One of the author's points seems to be decentralized technologies tend to have large points of centralization, so why does it matter that they're decentralized?
For me, the answer is the ability to opt out. When it comes to crypto currency specifically, it doesn't matter to me if 99% of users store their money on coinbase, as long as I individually have the ability to remove myself from the system.
The point isn't to force decentralization on everyone, it's to provide an opt-out ability to those who want it.
Exchanges facilitate liquidity between crypto and other common currencies. This has obvious value. But just like any currency, the value of a crypto is what you can get for it. So in the hypothetical where there are no exchanges, there would still be value in terms of the things you can buy with crypto directly.
This is the theory that has been expressed for years, but it is in practice still a fantasy. Somebody tried earlier this year to live on it for 36 hours; even in a major city it's not practical: https://www.nytimes.com/2018/04/16/nyregion/new-york-today-l...
We need more developments and time to move away from the hodl mindset to where crypto can be seen as currency not an asset. How much time this will take? I'm not sure, after all we are talking about some very powerful and ingrained institutions involved.
USD has a 225 year head start...not surprised BTC hasn't hit that level of adoption yet. Credit cards took a few decades to hit mainstream too to the point where you could literally use them everywhere.
The point is not that you can't use Bitcoin everywhere dollars (or even credit cards) are accepted. The point is that it's useless as a day-to-day currency. As far as I can tell, the number of places that accept it is declining, so it will never catch up with anything.
Getting out of exchanges is trivial. You transfer your money to an address you control. That's it, it isn't tough. Then you can use your money electronically, which is why it has different use cases than cash.
Yes, but cash has different properties than crypto. Some of those properties are better, some are worse. Depending on what you want to do, crypto may be more useful than cash.
This isn't really about Coinbase as an exchange. It has a bit more to do with 51% attacks by miners. They are either possible or they aren't, and either way is bad because you're screwed if your money gets stolen.
Might it be better to accept the risk of centralization and be able to dispute transactions? Preferably without the drama that happened with Etherium when they did that.
Another possibility is the Linux/DNS model where you have a central authorities who commit public transactions that are closely watched. Though this is only possible for things done in public.
It is though. The author's examples are about end-user consolidation on platforms that are built on the decentralized network, not the consolidation of the network itself.
> The classic rebuttal against blockchains and other distributed technologies goes something like this: there's nothing a blockchain can do that a plain old SQL database can't do cheaper and more efficiently. That's true, but it's also missing the point, and I'll leave it at that.
That is definitely not missing the point when it is raised in response to things that are sold as "OMG blockchain!" but do not need (or often, even make use of) what makes blockchains unique. Which is, IMHO, at least 95% of the things that I come across marketed as involving blockchains.
It's missing the point in the sense that plain SQL has properties that are not desirable for blockchain's (valid) use cases. Consider Git. Git could be implemented using plain SQL, but it's not. It's not implemented with SQL because SQL would be centralized. One entity would have to own the truth of a codebase. This is an unacceptable property for many open source projects, which is why Git was created.
The essential use case of a blockchain is when you have something where you want an immutable history, and where, for whatever reason, it is either undesirable, or difficult to converge on a single entity to own that history. This arises in many, many places. Financial assets, source code, legal documents, etc..
It is not that you can't implement say, legal document version control without a blockchain. You absolutely can. But to do so, you have to trust a single entity to warehouse that truth for you. Blockchains are a way of solving that problem, just like Git was a way of solving it for open source.
> It's missing the point in the sense that plain SQL has properties that are not desirable for blockchain's (valid) use cases. Consider Git. Git could be implemented using plain SQL, but it's not. It's not implemented with SQL because SQL would be centralized. One entity would have to own the truth of a codebase. This is an unacceptable property for many open source projects, which is why Git was created.
Huh? "SQL would be centralized"
At no point is git required to use anything over a network or somehow is more decentralized than a database you pass around and insert data into.
A push request is a request to push the same data I pushed into my database into yours, whether its SQL or not makes no meaningful difference.
Git would still be decentralised if it used SQL. SQL would be a language that the git clients would communicate in - git's model would still hold. What makes git decentralised is you copy the entire codebase and then git doesn't treat the original as any more valid than your copy.
There are some interesting applications of blockchain in the examples you mention, but they are very case specific. For example, there would be resistance to creating a financial asset where trades can't be rolled back, for example (from governments and probably a number of traders). Legal firms might _like_ being able to destroy documents without leaving a permanent record. With source code we generally have highly trusted groups who are ideal central authorities (eg, I'm only going to get my kernel sources from kernel.org).
> Git would still be decentralised if it used SQL. SQL would be a language that the git clients would communicate in - git's model would still hold. What makes git decentralised is you copy the entire codebase and then git doesn't treat the original as any more valid than your copy.
You're totally right. We're sort of mixing abstraction layers, here, of course you can implement Git on top of SQL and even SQL on top of Git! (since sql is just a query language + ACID constraints). But I suppose I was more responding to the spirit of the grandparent's statement, which was the traditional usage style of SQL. But you are absolutely correct.
> There are some interesting applications of blockchain in the examples you mention, but they are very case specific. For example, there would be resistance to creating a financial asset where trades can't be rolled back, for example (from governments and probably a number of traders).
Yes, that is certainly a possibility. However, if I were designing a financial system from scratch, I think i'd probably build in irreversibility at the protocol layer, and then allow institutions to sit on top of that protocol that implement reversible trades by delaying or abstracting settlement on that protocol. I.e. the current crypto model, where 99% of trading happens on exchanges, not on the blockchain. But, when you really do want an irreversible transaction, you bail out to the blockchain and you do it there. I think that is the most sensible model to build a modern, global financial system on.
> Legal firms might _like_ being able to destroy documents without leaving a permanent record. With source code we generally have highly trusted groups who are ideal central authorities (eg, I'm only going to get my kernel sources from kernel.org).
We do have highly trusted groups who are good central authorities, much of the time. But IMO that is something we've developed out of necessity. It's an artifact of our technical inability to collaborate with trust in the absence of intermediaries. What I think is so exciting about blockchains are their ability to alleviate that trust requirement in certain circumstances.
For instance, right now, financial institutions basically are in the business of trust. They do some other stuff too, but their course business is balancing risk and being trustworthy by having scale. JP Morgan isn't going to steal the money in your checking account, because if they steal your $10,000, they put their multi-billion dollar business at risk. So you can trust them not to steal your bank account balance.
But what systemic effect does that have? I would argue it has a centralizing effect, not just of trust, but of economics and innovation. If you have $10,000 to put in a savings account, you're not going to entrust it to a bank that only has $20,000 of deposits. Because they have a decent incentive to run away with it! This means that these sorts of institutions have very powerful incentives to grow ever larger, and be extremely risk averse. That is, they are incentivized not to innovate, because innovation is risky, and risk is trust-destructive.
Blockchains represent an opportunity to break these sorts of anti-competitive thickets, that rely on this intangible trust-asset to keep out competitors, in very much the same way that the internet helped say, blogs, compete with newspapers, by democratizing distribution. The internet democratized distribution, blockchains democratize trust.
>One entity would have to own the truth of a codebase. This is an unacceptable property for many open source projects, which is why Git was created.
What? Git doesn't solve that problem. Git allows peer to peer workflows, but on its own does not provide you with a network of forks or anything like that. For most projects, a single entity owning the source of truth is not only desirable, it's the current reality.
And before that, many projects got along fine with SVN and CVS, albiet with less fork friendly workflows.
I mean Git definitely enables better development workflows but I don't think it solves or attempts to solve the problem of having a source of truth.
Git absolutely does solve that problem. That was one of the major issues with SVN and CVS. The problem that git solved was "how do we collaborate if we don't want a hierarchy / owner?" which is exactly the same problem a blockchain solves.
I’d reframe it in a broader context than a decentralized immutable ledger. I’m lacking the clarity to make a broader statement, so here’s just an example: DAO’s and prediction markets. Both involve in some sense, a form of decentralised governance - where the entity being governed is self-sovereign. A ledger implies we have some functions that apply transactions on rows. A smart contract blockchain (which is a gratuitous interpretation of the author’s referral to blockchain), is more of a collection of self-sovereign entities/systems in the form of programs. While something like a DAO is clearly just a decentralized voting pool, something like a prediction market, which are composed further by other self-governed systems (the validators, the bidders, etc), have micro and macro characteristics for which a ledger-oriented interpretation wouldn’t suffice.
> It's missing the point in the sense that plain SQL has properties that are not desirable for blockchain's (valid) use cases. Consider Git. Git could be implemented using plain SQL, but it's not. It's not implemented with SQL because SQL would be centralized.
Fossil is definitely not centralized. Fossil is implemented using SQL.
Right. I understand that blockchains have at least hypothetical use cases. My point was that they are so widely over-used (or worse, invoked by not actually used) that any blockchain advocate can't just dismiss the point mentioned. They have to be clear that they are actually talking about a specific use case where blockchains do matter.
I'll note that the three cases you mention aren't obvious candidates for blockchains either. Financial assets mostly work via central registries. Legal documents are generally kept by all parties, as each entity has its own perspective. Source code is usually centralized but sometimes perspective-driven. Blockchains are a possible way to solve some of those problems. But in the 10 years they've been out there, cryptocurrencies aside, I have yet to see a use that couldn't be done more effectively with a better-tested, better-understood technology.
I totally agree. But I meant that using that argument as a blanket statement about blockchains ignores all of the questions around problems like data governance that these new decentralized technologies are raising.
Thanks for explaining! I also didn't know what you meant by "missing the point", so that might be a good place to edit the article to share what you were thinking.
Yeah! Using Notion as a publishing method seemed like the natural choice to me. It's basically zero effort to share my notes in a nice presentable way.
I was thinking the same thing. If only Notion allowed custom domain mapping - I will be the first person to shift my public content to Notion, having already done so with much of my private content.
He quotes Scott Alexander on "Moloch" (an essay I haven't read yet), "In some competition optimizing for X, the opportunity arises to throw some other value under the bus for improved X. Those who take it prosper. Those who don’t take it die out.... The process continues until all other values that can be traded off have been – in other words, until human ingenuity cannot possibly figure out a way to make things any worse."
Is this not a fancy way of describing what's usually called the Tragedy of the Commons?
It is about the tragedy of the commons and what it implies when self-modification becomes possible, such as genetic engineering in humans and recursive self-improvement in potential future AIs.
That essay is a hell of a piece or writing. It didn't so much change my object-level policy opinions for the here and now, but it ripped the heart out of my Libertarianism. I've always found markets and selection beautiful and fascinating and powerful, which is all true. But I also thought they had a teleology that was humanistic. This is false.
To the extent this seems true now, it is only because humans are the current hardware markets are running on. Fundamentally, they are not our side in the long term.
This is why I am very hesitative to accept a job in the "blockchain area", and I am still not convinced that I should.
Every single time I asked the question "how do you guys make your money?" it has been evaded ("we work in the finance area", thanks, that explains everything!) or has been paraphrased into "is my job secure?" which was then answered positively. I mean yes, my main motivation to ask is indeed about if my job is secure for at least a year -- in an area where people secure investor money by promising basically thin air, but I am also asking the question to gain an understanding of the company's business culture. And I haven't got the slightest idea of that after 7 interviews in the last 5 months.
I simply cannot wrap my head around this mass halucination. How are investors even agreeing with giving several million bucks to an enthusiastic young person with zero business planning? And zero ideas how will they repay the investment? The pitchers (future CEOs) are just like "we are totally gonna revolutionize area X with blockchain!" and then money starts rolling in.
I am sure I am over-simplifying but still, can somebody explain this process to me? I am still baffled to this day.
51 comments
[ 5.4 ms ] story [ 110 ms ] threadFor me, the answer is the ability to opt out. When it comes to crypto currency specifically, it doesn't matter to me if 99% of users store their money on coinbase, as long as I individually have the ability to remove myself from the system.
The point isn't to force decentralization on everyone, it's to provide an opt-out ability to those who want it.
Exchanges greatly help the transition to crypto but they are not necessary for it's existence
Might it be better to accept the risk of centralization and be able to dispute transactions? Preferably without the drama that happened with Etherium when they did that.
Another possibility is the Linux/DNS model where you have a central authorities who commit public transactions that are closely watched. Though this is only possible for things done in public.
It is though. The author's examples are about end-user consolidation on platforms that are built on the decentralized network, not the consolidation of the network itself.
> The classic rebuttal against blockchains and other distributed technologies goes something like this: there's nothing a blockchain can do that a plain old SQL database can't do cheaper and more efficiently. That's true, but it's also missing the point, and I'll leave it at that.
That is definitely not missing the point when it is raised in response to things that are sold as "OMG blockchain!" but do not need (or often, even make use of) what makes blockchains unique. Which is, IMHO, at least 95% of the things that I come across marketed as involving blockchains.
The essential use case of a blockchain is when you have something where you want an immutable history, and where, for whatever reason, it is either undesirable, or difficult to converge on a single entity to own that history. This arises in many, many places. Financial assets, source code, legal documents, etc..
It is not that you can't implement say, legal document version control without a blockchain. You absolutely can. But to do so, you have to trust a single entity to warehouse that truth for you. Blockchains are a way of solving that problem, just like Git was a way of solving it for open source.
Huh? "SQL would be centralized"
At no point is git required to use anything over a network or somehow is more decentralized than a database you pass around and insert data into.
A push request is a request to push the same data I pushed into my database into yours, whether its SQL or not makes no meaningful difference.
The parent's point is that most of the time it's the other way around, with blockchains being hyped for use cases where they're a terrible fit.
There are some interesting applications of blockchain in the examples you mention, but they are very case specific. For example, there would be resistance to creating a financial asset where trades can't be rolled back, for example (from governments and probably a number of traders). Legal firms might _like_ being able to destroy documents without leaving a permanent record. With source code we generally have highly trusted groups who are ideal central authorities (eg, I'm only going to get my kernel sources from kernel.org).
You're totally right. We're sort of mixing abstraction layers, here, of course you can implement Git on top of SQL and even SQL on top of Git! (since sql is just a query language + ACID constraints). But I suppose I was more responding to the spirit of the grandparent's statement, which was the traditional usage style of SQL. But you are absolutely correct.
> There are some interesting applications of blockchain in the examples you mention, but they are very case specific. For example, there would be resistance to creating a financial asset where trades can't be rolled back, for example (from governments and probably a number of traders).
Yes, that is certainly a possibility. However, if I were designing a financial system from scratch, I think i'd probably build in irreversibility at the protocol layer, and then allow institutions to sit on top of that protocol that implement reversible trades by delaying or abstracting settlement on that protocol. I.e. the current crypto model, where 99% of trading happens on exchanges, not on the blockchain. But, when you really do want an irreversible transaction, you bail out to the blockchain and you do it there. I think that is the most sensible model to build a modern, global financial system on.
> Legal firms might _like_ being able to destroy documents without leaving a permanent record. With source code we generally have highly trusted groups who are ideal central authorities (eg, I'm only going to get my kernel sources from kernel.org).
We do have highly trusted groups who are good central authorities, much of the time. But IMO that is something we've developed out of necessity. It's an artifact of our technical inability to collaborate with trust in the absence of intermediaries. What I think is so exciting about blockchains are their ability to alleviate that trust requirement in certain circumstances.
For instance, right now, financial institutions basically are in the business of trust. They do some other stuff too, but their course business is balancing risk and being trustworthy by having scale. JP Morgan isn't going to steal the money in your checking account, because if they steal your $10,000, they put their multi-billion dollar business at risk. So you can trust them not to steal your bank account balance.
But what systemic effect does that have? I would argue it has a centralizing effect, not just of trust, but of economics and innovation. If you have $10,000 to put in a savings account, you're not going to entrust it to a bank that only has $20,000 of deposits. Because they have a decent incentive to run away with it! This means that these sorts of institutions have very powerful incentives to grow ever larger, and be extremely risk averse. That is, they are incentivized not to innovate, because innovation is risky, and risk is trust-destructive.
Blockchains represent an opportunity to break these sorts of anti-competitive thickets, that rely on this intangible trust-asset to keep out competitors, in very much the same way that the internet helped say, blogs, compete with newspapers, by democratizing distribution. The internet democratized distribution, blockchains democratize trust.
What? Git doesn't solve that problem. Git allows peer to peer workflows, but on its own does not provide you with a network of forks or anything like that. For most projects, a single entity owning the source of truth is not only desirable, it's the current reality.
And before that, many projects got along fine with SVN and CVS, albiet with less fork friendly workflows.
I mean Git definitely enables better development workflows but I don't think it solves or attempts to solve the problem of having a source of truth.
Fossil is definitely not centralized. Fossil is implemented using SQL.
I'll note that the three cases you mention aren't obvious candidates for blockchains either. Financial assets mostly work via central registries. Legal documents are generally kept by all parties, as each entity has its own perspective. Source code is usually centralized but sometimes perspective-driven. Blockchains are a possible way to solve some of those problems. But in the 10 years they've been out there, cryptocurrencies aside, I have yet to see a use that couldn't be done more effectively with a better-tested, better-understood technology.
Is this not a fancy way of describing what's usually called the Tragedy of the Commons?
https://en.wikipedia.org/wiki/Tragedy_of_the_commons
That essay is a hell of a piece or writing. It didn't so much change my object-level policy opinions for the here and now, but it ripped the heart out of my Libertarianism. I've always found markets and selection beautiful and fascinating and powerful, which is all true. But I also thought they had a teleology that was humanistic. This is false.
To the extent this seems true now, it is only because humans are the current hardware markets are running on. Fundamentally, they are not our side in the long term.
I have found few pieces of writing more powerful:
http://slatestarcodex.com/2014/07/30/meditations-on-moloch/
Nick Bostrom explores similar themes in The Future of Human Evolution: https://nickbostrom.com/fut/evolution.html
Every single time I asked the question "how do you guys make your money?" it has been evaded ("we work in the finance area", thanks, that explains everything!) or has been paraphrased into "is my job secure?" which was then answered positively. I mean yes, my main motivation to ask is indeed about if my job is secure for at least a year -- in an area where people secure investor money by promising basically thin air, but I am also asking the question to gain an understanding of the company's business culture. And I haven't got the slightest idea of that after 7 interviews in the last 5 months.
I simply cannot wrap my head around this mass halucination. How are investors even agreeing with giving several million bucks to an enthusiastic young person with zero business planning? And zero ideas how will they repay the investment? The pitchers (future CEOs) are just like "we are totally gonna revolutionize area X with blockchain!" and then money starts rolling in.
I am sure I am over-simplifying but still, can somebody explain this process to me? I am still baffled to this day.