But the blockchain space has an extreme bias against the existing finance world. Frequently products in the space want to tear it down as they view it as predatory.
This leaves us with the current situation, the crypto industry speed running the history of finance and a technology in search of a problem.
[1] - "How Mainframes Keep The Financial Industry Up And Running"
"...92 of the top 100 banks use the mainframe to provide banking services to customers, and other types of financial services companies depend on the mainframe, as well. Visa, for example, uses the mainframe to process billions of credit and debit card payments every year. According to some estimates, up to $3 trillion in daily commerce flows through mainframes..."
[1] https://blog.share.org/Article/mainframe-matters-how-mainfra...
https://www.fiscal.treasury.gov/ach/ and https://www.swift.com handle much of the US, and it's a system developed in the 70s (or earlier) and it works.
It could be modernized and things like https://explore.fednow.org are trying to do that.
But the problems involved are not things a blockchain would secure because there's a trusted intermediary which can just run a database.
in every other rich country, you just log in to your bank's web ui thing, click "SEND MONEY TO MY MUM", and then it sends it, for free, to your mum, with no risk of your mum being able to take more money, no random intermediary, no worry about if it actually gets there, no third party holding it in a non-bank cash account, no pre-authorisation, etc. you enter a bank identification number and an account number (and a name, usually, to avoid mistakes) and it just happens and it just works. in most countries this is quick, even, e.g. in the UK it's almost always < 5 seconds.
FOR FREE.
no blockchains, no multi-billion ponzi schemes, just a boring and simple service offered by every bank in the country.
making the Fed make banks just introduce free, instant bank transfers could have saved the world tens of billions of dollars and apparently tens of billions of tons of greenhouse gases.
Most of the problems people perceive with the banking system are completely societal, 0% technical. If your bank doesn't let you send money instantly to your friend for free, that isn't because your bank needs a blockchain.
that's excellent, thank you for putting it better than I did.
Let's not ignore the non-"rich" countries
Also the name given during the transfer aside the IBAN won't make the transfer fail as far as I know if incorrect.
The banks are adding some instant money transfer services in the last few years though.
the EU did this, SPANNING TWENTY EIGHT COUNTRIES. they don't even all use the same CURRENCY.
edit: sorry, it's 36 - EU27 + EFTA + UK + microstates
> The banks are adding some instant money transfer services in the last few years though.
it appears to me, judging from talking to Americans, and my own use of the US banking system, that customers do not even generally have ability to login to their bank's website and transfer money, AT ALL, forget "instant".
overall, this is such a bizarre reply, but emblematic of many of the problems the US faces - "it's too hard to fix $problem_with_well_known_solution because of entrenched interests, so let's create this absolutely awful parallel system that creates a whole new world of entrenched interests who will in turn block any innovation".
why do you think it would be hard? ACH exists, and lets banks transfer money. why can't banks make it better like Australia did? or have the same structure create a parallel, better transfer system banks can opt in to, like the UK did with FPS?
I would have said that letting venmo/paypal/etc do it was the worst possible solution, but then I could not have imagined that another solution people would seriously propose was "cryptocurrency".
This is what happens when you build a country with a disproportionate number of the sort of people who are willing to say "Fuck it. Building a decent living in my home country is too hard. I'm going to cross an ocean in a steam ship and start a new life on a new continent where I am a complete stranger."
I say this as an American who has made similar choices of questionable wisdom.
The new services (and the tech companies) only selling point is they can be instant and cheaper or free (though not all older approaches have fees). And serve groups like younger people with no credit.
And what is your post emblematic of with it's abuse of caps and stereotyping? I'm just talking about why they haven't replaced an older solution that "isn't broke" since it gets 99.9 percent of the job done already. No need to lose your mind.
> Problem: US healthcare is broken.
> Solution: Build a for-profit company that will generate trillions of dollars in value for its shareholders, all of which will come from payment for healthcare
These are in theory lessons that are meant to be passed along by the Public Education system but ours is pretty broken.
Or send money to a wallet in China.
I assure you I understand the rails going on in international money transfers, and the amount of different systems, protocols and hops to make it happen is staggering.
It can take sophisticated modern treasury operations years to get up and running in new jurisdictions independent of the regulatory challenges.
If we could isolate it to the compliance and risk management portions of the challenge it would increase innovation dramatically.
KYC is a feature, not a bug, so there has to be at least some sort of relationship even if it's via mutual registration with a third party.
Also, modernization of banking systems, including inter-bank transfer, has been slowing happening in the background for the last decade. AFAIK no one is using pow, pos, or blockchains (except, maybe, just in the sense that traditional databases have many of the same desirable attributes as a blockchain).
> could unlock innovation in everything from payments to mortgages.
Innovation in mortgages didn't work out so well last time, and honestly the actual origination of a mortgage is one of the least painful and inefficient parts of real estate.
When bitcoin launched we really did need innovation in payments. Apple Pay and Google Pay solved a lot of the problem, and the recent rise of "bank/lender as an api" startups popping up now solve a significant part of the rest of the problem.
Now it's "investing" in the confidence of the future of a computing network that can only handle 7 transactions a second, but that still hasn't stopped it becoming the essential oils for tech bros either.
Google dorian satoshi nakamoto newsweeks. The guy is probably behind btc. He worked previously as army contractor and in the finance sector...
Just like TOR network was the work of 2 previously army contractors (I remember that quite well, even if wikipedia doesn't seem to remember as well).
Beside, Belgian and other CB (not even ECB) never had a thing to say about crypto with public blockchain of any sort. But monero, which has a private blockchain, has been prohibited in nearly all EU juridiction soon after its launch.
For me, enthusiasm for "the blockchain" is a quick way to identify a) people who promote technologies without bothering to research the fundamentals and b) crooks/charlatans.
Eh? You can’t like give me anything - you can give me a token - which can also effectively be money. The latter usually occurs due to some other trust relationship needing to be established - we are back at square one.
It doesn’t solve the underlying difficulty of exchanging physical goods and services that are not tokens - you, know, the actual hard part. It also doesn’t solve the laundering aspect once you try to get those tokens liquidated to something not volatile as fuck.
You can't trust the git guy.
Did you trust the POTUS when he said that Iraq had WMD before starting a war? I suppose he's a painter now so everything's peachy.
A lot of people have been giving reminders of the general untrustworthiness of establishments, including Snowden & Assange. Establishments that many people are forced to deal with.
It would be nice if everybody could be safely trusted. For those who readily trust, there is no problem to solve.
However, some other people see untrustworthiness everywhere, so they take opportunities to try to opt out of the system by engaging in a trustless system that does not require privileged middlemen. It's been baby steps so far.
Eg: all of the weird supply chain nonsense around blockchain. You can keep a ledger and so on, but if there's corruption/theft in the physical warehouse then the ledger is worth only and exactly the disk space to which it's written. No amount of distributed consensus will change anything about the fact that Joe's cousin's friend heard about the shipment and stole 10% of the bulk good and replaced it with dirt to make the weights match.
The problem of doing business with people who you don't completely trust is very real. However, blockchain offers no solution (except and unless the thing you are trading is something that literally be placed on a blockchain, ie nothing physical and nothing that depends on a legal system to enforce).
The "I don't trust you" market consists of everyone who does business using written contracts. So, nearly everyone.
Now, I may trust someone now, but circumstances change. People change. I don't trust the universe to be constant. I thus want to enshrine agreements in contracts and and I want there to be institutions that can offer objective (within reason) arbitration in case my counterparty and I come to disagree in the future.
I don't know what sort of business you operate in, but in my industry, trust is paramount and is practically equivalent to capital. You'll simply not even be employed unless you are trusted. It takes a long time to build a track record and you can lose it in the matter of seconds if you make poor decisions.
So yes, IMO the world operates fundamentally on the basis of trust. I don't believe for a moment that long term successful business can be conducted in an environment without fundamental trust between counterparties. Again, trust does not equal blindly taking people at their word or neglecting due diligence. "Trust, but verify" is the saying.
Trust is inherently a forwards-looking thing. If you don't trust someone not to change in a way that breaks the promises they've made to you, that's not trust at all.
> Fundamentally, I do business with people I trust.
> I don't know what sort of business you operate in
Software industry. When employers have tried to screw me out of things they promised me, I've pointed to sections of written contracts (with the unspoken understanding of a lawsuit if their side of the contract is not upheld) and it's saved me multiple times. These companies just don't care about what they promised you, you can't trust them, they only respond to the looming threat of legal action. On the flip side, I've been screwed before at those times where I didn't keep a meticulous paper trail. The last one was particularly tough because I thought I had made close friends with the person I was doing business with, and I genuinely thought they could be trusted, but they ended up stiffing me out of payment for a service I had rendered near the end of our business relationship.
In the software industry and in particular working at start-ups, promises are worth jack shit unless they're in a written contract. Nobody trusts anyone to uphold promises. I would love to work in an industry where people could trust each other to uphold their word. What industry are you in?
Courts are extremely expensive and time-consuming. Contracts are definitely not the opposite of trusting who you're doing business with. If you do not trust someone to fulfill their side of a contract, you probably don't bother writing up the contract. The contract is there to punish breach of trust, not to establish trust.
Security is the opposite of trusting who you're doing business with. There's a reason super markets -- the most common type of business operating without high trust -- employ loss prevention professionals.
Notice that the blockchain offers no substantive defense to a five finger discount...
If someone can only be trusted under threat of punishment, that means that they aren't actually trustworthy in the first place. I think we might have different definitions of trust. If I fully trust someone, to me that means that I know there's no need for the threat of court at all, because I can be sure that they will uphold their word even if it's in their better financial interest to break it.
That project was in an environment where chain of custody is an established mechanism for ensuring public safety. Layering a web of trust over the top of that was something the users could mostly digest. Consumers can only use software signed by a particular department or person, only approved software is signed, and approval requires a chain of approvals before it going back to an original signature that says "these are the bits we gave you".
That's a useful application of the Merkle Trees. But you'll note there's no distributed consensus, and there's no Proof of Work. Or rather, the proof inferred, backed by process and in this case legistlation.
Blockchain admits it's only barely a Merkle Tree right in the name. Our graph looked a lot more like trunk in a git repo. Slightly more tree-like but people only care about the last node.
Then e.g. in Ethereum there's also a Merkle tree of the entire state as well.
> there's no distributed consensus
Distributed consensus is necessary if you want high availability and replication for your Merkle tree.
If data in your tree is important, you want to replicate it, right? You want to be sure it's stored on multiple nodes.
So this distributed consensus thing, Byzantine Fault Tolerance, it basically gives you a receipt that at least N nodes have this data stored.
You didn't implement it because it takes considerable effort. But if you implemented Merkle tree with high availability, you'd get something very similar to blockchain.
Yes!
> You didn't implement it because it takes considerable effort.
I'd wager it's because he was smart enough to read the man page for rsync and didn't over-engineer a non-solution to a non-problem in his particular use-case.
No, distributed consensus is necessary if you're willing to sacrifice correctness for availability.
>> public safety
> So this distributed consensus thing, Byzantine Fault Tolerance,
Show me a blockchain that actually implements BFT. Longest chain wins is not Byzantine Fault Tolerance.
?!?!
Do you think it's most correct to have only one replica?
> Show me a blockchain that actually implements BFT.
A lot of blockchains implement some variant of PBFT. Including the one I made: https://gitlab.com/chromaway/postchain/
If I makes you feel any better, I see Raft as only BFT during leader election, the rest of the time if the leader is a bad actor then everything is fucked. It’s a game of Secret Hitler.
Remember, the Byzantine Generals problem is what the BFT term is acknowledging, and the problem with the generals was one of sabotage, not just missing messages. It’s only statistically unlikely that longest chain is created in earnest and not via malfeasance. But the bigger a system scales the more frequent counterexamples occur. That’s the lesson of every scalable system. Bad days that used to happen once a quarter now happen a couple times a week.
Edit:
> In a consortium blockchain, typically blocks must be approved (signed) by a majority of consortium members.
Well, well. Adults have finally joined the blockchain community. Maybe there’s hope yet.
Narrator: It doesn't.
I don't understand how anyone can be on HN talking about crypto without knowing any of crypto's use cases. I mean you don't see people here in Rust threads commenting "I can't think of a single use case of Rust".
Also possible with cash, but extremely risky for most people. Not an advantage of crypto, not an advantage in general.
> send money anonymously
Only relevant for crime. Disadvantage or irrelevant for most legitimate businesses (you anyway need to provide address for shipment).
> send money [] internationally in seconds without an intermediary
Also possible with many banks, VISA, Western Union. The fact that you're using an intermediary is irrelevant - since either way you're paying transaction fees, and trying to avoid sanctions is too dangerous for most people.
> Decentralization
In practice, it's far more centralized (far fewer exchanges in the world than banks, and the majority of people using crypto hold it with an exchange)
> composibility, programmable money
Doesn't really mean anything. Money is money, it can only change hands with a legal contract, and "smart contracts" are not legal contracts.
Sending money anonymously is speech. Just as there's no reason the government needs access to my Signal text history, they don't need access to my sex toy purchase history either.
Are you in favor of strong encryption for messaging, but not payments? If so, I am curious to hear more of your reasoning on that.
> Money is money, it can only change hands with a legal contract, and "smart contracts" are not legal contracts.
Possession is 9/10 of the law, and low-value transactions are not worth litigating. Smart contracts let a piece of software be the judge and jury on a $5 transaction, and I think there's some value in that. It could also be useful for transacting with people who live in countries with broken legal systems.
Not OP but yes. The government needs money for taxes which means it needs to track some financial transactions.
> Only relevant for crime
Absolute nonsense. There are people who prefer paying with cash for the same privacy advantages.
> Also possible with many banks, VISA, Western Union. The fact that you're using an intermediary is irrelevant
Sending crypto is way easier, faster, and cheaper than sending an international wire transfer or Western Union transfer. With crypto, it is peer to peer and no one can censor you. In the traditional finance world, anyone can have their bank account, payment provider, or transactions blocked by their bank, payment provider, government, or any of the other countless middlemen who need to approve of your transactions.
> In practice, it's far more centralized
Peer to peer money and self-custody is more decentralized than holding money in any centralized institution.
> Doesn't really mean anything
You clearly don't understand the concept, so please educate yourself before you comment. The composability of smart contracts is what enables defi.
Unless they're mailing in cash envelopes, they're usually doing this in person, so while there is some privacy advantage, it's not as great as most think.
> Peer to peer money and self-custody is more decentralized than holding money in any centralized institution.
First off, crypto is not money - it is an asset that you invest in. Secondly, few people ever bother with self-custody, because it is extremely dangerous for any significant sum, and very very hard compared to the alternative - getting someone to take you dollars and give you BTC or or ETH in return (in a trustworthy manner) is much more difficult, so few people do it. And there are far fewer actual exchanges (real money to crypto) than there are banks in most of the world. This also hits on the point about money transfers: for the way people use crypto in practice, it is justa s easy if not easier to prevent them from trading it tahn it is to trade money.
> You clearly don't understand the concept, so please educate yourself before you comment. The composability of smart contracts is what enables defi.
"DeFi" itself is a meaningless notion, just like NFTs were. It has no legal power, and it can't be used to trade real-world goods or even real money (again, crypto in general is not money, it is something closer to stock, at least in the USA). The fact that the technology allows you to trade ETH for Dogecoin or whatever it is is neat, but irrelevant - my income is in RON and things I want to buy are in USD, EUR or RON - and this is true for the vast majority of the world.
I can easily do this without crypto. (It many cases it's illegal, ofc, but it's trivial to do without crypto if you don't mind breaking the law.)
> Decentralization, composibility, programmable
Glad to see that the dot com era OOP consultants found new employment opportunities that don't involve agile or scrum consulting.
Good for you, not everyone in the world has this privilege.
Please take your substanceless sarcasm to Reddit, this is not the place.
Something that the vast majority of people have no need for. Remember, most americans never even leave the country.
>Decentralization
Prove this is good without just claiming so.
>composibility
What?
>programmable money
Ah yes, because the main feature missing from my bank account and debit card is a half assed, poorly programmed system that sends all my money to a random account that nobody controls.
>Rust threads commenting Because "impossible to corrupt memory" is a feature programmers have been asking for, developing, and considering since the 40s. Who the fuck has been asking for "you don't control your money unless you take 100% personal custody of it and take on all the risks that entails and the money changes value pretty much every day and any transaction takes at least a minute to have any confidence it actually went through"
For comparison, credit cards can verify in less than a second.
I've heard a lot of people used it to buy drugs on the internet.
Also, the bounty was awarded to a company who is theoretically developing a solution. I'm not holding my breath, and anyway I hope for the sake of everyone guilty of harmless "crimes" (buying recreational drugs) that the anonymity holds.
To track cash, you need to surveil each point at which the cash changes hands, otherwise that information is lost forever. To track XMR, you likewise need to surveil each point at which XMR changes hands. In some ways, the process is similar to reconstructing TOR traffic - you can't passively observe and deanonymize the entire network, you have to actively target a specific actor. I believe that's what the IRS is talking about when they offer their bounty.
It did seem though that some targeted attacks where you obtain the private keys of separate individuals could allow you to confirm that they transacted via Monero in the past by inspecting the block chain with these keys.
However, private keys are easy to strongly encrypt, typically don't leave your own machine, and can be safeguarded in many other ways. So in practice, they are impossible to lift from a sophisticated user without performing an equally sophisticated attack of deception, for example an evil maid attack with specialized hardware/software.
A real bounty would be close to 100x that number.
The value is in a permissionless and censorship resistant financial network. You may not find that valuable, but that's ok.
Assuming you do believe that decentralization is nice to have, applications like decentralized banking (ie. lending, borrowing, exchange of assets) become valuable.
There are also emergent culture sources of "value" in the industry, such as medium native artforms in on-chain generative artworks, distributed multiplayer "runtime" systems artworks, on-chain gaming and metagaming, etc.
I understand that for many people, even if you grant that _some_ people might find the above legitimately valuable or useful you may still believe that it doesn't justify the energy costs. To that my response would be that all of the above are serviced by networks like ethereum and its various layer two solutions, none of which utilize proof of work, and the sum of which have a fairly modest carbon footprint, as with other computationally inexpensive digital technologies.
If you take issue with Bitcoin specifically I can't really offer an argument with conviction. BTC is what got me into the industry, and I think the BTC whitepaper is a brilliant example of human ingenuity, but more recent advancements in the technology leave me skeptical about the societal ROI on large scale PoW operations.
> I think the BTC whitepaper is a brilliant example of human ingenuity
I largely have the same problem as hinkley (sibling comment): I had seen most or all of these ideas prior to the emergence of BTC. I first countered Merkle trees... gosh, forever ago. Got really into cryptography in the 90s. Etc. The idea of creating a currency backed by PoW didn't seem ingenious; it seemed like a particularly silly application of otherwise quite useful technologies. AFAICT it still is mostly useless, except that it made some people very wealthy.
Anyways, I'll go back to yelling at kids to stop picking my tulips.
https://www.npr.org/sections/thetwo-way/2014/01/22/265060754...
So no this effort was not enabled by crypto
I learned that by watching Cool Runnings.
Does that make it a good financial system? To the degree that a clown car is a good public transport system.
You have always --always-- lived in a high trust society with trustworthy institutions
I will concede your point if it means you'll agree that at the very least cryptocurrency is useless to people in the USA.
(Even as a hedge. My resiliency to societal collapse comes from the social relationships I maintain in my local community and the collection of skills and knowledge we collectively have, not my ability to flee to New Zealand and hope my digital tokens still have perceived value.)
For those either on the wrong side of the society (eg. Source of income is what the society defines as crime etc) or living in a society where your wealth (possibly acquired through corruption) can be seized without recourse, it is potentially a useful way to store and transfer wealth in a way that is difficult and expensive to interfere with or detect. This is a real use case though possibly not a morally defensible one to most of us.
The other theoriticical use case of having a form of liquidish currency that is not devaluable at whim by governments has not come to pass due to speculation and volatility.
The rest are either speculating OR selling shovels to the gold diggers.
I first played around with blockchain in 2011 or so and I still don't know what actual utility this technology is supposed to have. I have never -- never -- encountered a value-producing use case for cryptocurrency that can't be solved by either signed git commits or a SQL database.
Around 2015 a lot of people I thought were smart enough were exploring use cases for blockchain. AFAICT everyone in that space either left the space altogether, is still rambling about solving supply chain fraud (...), or pivoted to shovel salesmanship to support speculators (or speculate themselves).