And even those things that became successful did so in a form that the contemporaneous positive predictions did not expect. The 1990's predictions of the Internet was of decentralised power and freedom of information, what actually happened? There was a land-grab, and a new generation of billion-dollar corporations have become established. Where once there was Blockbuster, now there is Netflix...
My prediction is the same will happen with cryptocurrency and blockchain applications. The technology will live-on, mostly in non-currency applications (e.g. behind the scenes settlement rather than day-to-day transactions); most of the "land grab" phase will die off though. Then, one day, ten or twenty years from now, we'll realise that "fiat" currencies have been blockchain based since some un-trumpeted central bank upgrade eighteen-months prior. But no-one will have noticed, as they still spend "dollars" on a credit card... same as they always did.
Tom, Dick, and Jane may not notice, but I would hope that those investing in that space, and those building out the technology, would :) The general public may not have an appreciation for the complexity behind it, but I assume many of Hacker News's readers, now and in the future, will be working on the forefront of developing this new technology.
There were people in the past skeptical of an outlandish claim who turned out to be wrong as that thing became something great, therefore people who are skeptical of another outlandish claim today are also wrong. Did I get that right?
Rather, I am surprised to see comments on a technical website like Hacker News that are treating the long, drawn out development of cryptocurrencies and blockchains as something that is completely different than the long, drawn out development of the personal computer and the internet. It took the Internet more than 10 years to be useful, and so I think saying "shut it down, this is going nowhere" about Bitcoin today is not a useful viewpoint to take. Even if you doubt the technology itself, there is no reason to stifle its continued research and development.
I'm onboard with that. Although your argument may benefit from better phrasing, because it actually does come across like that, which is a disservice to your advocacy effort.
Back on topic, I don't see a lot of people in this thread saying "it's been forever and nothing came of it, let's just end the whole thing." What people are saying here is that there is no foreseeable legitimate (and legal) use case for the crypto currencies, hence let's not start the frenzy just yet. We should have a proposed legitimate use case first and a frenzy second, otherwise it's indistinguishable from millions of other exciting idea. Just because this particular idea excites you doesn't mean it has potential.
So where is the potential? What is the use case?
In the end I'm just a programmer, not an essayist :) I appreciate the feedback.
> So where is the potential? What is the use case?
I work in fintech and can speak firsthand about the potential use of this technology to reduce costs and reliance on third party auditing firms. I think people focus too much on cryptocurrencies just like people focus too much on AOL and Geocities. Those services weren't the internet, and cryptocurrency isn't the only use of blockchains. If anything, I would love for the shitcoin frenzy to die down so our efforts can be focused toward more useful/less scammy uses of the technology.
That's not world changing.
Digital nearly frictionless currency is another use case, but so far it seems there is a vicious cycle of value, scarcity, hoarding, boom, and bust in most of these that makes them unsuitable for use as a medium of exchange.
To go a bit further, I'm willing to wager that there is an inherent tradeoff in crypto between usefulness as a currency (stability vs fiat) and usefulness as an investment (appreciation). a stable store of value is also useful, just not as an investment.
The crypto currency that eventually works won't make anybody rich.
The same could be said of many of the early hardware and software makers of the early internet.
> The crypto currency that eventually works won't make anybody rich.
I think the bigger point I was trying to make is that we have a technology, and so far the killer app for it has been cryptocurrencies, but that we've not yet developed the technology to the point where its broader uses can come to fruition. We didn't have Facebook or Twitter in 1995, partly because of technological implications, and partly because the idea of social media hadn't been fully formed yet. These things take time, and I think there's a bright future ahead for these new technologies once they mature and people find more uses for them.
I don't think cryptocurrency will be the be-all-end-all use of blockchains, and the idea of technologies like Bitcoin may seem as quaint as services like CompuServe in the future.
Paper currency that may be in your pocket has serial numbers printed on it. Those numbers cannot be readily associated with an individual. Bitcoin and all other blockchain systems can be connected to a user directly or through alternative methods. This is ideal for government and is the direction most are taking - control over blockchain systems and therefore control over the system's users.
Pointing to credit or debit cards is a poor comparison since those require significant hurdles for participation. Cryptocurrency requires only a smartphone or some kind of computer and a rudimentary internet connection. The infrastructure for the entire system is already in place, unlike growth of the early internet needing computers and modems. Transactions work now and have been for years; higher level functions such as decentralized exchanges, asset registration and such are gradually being tested and implemented.
Meanwhile, users are voluntarily joining. Government needs do little other than take some corrective actions and dictate rules for usage of cryptocurrency that can be enforced within borders. It's a control-freak's dream come true.
The draconian implications of this technology, like many others, concern me greatly. Thanks for providing this perspective.
Bitcoin is already a reserve currency in crypto thanks to longevity and stability of the protocol. Another may become the primary transactional currency and there may well be national variants for local trade, but reserve is effectively established.
Keep in mind that enough data points from outside the system can be used to associate an identity with an address.
Just my two cents after spending months dealing with banks and PSPs.
I disagree with this sentiment. In the early days, the dissemination of information like pornography and texts like the Anarchist Cookbook, which had instructions on how to create bombs and other weapons, were two examples of why the internet was a bad thing. Using a computer was considered by many to be antisocial due to the perception of people staring at screens 12 hours a day without talking to others in person. Even today, we have those arguing that the proliferation of computer technology has been detrimental to societal interactions.
The reason I've become a bear on cryptocurrency is that I don't see the utility to justify the monstrous amounts of money pouring into it. It's almost 10 years old and today it's actually less useful than it was a few years ago due to runaway fee growth. The feedback system works in the wrong direction. Did the Internet get less useful the more people used it?
That and I see a ton of scams. Almost all cryptocurrency projects seem like either scams or delusional vaporware projects akin to badly thought out Kickstarters or over-funded boil-the-ocean startups. These things rarely accomplish anything other than to blow a lot of money.
Want to change my mind? Show me the cryptocurrency killer app that people are climbing over each other to use.
... and no, gambling and virtual MLM / pyramid schemes don't count. I mean utility in the real world.
You must have hung out with a nerdier crowd than I did :) I was the only person I knew who owned a personal computer until well into the late 90s.
> The reason I've become a bear on cryptocurrency is that I don't see the utility to justify the monstrous amounts of money pouring into it. It's almost 10 years old and today it's actually less useful than it was a few years ago due to runaway fee growth.
So I think cryptocurrency here is getting conflated with the underlying technology, just like Geocities came to be the poster child of the early web. I agree with you that the current systems have much work to be done, and that many of them will be abandoned before they're fixed. But cryptocurrency is not the blockchain anymore than gopher was the internet. Services like Bitcoin built on blockchains may cease to exist in their current state, but just like we still have TCP/IP, I think the blockchain piece will be essential moving forward.
> That and I see a ton of scams. Almost all cryptocurrency projects seem like either scams or delusional vaporware projects akin to badly thought out Kickstarters or over-funded boil-the-ocean startups. These things rarely accomplish anything other than to blow a lot of money.
I get a lot of scams via postal mail, telephone, and the email, but that doesn't negate the purpose of the technology :)
> Want to change my mind? Show me the cryptocurrency killer app that people are climbing over each other to use.
I think you misunderstand my viewpoint. I don't think the technologies of today are the solutions anymore than Geocities was the be-all-end-all of the web. My comments are more directed toward those who believe this technology leads to a dead end and that reducing the reliance on third party trust is not a problem that needs to be worked on.
The fact that network effects to some extent works in the wrong direction for this technology is concerning. What happens when the current speculative cycle comes to an end and crypto needs to justify itself by its utility to end-users as opposed to investors?
P.S. Beside this point but one thing that can work in favor of crypto is the conflation of investors & users. You essentially get so many evangelicals for your project from the investment perspective "for free". If you can turn them to users, then you are in a nice shape. Though issue is that most these investors are only summertime soldiers.
Cryptocurrency is a vital component of the distributed blockchain architecture. It provides the decentralized economic layer, without which blockchains would be centralized by virtue of their dependence on a centralized payment processor.
You know this, but many users of AOL didn't. To them, AOL was equal to the internet, like many people believe that cryptocurrency is the only application of blockchains as a data structure.
> Cryptocurrency is a vital component of the distributed blockchain architecture.
It is now, but that doesn't necessarily have to be the case. Cryptocurrency is one of many applications that can be built on top of a distributed ledger. There are many applications that have nothing to do with payment processing.
I disagree with the notion that a cryptocurrency is a vital property of the distributed nature of blockchains. The purpose they serve now is to incentivize individuals to participate in the network who wouldn't otherwise participate by paying them a currency to represent the value of the service they've provided.
But for instance, you could also have private blockchains where the incentive for running a node is access to that blockchain's data. There does have to be an incentive to run nodes, but it doesn't necessarily have to be monetary.
That's not a decentralized blockchain. It's the decentralized consensus that is novel. Without decentralization, it's just an append only database.
As for compensation, rather than receiving a coin as a reward for doing proof of work mining, you would gain a key to enable you to read certain encrypted data on the blockchain, for instance.
And your scheme does require some amount of trust. Induction into the consensus node set would need to be controlled to prevent bad actors from disrupting the flow.
This is not a property these systems possess. The computational power of the system remains is bounded by the computational power of weakest full-node.
There will probably be a better end state for distributed trust, but we're legitimately not there yet.
What is the energy consumption of all the bank offices and computer systems in the world? Even without this comparison, I think the amount of energy required is not a flaw in itself, but rather an aspect of the technology we should seek to improve upon (for instance, proof of stake is an attempt at this). I don't think it's sustainable long term (2400 baud internet wasn't sustainable long term either), but that doesn't mean we don't have the kernel of a great idea today. I agree with you 100% that we're not there yet, but I disagree with those who say this road leads to nowhere.
Banks and credit card processors can handle billions of transactions per day. Bitcoin, ethereum, and the other cryptocurrencies struggle to handle a few thousand, and are technologically incapable of non-linear scaling.
https://www.stellar.org/papers/stellar-consensus-protocol.pd...
> but we're legitimately not there yet.
Maybe Directed Acyclic Graph technology (instead of blockchain), such as iota and raiblocks? Iota seemed to make its enterence into the top 10 of cryptocurrency, so I guess we're there.
In 1984, middle managers at Sears and AT&T were able to accurately predict how we'd use the internet in 2014.
In 1999 a now-defunct ISP explained how Netflix streaming would work.
https://hackernoon.com/what-14-tv-commercials-from-the-dot-c...
When I talk to crypto folks, I rarely get any predictions to this level of fidelity. There's a lot of talk about "Sovereign Individuals" and the decline of the US dollar as global reserve currency, but very little in the way of intermediate steps. How about this as a starter:
Which will be the first public tech company to cite a blockchain project as the reason for a missed quarterly profit target? Is it Filecoin pinching Amazon? If not, who?
I don't doubt that I'm missing something, but it seems like many are overly-concerned about joining the litany of Luddites:
"Everything that can be invented, has been invented!"
"There's a world market for five computers!"
"Apple's not just gonna walk into the phone market!"
That they've checked their critical thinking faculties.
The big four accounting firms bring in about $40 billion in revenue each. Thus $160 billion would seem to me to be a reasonable order of magnitude estimate for the max value audit-free fin-tech can create.
Is there a better estimate of total value this can create?
I don't think there'll be a way to realistically estimate this for at least another decade. That would be like asking what the effect of TCP/IP will be on eCommerce in 1980. What I've laid out is very, very high level, while the technology is still in what could be considered pre-alpha stages.
If all of the transactions of a company existed on a blockchain system, this would greatly simplify the auditing process. In order to have access to this system, your financial institution or business would run a node on the network, spreading out the overall cost of using the system. Because of cryptographic assurances, you can guarantee that past data hasn't been manipulated. Using smart contracts, you can also guarantee that every transaction follows certain conditions, making it impossible to do trickery like backdating documents. Security additions (like zkSNARKs today) would enable concealing specific aspects of transactions while allowing third parties to verify their validity.
Long term, you could theoretically have an entire exchange that runs on a blockchain, with asset transfers mediated via smart contracts. The clearinghouses that exist to verify the assets of those who buy and sell, and complete the paperwork to document such transfers, could be largely automated.
All of this can be achieved today with third parties, but you pay a lot for that trust. Once the technology has matured to a point where it's deployed widely and these types of transactions can be automated, I expect the associated costs of that trust to be reduced.
Could we achieve the same end by creating a big Git repository under control of the SEC? Anyone can make a clone, SEC will approve pull requests as needed. Or would you argue that this effectively becomes a blockchain as soon as we use start using hashes?
I think it's useful to have a paper-trail of hashed blocks/files, gives you a simple mental model to reason about immutability. I just don't quite understand the need for the decentralized commit protocol. For any legitimate (legal) purpose one could rely on a large central entity yielding much higher speed and lower expense/complexity.
In the end, you're just moving the third party elsewhere, and you'd still need staff to verify that people are committing their finances regularly and aren't trying to sneak in retroactive changes in large commits. If someone ever decides to try to get away with rewriting their git history and arguing that the SEC accepted an erroneous pull request that contains the wrong history, that would need to be audited/litigated out to resolve whose tree was correct (just because the SEC owns the master repo doesn't necessarily mean that their custodians of it haven't rewritten history themselves). Also, the fact that the "authority" repo is centralized means you may have issues if for some reason it's inaccessible (these issues arise in reality when GitHub goes down).
Now, keeping all records digitally and openly accessible, and having automated processes to replace human processes, that can certainly reduce cost, but it's a business process change and orthogonal to the blockchain.
In another reply, I explained the use case for government is control and tracking via blockchain.
From the consumer perspective, the benefit will be convenience. We have car find that automatically open doors. Automation of the world around us will increase significantly, and instead of having a key fob for each item it will be a single device registered on a blockchain which everything else is registered as well. Permission can be automatically granted by machine to machine communication.
Why not a normal database? Maintenance, trust and universal accessibility.
Also with respect to things like 'nobody will ever need a computer in their house' or what Watson of IBM said (regarding the need for only a small amount of computers in total) you are also not looking at the times that that type of statement ('will never work and here is why' or 'not needed because xyz') was true. You are only looking at the survivor bias type of things where people were wrong. Because you don't know of or keep track of the times things didn't work out (like flying cars but there are most likely thousands of other examples out there I am sure).
At what point do you believe the internet had made its case as a technology? 1975? 1985? 1995? 2005? In each of those years, you had naysayers saying the internet would never become something people use in their daily lives, but here we are. The evidence of today should not stifle the innovation of tomorrow.
> Also with respect to things like 'nobody will ever need a computer in their house' or what Watson of IBM said (regarding the need for only a small amount of computers in total) you are also not looking at the times that that type of statement ('will never work and here is why' or 'not needed because xyz') was true.
It's not just Watson who made that statement. Many business owners in the 90s looked at computer and internet technology and dismissed it as a fad that would cease to exist in 5 years (and after the bubble popped, they were 100% sure they were correct). I believed in computers and the internet then because they solved unsolved problems, and offered better solutions than existing ones. In the field of trustless services, I believe the blockchain will be an essential part of that. And maybe it won't exactly be the blockchain we have today, but it will either be an improvement upon it, or an alternative idea created to address the problems of the original. Regardless of how the blockchain is and will eventually be used in practice, it's a simple theoretical model that offers a proof of what's possible in this space that we didn't have before.
If you don't think the blockchain is "it", then what other technology do we have today that solves the same third party trust problems as the blockchain? Or do you believe that reliance on third parties in business and finance is something we don't need to overcome?
I sold cell phones to senior citizens in the early 00's, and that was a HARD SELL. Most of the ones that did buy, bought the minimal $20 / month, 60 minutes + nights & weekends plan because they thought "they would only use cell phones for emergencies". Don't even get me started on mobile web WEP browsers. It was unusable crap 15 years ago. And I would have to convince people that surely they would be checking their stocks, the news, etc. on their cell phones. The scoffs I got were unbelievable today.
Now, 15 years later, everyone and their grandmother has an iPhone / Android.
Where are all the hackers and dreamers on HN? I thought that's what this site was for. Irrational optimism is the fuel that feeds technological revolutions. So much negativity with crypto.
Well I've been around this for much longer than the 90's. Since the late 70's actually. I don't remember it that way at all. What I remember was that at the time it was either to expensive or the company (small ones) didn't have the time or resources to stop what they were doing and get a system up and running (say for inventory or shipping). There was not at all (and I was around plenty of small businesses btw) any sense that it wasn't something they needed. Anyone who typed invoices at the time (on a typewritter) and had to look up or remember pricing and/or work with inventory could easily see what a computer could do for them. The only issue was the cost.
With respect to the internet it was seen as unusable and not needed because of the speed primarily. If the speed wasn't fixed by broadband it would not have taken off. If you told people back then 'in 2 years you will have 'always on internet'' they would have thought differently.
Even just 5 years ago, I worked for a tech company in the self-storage industry, and many large operators were still running their entire businesses in physical ledgers with no equivalent computerized records. There is still a strong resistance among many older businesses to convert to computerized records, despite the clear cost savings that can be demonstrated at this point. Reasons include not wanting to learn a new system and being afraid that the business couldn't run if the internet goes out. As I said, this was in 2012.
On the east coast near a major city and in wholesale and distribution primarily.
Instant, zero marginal cost communication reduced cost, and improved decision speed.
telegraph:instant communication::bitcoin:block chain
internet:instant communication::______:block chain?
Why do you assume that Bitcoin is one of these few winners, rather than the multitude of losers? The default position should be "failure"; it's not irrational.
I didn't state that Bitcoin would be a winner, and in fact stated in my comment that Bitcoin may cease to exist as a software product. My criticism is more directed toward those who don't believe the blockchain is a useful data construct and that the research taking place today into blockchains and cryptocurrencies are a dead end.
The end user doesn't care what database you're using. They care about utility.
I agree, but this isn't just about the end user. Many businesses incur costs to third parties that could be reduced or eliminated by trustless systems whose validity of data can be verified mathematically without an auditing team. The blockchain of today can't do that yet, just like the internet of 1985 didn't allow you to buy books, but I think we're headed in the direction of progress.
The way you phrase this it sounds like a marginal reduction of costs, and maybe a marginal reduction in the auditor workforce. That’s great, and it will bring about some efficiency in the businesses it applies to, but it doesn’t sound like a story of transformational change and an unlocking of new value. Even in the worst case scenario, how big are auditing costs to a business?
Unfortunately, a lot of the cost of the 3% is providing fraud and chargeback protection that lets customers be comfortable paying online.
So, while it's conceivable that a stable block chain based payment method could revolutionize ecommerce payments, the present incarnations have trust math (before we even begin to discuss volatility's effect on suitability of a medium of exchange)
Another portion of that 3% cost is marketing in the form of cashback and rewards points which can be eliminated if the market or regulators demand it. In Australia they capped credit card fees to around 0.5% on the basis that the fees were a market distortion. They review them regularly and have suggested that lower fees are appropriate [1]. It doesn’t actually cost Visa that much to handle transactions, and there are proven solutions to fixing credit card fees if that is what is desired.
[1] search document for “cap” http://www.rba.gov.au/payments-and-infrastructure/review-of-...
we all need skepticism in our arsenal and that is what you can expect here, brilliant at times but hn is simply not the voice of this moment. you will be frustrated if you forget this rather than accepting it.
The future will definitely have cryptocurrency used in ways we can’t even imagine. Digital cash will be huge. That I believe. That any of the current currencies warrant any value at all much less the speculation, I’m iffy on.
Both statements “the future is crypto” and “current crypto is a bubble and all are worthless” can both be true.
The main use case of crypto currency, digital cash for digital transaction, does not require a bitcoin worth $1M. Successful cash doesn’t mean massive increases in crypto portfolios.
So the article doesn’t seem in conflict with my HN reading, 80s/90s surviving self any more than me thinking AOL and Broadcast.com sucked back then even though I bet my whole career on the Internet.
I think we agree and I haven't made my point clear. To use your analogy, my criticism was more directed toward those who think AOL = the Internet. I'm not cheering for Bitcoin per se, but I'm cheering for the development of the technology underlying it, and disagree with those here in the comments who are saying we don't need blockchains because we already have relational databases.
1. Just because something is true in the past does not make everything else true in the future.
2. Just because something works does not mean it should be overvalued.
I'm reminded of the quote about the radio:
“The wireless music box has no imaginable commercial value. Who would pay for a message sent to no one in particular?” — Associates of David Sarnoff responding to the latter’s call for investment in the radio in 1921.
And then a couple of years later, for someone that made their stake in radio:
“While theoretically and technically television may be feasible, commercially and financially it is an impossibility, a development of which we need waste little time dreaming.” — Lee DeForest, American radio pioneer and inventor of the vacuum tube, 1926
And remember TV didn't really come into its own until decades after 1926.
---
Yesterday, I was reading about past objections (circa 2007) to using Git vs CVS or SVN, and most of the objections were things that turned out to be unimportant. The objections focused on how their team doesn't have a decentralized workflow that the Linux Kernel does, so they don't need git. Or that the interface sucked, so they don't need git.
Turns out everyone mostly uses git in a centralized way (via Github), to coordinate, but the decentralized design reveals secondary affordances that are really useful in practice. The decentralized design allows you to work and commit offline--great as laptops became more pervasive and more people worked on them. (You use to have to be online to commit, and can sometimes take minutes) The decentralized design also used content hashing with parent chains, which allows for inherent self-checking--no object modification can escape detection. Git's data structure makes commits fast, which in practice makes fine-grained commits possible. And the decentralized design gives everyone a backup of the repo, so the central repo getting nuked by the intern doesn't take down the org. Nowadays, in saying these things, I'm preaching to the choir. But back then, it was completely non-obvious.
The only people that got it right back then are the ones that dug into the technical details, and then actually tried it out. Notably, the guy at X.org. https://keithp.com/blog/Repository_Formats_Matter/
And I think it's a similar thing with cryptocurrencies, in the way that the fundamental different design and architecture of blockchains allows for secondary effects that are harder to see (until you've actually used or programmed in it) that aren't available to you at all otherwise.
The trap most people fall into is that they compare the new X with what the old Y does very well. But they never consider that if it's actually got a new underlying concept, it might suck at what the old Y has had time to get good at, but it allows for some other thing that we just couldn't do at all before.
Most world changing technologies have visionaries forecasting their effect, even in spite of the naysayers.
You are correct that the presence of nay-sayers has no impact on the viability of a technology.
But you're looking at the wrong variable.
Where are the visionary descriptions of the beautiful future? The absence of visionaries, I think that has a substantial impact on how we should estimate the viability of a technology.
When a technology has visionaries, technicians, skeptics, and speculators -- it has a real shot.
When a technology only has technicians, skeptics and speculators - well, we will see what that leads to.
As a technologist, the tech of blockchain is pretty cool. Distributed trustless consensus, Wow!
As an economist and futurist, I've searched for good uses for going on five years now. There's nothing I've found yet to be excited about.
TCP/IP alone wasn't enough to sell people on the idea of the Internet. We had to invent POP3 and NNTP, then eventually HTTP. Even after we had the web, people still weren't sold on the relevance of the internet, but at that point, we had visionaries who could start to paint a clearer picture.
To compare them to the internet, blockchains and cryptocurrencies aren't even out of the DARPA yet, by at least 20 years. The point I was trying to make is that the Internet took more than a decade to really come into its own, and blockchains will take as long as well. Skepticism is welcome, but closemindedness isn't.
"The CueCat isn't worth installing and using, even though it's available free of charge" —Walt Mossberg[1], WSJ Tech Reviewer, 2001
I think he nailed it.
But it is.
It's not a product that's useful on its own like a toaster or CorelDRAW. Instead it sits at the middle of a two-sided market -- on the one hand publishers, on the other hand readers. If it had caught on it would have caught on.
Our uses of cryptocurrency and blockchain technology now are similar to how we once used the power of the web to create Geocities pages with nothing more than MIDIs, scrolling text, and under construction gifs, because we didn't know what we were doing yet. But the early computer and internet pioneers were able to see past the proofs of concept and build on those ideas, to create the modern internet we have today.
Bitcoin may cease to exist as a software product, but I think the innovations that it has spurred on will be with us for some time. This technology has the possibility of making business much more efficient by reducing costs that are associated with distrustful parties having to rely on (and pay money to) third party escrow/auditing services. If I want to send a large sum of money to someone else now, I have to rely on third party services such as banks or Western Union to facilitate that transfer.
If you still continue to think "well that can be done with a SQL database now", you're completely missing the point. There's nothing wrong with relying on third parties, but now we have technology that allows us to choose not to if there's a need for it. In that regard, cryptography shares many of the same characteristics. We could communicate securely before public key cryptography was invented, but it broadened the scope and security of such operations, to the point where we espouse using https for all websites, not just ones requiring security. When the time comes, why would you trust a third party if you didn't have to?