I think the main point is that the decentralization of the whole concept makes it hard for single actors to "hack" the system. Imagine 99% of people agreeing to something and then 1% starts doing otherwise. Of course they will be crushed by the majority. The same goes for 51% vs. 49%.
IMHO I see it as a tool for reaching democratic agreement on anything. The data stored in the blockchain exist only as long as the whole network exist and the majority agrees about the data. It can be basically any type of data!
Also by this logic it could be compromisable by a large enough party. Since the whole existence is based on agreement and 50/50 scenario would only further splice the two groups, each following what they think is the "truth" or "correct".
By no means I'm not an expert on this topic and anyone who has PLEASE correct my if my understanding is skewed. Thanks
Simple - it may be called a "currency" but really it acts more like a stock.
- There are limited ways to convert the bitcoin to USD, much like there are limited ways (brokers) to move money in/out of stocks.
- The exchange/price compared to USD fluctuates wildly. It is not stable like USD - it is more like a volatile stock. BTC was worth $18k on Dec 1 2020 and has gone as high as $63k since then and is now around $32k USD per 1 BTC.
In my opinion, the major limitations to it becoming a stable, usable currency is the volatility and ease of use. You can have all the anonymity and hack proof tech you want but until its easy to use and stable, it won't be adopted widely. Any effort to make it easy to use will likely make it lose the anonymity part. For example if I can now pay at any POS terminal using an app on a phone, there goes anonymity.
A stock is a residual claim on the assets of a business and the cash flows those assets generate. A digital token is an entry in a database that…entitles you to say you have an entry in a database. And it is typically a pretty lousy database in every way but Byzantine fault tolerance.
This article fails to mention one very fundamental property that makes blockchains interesting (and is the motivation for their design): The prevention of double-spend.
Thats hardly its main motivation, banks have been preventing double spend for a long time now. The motivation behind the blockchain is to have a distributed ledger thats not controlled by a single party and thus cannot be taken down or controlled by governments.
The problem is that it's very good at that but nothing else, so if you're doing something legal or supported by the banking structure of your country, the blockchain is by far a worse solution in every way.
The best blockchain got so far was Bitcoin and such as a horse betting platform, basically another stock to bet on and thus its recent popularity. Aside from that Its hard to see a continued use, maybe as conservative governments keep increasing protectionism and divisiveness we'll get more use out of it.
Yes, and developers should be able to read the original white paper, where the double-spend problem is discussed. I don't think separate "blockchain for developers" articles are needed.
It's certainly slow at 3.3 to 7 transactions per second[1]. I could make a breadboard TTL chip computer that could do more transactions per second than the entire bitcoin system.
Visa does 50,000/second during the Christmas season. When you're 4 orders of magnitude away from the speed you need to be, you can't just tweak it a little to get it where you need to be, you need to start over on your architecture.
Sure, if the entire point of the blockchain was to be a database. But what about it's ability to run applications? I'd consider the idea of a blockchain closer to a computer than a database nowadays.
If the idea is to be a computer.... then I'll still take my breadboard TTL chip computer or a $1, 8-bit PIC MCU.
It certainly doesn't work as cash. For digital cash, you would at least need:
1. privacy
2. transaction speed
3. reasonable transaction settle rates of less than 1
minute
4. an easy way to do transactions.
They can probably fix 3 and 4, but for privacy (2) bitcoin is a PUBLIC LEDGER by design. Buy a snickers bar -- everyone IN THE WORLD knows. Go to the strip club -- everyone IN THE WORLD knows. You can paper over the problem with "coin tumblers", which is the WORST name for it. Want to look _exactly_ like you're laundering money? Put your bitcoin in a "coin tumbler". For transaction speed, see https://en.wikipedia.org/wiki/Bitcoin_scalability_problem
If it isn't cash, what is it? "A store of value"? Stores of value normally have _intrinsic_ value. What's the value of gold? Many women want it and many men will do anything up to and including murder to get access to women -- _that's_ a real store of value. What's the value of the US dollar? If a resident of the USA doesn't pay their taxes in it, the government takes away all their property and can put them in jail.
--
Personally, I don't disbelieve in cryptocurrency as digital cash, I just disbelieve in bitcoin. Monero and the fork of it by signal known as mobilecoin are heading in the right direction. Privacy by default. Transaction speeds that are within 1-2 orders of magnitude of what is needed. Txn settling rates in the right direction. In the case of mobilecoin, a platform for easy transactions ( the signal app ).
If Bitcoin did 50,000 transactions/second it would be impossible to keep it decentralized, since the size of the blockchain would be prohibitively large for most people to store/validate locally.
So being slow is actually a good thing to keep it away from centralization. Things like Lightning on top of Bitcoin can manage day-to-day micro transactions.
I strongly believe that we need a lot simpler explanations to bring more people on board. Last month, I was in Turkey and explaining Bitcoin to my 60-year-old dad. He got the concept within minutes. His first question was about double-spending, and then he failed to grasp the mining concept and PoW. I think this happened because he lacks some abstraction ability.
I don't think it is overhyped. We are still in the early days of blockchain, and I can easily say that it offers a cheaper & more inclusive financial system than the traditional one.
Because peer-to-peer money without intervention of third-party institutions is genuinely a good technology that would benefit from more people using it and developing for it.
Yes, the mining and PoW is the thing that is absolutely insane so most people will assume they don't understand rather than they do understand and it is stupid.
> If 51% agree on the legitimacy of the block, consensus is reached
I think this isn't entirely right, because he's talking about 51% of miners. The ones that actually incorporate the blocks to the blockchain and validate if the transactions are valid are the nodes (I might be wrong but that's my understanding). In fact this article fails to mention nodes at all, and nodes (for example people running the Bitcoin Core client at their computer) are what make the whole thing decentralized.
For the most part your are correct. I think one distinction should be made. Economically active nodes are what matters not just any old node that someone has sitting in a closet.
Right, there are two groups and you have to figure out which group you're talking to.
One group sees new, distributed consensus data structures with unique properties that can advance civilization. They're out there; I've met them and they're doing good work.
The other group are pure crooks and speculators willing to burn everything to the ground as long as they get theirs. But they wear a cute face and tell a flashy story, so it's hard to tell them from the first group.
The first group is small and it feels like it's thinning as cryptocurrencies fail to prove beneficial to humanity.
I'm referring to the promises of 1) giving access to banking to people in the global south 2) giving financial stability to people facing unsustainable inflation 3) doing that while not destroying the environment
Maybe true with currencies, but I'll point out there are other applications of the blockchain-related datastructures, such as namecoin for global pointers, ipfs for content disemination, ethereum for contracts, iota for iot, etc etc.
Migrant workers used Bitcoin during the pandemic to transfer money to relatives in their origin countries without the need of a third party. I’d consider that beneficial to humanity, but your definition of beneficial might be different to mine.
Occasional feel-good stories might not be enough to balance all the complaints around energy consumption and money laundering.
> your definition of beneficial might be different to mine
It's not my own: I'm trying to summarize the promises that were often made, together with cheap and fast money transfers, ease of use, better security, and many more.
The problem is - as it often is with introverts and extroverts, technical and sales, product and marketing - the latter groups make a lot more noise than the former
A better way to put it is: "it's a log file composed of blocks."
> A blockchain “validates” and permanently stores the data after a consensus is reached.
Not so. The whole point of a consensus algorithm is to map a path through a tree of blocks (the active chain). That path can shift, depending on messages received by the network, typically in the form of more blocks.
It’s snake oil that is effective to a degree only so that it can be even more effective at convincing others to buy it.
Nobody is going to circumvent the power of government. I can show you proof that you don’t need to pay income tax, but I also promise you that you will go to jail eventually for doing so.
Extraordinary popular delusions take on a life of their own. They reflect the zeitgeist of the time.
Bitcoin is the savior so many tech enthused idealists can believe in, but if it supplants anything it will be legitimated and used by those already running the show.
Blockchain doesn't have to mean cryptocurrency. It could be any time when you want to have a highly distributed but zero-trust database.
Mind you, currency would be the poster boy for that use case, and it doesn't seem to be very good at that. All of the other potential applications seem even less compelling. But it's at least good to know that the distinction between blockchain and cryptocurrency exists.
43 comments
[ 2.8 ms ] story [ 111 ms ] threadIMHO I see it as a tool for reaching democratic agreement on anything. The data stored in the blockchain exist only as long as the whole network exist and the majority agrees about the data. It can be basically any type of data!
Also by this logic it could be compromisable by a large enough party. Since the whole existence is based on agreement and 50/50 scenario would only further splice the two groups, each following what they think is the "truth" or "correct".
By no means I'm not an expert on this topic and anyone who has PLEASE correct my if my understanding is skewed. Thanks
- There are limited ways to convert the bitcoin to USD, much like there are limited ways (brokers) to move money in/out of stocks.
- The exchange/price compared to USD fluctuates wildly. It is not stable like USD - it is more like a volatile stock. BTC was worth $18k on Dec 1 2020 and has gone as high as $63k since then and is now around $32k USD per 1 BTC.
In my opinion, the major limitations to it becoming a stable, usable currency is the volatility and ease of use. You can have all the anonymity and hack proof tech you want but until its easy to use and stable, it won't be adopted widely. Any effort to make it easy to use will likely make it lose the anonymity part. For example if I can now pay at any POS terminal using an app on a phone, there goes anonymity.
Else, you would just send a transaction updating the sender's and receiver's accounts, and there would be no double spent either.
You can build robust currency systems that are only partially decentralized, and partially distributed.
The problem is that it's very good at that but nothing else, so if you're doing something legal or supported by the banking structure of your country, the blockchain is by far a worse solution in every way.
The best blockchain got so far was Bitcoin and such as a horse betting platform, basically another stock to bet on and thus its recent popularity. Aside from that Its hard to see a continued use, maybe as conservative governments keep increasing protectionism and divisiveness we'll get more use out of it.
Huh?
Visa does 50,000/second during the Christmas season. When you're 4 orders of magnitude away from the speed you need to be, you can't just tweak it a little to get it where you need to be, you need to start over on your architecture.
[1]: https://en.wikipedia.org/wiki/Bitcoin_scalability_problem
It certainly doesn't work as cash. For digital cash, you would at least need:
1. privacy
2. transaction speed
3. reasonable transaction settle rates of less than 1 minute
4. an easy way to do transactions.
They can probably fix 3 and 4, but for privacy (2) bitcoin is a PUBLIC LEDGER by design. Buy a snickers bar -- everyone IN THE WORLD knows. Go to the strip club -- everyone IN THE WORLD knows. You can paper over the problem with "coin tumblers", which is the WORST name for it. Want to look _exactly_ like you're laundering money? Put your bitcoin in a "coin tumbler". For transaction speed, see https://en.wikipedia.org/wiki/Bitcoin_scalability_problem
If it isn't cash, what is it? "A store of value"? Stores of value normally have _intrinsic_ value. What's the value of gold? Many women want it and many men will do anything up to and including murder to get access to women -- _that's_ a real store of value. What's the value of the US dollar? If a resident of the USA doesn't pay their taxes in it, the government takes away all their property and can put them in jail.
--
Personally, I don't disbelieve in cryptocurrency as digital cash, I just disbelieve in bitcoin. Monero and the fork of it by signal known as mobilecoin are heading in the right direction. Privacy by default. Transaction speeds that are within 1-2 orders of magnitude of what is needed. Txn settling rates in the right direction. In the case of mobilecoin, a platform for easy transactions ( the signal app ).
So being slow is actually a good thing to keep it away from centralization. Things like Lightning on top of Bitcoin can manage day-to-day micro transactions.
If you have to ask what blockchains are, then it's not the tool you need.
If someone is telling/selling you blockchains, then you're talking to a cargo cultist.
How is it more inclusive if regulated countries still require KYC to buy into it or sell out? What can you buy with it without converting to fiat?
But if you’re talking about Bitcoin’s energy consumption - there are alternatives (Nano, for example) that are not resource intensive
The comment you're responding to referenced a lack of understanding of POW and doubles pending, which has are specific to Bitcoin, not blockchain.
I think this isn't entirely right, because he's talking about 51% of miners. The ones that actually incorporate the blocks to the blockchain and validate if the transactions are valid are the nodes (I might be wrong but that's my understanding). In fact this article fails to mention nodes at all, and nodes (for example people running the Bitcoin Core client at their computer) are what make the whole thing decentralized.
It ain't the tech, it's the people.
One group sees new, distributed consensus data structures with unique properties that can advance civilization. They're out there; I've met them and they're doing good work.
The other group are pure crooks and speculators willing to burn everything to the ground as long as they get theirs. But they wear a cute face and tell a flashy story, so it's hard to tell them from the first group.
I'm referring to the promises of 1) giving access to banking to people in the global south 2) giving financial stability to people facing unsustainable inflation 3) doing that while not destroying the environment
https://restofworld.org/2021/crypto-remittances/
> your definition of beneficial might be different to mine
It's not my own: I'm trying to summarize the promises that were often made, together with cheap and fast money transfers, ease of use, better security, and many more.
There are no truly decentralized scalable blockchains right now. None.
A better way to put it is: "it's a log file composed of blocks."
> A blockchain “validates” and permanently stores the data after a consensus is reached.
Not so. The whole point of a consensus algorithm is to map a path through a tree of blocks (the active chain). That path can shift, depending on messages received by the network, typically in the form of more blocks.
Nobody is going to circumvent the power of government. I can show you proof that you don’t need to pay income tax, but I also promise you that you will go to jail eventually for doing so.
Extraordinary popular delusions take on a life of their own. They reflect the zeitgeist of the time.
Bitcoin is the savior so many tech enthused idealists can believe in, but if it supplants anything it will be legitimated and used by those already running the show.
Mind you, currency would be the poster boy for that use case, and it doesn't seem to be very good at that. All of the other potential applications seem even less compelling. But it's at least good to know that the distinction between blockchain and cryptocurrency exists.