We’ve been hearing this for a decade – it’ll change the world, if you don’t agree it’s because you don’t understand it well enough – and yet we don’t have a single example of it being competitive, much less compelling.
One of the common comparisons is the internet or, more specifically the web, but those really just highlight how inappropriate those comparisons are. In both cases, within a few years there were multiple examples of real problems being solved and businesses seeing profits from adoption (not just speculation) — and that despite far greater barriers to adoption.
It allows you to store and transfer value in situations where you either cannot obtain, or do not trust your available banking relationships. You also have much, much lower fees for international remittance.
> What risks does it have - for example, do users take on responsibility for fraud risk?
It has two primary risks:
- Transaction finality. This is a positive and a negative, of course.
- Risk that you improperly handle your private key and have your funds stolen.This is already a small percentage of people but it’s smaller still when you realize that it requires full access to the blockchain network and a solid local network of people who accept it and/or convert into local currency at low rates, not to mention that since the model is so well-suited to support oppressive regimes you’re really only talking about people who live in countries which have collapsed into disfunction but not authoritarianism.
> You also have much, much lower fees for international remittance.
From whom? What are the actual rates?
> Risk that you improperly handle your private key and have your funds stolen.
This is a big caveat for most people since “handle improperly” actually means “never use buggy or untrustworthy software, get mugged, etc. The benefits listed above don’t apply to most people enough to be worth that big of a risk transfer.
The rates are the cost of buying/selling bitcoin on both ends, let's call that 20 bps on each side, and then the cost of a single bitcoin network transaction, which is about 66 cents at the moment, if you're willing to wait 6 blocks [1]. So, to send $1000 it'll cost you 40 bps + 66 cents = $4.66. By comparison, international wires at your local bank will run you around $50 all in [2]. That's quite a savings.
1. https://bitcoinfees.info/ 2. https://smartasset.com/checking-account/average-wire-transfe...
> This is a big caveat for most people since “handle improperly” actually means “never use buggy or untrustworthy software, get mugged, etc. The benefits listed above don’t apply to most people enough to be worth that big of a risk transfer.
Sure, and those are real challenges of using cryptocurrencies right now. However, they're also extremely solvable problems and people are working on them.
Don’t forget to add in the currency conversion fees on either side since most people transfer money to use it.
Walmart charges $8 for the same service. There is some potential savings here but it seems unlikely to argue that Bitcoin’s enormous costs can be justified by the number of people who need to regularly do international transfers and, if everything is lucky, save a dollar or two on the transfers.
> Sure, and those are real challenges of using cryptocurrencies right now. However, they're also extremely solvable problems and people are working on them.
“Extremely solvable” but unsolved a decade later suggests that they are not in fact that easy and will end up making the cost even less competitive. People have been preaching that Bitcoin will take over for years but even most advocates don’t use it for a non-token percentage of their transactions because it’s simply not financially sensible to do so.
Hm? That would be factored in already. If I wanted to send money to say, India, I would buy Bitcoin with US dollars and then send it to someone's account on an Indian exchange, where they'd sell it for Rupees. The conversion is already baked in.
> Walmart charges $8 for the same service. There is some potential savings here but it seems unlikely to argue that Bitcoin’s enormous costs can be justified by the number of people who need to regularly do international transfers and, if everything is lucky, save a dollar or two on the transfers.
I'm not arguing that international wires are the only useful thing it can do. It's simply a counter-example to the idea that there are none.
> “Extremely solvable” but unsolved a decade later suggests that they are not in fact that easy and will end up making the cost even less competitive. People have been preaching that Bitcoin will take over for years but even most advocates don’t use it for a non-token percentage of their transactions because it’s simply not financially sensible to do so.
It's already solved if you keep your money on an exchange.
Right, but if you're comparing apples to apples, you need to compare the cost of, say, going to Walmart.com (or a bunch of other places) with $1,000 and sending it to someone in India vs. starting with the same $1,000 and shipping it. Unless the conversion rates for gating in and out Bitcoin are always exactly the same you need to measure the whole cost.
> I'm not arguing that international wires are the only useful thing it can do. It's simply a counter-example to the idea that there are none.
Note that I wasn't saying that there no things which were technically possible, only that very few people have a situation where it's advantageous to use Bitcoin. A possible modest savings on international transfers does not seem like a viable foundation for a decade of big world-changing rhetoric.
> > “Extremely solvable” but unsolved a decade later suggests that they are > not in fact that easy and will end up making the cost even less competitive. People have been preaching that Bitcoin will take over for years but even most advocates don’t use it for a non-token percentage of their transactions because it’s simply not financially sensible to do so. > > It's already solved if you keep your money on an exchange.
… so, you get rid of banks by creating a new bank, putting a “not a bank” sign on it, and hoping nobody will notice a) how many people have lost money by trusting Bitcoin exchanges and b) how quick the community was to blame them for the loss and saying that they were fools to trust an exchange?
Ya, but that only argues for even more cost to the traditional method, no?
> Note that I wasn't saying that there no things which were technically possible, only that very few people have a situation where it's advantageous to use Bitcoin. A possible modest savings on international transfers does not seem like a viable foundation for a decade of big world-changing rhetoric.
Let's take a look at what you said:
> We’ve been hearing this for a decade – it’ll change the world, if you don’t agree it’s because you don’t understand it well enough – and yet we don’t have a single example of it being competitive, much less compelling.
I'd say I provided a single example of it being competitive. And I think there's a lot more value there that isn't being properly realized yet, but the international wire use case is concrete and immediately available.
I think part of the reason people don't see the value (yet) is that they are so entrenched in the existing system they don't even realize what it's costing them. You see people on this site complaining about companies like Facebook violating their privacy rights all the time by aggregating their behavioral data. Do you know who's been doing that for decades? Credit card companies and banks. Nobody bats an eyelash when they do it, simply because they've been grandfathered in, and we had no reasonable alternative to them. Cryptocurrencies are a reasonable alternative to the banking / credit card system. And they're one that allows their users to maintain genuine autonomy and privacy. It's fine if you don't personally find that valuable, but the chorus of people here whining about corporate privacy violations ought to if they're concerns are more than performative.
> … so, you get rid of banks by creating a new bank, putting a “not a bank” sign on it, and hoping nobody will notice a) how many people have lost money by trusting Bitcoin exchanges and b) how quick the community was to blame them for the loss and saying that they were fools to trust an exchange?
This is a common criticism, but there is a very important difference. You cannot practically remove your money from the banking system. You can practically remove your crypto from an exchange. This gives you a degree of leverage and autonomy you simply don't have when your money is at say, Wells Fargo. You have a meaningful choice about where to keep your funds when you're dealing in crypto. You can keep them on an exchange and incur that risk, or you can hold them yourself and incur the risk that you'll lose them in some way. But you get to choose.
This is patently false. My bank, Fidelity, lets me send domestic wires (which are virtually instantaneous) for free. (Fedwires actually cost most customers virtually nothing.) International wires aren't that much more expensive, with the majority of the cost for small transactions being antifraud. In that respect, every cryptocurrency is orders of magnitude more expensive than the status quo.
Perhaps your bank is different, but googling "international wire cost" brings up links like these:
- https://smartasset.com/checking-account/average-wire-transfer-fee
- https://www.nerdwallet.com/blog/banking/wire-transfers-what-banks-charge/
Just google it though. It's the most common way to send moderate sums of money in the world. And yes, pretty much any retail bank or credit union will offer wiring, probably for a fee.
That is, something that blockchain is clearly and obviously the use case for.
"Potential" goes only so far. Eventually you need kinetic.
I suspect not too many drug dealers or gun runners want to wait around 20 mins staring at their phone (with a traceable internet connection) for 2 confirmations before declaring the deal "done"...
The seller still needs to make sure the buyer can't get a transaction transferring the coins back into a wallet under their control confirmed before the seller can move them out.
(I'm now vaguely curious about how the financial transactions on shipping container sized sales of guns/drugs work. But I'm not about to Google _that_...)
* Decentralized digital Asset ownership verification. Again, imagine facebook without a facebook. Or imagine purchase a music or software token that you could use on any provider, and never expired. Sign up for a new streaming service and take all your songs/videos/games with you from the old one.
* All the legal structures of a company, purchased off the shelf, handling all the vagaries of human resources and accounting, but without managers or payroll accountants. Just remote teammates, who may never have worked before, but know they will get paid a salary, receive evaluations and promotions from their peers.
These are just toy examples, I'm sure if I took more than a few seconds, I could give you much better ones. The problem with blockchain isn't finding applications - it's finding monetizable ones.
All the examples above would make amazing open source projects, but IMHO would be very difficult to generate revenue without compromising their decentralized nature, by inserting oneself into the transactions to take a cut. Centralized control of an application is almost a requirement for monetization, and, blockchains, are, by definition, intended to circumvent centralization.
Moreover, trust and verification aren't new problems, and we already have plenty of centralized solutions for these problems. So, blockchain applications both have to be better than what was there before, and work around the decentralized nature of the system.
Consequently, people trying to make a living on the blockchain mostly resort to monetizing the networks themselves - in other words, developing cryptocurrency-like products of some form. Is this decentralized? Not entirely, but it's less centralized than what came before. If people disagree with the behaviour oof the ethereum foundation, they can fork the currency. However, this still a long cry from actual decentralization. It is certainly an open question what value 'kindof-sortof' decentralized networks provide.
* Digital assets ownership ultimately only require external sources of truth for storage of whatever digital asset they intend to provide. I concur that this would be impossibly expensive to provide via an existing blockchain implementations, without an external point of truth, but still a technically possible feat.
* An entire company on the blockchain? Sure, it's not reasonable at the moment. It was just an attempt to paint a bigger picture. The fact that it's 'not yet reasonable' is why many people are starting to try. By the time it's 'reasonable', someone will have done it.
There are about 500 articles every week about China's "social credit score" dystopia, and you want to put that on the block chain?
An decentralized credit score would have you scored by your peers. An anonymized one would only be evaluable when you chose to use it.
Could it present some heretofore unimagined dystopian situation? Sure, but the question was whether there was an application, not whether it was a good idea to build it :)
Moreover, reputation systems aren't inherently dystopian (or all encompassing like a social credit score, ftm), or we wouldn't have the long standing real-world ones.
This reputation system is one application I'd really like to see in the future. It's silly that we have sepearte silos of reputation (eBay, Amazon, credit scores, etc.) that are each controlled by a company. In our increasingly global world, who would we trust to govern this system? Seems like a legitimate application for a blockchain (including consensus).
Don't really see what's hand-wavy about your parent comment tbh, the link you posted doesn't seem to address common scenarios like 51% attacks or even why our current system is flawed. The only tangible thing I can find in there is that they don't like trusting verisign - which is fine but really a weird narrative to demonstrate why the world needs that particular implementation.
In the link that was posted, a pollution of a distributed root zone will vitiate the entire Internet's DNS. That is the vulnerability, and there are many attacks that will achieve that for the link that was posted.
Beyond that, some games are using public blockchains to track ownership of game items.
For example, property records. Right now there are considerable checks and balances needed to ensure there aren't funny things going on with the books when they are locked away at night.
This isn't as pressing an issue in the US, but it is a massive problem worldwide. Central governments in some countries want to be able to track property without the record keepers stealing it.
I don't think we'll see this widespread for the next 20-30 years. But imagine when existing power structures have absorbed this tech and they can then sell it - like VISA selling a block chain property registry to countries where the money is auto transferred in local currency from one end user to another while communicating to the countries central bank... maybe with tie in to bio metrics for ID and transaction verification and automatic tax payments.
Hardly a disruption from existing nation state and corporate power structures, but definitively a disruption in the possibilities of what can be offered.
The biggest problem is that decentralized systems tend over time toward recentralization. That pressure will not go away, and it can only be fought against if there is no friction in the decentralized system.
There is a reason why the topic is brought up so often and its because among all that garbage there is genuine potential. It requires education, and R & D to unlock most of it. But at some point we'll have straight-forward tools that can be applied to solve a variety of common problems.
I predict the end result won't look any where near as exciting as it is today. It's likely going to end up being a flexible and boring set of auditing tools. But that's still going to improve the transparency and efficiency of many organizations. And give how archaic some of the processes around businesses are today -- those changes are still going to look revolutionary in their context.