacy in bitcoin is a big killer app in those aspects, trust and non-tracked purchases.
Bitcoin is more volatile, if your bank and credit cards are RDBMS then bitcoin is memcached/redis/mongo, more volatile but private. A nice side effect of bitcoin is money may go up in value but alternatively it can lower in value.
Bitcoin could also allow someone to sell products globally without credit processors or other payment solutions that may be blocked or instead of setting those up. This can help entrepreneurs get their products available globally and not just for underground products but small hobbyists, creators, artists, and more. Bitcoin also greatly helps with donations and tips for FOSS and others that setting up a paypal invoice or credit transaction would be more of a pain.
Yeah paying with savings/checking accounts they can take 3-5 business days. It may be faster but usually processes in that amount of time. If someone gives you a check the other side can take 3-5 days before it can be pulled/reversed as well. Much of this is due to fraud protections but also to get cheaper transactions during ACH sweeps. You can setup ACH transfers that happen nightly but usually that is for something like regular payment that it is worth setting it up i.e. maybe direct deposit for a contracting job.
I used to be a sober guy with a typical penis and U.S. dollars in the bank. I would often lay awake at night, wondering, “How can I solve this?”
You see, I was stuck in a rut. I wanted drugs, massive boners, and the thrill of a wildly unstable currency, all while shrouded under the cloak of anonymity.
Ad hominem and strawman, a private but verified payment solution isn't all drugs, money laundering and underground illegal purchases.
Crypto is one step above cash, no fraud protection but some amount of verification. So is everyone that uses cash looking to skirt the law just because they want it private? Maybe they don't want their credit card company knowing they ate fast food for days straight.
Money is the root of all evil but it is the people not the currency that can be bad. There are real world examples and uses for crypto. Is it used for bad things? Sure. Do criminals use all types of money? Yes. Crypto is just another currency, people are still good and bad.
Blockchain tech and the whole "trustless economy" freak me out precisely because I think they can work... The things that emerge out of this and scale long-term can have some really scary consequences:
(1) a working "trustless economy" makes trust and peace no longer be requirements for a functional global economy... this opens the door to all sorts of fucked up scenarios like financing (or betting on) wars, no longer working for peace because it's not always required to make your economic schemes work, no longer caring about keeping your countries economy at least somewhat functional because you can always "pull your money out" etc.
(2) a "human-less economy" enabled by smart contracts - long before autonomous "un-owned" corporations run by AIs take over the world, they will be used for all sorts of shady things, money laundering, toxic waste disposal by buying it but never paying to store it etc. I can't even imagine the creativity of the conmen and criminals that will start to play with these possibilities.
"Trustless" can work... just that it doesn't seem to lead to scenarios that increase the mid term survival changes of the human race :|
You don't think people already bet on wars? Why is there wars? You think that Putin invades countries just for fun? Opening the bets for everyone should make a more peaceful world, because wars don't benefit the majority.
I think your concerns are very reasonable. However, I think that thinking them all the way through is cause for more optimism than you're applying. For example,
> no longer working for peace because it's not always required to make your economic schemes work
Is this really a possibility? Peace is always good for bounty. Everybody everywhere wants peace. Along with justice, freedom, and love, it is one of the most unifying characteristics of the human condition.
It is precisely those middlemen whom blockchain tech might undermine that have seized upon these soft parts of human kind and turned perverted them.
In a world without fiat currency, I am quite confident that there will be less money for bombs and cheap plastic nonsense. This has been a critique of fiat currency for thousands of years, and only now does humanity have a tool to visualize it.
And it's not hard to imagine blockchain technology replacing currency and consumerism altogether. Of course this will take a massive social movement - advances in the technology alone are perhaps necessary, but certainly not sufficient.
> a "human-less economy" enabled by smart contracts - long before autonomous "un-owned" corporations run by AIs take over the world, they will be used for all sorts of shady things, money laundering, toxic waste disposal by buying it but never paying to store it etc.
But again, humanity has a deep desire for the verdant. The deprecation of "easy" money, global theft, and warfare-as-the-norm - these are continuing imperatives and are good prayers for our earth. And on long time scales, it seems that blockchain tech tends toward, rather than away from, these things.
> And it's not hard to imagine blockchain technology replacing currency and consumerism altogether.
It is for me. How exactly would blockchain replace consumerism? And replace it with what?
> The deprecation of "easy" money, global theft, and warfare-as-the-norm - these are continuing imperatives and are good prayers for our earth. And on long time scales, it seems that blockchain tech tends toward, rather than away from, these things.
Do you have any evidence for such a bold claim? Or at least a rational argument for why blockchain tech would lead to such outcomes?
> It is for me. How exactly would blockchain replace consumerism? And replace it with what?
Painting with broad strokes: easy money / inflationary currency policy promotes spending over saving, right?
So, with a less inflationary currency (or ecosystem of currencies), people will be less incentivized to spend in such a frenzied manner.
I'm not really introducing anything new here; this is the basic Austrian critique re: price signals in the environment.
> What evidence do you have for such bold claims?
Well, I hope we can take the former as read: obviously a cryptocurrency with a less inflationary policy will promote deprecation of each money.
As for global theft: the main infrastructure for nation-state level economic predation is monetary policy, and then trade policy as a secondary matter.
Monetary policy may (again, in this admittedly utopian world I'm describing) be wrested from the state by virtue of cryptocurrencies. And trade policy with smart contracts.
As for deprecation of warfare-as-the-norm: This, at least to me, is the logical consequence of the first two. If there is less rampant easy-money-consumerism, and no state-level monetary or trade policies, then warfare will increasingly be viewed as a sink of power rather than a fount.
Am I being very hopeful here? Yes, I am. But I am very hopeful. I think that in these troubled times it is a great visionary exercise to ask yourself: what are some of the best things you can imagine happening for humanity in the next 50 years?
It seems like your argument is centered around inflation, which is a relatively new phenomenon.
Regarding consumerism, perhaps you’re right that lack of inflation will reduce it. But what if, after a certain point, consumerism is the main driver of economic growth, the thing that enables all the really good stuff to develop, such as scientific development?
Regarding warfare, before fiat currency, you could argue that some wars were waged in order to get access to gold and silver mines. But I hope you’ll agree that those were only a small minority.
I’m excluding violence for the purpose of simply stealing gold and silver outright, because the equivalent can still happen in a blockchain world - just point a gun to someone’s head and tell them to transfer all their coins to your account.
Well, not only inflation, but a disarming of the international corporate state's sole franchise in trade. Smart contracts cross borders in a nearly frictionless manner; the same cannot be said of Coca Cola or the World Bank.
> Everybody everywhere wants peace. Along with justice, freedom, and love, it is one of the most unifying characteristics of the human condition.
People want safety and stability. In the context of large societies, a mutual desire for peace exists only because the alternative (large scale war) has such terrible consequences.
In fact, for centuries - and still in many places today - the opposite has been true: increasing wealth by exploitation of other nations' resources has been used as the rationale for military conquest.
> But again, humanity has a deep desire for the verdant. The deprecation of "easy" money, global theft, and warfare-as-the-norm - these are continuing imperatives and are good prayers for our earth. And on long time scales, it seems that blockchain tech tends toward, rather than away from, these things.
These are lovely sentiments, but trustworthy and accountable/transparent institutions made of people are the only thing that can achieve that kind of vision, not some kind of invisible hand of justice that one assumes is behind blockchain. That is basically anarchism - leaving matters of broad societal importance: justice, finance, etc. to the mob. We humans have been there before. It isn't pretty.
I am rather optimistic about blockchain for the exact opposite reasons. I don't believe it is "trustless" but rather "distributed trust" or "decentralized trust".
Depending on entities like banks to determine who could/should be trusted, e.g., for loans, has allowed systematic discrimination against marginalized parties like African-Americans to continue for centuries. Being able to push the determination of trust out to the entities closest to the interested parties - perhaps those in their community who have lent them money and had it paid back - could allow for those people to have the same opportunities as the 'mainstream'.
There have been rumblings about Yelp reviews being manipulated for years. Small business reviews on blockchain don't allow for that kind of manipulation - and could be integrated with smart contracts that verify that only actual patrons of that business could leave reviews.
My personal favorite is the idea of blockchain election systems. It's not that I don't trust the U.S. government _per se_, but Congress has shown astounding indifference to modernizing and securing our election systems on their own. I would vastly prefer a well-designed decentralized implementation over whatever they could implement, securely, centrally.
PS I'm not saying these implementations are trivial or easy in any way, nor are we necessarily ready for them, especially for the general public. But I do feel that removing centralized arbiters of trust could leave us in a better place than where we started.
I like your idea about “pushing trust to the edges”, as it were. Food for thought...
> There have been rumblings about Yelp reviews being manipulated for years. Small business reviews on blockchain don't allow for that kind of manipulation
How would a blockchain prevent a restaurant owner from paying, using some unrelated method, someone to post a good review for them?
Smart contracts are a great example of someone from tech saying they can fix something they never understood to begin with. Theranos is another example of this effect, which is characterized by a combination of unjustified arrogance and Dunning Kruger. Automated law would be a dysfunctional nightmare, and the human touch, while decidedly imperfect is a feature and. It a bug.
Unless you’re a cryptolobertarian there are similar issues with Blockchain for money. A total lack of insurance and control isn’t actually what most people want, because it predictably leads to the kind of volatility and insecurity we see in crypto markets today. People already made the choice to stop stuffing dollar bills in their mattresses.
The criticisms of blockchain tech have become so incoherent that there may be cause for confidence again. Full circle!
> There is no single person in existence who had a problem they wanted to solve, discovered that an available blockchain solution was the best way to solve it, and therefore became a blockchain enthusiast.
It's amazing to me that this person finished this sentence and didn't, in the time it took to type it, realize how flatly wrong it is. Every corner of the USA, online and otherwise, has satisfied customers who were able to purchase psychoactive compounds online despite the prohibition against them. This is a wonderful application of blockchain tech and, as a solution, has produced many enthusiasts.
Moreover, society benefits generally from drug prohibition being undermined, and this too has produced more indirect enthusiasts.
However, this phenomenon serves to show the blockchain's fitness, not the limits of its reach.
Many of us spend our days working on blockchain tech that is far more mundane and unlikely to grab headlines, but also fits more cleanly into current legal and political structures. What has the author to say of that?
> The number of retailers accepting cryptocurrency as a form of payment is declining, and its biggest corporate boosters like IBM, NASDAQ, Fidelity, Swift and Walmart have gone long on press but short on actual rollout.
Borrowing from the previous confused critique: are any blockchain enthusiasts (regardless of their original fount of enthusiasm) also enthusiasts for these giant, largely outdated companies? The fact that these companies have tried and failed to integrate blockchain tech is, in the minds of most enthusiasts, a positive sign, not a negative one.
> Hm. Perhaps you are very skilled at writing software. When the novelist proposes the smart contract, you take an hour or two to make sure that the contract will withdraw only an amount of money equal to the agreed-upon price, and that the book — rather than some other file, or nothing at all — will actually arrive.
Not a critique of blockchain tech, but of open source software generally. And a bad one.
> “Keep your voting records in a tamper-proof repository not owned by anyone” sounds right — yet is your Afghan villager going to download the blockchain from a broadcast node and decrypt the Merkle root from his Linux command line to independently verify that his vote has been counted?
I'll note the racist overtones here without further comment.
I will, however, point out that no blockchain voting system has ever been proposed with such a UI.
> These sound like stupid examples — novelists and villagers hiring e-bodyguard hackers to protect them from malicious customers and nonprofits whose clever smart-contracts might steal their money and votes??
Yes, they sound like stupid examples. They are stupid examples, designed precisely for use as a strawmen in this stupid essay.
> A person who sprayed pesticides on a mango can still enter onto a blockchain system that the mangoes were organic. A corrupt government can create a blockchain system to count the votes and just allocate an extra million addresses to their cronies. An investment fund whose charter is written in software can still misallocate funds.
I have no idea what point the author is making now. Can anyone clarify?
> The contract still works, but the fact that the promise is written in auditable software rather than government-enforced English makes it less transparent, not more transparent.
This has not been history's experience with government-enforced English. By ignoring this fact, the author allows himself to indulge in arguments that don't make sense in order to make points that don't matter. Such as...
> Eight hundred years ago in Europe — with weak governments unable to enforce laws and trusted counterparties few, fragile and far between — theft was rampant, safe banking was a fantasy, and personal sec...
A fully public, fully transparent, immutable ledger is "useless?"
Only if you don't believe in accountability and transparency.
What with modern voice and face morphing technology, I'd expect major news organizations to start signing their releases onto a block chain to allow us to spot mutations.
Currency is just one potential use case of block chains; there are many others.
A lot of valid points here, but ultimately very short sighted. Firstly, the author does not mention many of the highly plausible use cases for trustless and permissionless services such as replacing rent seeking P2P marketplaces like eBay (where the advantage is cost reduction) or online Poker sites (where the advantage is manipulation resistance). He does not mention DAOS, where strangers can trustlessly enter into contractual obligation to create e.g. a crowdsourced Venture fund. He does not mention the potential to provide financial services to the 2 billion unbanked people in the world. He does not see the potential for innovative and completely new financial products coming out because of the permissionless nature of public blockchains.
The use cases that he sites include buying an e-book using a smart contract or its use in the supply chain or voting. The e-book example is slightly misguided, because this is not an use case where decentralization provides much value. So the entire discussion about auditing smart contracts is rather unnecessary. But it is nonetheless an important objection that may become important in DAOs. But it's short sighted to think that this problem won't be solved. Some companies are already starting to tackle the smart contract to natural language translations (e.g. Iolite).
Supply chain is yet another use case where it is unclear whether blockchains will add value. Perhaps cost saving. But note that the blockchains used in supply chains will most likely be private, therefore permissioned. It's unfair to put private and public blockchains in the same basket, because they are very different beasts.
Finally the use case of voting. The author thinks that whoever is in power might distribute a few additional addresses to their cronies to manipulate the system. He is missing the point that all data is public in public blockchains. So anyone can audit the voting results later if they want and discover that those addresses do not belong to any real people (assuming there is a KYC type identification system built-in). Voting is an use case where blockchains are sorely required. All we need is for the knowledge to reach public consciousness and for the people to tell their governments that they want it.
> the author does not mention many of the highly plausible use cases for trustless and permissionless services such as replacing rent seeking P2P marketplaces like eBay (where the advantage is cost reduction) or online Poker sites (where the advantage is manipulation resistance).
Both of those claims are severely in need of support before you can attack the author for not mentioning them. eBay doesn’t cost what it does because there’s no other way to send money online – it’s things like discovery, fraud protection, etc. which are necessary either way. It’s similarly non-obvious how magic blockchain pixie dust could address the challenges which online gambling actually has.
You are right. Discovery, fraud protection and many other functions need to be there either way. When I say cost reduction, I mean getting rid of any additional premiums which eBay (or any corporation for that matter) levies because of their strong position in the market.
As for the problems of online poker, the Virtue Poker whitepaper is a good starting point about why blockchain is indeed that magic pixie dust[0]
1. Your bank account balance is a number in a database. There are multiple organizations much more powerful than you that have the ability to alter that database. Your protection against them is the legal system which is adversarial between you and these giant organizations, and run by government employees. If you’re fine with that, great. If you aren’t and you want to take responsibility into your own hands, try Bitcoin.
2. Blockchain doesn’t make it easier to distribute and process information. Blockchain makes it harder and a lot harder. Blockchain makes it possible to verify a set of rules going back to the genesis block. It makes it possible for you to prove that you own the book, if someone wants to create a book ownership registry smartcontract. I don’t disagree with this element of the article, a lot of people are trying to use blockchain tech to “solve” problems where it offers nothing.
But that fact that shock therapy is worse than useless doesn’t mean electricity is a bad vision for the future. To paraphrase Drake: the real will live forever, the fake will be destroyed.
Not only am I fine with that, I think it's vastly superior to a system where you can lose your entire balance by misplacing a key.
Forgetting my PIN doesn't lock up my account forever, if I get scammed by a vendor I can appeal to my bank for a chargeback, and if they lose my money they are on the hook for it.
"Be your own bank" sounds bootstrappy and self-reliant, but in reality it's just stupid.
Using cryptocurrency does not forfeit the ability to have a third-party take custody of your funds for you.
But because you are useless at looking after things, everybody else should forfeit their right to be custodian of their own funds?
The choice should be there for anyone to make. Do I look after my own funds, knowing the risks, or do I let someone else look after them, knowing those risks?
Or you know, we now have these things called multisig wallets, which mean that you can have third-parties secure your funds without actually giving them custody of the funds. You can have the best of both worlds by removing the risk of losing everything if you lose your keys, and also eliminate the possibility of a bank/government from stealing your money.
Right, as I said, the vast majority of people don't need to. Banks aren't going obsolete, but they'll be different in form for a world of people using cryptocurrencies. The way I see it is that existing banks will have to adapt to fit into the cryptocurrency world, or they'll just be replaced by other services that do.
They have a huge head start in terms of capital, reach and marketing potential, but so far they've not even left the start line. People with little capital, little experience, and only social media are apparently creating the financial organizations of the future.
You've (accidentally) pointed out why cryptocurrencies will never achieve mass adoption: 99.9% of people are perfectly happy to trust that banks and the government will do the right thing most of the time.
If you look at the world outside of your little bubble, there are over 3 billion people with little or no access to banking services that the west takes for granted.
And do you think people in Venezuela, India, Greece, Zimbabwe, etc trust that their governments will do the right thing?
The unbanked are not going to be using cryptocurrency, which requires secure access to secure computers, a whole mass of precautions, technical knowledge etc etc. They're not going to be putting what little they have into a wildly fluctuating asset class with poorly enumerated tax liabilities.
It's a pipedream of western cryptocurrency enthusiasts, not actually something that's going to be useful on the ground.
I mentioned Venezuela because people there are using Bitcoin, despite it being illegal, despite it being volatile. Because it's objectively better than what their government is offering.
You're really thinking short term if you think that Bitcoin can't spread to the masses of people worldwide. A couple of decades ago, people in rural India for example, didn't even have permanent access to a telephone in their home. Technical advancement has now meant that masses of them have phones, and many of them smartphones. They have completely skipped over the home telephone thing.
They certainly are going to use cryptocurrencies if it's the simplest way to transfer money to people, without going through the bank (which they have limited access to). In particular, you have large numbers of people working abroad who send money back home to their families. In the old financial system they usually end up paying big taxes on these transfers (fees which seem small to westerners, but which could feed entire families for a day). Just as these people haven't rushed to get a landline to get a telephone in their home, they're also not going to rush to get a bank account where they're restricted on how and when they can use their money, when a better technology is now available to them.
Volatility is and obvious side-effect when demand is changing at such staggering volumes. Some days Bitcoin might get a million new users if it's put out in mainstream media. These fluctuations will probably increase in the near term, as more people become aware and being to adopt cryptocurrencies, but long term, they will die down as adoption rate slows too. It's not going to happen overnight, which is probably where most of the dismissive attitude comes from. People's expectations are too high in what they want to be able to do tomorrow with crypto, but in reality it's going to take several decades to work its way into society.
> 99.9% of people are perfectly happy to trust that banks and the government
This seems to me to be a wildly inaccurate statement. Moreover, I find that my first reaction is that this is a position of privilege, exclusivity, and ignorance.
Please consider that there are people in this world in a more vulnerable position than you - many more than 0.1% of the world's population, in fact.
> Venmo is a free service to transfer dollars, and bitcoin transfers are not free.
Credit cards, payment gateways et al, are not free, they just obfuscate costs that are eventually passed back to consumers - when you include fraud it is estimated that society pays a hidden 5% tax on all goods and services just for payment processing.
> no single person in existence who had a problem they wanted to solve
Illicit purchases at minimum? Silk Road, etc.? Whether this is good or not, no need to think of other examples, the statement is simply not true.
> but once the vendor has your money they don’t have any incentive to deliver
There are many interesting solutions to this like automatic escrow, reputation, mutual burn, etc. Additionally using a trust-based system for small meaningless purchases while storing and transacting your actual wealth in crypto is not incompatible with the goals and vision of the space.
> Auditing software is hard! The most-heavily scrutinized smart contract in history had a small bug that nobody noticed
Sure is, yet the world runs on software now, it's doable. Additionally of course the contract was the most heavily scrutinized, it was one of the first ever.
> yet is your Afghan villager going to download the blockchain from a broadcast node and decrypt the Merkle root from his Linux command line to independently verify that his vote has been counted
An afghan villager (or even a sophisticated engineer in the valley) isn't going to read and check every line of code of all software ever written, and will end up trusting to some degree - but that's very different than having to trust every transaction, every build, and having to ask for permission for every use of the system. I didn't check the linux code, but I still trust it much more than a closed source alternative. There are degrees of trust, nothing is absolute, and here it is minimized. And if you somehow don't trust, then you are free to verify, you have the choice. This is valuable.
> These sound like stupid examples
Agreed
> in less than a decade, three successive top bitcoin exchanges have been hacked, another is accused of insider trading, the demonstration-project DAO smart contract got drained, crypto price swings are ten times
What does insider trading have to do with blockchain technology? What do hacked exchanges have to do with blockchain? What do price swings have to do with blockchain? Bitcoin itself has never been hacked. This is fud nonsense.
> A person who sprayed pesticides on a mango can still enter onto a blockchain system that the mangoes were organic.
Yes and we can trace it with certainty and punish the infringer who had to sign their name - rather than have the organization invent confusion and doubt until everyone forgets and moves on.
> Projects based on the elimination of trust have failed to capture customers’ interest because trust is actually so damn valuable
Trust is fine to grease the wheels, maybe the last mile will be trust-related, but having the underlying final infrastructure not reliant on the good graces of others when push comes to shove is valuable.
> If someone comes to you with “the mango-pickers don’t like doing data entry" then “let’s create a very long sequence of small files, each one containing a hash of the previous file”, is a nonsense answer
> “What if everyone keeps their records in a tamper-proof repository not owned by anyone?”
Exactly, "What if everyone keeps their records in a tamper-proof repository not owned by anyone?” is a re-framing of what blockchain does in use-case terms, (as opposed to technical terms) which makes it clear if you try to apply it to real use cases, that doesn't really solve anyone's problems
What a load of crap. Normally I feel more inclined to give thoughtful dialogue in response to critique, but this article was so ill-conceived in argument that the author had to narrowly define blockchain and it’s uses to make his point, and then went as far as to claim nobody has a real use case that only blockchain can solve. How incredibly naive, and so willing to discard any potential idea (despite actual, proven use cases). His privilege shows too — to argue that a war torn region can’t use technology. Has he seen how cellphones have become the de facto credit card in parts of Africa which are too remote for banking infrastructure? Articles like these read like NoSQL naysayers when it first broke out into the developer ecosystem. It’s easy to be a critic.
Engineers are trained to look critically at proposed solutions.
It's much harder to imagine where the future lays. I personally see crypto as just another extension of software eating the world.
As someone born and lived in a 3rd world country for a better part of my life, I believe Blockchain solves a very real problem. That's equal participation in internet economy irrespective of someone's geographic location.
It was thanks to the internet I realized I can also contribute to the world (by creating something people want & writing about something others want to learn). However, when it came to making a living out of that there weren't many options. One of the prime motives for me to move out of Sri Lanka was it will be way easier for me to accept payments online.
PayPal is still not available in Sri Lanka, even after repeated attempts to convince Central Banks and governments [1]. Also, recently Stripe blocked a payment from one of my customers due to high risk profile. Reason? He used a US issued debit card from Nigeria. I reached out to the person, turns out he was a passionate young entrepreneur who was trying to build a really interesting business. But his geographic location becomes a resistance in a medium it shouldn't.
For me, Blockchain( and Cryptocurrencies) is a reframing of the trust model from heuristics such as geographic location to verifiable algorithms. The Internet protocols enabled us to exchange code, art & virtual goods without geographic boundaries. Then why not money?
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[ 3.6 ms ] story [ 125 ms ] threadNo. Nobody trusts an exchange because it's on the blockchain. The idea of a smart contract is to decentralize high-friction transactions such as insurance (which is essentially what Amazon or PayPal is providing). The whole point is to not have to trust anybody to ensure a transaction is carried out, which it does accomplish to a reasonable extent.
The author also confuses peer-to-peer trustworthiness such as making a purchase, with trustworthiness that data or transaction executions will not be tampered with. The blockchain backs up the latter with mining, whereas it does not back up the former.
An insurance smart contract should require the insuring party hold some fraction of the payout based on the expected number of claims.
Then he ties in crypto currency volatility and Mt Gox as part of its “trust” failures. Being able to trust the results of a block chain does not mean that people will value any currency based at the same price from day to day, or that people who offer to trade and store that currency got you will be competent and honest.
Blockchains and smart contracts don't have to be related at all.
> There is no single person in existence who had a problem they wanted to solve, discovered that an available blockchain solution was the best way to solve it, and therefore became a blockchain enthusiast.
Anyone who was trying to buy drugs/penis-pills/whatever-other-illegal-substance online and wanted to pay in an anonymous form would disagree. Anyone who had a bit of money in a country with restrictive international money transfer laws and who wanted to get that money out of said country would disagree.
For both of these groups, available blockchains provided a good solution to a real problem. And especially in the first group, which is generally underestimated in size I think, a lot of people genuinely got enthusiastic about blockchains and jumped on the cryptocurrency train relatively early - first to buy some weed or whatever, and later also to make more money out of less money. But the problem-seeking-a-solution situation was first!
However, one of Bitcoin's features is that it has a completely public permanent ledger showing all transactions assigned to everyone. It is a wildly inappropriate technology for doing illegal things or skirting the law (which cross-country transfers outside the system could well be). It has more downsides than cash in a duffle bag.
CHECK MATE ATHEISTS. Actually the article is pretty moronic. Besides being written by a person named "Kai" who supports "Whatever the opposite of a futurist is", it's obvious that the crypto crowd is trying to decentralize All The Things. Slush Pool as p2p alternatives, as does silk road.
Trust systems have trade-offs. Decentralization is hard. Nothing of interest was revealed here, besides HN has a hard-on for centralized authority.
It seems the crypto community also does not care about the obvious centralization, but who would've ever thought major contradictions would come out of cryptocurrency?
Er, well, no. You can feel pretty safe that no 3rd party will come bail out the failed exchange, but I'm not sure how you could conclude that they could not. At least, until all the bitcoins have been irrevocably lost.
Again, more lies. Where did you get this information? Everyone in crypto knows the biggest risk are the exchanges.
I'm curious, who takes time out of their day to villainize a database architecture? People are getting desperate.
97% of Bitcoin is held by 4% of addresses - textbook centralization. (http://www.businessinsider.com/bitcoin-97-are-held-by-4-of-a...) Now that can be whales, or it can be exchanges, which isn't clear. However, calling someone a liar for stating the fact that Bitcoin isn't the decentralized utopia you've dreamed of is uncalled for.
> Everyone in crypto knows the biggest risk are the exchanges.
Alot of crypto is purchased and held by people who aren't "in crypto" but are just normal people who have a FOMO.
(I've been mildly interested in this question for a while, since it seems like them as got into bitcoin early ought to be whales, right? First come, first served and all.)
Was there a poll of the community? We're lumping in early adopters of "the web" with promoters of the dot com bubble. The position is uneducated at best and disingenuous at worst. I suspect "Kai" benefits from click bait.
"Everyone in crypto knows" perhaps, but their actions suggest that centralised services are preferred by most and this is entirely verifiable.
Anecdotes certainly aren't as effective in the blockchain world.
https://bitinfocharts.com/top-100-richest-bitcoin-addresses....
https://ethereum.stackexchange.com/questions/886/which-ether...
With banks and checking/savings accounts you have 3-5 business days, mainly due to the ACH and for fraud protection. But some transactions don't need fraud protection or are low enough that it might not matter. In that case bitcoin can transfer funds, verify it within an hour and many times around 20 minutes or so, that is much faster than transferring some money that settles 3-5 days later.
A real world use case for bitcoin is to transfer money into it then buy from third party small products vendors or donations that one may or may not trust with credit card or to maintain privacy on purchases. Paypal usually fills that type of role but some don't use that. In those cases bitcoin and solutions like Bitpay work nicely.
One can use bitcoin (or other alts you like) like a wallet/cash by having a smaller amount in there for transactions that you don't want to share your credit/payment processor information with similar to Paypal. Some might even trust bitcoin wallets more than Paypal and competition is always good. Credit card companies correlate your data through your card email/id to sell your ad data i.e. you order food out you might get competitive food ads. Privacy in bitcoin is a big killer app in those aspects, trust and non-tracked purchases.
Bitcoin is more volatile, if your bank and credit cards are RDBMS then bitcoin is memcached/redis/mongo, more volatile but private. A nice side effect of bitcoin is money may go up in value but alternatively it can lower in value.
Bitcoin could also allow someone to sell products globally without credit processors or other payment solutions that may be blocked or instead of setting those up. This can help entrepreneurs get their products available globally and not just for underground products but small hobbyists, creators, artists, and more. Bitcoin also greatly helps with donations and tips for FOSS and others that setting up a paypal invoice or credit transaction would be more of a pain.
Transfers here in the UK are effectively instant and free.
Ha, I haven't had a chequebook for over a decade now. Seems like archaic tech :)
You see, I was stuck in a rut. I wanted drugs, massive boners, and the thrill of a wildly unstable currency, all while shrouded under the cloak of anonymity.
That’s when I became a blockchain enthusiast.
Crypto is one step above cash, no fraud protection but some amount of verification. So is everyone that uses cash looking to skirt the law just because they want it private? Maybe they don't want their credit card company knowing they ate fast food for days straight.
Money is the root of all evil but it is the people not the currency that can be bad. There are real world examples and uses for crypto. Is it used for bad things? Sure. Do criminals use all types of money? Yes. Crypto is just another currency, people are still good and bad.
(1) a working "trustless economy" makes trust and peace no longer be requirements for a functional global economy... this opens the door to all sorts of fucked up scenarios like financing (or betting on) wars, no longer working for peace because it's not always required to make your economic schemes work, no longer caring about keeping your countries economy at least somewhat functional because you can always "pull your money out" etc.
(2) a "human-less economy" enabled by smart contracts - long before autonomous "un-owned" corporations run by AIs take over the world, they will be used for all sorts of shady things, money laundering, toxic waste disposal by buying it but never paying to store it etc. I can't even imagine the creativity of the conmen and criminals that will start to play with these possibilities.
"Trustless" can work... just that it doesn't seem to lead to scenarios that increase the mid term survival changes of the human race :|
> no longer working for peace because it's not always required to make your economic schemes work
Is this really a possibility? Peace is always good for bounty. Everybody everywhere wants peace. Along with justice, freedom, and love, it is one of the most unifying characteristics of the human condition.
It is precisely those middlemen whom blockchain tech might undermine that have seized upon these soft parts of human kind and turned perverted them.
In a world without fiat currency, I am quite confident that there will be less money for bombs and cheap plastic nonsense. This has been a critique of fiat currency for thousands of years, and only now does humanity have a tool to visualize it.
And it's not hard to imagine blockchain technology replacing currency and consumerism altogether. Of course this will take a massive social movement - advances in the technology alone are perhaps necessary, but certainly not sufficient.
> a "human-less economy" enabled by smart contracts - long before autonomous "un-owned" corporations run by AIs take over the world, they will be used for all sorts of shady things, money laundering, toxic waste disposal by buying it but never paying to store it etc.
But again, humanity has a deep desire for the verdant. The deprecation of "easy" money, global theft, and warfare-as-the-norm - these are continuing imperatives and are good prayers for our earth. And on long time scales, it seems that blockchain tech tends toward, rather than away from, these things.
It is for me. How exactly would blockchain replace consumerism? And replace it with what?
> The deprecation of "easy" money, global theft, and warfare-as-the-norm - these are continuing imperatives and are good prayers for our earth. And on long time scales, it seems that blockchain tech tends toward, rather than away from, these things.
Do you have any evidence for such a bold claim? Or at least a rational argument for why blockchain tech would lead to such outcomes?
Painting with broad strokes: easy money / inflationary currency policy promotes spending over saving, right?
So, with a less inflationary currency (or ecosystem of currencies), people will be less incentivized to spend in such a frenzied manner.
I'm not really introducing anything new here; this is the basic Austrian critique re: price signals in the environment.
> What evidence do you have for such bold claims?
Well, I hope we can take the former as read: obviously a cryptocurrency with a less inflationary policy will promote deprecation of each money.
As for global theft: the main infrastructure for nation-state level economic predation is monetary policy, and then trade policy as a secondary matter.
Monetary policy may (again, in this admittedly utopian world I'm describing) be wrested from the state by virtue of cryptocurrencies. And trade policy with smart contracts.
As for deprecation of warfare-as-the-norm: This, at least to me, is the logical consequence of the first two. If there is less rampant easy-money-consumerism, and no state-level monetary or trade policies, then warfare will increasingly be viewed as a sink of power rather than a fount.
Am I being very hopeful here? Yes, I am. But I am very hopeful. I think that in these troubled times it is a great visionary exercise to ask yourself: what are some of the best things you can imagine happening for humanity in the next 50 years?
It seems like your argument is centered around inflation, which is a relatively new phenomenon.
Regarding consumerism, perhaps you’re right that lack of inflation will reduce it. But what if, after a certain point, consumerism is the main driver of economic growth, the thing that enables all the really good stuff to develop, such as scientific development?
Regarding warfare, before fiat currency, you could argue that some wars were waged in order to get access to gold and silver mines. But I hope you’ll agree that those were only a small minority.
I’m excluding violence for the purpose of simply stealing gold and silver outright, because the equivalent can still happen in a blockchain world - just point a gun to someone’s head and tell them to transfer all their coins to your account.
People want safety and stability. In the context of large societies, a mutual desire for peace exists only because the alternative (large scale war) has such terrible consequences.
In fact, for centuries - and still in many places today - the opposite has been true: increasing wealth by exploitation of other nations' resources has been used as the rationale for military conquest.
> But again, humanity has a deep desire for the verdant. The deprecation of "easy" money, global theft, and warfare-as-the-norm - these are continuing imperatives and are good prayers for our earth. And on long time scales, it seems that blockchain tech tends toward, rather than away from, these things.
These are lovely sentiments, but trustworthy and accountable/transparent institutions made of people are the only thing that can achieve that kind of vision, not some kind of invisible hand of justice that one assumes is behind blockchain. That is basically anarchism - leaving matters of broad societal importance: justice, finance, etc. to the mob. We humans have been there before. It isn't pretty.
Depending on entities like banks to determine who could/should be trusted, e.g., for loans, has allowed systematic discrimination against marginalized parties like African-Americans to continue for centuries. Being able to push the determination of trust out to the entities closest to the interested parties - perhaps those in their community who have lent them money and had it paid back - could allow for those people to have the same opportunities as the 'mainstream'.
There have been rumblings about Yelp reviews being manipulated for years. Small business reviews on blockchain don't allow for that kind of manipulation - and could be integrated with smart contracts that verify that only actual patrons of that business could leave reviews.
My personal favorite is the idea of blockchain election systems. It's not that I don't trust the U.S. government _per se_, but Congress has shown astounding indifference to modernizing and securing our election systems on their own. I would vastly prefer a well-designed decentralized implementation over whatever they could implement, securely, centrally.
PS I'm not saying these implementations are trivial or easy in any way, nor are we necessarily ready for them, especially for the general public. But I do feel that removing centralized arbiters of trust could leave us in a better place than where we started.
> There have been rumblings about Yelp reviews being manipulated for years. Small business reviews on blockchain don't allow for that kind of manipulation
How would a blockchain prevent a restaurant owner from paying, using some unrelated method, someone to post a good review for them?
Many of the other negatives raised already exist and get more efficient through technology one way or the other.
Evil will always exist, lessening it will always be necessary. Technology is nothing more than an agnostic onlooker.
Unless you’re a cryptolobertarian there are similar issues with Blockchain for money. A total lack of insurance and control isn’t actually what most people want, because it predictably leads to the kind of volatility and insecurity we see in crypto markets today. People already made the choice to stop stuffing dollar bills in their mattresses.
> There is no single person in existence who had a problem they wanted to solve, discovered that an available blockchain solution was the best way to solve it, and therefore became a blockchain enthusiast.
It's amazing to me that this person finished this sentence and didn't, in the time it took to type it, realize how flatly wrong it is. Every corner of the USA, online and otherwise, has satisfied customers who were able to purchase psychoactive compounds online despite the prohibition against them. This is a wonderful application of blockchain tech and, as a solution, has produced many enthusiasts.
Moreover, society benefits generally from drug prohibition being undermined, and this too has produced more indirect enthusiasts.
However, this phenomenon serves to show the blockchain's fitness, not the limits of its reach.
Many of us spend our days working on blockchain tech that is far more mundane and unlikely to grab headlines, but also fits more cleanly into current legal and political structures. What has the author to say of that?
> The number of retailers accepting cryptocurrency as a form of payment is declining, and its biggest corporate boosters like IBM, NASDAQ, Fidelity, Swift and Walmart have gone long on press but short on actual rollout.
Borrowing from the previous confused critique: are any blockchain enthusiasts (regardless of their original fount of enthusiasm) also enthusiasts for these giant, largely outdated companies? The fact that these companies have tried and failed to integrate blockchain tech is, in the minds of most enthusiasts, a positive sign, not a negative one.
> Hm. Perhaps you are very skilled at writing software. When the novelist proposes the smart contract, you take an hour or two to make sure that the contract will withdraw only an amount of money equal to the agreed-upon price, and that the book — rather than some other file, or nothing at all — will actually arrive.
Not a critique of blockchain tech, but of open source software generally. And a bad one.
> “Keep your voting records in a tamper-proof repository not owned by anyone” sounds right — yet is your Afghan villager going to download the blockchain from a broadcast node and decrypt the Merkle root from his Linux command line to independently verify that his vote has been counted?
I'll note the racist overtones here without further comment.
I will, however, point out that no blockchain voting system has ever been proposed with such a UI.
> These sound like stupid examples — novelists and villagers hiring e-bodyguard hackers to protect them from malicious customers and nonprofits whose clever smart-contracts might steal their money and votes??
Yes, they sound like stupid examples. They are stupid examples, designed precisely for use as a strawmen in this stupid essay.
> A person who sprayed pesticides on a mango can still enter onto a blockchain system that the mangoes were organic. A corrupt government can create a blockchain system to count the votes and just allocate an extra million addresses to their cronies. An investment fund whose charter is written in software can still misallocate funds.
I have no idea what point the author is making now. Can anyone clarify?
> The contract still works, but the fact that the promise is written in auditable software rather than government-enforced English makes it less transparent, not more transparent.
This has not been history's experience with government-enforced English. By ignoring this fact, the author allows himself to indulge in arguments that don't make sense in order to make points that don't matter. Such as...
> Eight hundred years ago in Europe — with weak governments unable to enforce laws and trusted counterparties few, fragile and far between — theft was rampant, safe banking was a fantasy, and personal sec...
Only if you don't believe in accountability and transparency.
What with modern voice and face morphing technology, I'd expect major news organizations to start signing their releases onto a block chain to allow us to spot mutations.
Currency is just one potential use case of block chains; there are many others.
The use cases that he sites include buying an e-book using a smart contract or its use in the supply chain or voting. The e-book example is slightly misguided, because this is not an use case where decentralization provides much value. So the entire discussion about auditing smart contracts is rather unnecessary. But it is nonetheless an important objection that may become important in DAOs. But it's short sighted to think that this problem won't be solved. Some companies are already starting to tackle the smart contract to natural language translations (e.g. Iolite).
Supply chain is yet another use case where it is unclear whether blockchains will add value. Perhaps cost saving. But note that the blockchains used in supply chains will most likely be private, therefore permissioned. It's unfair to put private and public blockchains in the same basket, because they are very different beasts.
Finally the use case of voting. The author thinks that whoever is in power might distribute a few additional addresses to their cronies to manipulate the system. He is missing the point that all data is public in public blockchains. So anyone can audit the voting results later if they want and discover that those addresses do not belong to any real people (assuming there is a KYC type identification system built-in). Voting is an use case where blockchains are sorely required. All we need is for the knowledge to reach public consciousness and for the people to tell their governments that they want it.
Both of those claims are severely in need of support before you can attack the author for not mentioning them. eBay doesn’t cost what it does because there’s no other way to send money online – it’s things like discovery, fraud protection, etc. which are necessary either way. It’s similarly non-obvious how magic blockchain pixie dust could address the challenges which online gambling actually has.
As for the problems of online poker, the Virtue Poker whitepaper is a good starting point about why blockchain is indeed that magic pixie dust[0]
[0]https://virtue.poker/wp-content/uploads/2018/03/Virtue-Poker...
2. Blockchain doesn’t make it easier to distribute and process information. Blockchain makes it harder and a lot harder. Blockchain makes it possible to verify a set of rules going back to the genesis block. It makes it possible for you to prove that you own the book, if someone wants to create a book ownership registry smartcontract. I don’t disagree with this element of the article, a lot of people are trying to use blockchain tech to “solve” problems where it offers nothing.
But that fact that shock therapy is worse than useless doesn’t mean electricity is a bad vision for the future. To paraphrase Drake: the real will live forever, the fake will be destroyed.
Forgetting my PIN doesn't lock up my account forever, if I get scammed by a vendor I can appeal to my bank for a chargeback, and if they lose my money they are on the hook for it.
"Be your own bank" sounds bootstrappy and self-reliant, but in reality it's just stupid.
But because you are useless at looking after things, everybody else should forfeit their right to be custodian of their own funds?
The choice should be there for anyone to make. Do I look after my own funds, knowing the risks, or do I let someone else look after them, knowing those risks?
Or you know, we now have these things called multisig wallets, which mean that you can have third-parties secure your funds without actually giving them custody of the funds. You can have the best of both worlds by removing the risk of losing everything if you lose your keys, and also eliminate the possibility of a bank/government from stealing your money.
Do what you like, but the vast majority of people should not be doing this, because the risks are vast and the rewards basically zero.
They have a huge head start in terms of capital, reach and marketing potential, but so far they've not even left the start line. People with little capital, little experience, and only social media are apparently creating the financial organizations of the future.
If you look at the world outside of your little bubble, there are over 3 billion people with little or no access to banking services that the west takes for granted.
And do you think people in Venezuela, India, Greece, Zimbabwe, etc trust that their governments will do the right thing?
It's a pipedream of western cryptocurrency enthusiasts, not actually something that's going to be useful on the ground.
You're really thinking short term if you think that Bitcoin can't spread to the masses of people worldwide. A couple of decades ago, people in rural India for example, didn't even have permanent access to a telephone in their home. Technical advancement has now meant that masses of them have phones, and many of them smartphones. They have completely skipped over the home telephone thing.
They certainly are going to use cryptocurrencies if it's the simplest way to transfer money to people, without going through the bank (which they have limited access to). In particular, you have large numbers of people working abroad who send money back home to their families. In the old financial system they usually end up paying big taxes on these transfers (fees which seem small to westerners, but which could feed entire families for a day). Just as these people haven't rushed to get a landline to get a telephone in their home, they're also not going to rush to get a bank account where they're restricted on how and when they can use their money, when a better technology is now available to them.
Volatility is and obvious side-effect when demand is changing at such staggering volumes. Some days Bitcoin might get a million new users if it's put out in mainstream media. These fluctuations will probably increase in the near term, as more people become aware and being to adopt cryptocurrencies, but long term, they will die down as adoption rate slows too. It's not going to happen overnight, which is probably where most of the dismissive attitude comes from. People's expectations are too high in what they want to be able to do tomorrow with crypto, but in reality it's going to take several decades to work its way into society.
This seems to me to be a wildly inaccurate statement. Moreover, I find that my first reaction is that this is a position of privilege, exclusivity, and ignorance.
Please consider that there are people in this world in a more vulnerable position than you - many more than 0.1% of the world's population, in fact.
> Venmo is a free service to transfer dollars, and bitcoin transfers are not free.
Credit cards, payment gateways et al, are not free, they just obfuscate costs that are eventually passed back to consumers - when you include fraud it is estimated that society pays a hidden 5% tax on all goods and services just for payment processing.
> no single person in existence who had a problem they wanted to solve
Illicit purchases at minimum? Silk Road, etc.? Whether this is good or not, no need to think of other examples, the statement is simply not true.
> but once the vendor has your money they don’t have any incentive to deliver
There are many interesting solutions to this like automatic escrow, reputation, mutual burn, etc. Additionally using a trust-based system for small meaningless purchases while storing and transacting your actual wealth in crypto is not incompatible with the goals and vision of the space.
> Auditing software is hard! The most-heavily scrutinized smart contract in history had a small bug that nobody noticed
Sure is, yet the world runs on software now, it's doable. Additionally of course the contract was the most heavily scrutinized, it was one of the first ever.
> yet is your Afghan villager going to download the blockchain from a broadcast node and decrypt the Merkle root from his Linux command line to independently verify that his vote has been counted
An afghan villager (or even a sophisticated engineer in the valley) isn't going to read and check every line of code of all software ever written, and will end up trusting to some degree - but that's very different than having to trust every transaction, every build, and having to ask for permission for every use of the system. I didn't check the linux code, but I still trust it much more than a closed source alternative. There are degrees of trust, nothing is absolute, and here it is minimized. And if you somehow don't trust, then you are free to verify, you have the choice. This is valuable.
> These sound like stupid examples
Agreed
> in less than a decade, three successive top bitcoin exchanges have been hacked, another is accused of insider trading, the demonstration-project DAO smart contract got drained, crypto price swings are ten times
What does insider trading have to do with blockchain technology? What do hacked exchanges have to do with blockchain? What do price swings have to do with blockchain? Bitcoin itself has never been hacked. This is fud nonsense.
> A person who sprayed pesticides on a mango can still enter onto a blockchain system that the mangoes were organic.
Yes and we can trace it with certainty and punish the infringer who had to sign their name - rather than have the organization invent confusion and doubt until everyone forgets and moves on.
> Projects based on the elimination of trust have failed to capture customers’ interest because trust is actually so damn valuable
Trust is fine to grease the wheels, maybe the last mile will be trust-related, but having the underlying final infrastructure not reliant on the good graces of others when push comes to shove is valuable.
> “What if everyone keeps their records in a tamper-proof repository not owned by anyone?”
Exactly, "What if everyone keeps their records in a tamper-proof repository not owned by anyone?” is a re-framing of what blockchain does in use-case terms, (as opposed to technical terms) which makes it clear if you try to apply it to real use cases, that doesn't really solve anyone's problems
It was thanks to the internet I realized I can also contribute to the world (by creating something people want & writing about something others want to learn). However, when it came to making a living out of that there weren't many options. One of the prime motives for me to move out of Sri Lanka was it will be way easier for me to accept payments online.
PayPal is still not available in Sri Lanka, even after repeated attempts to convince Central Banks and governments [1]. Also, recently Stripe blocked a payment from one of my customers due to high risk profile. Reason? He used a US issued debit card from Nigeria. I reached out to the person, turns out he was a passionate young entrepreneur who was trying to build a really interesting business. But his geographic location becomes a resistance in a medium it shouldn't.
For me, Blockchain( and Cryptocurrencies) is a reframing of the trust model from heuristics such as geographic location to verifiable algorithms. The Internet protocols enabled us to exchange code, art & virtual goods without geographic boundaries. Then why not money?
[1] https://www.change.org/p/enable-receiving-money-to-sri-lanka...