I don't see how privacy can ever be solved with blockchain. By design, everything you ever do is permanently out in the open for ever and ever for anyone to not only see what you did, but mathematically prove that it was you (well, your key at least) that did it.

Sure you can be "anonymous" when using your wallet etc, but as we all know it is usually trivial to de-anonymize large data sets. Likewise, being anonymous when using a wallet then removes a lot of the perceived value of using it for identity verification (e.g. sign-ins, proof of humanity etc).

See https://docs.zksync.io/zkevm/#what-is-zkevm-and-why-is-this-...

Basically you can make transactions anonymous using much the same kind of protection as you have between public and private keys. There is a proof the transaction is valid but that is basically all you can see.

Sounds like a good idea. Until, like Tornado, the tech gets sanctioned.

I feel like your downvotes are undeserved. From an engineering perspective, all Tornado did was add anonymity/plausible deniability to the blockchain--which is all that ZK will do. Maybe there's a question as to whether OFEC will also see ZK as money laundering, but my guess is they won't until it gets to a certain scale and then they will--exactly like Tornado. That limit was ~$7 billion, which is < 1 FTX, and far smaller than the current market cap of Ethereum.

Yeah, I feel like cryptocurrencies only have a chance of providing value to some users if it's not actually very succesfull.

- If it's successful in providing anonymous transactions to everyone: Regulated to death due to laws aimed at combating money laundering and organized crimes. Even cryptocurrencies that aren't perfectly anonymous will probably eventually be regulated to death for not providing good enough guarantees about the identity of the wallet holders. - If it threatens the Eurodollar as a world reserve currency: regulated to death at least in USA and probably Europe.

In what scenario can cryptocurrencies actually achieve its goals without risking being regulated to death?

And yes, I know you can't effectively ban all trade of cryptocurrencies. But trade will always be a niche if most people can't use it in the real world.

I confess I possess only a shallow understanding of ZK rollups - can anyone explain how you can have an opaque proof that transactions are valid and still solve double-spending problems?

This thread might be helpful: https://twitter.com/LuozhuZhang/status/1538171370814570497

Essentially, zkEVMs map EVM bytecode to equivalent zero-knowledge circuits (containing the logic of what is and isn't valid, i.e. double-spending) so that the entire execution can generate a proof. It is a lot of math.

Thanks for the link. I've glanced at it, and so far my understanding of it says that the ZK proof allows verification that the results of each individual transaction is exactly as what is given, so that the resultant state provided by the ZK commitment can be trusted.

My original confusion was more about how consistency of state can be maintained across completely opaque commitments of transaction validity.

Now that I think of it, it seems that my original concern was a matter more trivially dismissed than what you've explained - my doubts were more about how state could possibly be consistently yet opaquely maintained, but the blockchain state machine, and I gather the ZK commitments, are simply not opaque with respect to the VM state - the opaqueness provided by ZK commitments is opaqueness in the intermediate transaction state (essentially irrelevant information - perfect candidate to be optimised away). The problem of double-spending is never relevant within a single chain of block commitments, as any second-spending of resources is simply an invalid transaction and is rejected, given the (necessarily public) hitherto state reached by consensus (- the problem of which, is precisely what the blockchain mechanism was designed to solve).

Disclaimer: I have no idea what I'm talking about with respect to ZK, and may be completely wrong.

> more about how consistency of state can be maintained across completely opaque commitments of transaction validity.

I have the same confusion as you, and I'm not sure I understood your last paragraph. The prover (person submitting a new transaction) can provide a ZKP that the transaction he is making is valid, and the blockchain will adopt it if indeed it's a valid proof. So then the onus of preventing the double-spend here effectively on the prover: he can only provide a valid ZKP for a valid transaction, and a double-spend would not be a valid transaction.

But then at the end of the day, seems like the underlying balance needs to be accessed somehow (otherwise how would the prover even know if he has enough funds avaliable?). I guess the prover (and only the prover) can do this because he presumably has access to the right private keys?

it’s similar to how you can hash passwords to know that the user knows it without knowing the password. so you don’t know the amounts you just know that, for example, the output (debit) is affordable by the sender (in the case of a payment). the sort of “magic” of zk systems lies in the part where you can turn complex programs into something similar by converting them into polynomials. it turns out that pretty much any program can be represented as polynomial math and the second magical part is that although the proofs might be expensive to compute, they can be verified in constant time (in the case of a SNARK at least).

zk rollups do not inherently provide any privacy, but there are different ways to use zero knowledge proofs to provide privacy on a blockchain. See for example the Zerocash paper, the currency Zcash started off the back of the paper, and various follow up systems.

You should look up how Monero and ZCash work.

Can those be built onto eth?

Aztec already is: https://zk.money/

It's like the Zcash shielded pool, but as an Ethereum L2.

Monero can't for the simple reason that for privacy to work well it needs to be on by default, not opt-in like ZCash does it.

However Monero has shortcomings, the main one being its auditability.

Some Monero developers have created a new project which tries to solve those issues, and add zero knowledge proof to the mix: https://pirate.black

You can audit Moneros math and source code, therefore you can audit the supply. It's more work than with Bitcoin to be sure, but it's still possible.

Monero already uses zero knowledge proofs, but in a different way than eg ZCash.

The opt-in nature of Zcashs privacy mechanism is not inherent. You can just flip a switch and disallow private transactions.

No. Privacy has to exist at the base layer.

Not true

My bet is that a zero knowledge algorithm is what is hinted at.

You can prove that you have the keys to sign. Without having to produce the key.

Or something of that effect. Cryptocurrencies are bunker. Zero Knowledge is a big deal.

A reply you got already mentioned zk functions, which is the best answer (cool tidbit, Avalanche's custom VM allows you to build these functions and anything else you want as precompiled code. More gas efficient.)

My second reply would be a hybrid system. I've been tossing around this idea in my head for what I call a decentralized PBM. At first I struggled with the privacy idea. Then I had the realization that it was unnecessary to bring PHI on chain. I could accomplish all the stuff that would benefit from a chain without it.

You can realize a lot of value from blockchains even if you're not purely decentralized.

Look at this code:

https://docs.zama.ai/concrete/getting-started/quick_start

This is a rust based Fully Homomorphic Encryption (FHE) example.

That is to say, you can encrypt two numbers, do a mathematical calculation on them without decrypting them, and then, only the person with the private key can decrypt the result to get the value.

If you add something like FHE to blockchains (it's coming) then you can get anonymous transactions on the blockchain directly.

By the way, Zero knowledge proofs are not what is needed to get anonymous transactions. When you use ZK, you are issuing the proof AND have knowledge of the inputs. The prover needs to know the inputs, but does not need to reveal them to the verifier (which happens on chain). This means the transaction can assert that the mathematical operation occurred without doubt, but when you need to get at the numbers, you are back to a transparent value on the chain.

Given the high complexity of FHE, surely there be limits to FHE based transactions?

Definitely. And, the founder of Zama says there are new chips which will optimize these types of calculations and make them more mainstream.

For the record, no clue how true that assertion is, but seems like now that the calculations are possible, Moore's law will solve that problem one way or another.

FHE is going to make things interesting and it seems like it is only a matter of time before they are workable on existing blockchains.

Plus, these types of calculations are not susceptible to side-chain attacks, since no private keys are used in the calculations.

FHE computations are hundreds of thousands of times slower than non-encrypted computations, and are non-parallelizable, and Moore's law is long since dead for single-core performance.

I didn't know that. I'm interested in understanding why they aren't parallelizable? I'm surprised that is the case. It's a good point you make, and makes me wonder whether a combination of zk proofs where the inputs to the zk proof are the encrypted inputs of the FHE conjuration. If so, that could be used against a verifier to move the computation off chain. Seems like a complicated circuit you would need to make but if you could do it, you wouldn't need to worry about the computational cost on chain. Thanks for that information, very thought provoking.

> new chips which will optimize these types of calculations and make them more mainstream.

There are quite a few people working on this problem from both the hardware and software side of things. Source: I've talked to a large number of them. It is still early days, but given the level of interest out there to do this, I believe strongly that it will happen.

>When you use ZK, you are issuing the proof AND have knowledge of the inputs. The prover needs to know the inputs, but does not need to reveal them to the verifier (which happens on chain).

Can you elaborate more on this? What is this a ZKP proof for? That the transaction is valid?

Also from all the ZKP examples I've seen in crypto[graphy] class, soundness relies on the ability to repeat the process again and again. How does this work for the blockchain case where it seems like there's only one round of communication between prover/verifier?

ZK rollups/EVMs are one among the myriad of arguably badly named things in maths & CS.

They are named so because they are an implementation of what is called ZK proofs, but they leverage them to be able to prove a succession of modifications of the state (i.e. the accounts and their money) in a quick & easy way to check. As a simplification, you may think of them as a hash of transactions & smart contract executions that are a tad expensive to compute, but trivial to check. The end goal typically being to multiplex multiple level-2 transactions onto a single Ethereum transaction to enhance bandwidth and reduce fees.

However, they are not ZK in the applied sense of it; e.g. they do not even try to mask the operations; anyone could rebuild them themselves with a bit of effort.

There is a solution called DECO: https://invidious.snopyta.org/watch?v=zWTx1iQOCDM

Backup video link: https://www.youtube.com/watch?v=zWTx1iQOCDM

Original paper: https://arxiv.org/abs/1909.00938

Check zero-knowledge proof based blockchains. They provide ways to build privacy-enhanced applications with smart contracts (called zkapps). I wrote about it a bit here: https://www.cryptologie.net/article/575/whats-the-deal-with-...

Holy crap, Augur is still going!

Amazing, they are an OG of the first wave of ICO token..good to see them still operating.

I've stayed out of it the last few years and just maintained a high view of the market.

It seemed obvious to me this was all going to blow up, sad about BlockFi but once I saw them ink the FTX deal I knew they were done.

Too soon for that play... The story of Crypto!

They took a lion's share of money and Augur creator now runs an investment fund. They weren't successfully in the sense, people successfully gamed the outcome

this is true. Augur is not a success story. It's a story of mismanagement, legal "embezzlement" of tens of millions of dollars due to lack of legal safeguards, and squandering of the opportunity to build a truly great prediction market platform.

In blockchain, choose 2/3: security, performance, decentralization.

BTC = security, decentralization

ETH PoW = security, decentralization

ETH PoS = security, performance

It also applies to real world tech. For example, Visa is performance and security.

This means if Bitcoin or ETH ever wants to process as many transactions as Visa, it'll slowly morph into a centralized Oracle database.

You choose security and decentralization for the main chain and then use layer 2 for performance. This is the clear path forward, pretty well established by now.

So you can securely prove that your centralized and insecure layer 2 has indeed transfered all of your money away to them? Great plan.

No, the layer 2 inherits the trust-assumptions and security of the L1.

This is ridiculos and false.

For instance, with LN you have to be online to secure your funds, otherwise you might lose them.

L2 only inherits the security of L1 when it settles, which by definition is not that often (that's the whole point!).

LN's shortcomings are not issues for zkrollups on Ethereum. Transactions are stored on chain, just in compressed form. A contract checks the validity of all transactions before storing them. The proofs are expensive to generate, but so cheap to verify that a contract can do it on chain.

Some types of L2, like roll-ups, settle to L1 every block.

The "whole point" of L2 is to reduce the amount of resources used to settle its transactions on L1. Some L2s, like Lightning Network, achieve this by settling infrequently. But other L2s, like roll-ups, achieve it by batching transactions in clever ways so that less L1 resources are used on a per-transaction basis.

If your L2 has the same security and decentralization of the L1, then it's another L1. Since it has the performance part of things, it can only have either security (but then it's centralized, so it could fully securely write bullshit, which then gets written to L1), or decentralization (and then you get to write unsecure bullshit, which has no reason to either be trusted or true, and you can write that to your L1).

It could write to L1 immediately, but your writes can still not be trusted or right.

The trilemma is not a law of mathematics with binary outcomes. It's an attempt to describe certain tensions inherent in building blockchains. A great deal of work as been done on Ethereum to balance these tensions. Rollups increase throughput because they move execution off L1, while requiring proof on L1 that L2 executed correctly.

https://www.paradigm.xyz/2021/01/almost-everything-you-need-...

See loopring.io

Aren't they just a failed product at this point? They were building an application specific L2 and then full general purpose L2s have beat them to market. I know they are trying desperately to pivot but they have to be years behind at this point.

Incorrect on all counts.

I don't know about rollups stuff, but Lightning Network-type 2nd-layers are prone to flood and loot attacks. I don't see a way to make them secure. I'm happy to be enlightened.

The lightning network is not a good example of an L2, it's extremely basic state channels and won't scale because of routing / liquidity issues.

Look into Optimism and Arbitrum for current technology, or zkSync, Starknet, Polygon zkEVM for next gen L2's coming soon. There's a big list of all the current L2's and their tradeoffs at https://l2beat.com

Lightning is more of a sidechain than an L2. And it's definitely not a rollup.

It's only established by Bitcoin maxis. You need performance on layer 1 too, the world isn't black or white.

How is that any different than old school banking and finance? Using layer 2 for performance requires essentially opening an account with a trusted party.

I don't understand what we've gained here.

Let's forget "ETH PoW" as it is completely irrelevant. All of the community has moved on to PoS, all the relevant projects were kept on the fork, etc. To talk about "ETH PoW" on the same footing as ETH or BTC shows that you are basing your arguments on ideology and not objective truth.

Besides that, your breakdown has other problems:

- None of these three criteria you presented are binary attributes. How decentralized and secure are BTC vs ETH? How performant is ETH vs BTC?

- One could easily argue that PoS is more decentralized than BTC ever will. The capital and resources to start a viable node on Ethereum is a lot lower than it is to get a sustaninable/profitable BTC miner.

BTC is centralized — power lies with the miners.

ETH is centralized — power lies with the large coin holders.

> power lies with the large coin holders.

That is not true. This shows a terrible misunderstanding of how PoS works.

Stakers are only rewarded in proportion to their stake. "Power" in PoS comes from being a validator node, which requires the minimum stake of 32 ETH. Having more ETH on a node does not give them any power. Yeah, whales could try to create many nodes, but they would need 66% of the nodes to even consider the possibility of blocking a transaction or making a double spend.

So you are saying that by some crypto-magic it is technically impossible for groups which collectively own more than 2/3 the coins to create enough nodes to dominate the protocol?

Because that would be news to me and if so I would be misunderstanding things.

But my bet is that you are dismissing the threat of whales splitting their holdings to maximize their influence. Don’t know why though.

> So you are saying that by some crypto-magic it is technically impossible for groups which collectively own more than 2/3 the coins to create enough nodes to dominate the protocol?

Yes, that's exactly what I am saying. Not because of "crypto-magic", but because that is not how PoS works. Stakers have no control over the protocol. Their stake only gives them the benefit of validating and producing blocks and collecting rewards for it.

> But my bet is that you are dismissing the threat of whales splitting their holdings to maximize their influence. Don’t know why though.

You mean "joining their holdings", in order to achieve 2/3 of the staked capital?

If so, the threat is possible but incredibly stupid. There is more than 10M Ether locked in the staking contract. This means that they would have to control two-thirds of the tokens (that they do not have, which means that they will have to go to the market and shoot the price up). And even if they did get to collectively have that much, they would be willing to risk losing it all on an attack that (a) could be easily detected (b) would have to entail a single profitable operation that is more profitable than the current stake they are holding and (c) would lead to people losing faith in the ecosystem and consequently plunging the value of the token they have at stake and, worst of all, (d) if needed be, could still be remedied with an irregular state change like the DAO hack was.

IOW, even though such an attack is theoretically possible, in practice "malicious whales" could do nothing but bring a major inconvenience to the thousands of the developers, and they would have to spend ~$7B for it.

Those people don't have any governance power, they can't change the rules of the game. They only have the power to double spend or change the order of transactions in blocks.

It costs currently over $10B to pull off this attack, and the rest of the network can do a fork and burn all your tokens as soon as they notice. So game theory wise it makes no sense.

They can’t censor transactions? They can’t block certain protocol updates by continuing to use old/custom clients?

> They can’t censor transactions?

Not forever.

> They can’t block certain protocol updates by continuing to use old/custom clients?

They could try, but if that was clearly against the interests of the rest of the community, the minority could counteract by adopting a client that forked the chain to a state where the majority holders are slashed.

Wrong.

ETH PoS = security, performance and security (as in finance)

Solana is the busiest blockchain by active wallets and now has a higher Nakamoto coefficient (decentralisation score, currently about 31) than most of the Eth L2s.

> because the stake amount remained stable while validator count increased, it improved to 27 in Q2 and 31 in Q3. The improvement continues to put Solana above the industry average compared to other L1 networks.

https://messari.io/report/state-of-solana-q3-2022

Way more at:

https://youtu.be/5NDs3Il2J3Q?t=303

Re: Visa, Sol's hit peaks above Visa's global average of 7,500 TPS recently too.

Not boosting Sol, but if you're going to build, you should seriously consider it.

It sacrifices decentralization and it has poor reliability.

The post you’re replying to discusses and measures centralisation.

I’m happy to discuss reliability but it doesn’t appear we’re having a conversation.

I have no horse in this game but the Wikipedia page [1] doesn’t line up with the story you’re painting:

> On 30 April and 1 May, 2022, Solana experienced major outages due to being taken offline by bots.[18] On 1 June, 2022 Solana reportedly[19] suffered another outage due to a bug in how the blockchain processes offline transactions. On 1 October, 2022, the Solana network went down for 6 hours due to a single misconfigured node.

In a properly decentralized system, how does 1 misconfigured node take down the entire system? That looks like a single point of failure to me, something decentralized systems aren’t supposed to have. Can you elaborate how your distinguishing reliability and centralization in the context of single node failures?

[1]: https://en.m.wikipedia.org/wiki/Solana_(blockchain_platform)

Sure - it’s a bug, it’s been fixed. The issue occurred on 30 Sep and there’s a discussion here:

https://solana.com/news/09-30-22-solana-mainnet-beta-outage-...

That’s how software works. Things break. They particularly break at scale. Nobody’s done this before. If Eth was as busy it would break too.

They have done it before -- Bitcoin existed first, and has kept clearing transactions every ten minutes since, and will continue to do so once Solana is long dead.

Bitcoin and Eth have nowhere near the usage of Solana.

and Solana has way less usage than the average postgres DB running webapp xyz

Nope: https://news.ycombinator.com/item?id=33879077

I don't see how your link disputes my claim

ok

Ethereum and Bitcoin don't break because they thought about "What happens if we get DDOS'd" and added a fee market, something Solana still hasn't properly addressed which is why it still falls over when attacked by spam.

A network falling over because of high usage or (in this case) one validator had a misconfigured node is extremely bad.

Eth and Bitcoin don't have high usage. And the issue with the single validator mentioned, as you'll be aware from reading https://github.com/solana-labs/solana/pull/28172, wasn't a design failure, but a software issue. Bitcoin and Eth have those too.

There's a lot to like about Solana, but one thing to dislike is the ongoing claim by the Solana community that Solana is actually fairly decentralized.

In reality, Solana is a highly centralized blockchain. Solana has zero protocol specs (the code is the spec), one production client, one main development organization (Solana Labs), limited exposure to the academic research community, and the entire network only runs in data centers due to extreme hardware & bandwidth requirements.

If we wanted to boil down decentralization into a narrow metric (we shouldn't want this, but if we did), that metric might be "how many guns to how many heads to force an invalid state transition?" And Solana scores very poorly on this metric.

These are good things to be concerned about. There's a second client and a second validator in the works, there's some stats on datacenter decentralisation in the youtube link above https://www.youtube.com/watch?v=5NDs3Il2J3Q&t=303s - 230 datacenters, 9% in a single data center. But yes lots of work to be done - I don't want to pretend there isn't - but also don't want to pretend that a network with far less activity has has already done it.

I may be wrong today, but I took a peek awhile back and Solana's top N validators -- enough to exert outright control over the network -- were operated by companies from within the same 2-3 VC portfolios, which struck me as a shockingly poor standard of "decentralization" for a network which apparently prides itself on that metric.

From a certain angle, it could almost look as if said VCs were trying to add legitimacy to their portfolio investments by colluding to make Solana seem busier and safer than it really is...

> In blockchain, choose 2/3: security, performance, decentralization.

> BTC = security, decentralization

The brilliant thing is that you can stack. In other words, why would I want every transaction to be on the blockchain? I could just as easily use one of the more than 50 2nd-layer "Lightning" wallets and seldom touch the layer 1 blockchain.

So with very little risk you get:

BTC = security, performance, decentralization.

> why would I want every transaction to be on the blockchain

I think some of the recent events around FTX and similar are exactly why you would want on-chain records, fees or not. Actors in this space are (imo) not fully trustworthy.

How does the second layer handle this?

In the case of Ethereum's zkrollups, all transactions are on-chain in compressed form and fully validated. You're not trusting anyone to custody your funds.

No, with layer 2 you get

Layer 2 = security, performance

Layer 1 = security, decentralization

Just because you added a horse to a cart doesn't make the cart neigh nor the horse to have wheels.

Some other PoS systems are focused on high performance on chain, but ETH PoS is security and decentralization. There are over 400,000 nodes staking and validating, and the protocol supports quite a bit more.

It doesn't have that much of a performance advantage over PoW, but that's what rollups and danksharding are for. Combined, they should support 100K tx/sec, while inheriting base-layer security properties.

ETH PoS is more decentralized than ETH PoW was, and more decentralized than BTC PoW currently is.

> Hybrid apps: voting, govt registries, corporate accounting, supply chain apps, tracking access auth.

Yeah, no. Literally none of these benefit from blockchains. Moreover, blockchains make many of these things worse. This was already described eloquently, and with examples, 4 years ago: https://medium.com/@kaistinchcombe/decentralized-and-trustle... Why are these crypto maximalists still pretending it's a thing?

> This was already described eloquently, and with examples, 4 years ago: https://medium.com/@kaistinchcombe/decentralized-and-trustle... Why are these crypto maximalists still pretending it's a thing?

Because they don't agree with those conclusions.

That author is a dismissive ass - makes it hard to take his points seriously.

Like most anti-crypto authors he still misses the forest for the trees.

Trusting software is better than trusting humans because if the software is immutable you only have to trust it once! I don't know why so many people don't get this. When you trust human systems you have to keep trusting them forever, because humans are fickle and could decide to screw you at any time.

For starters, people have figured out how to run pretty solid and stable elections for while without needing anything but most basic technology. Also, if you have a society where no-one trust anyone, no amount of software will fix that. People can then just not accept the result of software and do what they please. Immutability is totally irrelevant at that point.

> Like most anti-crypto authors he still misses the forest for the trees.

Like most crypto-maximalists you've missed the point, the article, the trees, the forest, and the entire planet Earth

> Trusting software is better than trusting humans because if the software is immutable you only have to trust it once!

No. You don't trust it only once. You trust it every time you use it. And software doesn't magically appear, or grow on trees. It's created by the people who "are fickle and decide to screw you at any time".

It is very clearly described in the article that you missed. Technology does not make human systems obsolete.

> 3. The identity ecosystem: ENS

SNS / ENS etc aren't identity, they're naming. Much like DNS, many names correspond to someone different than what most people would associate with that name.

Disclaimer: I work in the identity so may be biased.

If you have [email protected], then that can be your online identity that you use to authenticate across multiple services.

The same can happen with nailer.eth (you authenticate via signing a message).

Someone else can register `nailer.eth` and promote that address as being associated with me too. Also personally, people that send me money (using the first example of utility from the article) want to send it to Mike MacCana.

Domains are a type of identity. For example, a domain can be the identity of a company brand, which is valuable, without it being a specific person.

> When I log on to Blockscan chat, I sign in with Ethereum. This means that I am immediately visible as vitalik.eth (my ENS name) to anyone I chat with. In the future, to fight spam, Blockscan chat could "verify" accounts by looking at on-chain activity or POAPs.

Imagine that same idea, but with traditional domains and support on major platforms. I've wanted domain validated/verified identities for as long as I can remember. Imagine being able to use your domain name as a handle, with instant reputation/recognition, on all major platforms:

    twitter.com/@example.net
    youtube.com/@example.net

If you decentralize identity and reputation by tying it to a domain name rather than an identity provider like Facebook or Google, it creates opportunities around all of the things he mentions in the article. Attestations are the most interesting in my opinion.

If you're interested in the details, you should read the section of the blog post related to this.

> many new applications have limited use today due to limitations in tech

The Ethereum foundation has been focusing on technical problems since its inception, and your conclusion has always been the official motto: once we solve the "technical problems", users will come. But there will always be technical problems, and as each year passes with still no meaningful democratization of this tech, it's becoming doubtful that these limitations are the real issue.

Applications such as decentralized finance are only as interesting as the tokens they allow users to trade, but in turn these tokens are either shady (the world of FTT, USDT, etc.) or legal (requiring KYC, AML, etc.) so just like traditional finance. Once the former have fallen enough in disgrace, it's unclear what benefit there is to trade the latter (centralized tokens) on decentralized platforms.

It's easy to stack layers of abstractions, thinking the next one will be the one gathering users, and focusing on what we think is the last technical hurdle before mass adoption. After the 3rd or 4th iteration, one could start asking: what makes you think it'll make a difference this time?

Not much has changed since ICOs: same kind of ambitious claims with very little to show for it years after.

One example of things that have changed is zero knowledge roll ups. When I first used ethereum, transacting with it was free and fairly quick. The QR code approach meant that it was easier, faster, cheaper and safer to transfer money with it than with my bank account. That changed dramatically for the worse once the systems started getting popular (and traditional banks upped their game too). With L2 systems like zksync, we're back to cheap and fast, and we don't have to give up the central security properties.

Another example of something that has changed for ethereum is Proof Of Stake. Some years ago, I worked for a large financial organisation, and we had a use case that would have saved a lot of internal work to move onto a public blockchain. Given the organisations eco aspirations, using a POW based system was never going to be acceptable. Now that ethereum is on Proof Of Stake, it's actually conceivable that these kinds of applications could be deployed by large financial institutions.

> we had a use case that would have saved a lot of internal work to move onto a public blockchain

If anything, large financial institutions have by now realized that they're not interested in public blockchains[0], one notable example as of late being the Australian Securities Exchange[1].

These technical improvements are a bit as if a salesman reduced the price of a product, on top of free delivery. That's nice, sure, but that doesn't mean you need the product any more than before. There are more fundamental reasons why smart contracts are not widely used, and they're not addressed by these technical improvements.

[0]: as defined in https://www.schneier.com/essays/archives/2019/02/theres_no_g... [1]: https://www.reuters.com/technology/australian-securities-exc...

My example was a situation where we would benefit from a public blockchain solution in terms of more efficient administration, but were unable to use it because of ecological concerns. In that situation we already needed the product, and the improvement removes a barrier.

> a situation where we would benefit from a public blockchain solution in terms of more efficient administration

That's what I'm doubting. Ecological concerns etc. are a problem, but in my experience public blockchain solutions fail earlier, at the stage where one asks "would there be any benefit" before asking what the costs might be.

Then we have different experiences.

The argument that use cases aren't developing is quite brittle when you dig into it a bit.

Take the use case of global stablecoin transfers. The ability to send cash point-to-point anywhere in the world is obviously valuable and novel.

But for global stablecoin transfers to be generally useful 1) everybody needs crypto wallets, 2) crypto wallets need to be increasingly safe and easy to use, 3) transaction fees need to be sufficiently low, 4) stablecoin on/off-ramps to integration with the traditional financial system must be widely available, and 5) stablecoins in a variety of popular global currencies must be available and liquid.

The industry has made progress in all five of the above areas in the past few years, and so good progress has been made on the greater goal of generally available point-to-point global cash transfers. Saying crypto "has no use cases" is lazy, uncurious, and intellectually bankrupt.

> Take the use case of global stablecoin transfers. The ability to send cash point-to-point anywhere in the world is obviously valuable and novel.

You're not sending "cash" though, you're most likely sending USDT or some other centralized stablecoin backed by a shady company ("stablecoin" is a very misleading term in this context given the counterparty risk). That's one point about trust being moved instead of removed, you need to trust the issuer to some extent. To this day I still haven't heard of a centralized stablecoin being fully audited, you merely get attestations, meaning that you can't treat them as "cash", you have a big risk just holding them.

Transferring / converting currencies from most countries to most other countries is easy and way cheaper via centralized means, e.g. https://en.wikipedia.org/wiki/Wise_(company) has been around for 11 years and was probably not first, and the fees are lower than what a blockchain transaction on BTC/ETH would cost. This is not even an apple to apple comparison, since in most cases you still need to convert your USDT back to USD to actually use them, incurring more fees in the process.

What ETH does allow you to do which you can't do with Wise and others is sending USDT without censorship. That's probably the best way to bypass US regulations if you want to send USD where the US government doesn't want you to. And some people suggest that this is how things should be, which is an interesting point. Whether you agree or disagree about the morals of it, it'll remain marginal compared with the amounts transferred via centralized entities for reasons listed above. In particular, this is incompatible with your 4.:

> 4) stablecoin on/off-ramps to integration with the traditional financial system must be widely available, and 5) stablecoins in a variety of popular global currencies must be available and liquid.

As soon as you integrate with the traditional financial system, you have the same legal requirements. But as explained above, skirting regulations is actually the only one thing that you could do more easily with Ethereum. Once you've accepted to deal with the law, you're better off using centralized platforms all the way. If I have EUR and want to send you USD legally, why would I go through USDT or whatever blockchain token and pay higher fees?

In this space, there's still very little in terms of products with actual impact, to the point that it's hard to tell what will be left once (if ever) the noise from the blockchain-related scams disappears.

I was debating these points 5 years ago already. The fundamental problems I'm mentioning now were already there (the decentralization of a blockchain-based system breaking at its boundaries with the real-world, the oracle problem). The hype has evolved, but retains the same fundamental flaws.

USDC is not nearly as shady. Nothing forcing you to use USDT.

Friends in Turkey were turning their savings into USDC and DAI to save themselves from their country’s near 100% inflation.

Crypto critiques need to take off the first-world Goggles.

Maybe your friends, but most people were buying the ordinary US dollars.

And store it in a local bank with the economy on the verge of collapse and the government being what it is? You have no idea wtf you're talking about sir.

No, just keep the cash.

Worst advice.

The second worst at least.

It’s not that easy to buy dollars in large quantities. At least in my country, there is a cap on how much foreign currency you can buy.

The problem is that Ethereum continues to be used almost exclusively for speculation of ethereum, followed by creation of literally hundreds of thousands of ERC20 cryptocurrencies, followed by anonymous lotteries/gambling (and for a brief time NFTs which themselves were a form of speculation, although that's mostly collapsed). At what point will that change? How much more do they have to do before Ethereum is mainly used for real-world applications? Ethereum is a solution shoe-horned into a trustless blockchain to an already solved problem.

While I'd certainly agree that Ethereum has problems, the problems you list aren't Eth problems. They are legal issues in some geographic jurisdiction.

Can you elaborate? Isn't the whole point of Ethereum's creation for practical applications, which they've continued to fail to have adoption for?

> and as each year passes with still no meaningful democratization of this tech, it's becoming doubtful that these limitations are the real issue.

I think it's pretty easy to see that each transaction costing a few bucks (or tens of bucks at it's peak) is a huge issue if you want more adoption.

Gas prices (determine costs of transactions) haven’t been too high lately, though there can still be spikes when transaction volume surges. Gas prices will become less sensitive to such surges once the mainnet is sharded (plus L2s) because the chain will be able to handle a much higher max volume of transactions at any given time.

https://www.gasprice.io/

A lot of the past few years has been spent on research.

The move to PoS is now complete and rollups are under active development.

For a lot of use cases scaling is a prerequisite and that's coming soon, likely 2-3 years of progressive improvements.

Transactions on rollups are as low as 2 cents and EIP 4488 is expected to bring that down about 100x.

You should really take a look at the roadmap: https://notes.ethereum.org/@domothy/roadmap

(This comment was originally a reply to https://news.ycombinator.com/item?id=33878419. Hence the "your conclusion".)

Vitalik is a clearly a smart guy but I don't get this "All solvable problems" mindset of him and others. Saying stuff like "supply chain apps" is a key application at the same time global supply chain apps on the blockchain are getting shutdown. The only use case of blockchain is coins and those are merely unregulated pump-and-dump. Bitcoin was an interesting thought experiment but the probably is that you need it to be profitable for individual miners (minus pools) to drive true decentralization and as soon as that is true, economies of scale will win and there will be a drive to centralization.

He actually links to the recent Maersk/IBM supply chain blockchain shutdown in the introduction, even though he mentions supply chains again later on

> Vitalik is a clearly a smart guy but I don't get this "All solvable problems" mindset of him and others.

It comes from a techno-optimist perspective that attempts should still be made to see if it could be solved in the first place. The binary alternative is a nihilistic "don't ever try" mindset, wherein the Nikola Tesla, Marie Curie, & Joseph Fourier shouldn't ever try to solve existing problems, and that they should just toil in misery like the rest of us.

There definitely exists gradients in between the two, but it's worrying that HN, a supposed place of hackers/experimentalists, is adopting a more "this'll never work" stance over time. The Dropbox negativity was the popular start of this downtrend, & I fear it's getting worse.

https://news.ycombinator.com/item?id=8863

I only joined HN a couple years ago (I've been working in tech for 12 years). I also find HN to be a bit depressing and pessimistic.

It's like there is some sort of "I tried that and it didn't work, so no one should ever try it again and if you do I'll warn you and then ridicule you for wasting your time" attitude that permeates all of some people's contributions to the discussion. This attitude isn't just at the individual level but also at the team, company, societal levels.

This doesn't feel like a hacker mindset to me at all. It feels increasing defeatist.

While I can't point to HN glory days (I wasn't here), I imagine that HN is devolving from hacker news to defeatist expert news.

But maybe it's society as a whole? I don't know...

What I can say is that the real hackers (eg builders, not speculators) in the web3 communities seem to be more optimistic than the average interaction I see here.

Your comment about this place is spot on and has been for several years now. Even though it's been a tough year in crypto, one of my personal favorite HN threads and one your summary rings true for is Brian Armstrong's Hacker News post, before Coinbase blew it's top off.

https://news.ycombinator.com/item?id=3754664

Another one of my favorites is the multiple times 4Chan has made fun of HN. An example of that:

https://news.ycombinator.com/item?id=9788317

i observed quite late, that the views expressed on HN do not represent the real world views. Its not a proxy or a petri dish for new ideas.

My experience from discussions both with technical experts and non-technical layman views suggest a very low co-relation with views expressed on HN. Try it yourself, discuss some top HN posts with experts and non-experts and compare.

So i look at HN as a lopsided subset. This has 2 outcomes, on one hand, it is depressing to spend more than a few minutes a week here, and on the other hand, the real world has parts which are less so.

Another topic constantly seeing scorn is Kubernetes. This place has been over negative towards k8s since I have known about it, and yet it is getting bigger and better. The same reasons apply, we don't know it get it outta here.

I think most people concerns about crypto is either the scam (of other people) or the potential displacement of the system they are part of (which will cause its fall and a loss to them/it's a zero-sum game). Both of these are valid concerns.

What I am wondering, however, is if this scamming/pumping money will eventually make a legitimate industry. Many industries/technologies have started out of that (Military, Gambling, Sex, etc...)

"If all you've got is a distributed ledger, everything looks like a token."

It is not a very impressive list of future technologies for the year 2022, unfortunately. I don't mean this as shade: I just mean that most of these are older ideas that have either been deployed or attempted (with limited success.)

Clearly money and DeFi are already real and well-established things, whether they're "going great" is in the eye of the beholder. DAOs have been around for a while, and the main examples Vitalik lists are basically DeFi apps that call themselves DAOs. General-purpose DAOs that have real-world influence remain questionable things, mostly because they have too many human and legal dependencies. On-chain identity might be exciting. NFTs might eventually prove to have exciting real applications beyond apes. Blockchain voting remains an old idea that doesn't have much real benefit outside of DeFi project governance.

Was this summary brought to us by ChatGPT?

It is hard to read this list objectively and not conclude immediately that while "limited use" "don't scale" "slow" and "privacy issues" are hypothetically solvable(?),

the divergence between investment and expectation and reality is exactly as great as critics assert,

and that it is indeed entirely the energy and momentum of greed and grift that keeps this from collapsing back to its natural state,

one I was close to prior to the grift, when the technological challenges and approaches were collectively known as "the decentralized internet" and there was not dirty, funny, fake, and stolen money fueling a narcissistic crime carnival.

"All solvable problems."

Let us know when they have been solved.

Having been on the web since it went public, there has always been a disproportionate amount of prophetic discourse, not to mention advertising, focused on computers. More often than not, the predictions are wrong.

Of course, sometimes, perhaps most of the time, the discussion is "hype" and serves a commercial purpose. One can expect those spreading computer hype will keep trying even when it has a low success rate. The www is an inexpensive medium for advertising and spreading hype.