Ask HN: Are there any substantial examples of blockchain solving a real problem?
There are many startups and companies involved in blockchain technology.
I’m wondering what kind of ‘significant’ problems they solve and by this is not possible with regular technology.
I have a strong sense that blockchain technology is a solution that has yet to find a relevant problem to solve.
I think the same is true for cryptocurrencies but I would like to keep those out of the discussion, if possible.
191 comments
[ 0.20 ms ] story [ 228 ms ] threadA bit strange to exclude the one and only answer to your question.
Do you have a source for where this is actually use in production and not as POC in a lab?
For as long as humans have engaged in trading, we have relied on trust that's built over time. There are bad actors from time to time, sure, but I'm not sure if that's enough of a problem (perhaps it is in cannabis circle) to justify making blockchain a centerpiece of one's endeavor to modernize the purchasing experience.
The same goes for other current applications of blockchain such as trading card games. I left the event feeling most of the presenters just forcefully shoehorned blockchain tech into their applications, with one exception: cryptocurrencies use in countries with oppressive regimes and poor banking system).
If you solve a problem with non-blockchain technology, you will get a centralized entity of some kind. Be it a bank, a SaaS service, a social network, a database, or whatever. Sure, it can be open source, but it's still centralized in one way or another, and decisions must be made be someone. If you are the owner or have privilidged access, you may do bad things (alter data, abuse user data, increase prices, etc).
With blockchain technology, you can get around having a centralized entity. Instead, you are developing an incentive schema that allows distributed ownership and decision making, so that all participants have power and are incentivized to behave in the best interest of all.
Besides money, there are many other cases where this make sense, but is the downside of having a centralized entity really large enough to justify the downsides of blockchain (hard to develop, slow, hard to use and manage, etc)? Probably not right now, and maybe it will never get to the point.
IMO, a well-run, transparent, centralized entity can be more trustworthy than a complex technology that is potentially exploitable, buggy, you don't fully understand, and is difficult to change once to initial incentive schema is in place.
A well designed decentralized system will maintain its integrity indefinitely. In practice we've only really seen this play out with Bitcoin so far, but that's because the space is young and people still haven't really gotten their heads around the exact strengths and weaknesses of a blockchain.
And the opposite can also happen. Humans are good at quickly adapting to circumstances and fixing "bugs" in organizations through firing/hiring, new organizational structures, or other means. That's what markets do.
A "perfectly designed" decentralized system may be superior, but I don't believe it's possible to perfectly design an incentive structure from the get-go. The world is incredibly complex, and once you have a bug or mistake in your decentralized system, it's doomed because it can be exploited. There are already countless examples of various tokens and blockchains being hacked/exploited. A centralized, human-led organization is less efficient, but more resilient to such things.
This is similar to the AI question. Are you willing to put your full trust into a system with dynamics not fully understood, or do you put your trust into humans running centralized systems? By "not fully understood" I don't mean the algorithms, but the emergent behavior of an incentive structure, which is incredibly complex because it deals with human agents.
Part of the issue here is that the blockchain space as a whole has been _super_ eager to rush ahead of the safety margins and build everything they can imagine rather than build everything that's comfortably within our understanding of how it works.
I would describe a lot of the building happening today to be similar to Mesopotamians trying to build aircraft carriers. Like yeah, boats are one of the most important inventions in history, but you can't just go from river boat to crossing the ocean in one step.
Tangent, but this is poor phrasing. If posed this way, an astute response would be that we don't fully know how human brains or emergent group behaviour in humans works either (which is why the social sciences are so hard!), so how is the second option meaningfully different from the first beyond tradition?
The key thing that separates AI systems and human systems is lack of intuition for AI behaviour. So the question should really be phrased: is it safe to trust a system you don't have an intuitive model for?
There are some cases where the answer is yes e.g. we trust airplanes built and ratified by experts even if we don't know how airplanes work on the presumption that, at least in the conditions we care about, airplanes have been tested and behave correctly.
> There are some cases where the answer is yes e.g. we trust airplanes built and ratified by experts even if we don't know how airplanes work on the presumption that, at least in the conditions we care about, airplanes have been tested and behave correctly.
A big difference is that airplanes do not interact with humans, and humans have no incentive to exploit airplanes. They are a system that purely interacts with the physical world, or physics, which seems to be simpler to model than human behavior and is not fundamentally adversarial.
With many blockchain networks, e.g. Bitcoin, you are in an adversarial environment - exploiting the network yields huge payoffs. With a fully autonomous AI-based decision making system you can get something similar, depending on where it's applied. For example, tricking recommendation systems to uprank your product, automated trading systems (responsible for flash crashes), impersonalization through voice/face recognition, etc. To be fair though, most AI systems are not deployed in adversarial environments, but blockchains seem to be, since you can almost always profit from exploiting them.
That’s a giant leap of faith.
If the system is maintainable it is also corruptible.
I totally agree with you, if someone has the ability to make good changes, that same someone has the ability to make bad changes. And a blockchain is best able to deliver on its promise as a tech when nobody has the ability to make bad changes. Therefore, mature blockchains really should be rigid entities.
I think this is already relevant for court cases.
I imagine for a court case this would be better. One less thing to explain.
I think for a court case you would have to prove that the block chain is a historical record, not just some data you and your friends made up.
I think the free service of https://originstamp.com/ publish a daily bulk-hash in a german newspaper. (they call it "root-hash")
I couldn't find the info on their website anymore, but on the branded portal of the newspaper itself: https://blockchain.suedkurier.de/ (german)
It does rely on having some trusted authority making (signing) that timestamp, but for the legal system that's not a problem, probably the other way around - having a digitally signed document with a timestamp from some official provider will be trivially accepted by the court, but any custom solution that somehow places data on some public blockchain will require an extensive and possibly expensive process to get acknowledged.
Decentralization is a trade-off; it almost always incurs an efficiency cost compared to an equivalent centralized solution, so the question is if it brings some specific benefits that justify the drawbacks.
Regarding costs, as I mentioned above, the verification in court (which is the whole point of this service) would be much more expensive for the decentralized scenario and the timestamping services are trivially cheap already, so if we look purely at costs then decentralization does not provide any advantage.
> timestamping services are trivially cheap already
what does it cost, where can I do it right now?
More costly services would be something like DocuSign.
Please be mindful about request rate and content size, we don’t want to abuse the Archive.
Now that I scrolled down it is so obvious I do not know how I could have missed it. Thanks again!
For signing e-documents as an individual with the gov't ID chipcard I get the timestamping services for free (there's probably some limit to quantity, but it's large enough). But that, of course, depends on the national infrastructure - so it's simple and cheap for me, but I have no idea if you can do it right now easily - there are a bunch of companies that offer digital timestamping for something like $10 per a bundle of signatures, but I have no particular recommendations as I haven't tried them.
For larger companies the general practice seems to be that providers of document flow/recordkeeping management software also bundle the digital signature process, integrating the timestamping services there along with other stuff such as verification of digital signatures on incoming documents, and charge some trivial monthly fee for that integration; I believe my employer is paying something like 50 eur/month for that, which is a bunch of money for an individual (but it's free for individuals) but it's tiny compared to, for example, the cost of drafting and filing a court document explaining how you made and published your document hash in some unconventional way. In any case, that means that the company has a pre-existing solution that works reasonably well and has no obvious benefit that a change to blockchain might bring.
And to preempt a suggestion that this nation-specificness is a failure of centralized solutions and a decentralized solution can be global, this is not really the case - since the key purpose of e-signatures (and timestamps) is to integrate with national legal systems, a decentralized solution with no integrations doesn't work anywhere. E.g. here's a EU list of trusted providers https://webgate.ec.europa.eu/tl-browser/#/ - it's decentralized in some manner (there are many providers providing very different services in very different ways), but it's centralized in the sense that the law acts as a gatekeeper of what signing providers are considered trustworthy. You can have a "we'll put this stuff on the blockchain" signing provider, but doing the exact same thing yourself won't be as trusted, you'll need to (expensively) demonstrate how you're doing that and prove that it's actually the exact same thing.
China explicitly allows for it though: https://www.scmp.com/tech/article/2163487/china-accepts-bloc...
What it doesn’t include is any kind of proof-of-work or proof-of-identity, which some people might consider necessary for something to be “blockchain technology”.
Edit, to the downvoters. In order for me to produce better commentary on this topic in the future, I would like to know: Do you view these statements as incorrect, misleading, or simply unhelpful?
The distributed operation is both necessary, and the key challenge for blockchains. There is a heavy cost to secure distributed operations. My personal opinion is that most people don't care so much about distribution, they're fine with a few trusted/regulated actors using more efficient centralized schemes. And this is, in a nutshell, the big challenge of blockchains IMHO. And why some people are tempted to drop the challenging part, put a centralize scheme on top of a Merkle tree and call it a blockchain to ride the hype. I don't think this is correct, both technically and ethically. It's "merklewashing" ;)
[1] https://en.wikipedia.org/wiki/Merkle_tree
It sort of happens now in an ad-hoc way, if you include blogs and such with big fork announcements that sometimes result in an effective change of ownership, but that’s a slow, rare, unreliable process at the moment.
This is not ‘substantial’
To your point, cryptocurrency enables reconstructing the entire financial infrastructure on blockchain. Everything from car loans (https://twitter.com/DMMDAO) to rental real estate (https://twitter.com/RealTPlatform) to interest-bearing savings accounts (https://compound.finance/) to derivatives and trading (https://www.synthetix.io/), to decentralized storage (https://sia.tech/), etc. There's hundreds of projects I follow regularly and I find new ones cropping up all the time. There's a Cambrian explosion of apps in blockchain right now.
I recommend reading https://bankless.substack.com/ and https://thedefiant.substack.com/ to stay on top of the topic. Watch some of the presentations from ETHDenver 2020 that was held 2 months ago (https://www.youtube.com/channel/UCgz9NU06t_FkT0Py1Vadczw)
Follow some of the thought leaders on Twitter, et al. Tons of promise in this space.
Hyperledger is a blockchain that is mainly used for these private blockchains that are used in corporate settings. However, a public chain has 100% uptime, is permissionless, and is by far the most useful application of the tech.
https://www.baseline-protocol.org/ Baseline Protocol is a collaboration between Ernst & Young and Microsoft to use Ethereum as a secure, cross-enterprise business process collaboration layer, which is powerful but you'll have to some knowledge of how back offices in enterprises currently work in order to grasp it.
Finance is incredibly substantial. Everything you know is powered by finance. It's a multi hundred trillion dollar industry.
Could you provide a reason why, with some examples?
It seems easy to do because anyone wanting to pay or be paid has to somehow advertise this.
In the airline space, for example, all the airlines pay OAG to file schedules. OAG is a central authority they trust, and pay. Blockchain could replace that, and save them all some money. Hasn't happened though.
I don't think that can be proved to be true? I can easily imagine that any blockchain would introduce obvious weaknesses in the process for everybody, and such which can be avoided by having a central authority, which keeps the central authority option being cheaper for everybody.
The rest of "cryptocurrency" is snake oil. Most of it attempts to reintroduce inflation and undermine the fix which Bitcoin introduced. While they may come up with a bunch of reasons for their decision to mint new tokens - the sole purpose of the new inflation is to enrich the creators, who intend to exchange their zero production cost tokens for some other tangible wealth before the naive buyers of the tokens realize they've been scammed.
Building on top of Bitcoin is the way to solve real problems because each development strengthens the permanent fix on inflation and enables Bitcoin to be more accessible.
A "blockchain" is just a linked list where each tail item is content addressed.
I want my money to be backed up by a government that wants to keep society stable.
Sad to see that bc is always so tied to distrust of governments. That way of thinking seems so naive.
The only "volatile" is the exchange rate market of Bitcoin to USD. Obviously, this is going to be volatile for some time because demand varies from day to day. What's obvious, however, is that the trend in demand is continuing to increase over time. If you look at purchasing Bitcoin to hold for 4 years or more (or indefinitely), then you aren't concerned about the day to day fluctuations in the exchange rate.
If you purchased Bitcoin at any time in the past 10 years, and held onto it for 4 years, there is no point at which you could've made a loss. In fact, on average, you would've almost doubled your money if you converted it back to USD after 4 years.
They say past performance is no indication of success, but next month we enter another "quantitive hardening" period in Bitcoin, where the new supply released over the next 4 years is half of the supply released over the previous 4 years. If the rate of growth in demand stays the same, the exchange rate will continue to rise - but that itself causes an increase in demand because more people want to hold onto an appreciating asset rather than a depreciating dollar. Especially true given that the Fed has committed to rapidly devaluing the dollar this year in a struggle to deal with COVID-19.
Bitcoin doesn't care about the virus. There's nobody to bail out bitcoiners. The State is the virus, and Bitcoin is the remedy.
That's exactly what I would say if I have cryptocoins
That is the pyramid scheme part. Convincing people to buy as not to miss out.
problem #2 - adaptation to the needs of the complex system like modern society
those are kind of ‘significant’ problems, technologies like Internet, blockchain etc, provide sequential approximations to the solution of those problems.
Parting suckers with their hard earned money is not likely count.
The reason I ask is that the security of Blockchain comes at a cost (both in additional complexity and, for PoW at least, energy use). Have people who need those records in the real world found the additional tamper-proofness worth the cost?
It's been done. But has it really solved a problem? I'm not sure. Perhaps it's just better to use a simpler solution. A key on an iot device could sign every entry.
So the ledger must by design, anonymise each entity involved.
If you anonymise each entity, then every entity is Sybil.
You have no more confidence in anything than you would've had pre-"blockchain".
For most use cases, Ethereum is too expensive and the blocks are too full, the same is true for Bitcoin.
Once second layer solutions are more mature and layer 1 blockchains are substantially cheaper due to new consensus protocols, you will see more applications for blockchain.
Until then, blockchain is too expensive for the free world, and is largely only somewhat useful to those in failed states.
Seems like a massive lack of patience and long term thinking. It took nearly a century for the first airplane to go anywhere and another half-century for it to be widespread and practical.
It took decades before the internet and mobile phones had any significant market penetration, and then within the space of a few years there are fewer people without it than with it. Technology adoption typically follows a Gompertz function: initially slow, but then rapid adoption before declining as there's no larger audience to adopt it.
Bitcoin presents a fundamental shift in how we treat money which can have a knock on effect on every other industry, just as the internet did. If you think it's time to call it off after 10 years (despite continued new interest over that time), this is a bit short-sighted.
The issue with "cryptocurrency," is unlike Bitcoin, they don't actually provide us with any new innovation. They are scams designed to enrich their creators, who pretend that changing a few variables in a codebase can replicate the invention of Bitcoin. All "cryptocurrency" are useless because they don't have the permanent fix for inflation that Bitcoin has. They introduce inflation by design - they are fiat money made digital. Bitcoin's key innovation is the fix for inflation, which is now impossible to replicate because Bitcoin already exists.
With blockchain it’s reversed: we have suddenly tech but after 11 years still no idea other than use it to sell drugs, and boil the oceans.
Who is "we?"
A small group understood the applications early on and was way ahead of the curve. Obviously costs coming down in the 90s enabled a wider audience to access the technologies - but most were clueless of its potential until they were already using it.
This is the case for Bitcoin now. Selling drugs has little to do with it, other than demonstrating the future role of the State meddling in people's personal finance. Bitcoin is about sovereign control of one's own property - a way of saving money which cannot be unjustly taxed. All other applications of the technology will emerge from the fact that it's better money for anybody who actually has any.
Are you just another Krugman, who still didn't realize the internet's potential in 1998?
> “The growth of the Internet will slow drastically, as the flaw in ‘Metcalfe’s law’ becomes apparent: most people have nothing to say to each other! By 2005, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s”
Oh, and "cryptocurrencies" are like the Intranets of the 90s. Everyone wants their own, for now, until they realize that being part of the global digital money network has far more advantages than trying to work with walled gardens.
We knew what we wanted, but the interface was a problem and Apple solved it.
We knew what we wanted but we could not get there, until then.
None of the bitcoin/blockchain people can exactly explain why blockchain or bitcoin is relevant. Even after 11 years they can't.
> than demonstrating the future role of the State meddling in people's personal finance.
A citizen pays their due taxes, as required to run a decent society. Cryptopeople just want to have a means for tax evasion: to support criminal behaviour.
> Are you just another Krugman, who still didn't realise the internet's potential in 1998?
Haha, I don't think so. The purpose of the internet was very clear. It was just too hyped. But it recovered. crypto and blockchain are hyped, but the purpose is not clear at all. Big difference.
> Oh, and "cryptocurrencies" are like the Intranets of the 90s. Everyone wants their own, for now, until they realize that being part of the global digital money network has far more advantages than trying to work with walled gardens.
We have already money. And we already have means to pay people in other countries. And they are overall more convenient and the transaction costs are not an issue for most applications.
The relevance of Bitcoin has already been explained to you: it provides for the first time in history, a form of money which is inflation-proof, censorship-resistant, easily verifiable and possibly private (or at least plausibly deniable), making it potentially unconfiscatable.
Bitcoin isn't merely about transaction costs or means of paying people. It is about having sound money. It has a use case for anybody who wants to save money, which is impossible to do with fiat money, because it is rapidly devalued due to the monetary policy of central banks.
Other "crypto" or "blockchain" is irrelevant. We can agree on that. Only Bitcoin matters.
Just because you have not seen the need for Bitcoin yet, does not mean there is no need for it. You are like those who would mock the mobile phone or the dial up internet of the '80s, with very little insight into what value Bitcoin can bring to the world. Bitcoin will be used to bypass warrantless surveillance and State-enforced restrictions, and yes, even to avoid paying taxes - which you might consider "criminal behavior," but this merely highlights your state-worshipping world view. Tax is theft - and a significant amount of "criminal behaviour" is coming directly from the State itself.
That said there might be a lot of fun geeky “uses” like creating smart contracts that you share about and use. But the practical problem is the transaction and conversion costs and currency fluctuations make it hard to take that from fun to useful for business.
With blockchain it’s the other way around.
Air power was already militarily important by 1916.
You might better have cited the laser, which took three decades to find heavy use, or microwave technology, worked out around 1890 but not used much until the 1940s.
It's the type of thing that you go 30 years without needing it, but then when you do need it you really badly need it. Bitcoin does this well today and there are plenty of people who proactively plan for financial contingencies by holding some percentage of their portfolio in self-custodied Bitcoin.
We also have several examples (Greece a few years ago, Venezuela recently) of this playing out in favor of the prepared in the real world. When your country's financial system melts down, your Bitcoin holdings can give you liquidity and options despite everything else around you being completely disfunctional.
Good or bad, it's exciting to see what the future holds for these currencies. I have my own theories on whats going to happen, but no one actually knows. Obviously some peoples theories will prove correct and they will come out with "yeah I was positive this was going to happen". Not looking forward to that part.
I work on tezos smart contracts for tokenized decentralized rewards issuing on baking (mining but delegated proof of stake so efficient and not killing the planet). This however has jackshit to do with blockchain as a datastructure as there is no representation of it within the tezos smart contract language (michelson). This is useful and maybe what you understand as blockchain but I cannot name any specific application that you (going by your blog) will not spin of as being pointless because of some buzzwords because its easier.
- Currencies that cannot be manipulated/controlled by a government / external forces (plenty of examples why that’s a real problem in history, including runaway inflationary policies, payments restricted from certain individuals eg sex workers)
- Cheap accounting (see digital autonomous companies), you can run a company with lower costs by programmatically handling all transactions. eg running a justgiving type site should be cheaper on a blockchain, in theory
- Fully traceable payments (i.e. knowing who paid who how much throughout history, makes paying taxes, illegal transactions easier)
- A single place where a piece of data can be guaranteed to be accurate (eg you can publish data on a blockchain and prove it was published then at a later date, and there’s no way to manipulate this)
There’s more, I’m sure... Whether these justify the hype or are big enough problems are different questions
There is a ton of ‘will’, ‘could’, ‘might’, but no ‘is’. The concrete examples pointed to are sales pitches, announcements, protocols, consortia being organized.
It looks a lot like the answer is no.
That may change I suppose, but it really seems like no one is doing anything practically useful with it.
Providing an example of blockchains solving real problems aside from cryptocurrency should be trivially easy at this point: well funded companies have had /years/ to do this now.
It's not just startups either - IBM and other big consultancies have been pushing blockchain solutions really hard.
How much longer do we have to wait for someone to build something that's actually useful, and that genuinely couldn't have been built cheaper and faster without a blockchain?
Like someone else already said I think it's less about the "blockchain" and more about finding ways to decentralize traditionally centralized services.
A blockchain is a trust minimizing, independent network which allows participants to interact with eachother such that:
1. Everybody knows who did what, in what order 2. Significant confidence exists that the order is fixed / finalized (git can't give you this) 3. There is no set of controlling parties that could reasonably be expected to change the rules of the system, even if they were all trying to work together.
When someone says "blockchains are going to change the world", they are talking about the above three properties, not about the ability to commit to a thing that commits to other things.
At the end of the day distributed trust literally means we all trust each other to do the right thing because, at the end, it's more cost effective and more beneficial for everyone. Directly from the Bitcoin whitepaper:
"The incentive may help encourage nodes to stay honest. If a greedy attacker is able to assemble more CPU power than all the honest nodes, he would have to choose between using it to defraud people by stealing back his payments, or using it to generate new coins. He ought to find it more profitable to play by the rules, such rules that favour him with more new coins than everyone else combined, than to undermine the system and the validity of his own wealth."