What should I have said instead? Centralization of data? Unreliability of single-points-of-failure?
Actual problems are things like "I want to buy this candy bar," or "I want to fly to New York in August and I need to pay for the ticket." Those are problems Bitcoin, as "a purely peer-to-peer version of electronic cash" [1], was intended to solve. It didn't.
As far as I can tell, the main problems blockchains "solve" are things like, "I would like to run a Ponzi scheme and not go to jail." Or, "I would like to hype something and make a lot of money off people." Or, "I would like my consulting company to bill a lot of hours." Or, "I would like to gamble on price fluctuations, and gold isn't volatile enough for me." But I wouldn't call any of those real problems in the sense of being things where solving them is positive sum for the society as a whole.
I would be happy to be proven wrong, of course. Blockchains are a cool technology. But I've spent nearly a decade asking for actual customer problems that are demonstrably solved better by a blockchain. I haven't found one yet.
Some of those aren't real needs. E.g., "without needing a bank" is not a real problem. The "diversify with an asset that is truly global" is similarly an ideological statement, not a financial one.
The "without taking fees" thing is slightly more plausible, but in practice most people are happy to pay 2-3%, or have merchants pay that, and payment networks aren't free to run, so I'm not sure how plausible it is. Sending money to family can be solved much better with non-blockchain methods, which is why Bitcoin has approximately zero foothold there.
The "inflating like crazy" thing is similarly mostly a fantasy. How many countries are falling apart financially but where rule of law, power service, and internet service are stable enough to run blockchain nodes? How much better would a barely-accessible digital currency be than scarce USD? Why not just buy some directly useful inflation hedge, like medicine or canned goods?
Even if it were good for the "financial collapse" use case, that doesn't mean much in the rest of the world. The US dollar and the Euro are useful in unstable financial environments because they have value elsewhere. But the reverse isn't true; nobody in the US holds USD because it's the black market currency of choice in Caracas. So that use case isn't anything to build a real system on.
The lightning network is just getting started which (once mainstream) is going to dramatically lower fees and transaction speeds for a ton of bitcoin use cases.
And even if some of the most compelling use cases are niche- (collapsing economies, illegal activities) those alone will keep the currency value afloat and if eventually it matures and offers lower fees than credit card companies and developing nations where many people don’t have bank accounts can leap frog our legacy payment systems then I think the tech will be here to stay.
In 1995, the Internet was a vast improvement for things like email and file transfer and online forums and some games. It delivered actual value for 30 million people. Yes, there was more that it could do. But it delivered value on a daily basis for a lot of people. (And that was also true in 1985, albeit for something like 30,000 people.)
Bitcoin will never offer lower fees and greater convenience than existing payment networks. If it actually becomes a threat, those existing payment networks will get their shit together. And they can be far better than blockchain-based alternatives, because blockchains impose unnecessary technical limitations.
Look, for example, at M-Pesa. It's an electronic currency that leapfrogged existing payment systems. It started about the same time as Bitcoin. Except that it's actually useful for normal transactions and has real usage. In 2016, it was averaging 190 transactions per second, about 100x what Bitcoin is doing. Transactions are instant, and its fees are already lower than credit cards.
We could have that today in Western countries, but we don't because incumbents don't want to change and we're mostly fine with that. But if incumbents come under threat, they can do at least that well, and probably better given their much larger tech and research budgets.
Also, you seem to believe that high inflation somehow destroys internet access, and everything around it. I suppose it's something from Hollywood movies, sorry. Even in Somalia (which is typically a first example of failed state) internet is a working thing.
I don't think high inflation on its own destroys access. I think a failing economic system definitely harms it, just as it harms every other business activity. Last I heard, if you were going to run your own Bitcoin node, you needed reliable connectivity and power. Try doing that in Venezuela right now, where people are barely getting food, and where the government has cracked down on people getting around its financial controls. (Somalia's a bad example; inflation there is reasonably stable now.)
And if you're not going to run your own Bitcoin node, but instead are using a service, then there's really no point to having a blockchain. At that point, you are just using a bank with a highly volatile currency and an overcomplicated transaction database. You'd be better off using a regular online bank and some stable currency.
Exactly, except I don't see why do you think it's a narrow case? Legal ways are burdensome, expensive for those who can live a week for $10, and sometimes don't work altogether because of political reasons which are unlikely to disappear soon (I don't even sure they have to disappear at all). And economic migration is huge, so it's safe guess to say that number of people who need to send money back to home country is very significant. And now it's already being done via gray, and illegal schemes, in fact. (Please note: "illegal" is used as morally neutral term here because laws could be wrong, or simply inefficient.) In many places around the world you can find a sort of alternative banking in a medieval fashion - as a trusted network of individuals, and families. One may expect regular online bank should beat this system, but it just doesn't happen, because of reasons I mentioned.
Somalia remains politically disintegrated by warring factions which I think is a bigger factor then currency rates and still there's internet, that's what I'm saying. Also, myself lived in a country where price of local currency could substantially change during a day, and it wasn't the end of the world. In those times much fewer people used internet, but it was there, electricity was there, no zombies walking in streets, shops worked, and rule of law (even if bad law, and bad rule) remained in reasonable amount. People just started to ignore that part which prohibits use of foreign currencies. Payments were often technically illegal - you see the pattern. Would I use bitcoin then if internet were as available as it is now? I can't say for sure, but maybe. Depends on circumstances like taxes, enforcement of currency controls, availability of US$ cash, need to make cross-border transfers.
Don't know a lot about Venezuela's current condition, but if electricity has become luxury already, an intermediary can solve this trouble, it could still be more efficient than moving cash in bags.
Yes, the international transfer system isn't great. But that doesn't mean that blockchains are the best solution. Or a solution at all.
Is Somalia undergoing economic breakdown? I didn't find much evidence for that, and war doesn't mean that it is. And if it isn't, then it's not the kind of economic-collapse case that is typically used to justify Bitcoin.
If you're using an intermediary, then there's no real point to a blockchain solution. Blockchains create a trustless context. If I'm willing to trust an intermediary, then a blockchain doesn't add value.
We are building this, using a Blockchain. No, there's no bullshit. Actually, we already did, few days ago (sold a property (a small lot of land) in California for ~$7.5k, paid in ETH): https://etherscan.io/address/0x190d022d7e4913fee5533cfdba79f...
Online transactions without fees? Bitcoin still has fees.
I send money overseas cheaply, easily and instantly all the time. Without Blockchain.
Really? I live in Canada and bill US customers for 6yrs and I've yet to find a solution for this that isnt awful. It's either slow, not practical for large amounts, very expensive, or requires tons of paperwork and special bank accounts not easily attained.
So by all means please share your solution for this. It'd be a massive industry if you found one...
https://www.nerdwallet.com/blog/banking/best-ways-to-wire-mo...
And more all the time; it's a hot area for startups: https://www.wsj.com/articles/fintech-startups-seek-to-shake-...
So it's entirely plausible there's a solution that works well for him already.
That's illegal in some places - transactions above a certain value must be done by bank transfer, not cash or whatever.
The number of places with those laws is probably not going down.
The only organization I can think of that might be in that category is Wikileaks. But they take both credit cards and Paypal, so they don't qualify. Maybe Hamas or Al Qaeda? Except that those are illegal to donate to, so the market is not going to be large.
Honestly LibGen+SciHub is doing more for humanity than almost any organization I know of. It's the next generation complement (not replacement) of Wikipedia -- truly opening the entirety of Man's knowledge to anyone.
I don't oppose paying content creators, but I suspect the vast majority of people accessing this knowledge wouldn't do so under traditional publishing. This shows copyright is largely outdated, not serving society optimally as it should.
As for Bitcoin and blockchains... my opinion is that they are extremely useful for efforts like those (and other niches like totalitarian states), if not much else. Perhaps paradoxically I also (controversially) think they should be outlawed and/or heavily regulated (outlawed but as a lightweight non-criminal offense). The potential for theft and money laundering is too large otherwise.
In the limit where everyone used perfect secrecy coins, paying taxes would need to be largely voluntary. And I suppose we all know how well that would turn out.
So I think cryptocurrencies are meant to be underground. It will always be possible to acquire some under the censorship conditions they are really useful for. So restricting their usage mainly curbs trivialized laundering.
[2] e.g. http://booksc.org/howtodonate.php, it does support amazon gift cards too but I find that inconvenient
That really just boils down to cryptocurrency being good for business models that are so new that they sound really risky. I'm not really sure that enabling such models is really a net good to society.
I thought it was ridiculous too when I first heard about it, and then I realized that "other people have money and I don't" is perhaps the strongest motivation in history. The American, French, Russian, and Chinese revolutions all stemmed from that, as did WW2 and the Holocaust, as did the conquest of the Americas, as did the settlement of the American West.
The American revolution was rich aristocrats shaking off the power that the British ones had over them.
The Russian revolution (October 1917) was a military coup that the Bolsheviks pulled off by subverting enough of an army tired of war - the democratic February revolution hadn't taken Russia out of WWI.
The French revolution was a religious one - the encyclopedists had found a revelation, and by gosh they were going to islam the rest of the world with it.
Etc.
"Completely non-reversible transactions are not really possible, since financial institutions cannot avoid mediating disputes. The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for nonreversible services. With the possibility of reversal, the need for trust spreads. Merchants must be wary of their customers, hassling them for more information than they would otherwise need. A certain percentage of fraud is accepted as unavoidable."
(No solution is offered for the merchant defrauding the customer, which is the business that ebay was built on solving)
All I see are Long Island Ice Tea Blockchain Corp. and Walmat saying that they're using blockchain to help their supply chain (whatever that means).
The reality is is that Blockchain is no longer new. Compare it to iPhone - they both roughly came out at the same time, yet we're still having the same conversations - "What problem does Blockchain solve" - while the iPhone found its place in the market. The reality is is that if Blockchain had a 'killer app' beyond tech bros speculating, we would have found it by now.
I still do not understand what kind of problem the iPhone solves (seriously!), while I can imagine quite well what kind of problem Bitcoin attempted to solve when it came out. If you want to understand it, consider the coinbase parameter in the Genesis block:
> https://en.bitcoin.it/wiki/Genesis_block
"The Times 03/Jan/2009 Chancellor on brink of second bailout for banks".
This summarizes quite well the situation at that time: People feared that the dollar and euro system was on the brink of collapse; because of the bailouts and money printing, people feared inflation; the central banks became highly distrusted institutions etc.
So at that time, a currency system that
- is not based on a central trusted institution
- has a limit on maximum amount of currency that can exist (so it is free of inflation)
became a very desired one. We know that history turned out somewhat different - most people would argue that the trust in the national currencies has at least partly been reestablished. On the other hand, at least the original bitcoin protocol was eventually not able to abide its promises (e.g. scaling) or properties that people projected into it (anonymity; Bitcoin was never anonymous, only pseudonymous).
So to me it is quite obvious what kind of Bitcoin attempted to solve and why at that time this solution seemed quite attractive. From today's perspective, we can probably say that Bitcoin - as in the original protocol - has mostly failed. On the one hand, people regained trust in the central banks (whether this trust is justified, can of cours be debated for hours), which makes the Bitcoin product now less attractive to the masses. On the other hand, the original protocol had scalability issues.
Bitcoin promoters will argue that the scalability issues are now solved, altcoin promoters will argue that their altcoin offers properties that people loved to project into Bitcoin (anonymity). For most people, with the regained trust in national currencies, the problem that Bitcoin attempts/attempted to solve is - in opposite to the situation 2008/2009 - simply not a burning issue anymore.
My opinion is: Bitcoin was an idea that seemed very attractive at the time when it came out, but history turned out differently (for good or bad).
Meanwhile, bitcoin was never better than the existing alternatives of barter and foreign currency for dealing with a failing central currency. It's not got substantial traction as an electronic currency.
Bitcoin does solve one problem: "how can I rake money in from suckers when I'm providing them with nothing in return". It does this well. Tremendous amounts of money are going from "investors" to miners and people at the top of the pyramid. This can only continue so long as there's a growing base of new money coming in - but nothing of value is coming out, just the promise of more coming in later.
My opinion is that Bitcoin was originally a political statement or thought experiment in crypto-anarchy, with a poorly thought out economic model that actively discourages its use as a coin, and history continues to reinforce that opinion.
Did you try smart phones before the iPhone? It solves the problem they promised to solve but it actually delivered.
High fidelity web browsing in your pocket is probably the biggest one, but there are more.
Being a market fit does not mean that it solves a problem. To me, this is only one important reason (though IMHO a more safe one to bet on) among many, why aroduct is successful in the market.
As I wrote: Bitcoin attempted to solve a problem that seemed (and in my opinion was) very important at the time when it came out (this also IMHO explains the initial hype). The problem simply has become a lot less important and urgent for most people in our days.
I went from carrying a phone, an MP3 player and having a GPS and maps in my car to having one device and never having to stop for directions. That's just the most obvious ones.
Solves a lot of problems.
This kind of motivation has arguably always been about people misunderstanding economics. In this particular quote: government bailouts are not a function of the exact mechanisms of the currency, but of whether you elect politicians that want to keep banks in check or not. Even if everybody used Bitcoin, a certain type of politician would still be tempted to do bank bailouts.
> - has a limit on maximum amount of currency that can exist (so it is free of inflation)
And this is actually an anti-feature.
It should be obvious that relative prices need to be able to adjust in order for markets to function well, and if you look at economic history without ideological blinders, it becomes clear that there are many important markets in which absolute prices move up more easily than they move down, notably but not only wages and salaries.[0]
Having a modest amount of inflation means that the absolute price that you as a seller can earn must increase if you want your relative price to be stable - a kind of economic Red Queen hypothesis. This makes it easier for relative prices to adjust downwards, which is good for the functioning of markets.
The economics behind Bitcoin has always been a bad idea.
[0] There are good reasons for this. In order to improve your financial position, you have to reduce your monetary outflows or increase your monetary incomes. The amount of effort you spend is proportional to the number of contracts you negotiate, not to the value of those contracts. So if you have many monetary outflows, but comparatively fewer (but larger) monetary incomes, then you'll rationally focus your efforts on increasing those incomes (or fighting against decreases of those incomes). Almost every household, and many companies, are in the position of having fewer incomes than outflows, so they all have an incentive to fight relatively harder against price decreases on their income. Which has the net effect that absolute prices move upwards more easily than they move downwards.
That’s it.
I believe a massive number of social and societal problems are solved by distributed trust models in the same ways free market economies generally lead to more equality and democracy leads to more freedoms.
Again. What specific problem does Blockchain solve?
- Art transactions: registry of origin and property transfers for any object (with authenticated certificate), currently done by lawyers & auction houses (costly, inefficient, painful, near-impossible in some cases involving war/expropriation because records were destroyed at some point)
- International shipping: INCOTERMS, currently handled through various specialized intermediaries (costly, inefficient, painful)
- Registry of operations over the life of a company (creation/address change/acquisitions/foreclosure), currently done by national commerce courts & accredited local newspapers (costly, inefficient, painful)
- Wills: self-authentication of one's will preventing repudiation attempts by third parties, currently done by lawyers and witnesses (costly, inefficient, painful)
- Escrow accounts for service providers (ex freelancers) through multisig wallets, currently done by intermediary platforms (costly, inefficient)
You, your trade partner, your bank, your bank's correspondence bank, their bank, their bank's correspondence bank, customs at ports of entry, shipping agents, and others, and they're all taking their time and their cut to manage your risks for you.
I don't think blockchain solves anything remotely close to all problems but I think it could have its uses in providing services for escrow and a gigantic, tamper-proof distributed log.
That said I don't work anywhere near international trade, just recalling some stuff I learned in an old college class
Yes, I know US Gov is not like Venezuela, they are not printing money like there's no tomorrow, but they still do stupid shit and try to control the economy. Crypto at least gives you money that is not issued by the government. Of course, governments can try to control it, like they do with everything else, at least through taxes etc.
I like how you phrased it. It tickled the Rustacean in me.
> Modularity, DRY, SRP, etc. is never a goal, it’s a trait. Don’t let the pursuit of theory get in the way of actual productivity.
> That’s not to say Modularity, DRY, SRP, etc. aren’t great ideas—they are!—but understand that they’re approaches and not achievements.
I know it might sound lame, but these two tweets have stuck by with my as probably the best piece of advice I've ever read. "approaches and not achievements" has found itself useful on so many occasions.
That's still not it. "Distributed Trust" isn't a problem, its a trait. What actual problem is solved by distributed trust?