Ask HN: When is federation a better solution than decentralization?

Re:Ask HN: When is federation a better solution than decentr... by endymi0n on Monday May 28, 2018 @10:32AM (#17172615)

Here's the core of the problem and also why most of crypto / blockchain technology will go down the drain soon:

Decentralization isn't a business model. The opposite is.

That's it. How you get to any competitive edge in a market is: 1) Be better than your competitors in a field. 2) Own that field and displace everyone else. 3) Extract value.

The Crypto hype happened because a super elegant technical solution (-> Blockchain) that nobody really understands was (and IMHO still is) waiting for a problem met a visionary hippie fantasy of a world of inefficient, evil companies that somehow will be made better by some form of decentralization.

The problem is: There wasn't ever an inefficiency and none of those "huge" competitors has any incentive to leave their market share to someone else. So exactly nothing will happen.

Crypto is nothing more than modern white knight fantasy - in reality all the purpopoted benefits of a blockchain are serious shortcomings. Do you really want a payment that can't be rolled back by a centralized authority because you were defrauded or someone hacked your account? Do you want any kind of accounts for a whole tech-afraid populace that they can't access anymore once they've lost their key?

Most people haven't realized that the current centralization and trust in some large companies and institutions is actually a pretty deep local optimum that will be incredibly hard to displace with something better.

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Re:Ask HN: When is federation a better solution than decentr... by purvis on Monday May 28, 2018 @10:57AM (#17172731)

Your argument against crypto is one of the more compelling I've read. I like the "deep local optimum" visual you painted. I definitely agree if you're comparing "crypto" directly to centralized companies doing traditional things -- they're not going anywhere.

However, I think it solves a different problem. It's a geopolitical problem. Blockchain technology provide a bulletproof (so far) way of exchanging value across borders without having to trust any middlemen.

There's a quote, I believe by Erik Voorhees, saying roughly: "Bitcoin is separation of money and state".

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Re:Ask HN: When is federation a better solution than decentr... by smilesnd on Monday May 28, 2018 @11:38AM (#17172993)

But currently this only works in third world countries where the government lacks resources or care to combat it. Plus their is still a middleman if you don't mine the cryptocurrency yourself. I still have to pay a exchange if I cannot find someone willing to take cash/check from me. You also have the opposite effect where you need the exchange and a bank account to turn that coin I sent into usable cash.

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Re:Ask HN: When is federation a better solution than decentr... by whiskers08xmt on Tuesday May 29, 2018 @05:35AM (#17177687)

Most of the world's population lives in third and second world countries. You're absolutely right that the centralized fiat gateways are the obvious, censurable bottlenecks of crypto-currency, and there's no good way around that, but crypto-currency itself is still an attractive way for many people, to move their money out of very restrictive regimes. The centralized exchange problem is mainly a problem of creating a black/grey market economy, with crypto-currency as it's main unit of value transfer, which of course is a whole other can of worms.

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Re:Ask HN: When is federation a better solution than decentr... by purvis on Monday May 28, 2018 @09:47PM (#17175866)

Correct, but you only have to trust a centralized company within your own country. You don't have to trust a bank or money transmitter in a foreign country. In the case of people in countries where they don't have an adequate level of government protection over financial transactions, I think it becomes more interesting. In cases like those, it's possible they don't even value their own local currency as a store of value and might feel a cryptocurrency has better odds of being worth more than zero by the time they need to spend it.

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Re:Ask HN: When is federation a better solution than decentr... by gota on Monday May 28, 2018 @12:07PM (#17173139)

Maybe that's enough of a use case for an established following that supports a long-term 'market' for cryptocoins. Maybe the ideal (or something closer to ideal) would be that people in too-strong States got to use it; but there are enough people in too-weak States with dreams of authoritarianism

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Re:Ask HN: When is federation a better solution than decentr... by nostrademons on Tuesday May 29, 2018 @02:08AM (#17176845)

I think you're mostly right (or at least insightful), but there's a caveat. Decentralization can't create big companies, by definition, but it can destroy big companies.

There's ample historical examples of that. The Internet (originally) built upon the plain old telephone network, but eventually ended up supplanting telephones, AOL, the big-3 TV networks, and many other communication monopolies. Open-source software has commoditized many formerly-profitable software businesses. Napster and the P2P craze failed as businesses, but not before taking down the record industry and opening the door for iTunes & Spotify.

For many of crypto's proponents, that's a win. They'd be happy if a bunch of banks & VC firms faded into obscurity. There'll be new evil corporations built on the backs of crypto (just witness the community blowback against Coinbase), and in the long term some form of centralized power will just colonize the crypto space the way Google & Facebook colonized the Internet, but in the meantime it may shake up quite a few old industries.

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Re:Ask HN: When is federation a better solution than decentr... by evbots on Thursday May 31, 2018 @01:04PM (#17198008)

you extract value from fat protocols by owning part of the protocol itself, then influencing the direction of the development by being part of the community.

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