The core things that blockchain stuff tries to solve are not actually the hard problems. The hard part of online commerce is not that customers can reverse credit card transactions. The hard part of contract law is not automatic payments. The hard part about property law is not atomic transactions of money and deed transfers.
So just off the bat, almost everything that is presented as a "solution" is not actually solving anything meaningful.
But it doesn't stop there. It's actually making the actual hard problems worse.
For cryptocurrencies, it makes courts all but impotent. A court can't compel you to pay child support, or return the money you stole. You can just say "no".
It's not trivial to track money, but the stated goals of cryptocurrencies is to make it hard or impossible to trace, and to compel.
It's not easy to find money laundering, or just criminal money being moved around. AML & KYC laws exist. They're not perfect. They can inconvenience legit people, and they can be gotten around. But they do help greatly.
The explicit goals of cryptocurrencies is to get around AML & KYC laws. This is what Pintrest was talking about.
So that's for "anonymous". We don't actually want someone to trivially move $1B anonymously.
We as a society, as a people, don't even want people to be able to send money any way they want. E.g. we don't want people to be able to send money to ISIS. There's a "baby and bathwater" argument that can be made here, but since cryptocurrency people don't even WANT to prevent this use case, it's not what they're making, or selling.
Like airline security, it's not effective because it's perfect, but because there's too much risk that one of the layers will catch you.
And the cryptocurrency dream is to remove all those layers.
Reversibility: People don't want this. One of the main reasons to use a credit card AT ALL is that people want reversibility. If that's all you wanted then you can probably just accept debit cards.
And as for smart contracts:
All smart contract systems need a way for a court to interpret the contract. The contract may not be legal, it may have been signed under duress, etc.. So all smart contract systems need this escape hatch.
So how is it adding any value?
And the hard part of contracts was never what's being solved here. The hard part is codifying your intention into legalese, and conflict resolution. The codifying is still there, but now it's computer code instead of legalese. But conflict resolution is removed? Why?
The most ridiculous one is "land ownership registry". You know who ultimately decides who own a piece of land? The government of the country it's in.
Do you think France will bow down to "math" if a French court orders a house to be sold, but the would-be seller is some anonymous "wallet" that refuses?
France would just "fork the blockchain", and the authoritative fork is the one backed by police who will come remove anyone who claims ownership of something they don't own.
In an extreme example, if the ownership of Mona Lisa was "on the blockchain", and a rogue employee sold it, do you think France would hand it over? Of course not. So it means nothing.
I realize this comment is all over the place, and not diving deep into any one argument. It's more like a survey (though not complete) of various arguments, that can then be explored in more detail. This comment is long enough already.
And note that all this is in addition to technical problems like PoW/PoS, electricity use, scalability, transaction speed, 51% attacks, etc... Even assuming all those are solved, the problem is the the very GOAL is a dystopia.
ISIS has figured out how to get funded long before crypto was a thing. Banks already launder billions and that's harder to trace than Bitcoin transactions. And now, like it or not, crypto already exists and is here to stay, so perhaps it's better to start building legitimate use-cases around it than to just mumble about ISIS from afar.
All of your examples seem very contrived for how crypto won't work. I can make up examples of areas where crypto won't help, too. It's not supposed to be the end-all use case for everything.
The lack of conflict resolution in crypto is a side effect of decentralization. When you're talking global interoperability and value exchange, conflict resolution is off the table anyway. What court am I supposed to go to if I wire money to a guy in Nigeria and he doesn't fulfill his end of the bargain?
Ownership of the Mona Lisa might not be one, but there are many use-cases where removing a centralized mediator has a ton of potential benefits. One example might be Basic Attention Token, where advertisers and users can get a better experience because there's no need to satisfy the Google Ads middleman. What's the use for a conflict resolution mechanism in online advertising? Same with device connectivity with helium network, or decentralized lending that can provide better interest rates because there's not a huge meatspace banking infrastructure to support.
> Illegal activity in crypto isn't as prevalent as you may think, and it's actually on the decline:
Do you have the source study? I don't want to give my personal data to a blockchain company, and they rejected both mailinator and gmail for registration.
> All of your examples seem very contrived for how crypto won't work.
I'm not saying crypto won't work. I'm saying every single idea that's been proposed won't work.
And the base problem is that the whole point of these coins is disguising "I want to create a world problem" as "I want to solve a problem".
"It's hard to get around [AML, KYC, tax, etc.] laws" is not a "problem" that needs to be solved. Yet again and again, this is what coiners propose as a potential "killer app".
> When you're talking global interoperability and value exchange, conflict resolution is off the table anyway.
Huh?
> What court am I supposed to go to if I wire money to a guy in Nigeria and he doesn't fulfill his end of the bargain?
Your bank makes it hard to do this, to make sure you're not being scammed.
And what problem exactly are you trying to solve? If you send BTC to Nigeria and the guy doesn't fulfill his end of the bargain then BTC by design doesn't allow any recourse.
Our current system may or may not be able to help you, but BTC goes out of its way to say "fuck you, you should just never have made a mistake".
But also, if someone moves $10B to Nigeria, you can bet your ass they'll find a way.
C.f. when one of the Pirate Bay founders, while living in Cambodia which doesn't have an extradition treaty, hacked some banks. VERY quickly that whole "doesn't have an extradition treaty" did not matter at all, and he got arrested and put in prison.
He should have bought bitcoin/monero. Noob. :-)
It's actually telling that he had full access to the bank's mainframe, yet still only managed to steal like a couple of thousand USD. The rest of the transfers were blocked or reversed.
So the system worked as intended. And as we've seen time and time again (cough, Mt Gox), bitcoin just doesn't work even as intended.
> One example might be
For many years now we've heard hypotheticals, but no actual solutions. The time for brainstorming should have been over, considering the HUGE environmental and crime impact.
At this point it all sounds like "it's not worked so far, but can we just continue setting fire to children? I think it'll do something good one of these days".
> decentralized lending that can provide better interest rates because there's not a huge meatspace banking infrastructure to support.
But can we have an actual solution, not just handwaving, here?
How are you going to solve the intersection between lending contract and laws? What about bankrupsy? What about court ordered child support? What about inheritance, death, etc?
These blockchain things are trying to solve what is actually the EASY problems, not the hard problems.
Like, what do you think will happen if you say "can I get a better interest rate, if I agree to be excluded from chapter 11 and chapter 7 laws?". Likely no, no you cannot. Your "math" doesn't magically make the government, judicial system, and police just "go away". And for good reason.
> Your bank makes it hard to do this, to make sure you're not being scammed.
Most exchanges also blacklist addresses to help keep you from getting scammed. People still get scammed, though.
> Mt Gox
A sketchy exchange hacked 7 years ago and many of the BTC was recovered. Good luck hacking Coinbase.
> hypotheticals, but no actual solutions
Basic Attention Token is literally a functional system working today, right now. So is Helium Network, The Graph, Unlock Protocol, Storj, Golem, Livepeer, and dozens of other projects that are actually making awesome innovations today.
> The time for brainstorming should have been over, considering the HUGE environmental and crime impact
So if we stop all crypto brainstorming and innovation, then mining and crime will suddenly disappear? What if I told you crypto innovation is making these things better, not worse - Proof-of-Stake is about to reduce Ethereum's energy use by 99.9%, only made possible by continued innovation in crypto.
> But can we have an actual solution, not just handwaving, here?
Yes, Compound and Aave are decentralized lending platforms that give you better interest rates than banks. Your points about bankruptcy don't apply here, because DeFi lending is designed so that you can't go into debt. Bankruptcy only happens when you're loaned some money that you can't pay back.
In meatspace, avoiding debt collectors and child support is still illegal, whether you're hoarding BTC or just putting cash under your mattress.
Even so, can we agree that if I'm paying for a newsletter subscription online, that the multi-trillion dollar meatspace infrastructure of banks, credit cards, bankruptcy laws, FDIC, and court settlements is basically wasted? Shouldn't I just be able to sign up to a website, instantly pay a fraction of an ETH, and be on my way, no banks involved? That's the core of what crypto promises: web-native money.
> A sketchy exchange hacked 7 years ago and many of the BTC was recovered.
4 years before that article.
> Good luck hacking Coinbase.
That's a matter of when, not if. Like I just said even actual real banks get hacked.
But it doesn't even have to be that clean. It's enough that one Coinbase employee has the opportunity for even one minute. I don't know how much they manage, but someone left alone (or conspiring, for a two-key system), and you can have all the money disappear.
And the thing is, they'll likely get caught in that case. But so what?
The average sentence for robbery is apparently 111 months. Now, I didn't do more research on that than a simple googling, but 10 years prison, and when you get out you're a billionaire?
And keeping in mind that during that whole prison time, your family is stinking rich.
> Proof-of-Stake is about to reduce Ethereum's energy use by 99.9%
Again, I'm not holding my breath. Especially since bitcoin HODLers will never give up, and bitcoin factories have financial incentive to continue the scam.
> So if we stop all crypto brainstorming and innovation
No. You should show some results after a decade of crime and waste.
> What if I told you crypto innovation is making these things better, not worse
I read this as "reducing the problems they created", not "making the preexisting problems less of a problem".
Great. Let me know when coiners consume less power than Denmark for 7tx/sec.
> DeFi lending is designed so that you can't go into debt.
How does that work? Let's say I have a DeFi loan, and then I get drunk and smash a priceless vase, now owing $100M to some art gallery?
So my assets and liabilites are now that loan, and my debt to the art gallery. I go bankrupt, and my assets and liabilities are renegotiated / forgiven.
And the solution can't be "the law of the land, and courts, do not have jurisdiction over DeFi debt". Because obviously they do.
> In meatspace, avoiding debt collectors and child support is still illegal, whether you're hoarding BTC or just putting cash under your mattress.
Yes, but like I said: judgement proof.
Today it sucks to be judgement proof (i.e. you pretty much have to be a bum). In a coin future it doesn't really affect you at all.
> Even so, can we agree that if I'm paying for a newsletter subscription online, that the multi-trillion dollar meatspace infrastructure of banks, credit cards, bankruptcy laws, FDIC, and court settlements is basically wasted?
Not sure what you mean, here. The multi-trillion dollar industry does more than allow you to pay for things online. It's the engine of the whole economy. A better comparison is to compare it to only paypal.
And paypal does have overhead, to be sure. And yes for any happy transaction between you and the newsletter that overhead is waste. But you're paying for when it's not a happy transaction. E.g. when the company goes bust, just plain doesn't give you the product or service, or when your card gets stolen (c.f. someone hacked your computer), and other mishaps.
And also for when actually the newslesser is a front, and "you" are actually just laundering money for them. Compare this to how in the 90s some people set up companios selling ringtones, and then went and bought SIM cards with cash, and used it all on their own ringtones.
You don't have to make it impossible, just too risky or expensive to be worth it. At least with real money. With coins making it risky doesn't help, because the money can't be clawed back, so you can just wait out your prison sentence.
You saying the whole industry is wasted is like me saying police, fire departments, and ambulance are a complete waste, because I have never neither either of them. Hell, I've never even needed my home or car insurance, or my life insurance.
Oh damn, that's a long comment, let me try to answer point by point.
> The core things that blockchain stuff tries to solve are not actually the hard problems.
What are the hard problems though? Depending on where you stand you might see different things, but to me the hard problems are that banks throughout the world have a hard time trusting and interoperating, things are slow (payments have to go through banks correspondences and central banks and the BIS and that route takes a long time even if some of the stages are RTGSs), errors are way too common (basically audits happen all the time, are manual, and consequences of errors are real issues that people have to deal with).
> The hard part of online commerce is not that customers can reverse credit card transactions. The hard part of contract law is not automatic payments. The hard part about property law is not atomic transactions of money and deed transfers.
What are the hard parts from your point of view? Is your point of view that the system is perfect and doesn't need the technical improvements proposed by blockchain? I'm not sure I follow.
> It's not trivial to track money, but the stated goals of cryptocurrencies is to make it hard or impossible to trace, and to compel.
I feel like that's too much of a strong statement considering that some cryptocurrencies, which I've worked on, were built specifically to follow regulations and make fraud hard.
> The explicit goals of cryptocurrencies is to get around AML & KYC laws. This is what Pintrest was talking about.
Again, there are many cryptocurrencies with very different goals and this statement can't apply to all. The statement is at least very wrong for some well-known cryptocurrencies.
> We as a society, as a people, don't even want people to be able to send money any way they want. E.g. we don't want people to be able to send money to ISIS. There's a "baby and bathwater" argument that can be made here, but since cryptocurrency people don't even WANT to prevent this use case, it's not what they're making, or selling.
So, ignoring what I said previously that different cryptocurrencies have different goal, and so that statement doesn't apply to the field in general, there's still something to be said about that. How much privacy do we deserve? Where is the line where privacy is too strong that it is damaging to society? There's a very similar argument with end-to-end encryption in messaging applications and governments trying to fight it. For example: https://www.gov.uk/government/publications/international-sta...
> Like airline security, it's not effective because it's perfect, but because there's too much risk that one of the layers will catch you.
BTW I don't think airline security is a good example. Adam ruins everything has a good episode on that: https://www.youtube.com/watch?v=-LDzOi1dyAA (tl;dw: it's security theater)
> Reversibility: People don't want this. One of the main reasons to use a credit card AT ALL is that people want reversibility. If that's all you wanted then you can probably just accept debit cards.
Credit cards are mostly a US thing btw, I never knew about them before moving here, and even in the US reversibility is not always a thing. For example, you can't reverse transactions done on venmo or zelle. But even then, cryptocurrencies don't preclude reversing transactions, there's nothing in the technology that would prevent that, especially if it used as a settlement layer for virtual assert service providers (exchanges, banks, etc.)
> And as for smart contracts: All smart contract systems need a way for a court to interpret the contract. The contract may not be legal, it may have been signed under duress, etc.. So all smart contract systems need this escape hatch.
I'm not sure I understand your point. A smart contract has its code published in clear so by using it you already choose to trust and obey the code.
> The most ridiculous one is "land ownership registry". You know who ultimately decides who own a piece of land? The government of the country it's in.
Agree, linking real objects to the blockchain is hard, and projects that tout that usecase are often scams.
> And note that all this is in addition to technical problems like PoW/PoS, electricity use, scalability, transaction speed, 51% attacks, etc... Even assuming all those are solved, the problem is the the very GOAL is a dystopia.
PoW/electricity use are things of the past for the technology. No new cryptocurrency rely on these. Scalability and transaction speed are things that are being solved (I believe Algorand is aiming for 20k transaction/s for the end of the year). There are other consensusless protocols that pretty much scale linearly based on the number of machines you throw on the problem (see fastpay or At2).
BTW if you have any question, happy to continue this conversation or clarify anything.
I mentioned this. E.g. "The hard part is codifying your intention into legalese, and conflict resolution".
But again, I would invite you to talk to some contract lawyers and see what the hard problems are in their space. And carefully listen to how they solve them, and if your cryptosolution maybe not only doesn't solve the problem, but actually makes it worse.
Especially internationally, where you maybe hire a service, but then one of the countries involved has export restrictions, or immigration requirements, or whatever else.
These blockchain things are explicitly made to "go around" all government regulations (that's why they can say it'll be cheaper and more efficient). But the companies still have to obey the law, or they'll go to jail. So no that's not the problem.
> Is your point of view that the system is perfect and doesn't need the technical improvements proposed by blockchain?
I have not seen a solution based on blockchain that solves a hard problem. Nor have I seen one that doesn't make a hard problem even harder.
E.g. when I bought a house I had to prove to the bank and various involved parties where the money came from. And then when transferring I had two people from the bank walk me through it, to make sure this 6 digit cash transfer was legit.
It was annoying, yes. But I understand why it's there. To say "oh if this had been bitcoin you could just have transferred and it would be there in an hour". Or "had this been a smart contract it would have triggered deed transfer". Ok, sure. But what if there were some legal dispute and the seller was about to lose the house? That I would essentially be buying stolen goods?
What if the house had known deficiencies that the seller provably knew about but lied about during selling? If this had been Bitcoin they could simply decline to pay me. They'd launder it in Monero, and sucks to be me.
It's easy to set yourself up to be judgement proof if your assets cannot be seized.
> Credit cards are mostly a US thing btw, I never knew about them before moving here, and even in the US reversibility is not always a thing
I've lived in two countries, neither of which are the US, and credit card extra protection is certainly not US-only.
But that was still not my point. I'm saying reversibility is a feature. That mainstream finance can deliver. And it's good, so cryptocurrencies should too. They mostly do the opposite on purpose, which shows that they are not actually making what people actually want in a currency.
> Again, there are many cryptocurrencies with very different goals and this statement can't apply to all. The statement is at least very wrong for some well-known cryptocurrencies.
zcash, I believe, makes lip service to AML/KYC, but to me as a non-ML-investigator it smells a bit loophole-y, and one that may close.
> BTW I don't think airline security is a good example.
Adam ruins everything (and I've seen it) is entertaining and informative and all, but while yes there are aspects that are security theatre, turns out many of them do add up. The hijackings of the 70s largely went away. But also, Adam's not even saying airline security is security theatre! He even enumerates four added security features that DO stop terrorists. He's talking about the TSA. And then Bruce Schneier says more relevant things.
So the sum of airline security is: good old fashioned police work, infiltration of organizations, wiretaps, anomaly detection, behavior checking (Israel does a lot of this, and the have a good track record despite the obvious targeting), TSA, passengers, air marshals, reinforced cockpit doors, etc..
So if you want to be successful, then you have to get past ALL that.
And while the TSA doesn't do much, any suicidal idiot could just get on a plane with a fullauto in his carryon. At least now he has to weigh the risk of being embarrassedly found in the security check.
So maybe he probably switches to a handgun instead of the AK47. So he's less dangerous.
> cryptocurrencies don't preclude reversing transactions, there's nothing in the technology that would prevent that
Sure. But every time someone tries to sell the benefits of cryptocurrencies they will list this as a feature. And again this is my core point: All of the features they list, are actually bugs. And if you invent a cryptocurrency without the bugs, then it doesn't actually solve anything for anyone.
> I'm not sure I understand your point. A smart contract has its code published in clear so by using it you already choose to trust and obey the code.
It's not your choice to obey an illegal contract. And it shouldn't be. That's the point of contract legality.
And the hard part of writing a contract is not the enforcement, but codifying your inner intent into a bugfree contract, signed in a legal manner.
If you hold a gun to my head and force me to sign a smart contract, and I can prove it, how can a court invalidate the contract if you refuse to sign the invalidation block?
> PoW/electricity use are things of the past for the technology
https://www.amazon.com/Attack-50-Foot-Blockchain-Contracts-e...
I should have a cut-and-paste answer to this question. I actually do already, but under my real name and I don't want to dox myself.
Search for my username here for some: https://news.ycombinator.com/item?id=27210604 (some comments are "below the fold" (e.g. this comment: https://news.ycombinator.com/item?id=27219137).
And here: https://news.ycombinator.com/item?id=26944659
But I'll try to summarize:
The core things that blockchain stuff tries to solve are not actually the hard problems. The hard part of online commerce is not that customers can reverse credit card transactions. The hard part of contract law is not automatic payments. The hard part about property law is not atomic transactions of money and deed transfers.
So just off the bat, almost everything that is presented as a "solution" is not actually solving anything meaningful.
But it doesn't stop there. It's actually making the actual hard problems worse.
For cryptocurrencies, it makes courts all but impotent. A court can't compel you to pay child support, or return the money you stole. You can just say "no".
It's not trivial to track money, but the stated goals of cryptocurrencies is to make it hard or impossible to trace, and to compel.
It's not easy to find money laundering, or just criminal money being moved around. AML & KYC laws exist. They're not perfect. They can inconvenience legit people, and they can be gotten around. But they do help greatly.
The explicit goals of cryptocurrencies is to get around AML & KYC laws. This is what Pintrest was talking about.
So that's for "anonymous". We don't actually want someone to trivially move $1B anonymously.
We as a society, as a people, don't even want people to be able to send money any way they want. E.g. we don't want people to be able to send money to ISIS. There's a "baby and bathwater" argument that can be made here, but since cryptocurrency people don't even WANT to prevent this use case, it's not what they're making, or selling.
Like airline security, it's not effective because it's perfect, but because there's too much risk that one of the layers will catch you.
And the cryptocurrency dream is to remove all those layers.
Reversibility: People don't want this. One of the main reasons to use a credit card AT ALL is that people want reversibility. If that's all you wanted then you can probably just accept debit cards.
And as for smart contracts: All smart contract systems need a way for a court to interpret the contract. The contract may not be legal, it may have been signed under duress, etc.. So all smart contract systems need this escape hatch.
So how is it adding any value?
And the hard part of contracts was never what's being solved here. The hard part is codifying your intention into legalese, and conflict resolution. The codifying is still there, but now it's computer code instead of legalese. But conflict resolution is removed? Why?
The most ridiculous one is "land ownership registry". You know who ultimately decides who own a piece of land? The government of the country it's in.
Do you think France will bow down to "math" if a French court orders a house to be sold, but the would-be seller is some anonymous "wallet" that refuses?
France would just "fork the blockchain", and the authoritative fork is the one backed by police who will come remove anyone who claims ownership of something they don't own.
In an extreme example, if the ownership of Mona Lisa was "on the blockchain", and a rogue employee sold it, do you think France would hand it over? Of course not. So it means nothing.
I realize this comment is all over the place, and not diving deep into any one argument. It's more like a survey (though not complete) of various arguments, that can then be explored in more detail. This comment is long enough already.
And note that all this is in addition to technical problems like PoW/PoS, electricity use, scalability, transaction speed, 51% attacks, etc... Even assuming all those are solved, the problem is the the very GOAL is a dystopia.