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None. Suffer.
(lemmy.world)
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this post was submitted on 13 Nov 2024
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Blockchain is a solution in search of a problem. A way to establish trust while not trusting any party is a cool concept, but in the real world it's far easier to establish a source of trust.
Congratulations, now your trust relies on your subject never becoming important enough that someone bothers to run 50%+1 of the nodes in your network which means only very, very large subjects (or ones where trust wasn't very important in the first place) ever even have a chance of that not happening. What do you say? Your technology doesn't scale to very, very large subjects because of abysmal transaction rates?
Yup. Very well said. People don't realize the extent of wealth inequality (and how ridiculously resource intensive blockchain tech is). If anything important were to be decide by a blockchain, the top 1% would control the network.
More on wealth inequality here.
Today's inequality was created by the Cantillon effect.
What happened in 1972?
Soviet Union launched Venus-8
It is a bad solution though, because it revolves around wasting tons of energy in solving made up problems no one actually needs the solution to. I know there's alternative cryptocurrency that use better methods or solve actual problems but 90% of it is bitcoin.
I have a friend who works at a major bank and they use Blockchain technology to keep track of something or ither internally, though I don't remember exactly what. In this case at keast we can bet that it has found a problem wirth using it to sokve. Banks are nothing if not efficient.
I envy your trust in the efficiency of banks
If it's used internally, then I question whether it made sense to use blockchain. At the end of the day, it's probably the trust in the bank that matters and not blockchain.
Banks are businesses made up of people. If a manager thought he could get a promotion by supporting a blockchain project at the height of blockchain mania, that's what he would do. Whether if fails or not is of no consequence, the manager is already on another project.
Is it easier to establish a source of trust? With blockchain trust lies in the protocol and in the node operators who make decisions about how to operate their nodes. Running a node isn't extremely difficult. Running a financial institution is difficult.
Well, sure, now you have a currency that doesn't rely on trust
...now what? How are you going to spend that currency if you don't trust anyone? How will you ensure you get what you bought? How will your property get protected? Hell, how do you get others to agree that your crypto is the one they should use?
It's trust all the way down. Removing it from one small part of the chain isn't going to fundamentally change things
Idk I think centralised trust is a problem in and of itself but you can just look to history and world events that created bank runs and financial crashes like y'know - 2008, a year later the bitcoin ledger began.
Yes but it also comes with problems as mentioned above. Blockchain tech being used for scams if anything is evidence of it being a mature and functional technology for finance because under capitalism it's all inherently a scam of some sort.
That said we shouldn't let perfect be the enemy of good, I'm glad the technology exists even if I don't think it achieved what it set out to do quite as well as one would've hoped, if for no other reason than the fact we can all just buy any drugs online now with one day delivery instead of being stabbed on the street after calling some number like barbarians in the olden days.
Blockchain wouldn't have mattered for 2008, at least not the crash parts. Blockchain would help with who owned which loans which was also an issue. It wouldn't do anything for the crash parts as that was bad lending fundamentals of no verified income or unrealistic appraisal.
Blockchain scams are evidence of it's unreadiness and naivety. Crypto has speed ran the last 200-300 years of financial fraud. Pump and dumps, ponzi schemes, front running, market manipulation, rug pulls, and more.the fact the only viable use case is crime is also pretty telling, anyone that can safely involve a government entity would rather do that.
No it would not prevent the 2008 crash however if you had some money in a cryptocurrency you would be cushioned from some effects of the fallout. Not a replacement, just an addition. Having an alternative is the draw.
Hard disagree, it's evidence of its effectiveness and maturity. No primitive financial system would be capable of being used for:
Financial systems are primarily tools for fraud and zero-sum transactions, there's a line there for what is and isn't legal which is decided by the government, but it's ultimately all just taking money from one place to another and someone loses.
I had my money - which at the time include the proceedings of working a few years in Finance - spread over 3 bank accounts in 3 countries back then and came through it all with no loss whatsoever.
Further, crypto is so stupidly volatile that even stocks are better at protecting your wealth because you're actually less likely to see half its value gone in a week with stocks (incredibly unlikely, even, if you get a tracker fund on a major index).
And don't get me started on the ultimate most conservative (literally capable of surviving the collapse of modern civilization) wealth protection thing around - gold.
The point being that unless you expect the collapse of modern civilization (in which case you might try gold or, even better, tradable essential needs like thr kind of food that doesn't spoil easily such as pulses), the best way to safekeep your wealth is as usual Diversification, with a focus on things with a stable value, which crypto is definitely not.
This volatility isn't something inherent to all cryptocurrency - bitcoin and eth and pump and dump cryptos are just especially hot speculative assets for people who enjoy holding bags and pump and dump YouTube grifters.
Tradeable essential goods aren't a good basis for currency, they would be your best bet without the internet, but with the internet in such a collapse cryptocurrency could actually work.
Diversification is not a concept in opposition to cryptocurrency, the former is a viable financial principle for savings and investments, the latter is one type of asset (a currency) that someone can hold if they choose to if they believe that centralisation of financial institutions and growing connections between corporations and governments is a risk - for instance I would not expect S&P500 to survive a major climate or landemic catastrophy/incident, world war, especially with protectionism, and maybe I'm an alarmist prepper but while remote, these things are growing increasingly likely or if the oversight of the powers that be is undesired e.g. such as with buying drugs on the internet.
Ultimately it all comes down to that.
Cryptos are inherently volatile because they're natural Ponzi-schemes with no oversight hence no crack-downs by the Law, and have low liquidity - they pull ill all manner of greedy types, suckers and swindlers and naturally end up with boom/hope-bust/fear cycles which have large movements due to the low liquidity of them as an asset. They're also far easier to manipulate with very little investment, especially the smaller ones (exactly the ones that you claim aren't as volatile).
The Tech per se doesn't make so, it's what it allows crossed with human nature that makes it so.
Tradeable essential goods are not supposed to be currency, they're supposed to be for consumption and bartering if shit really hits the fan. I was responding to your point on using cryptos for wealth protection and now you've moved the goalposts to "currency". Yeah. barteable goods aren't good currencies, which is why we have currencies for trading rather than bartering as was was done before currencies were created.
As for the S&P 500 dying, how do you expect crypto would survive a scenario that causes that outcome, considering that the companies that hold and maintain the Internet infrastructure, from consumer ISPs all the way up to LVL1 providers are almost all publicly traded companies? If the S&P 500 dies that means companies are going bust left and right and in that kind of situation the networks needed for crypto would simply stop working (plus a lot of other infrastructure too, but the most complex and interconnected stuff would go first) and people would be down to hard cash and bartering.
The Internet might have originally been designed as ARPANET, a network supposed to survive nuclear war, but the modern Internet is a completely different beast and even ARPANET wasn't capable of maintaining connectivity to consumer homes in the event of a catastrophe, it was only supposed to keep an small number of nodes connected.
Crypto is massively dependent on modern high-tech infrastructure and would collapse well before any currency that still has notes and coins.
As for the not quite so bad stuff, the worst crash of the S&P 500 ever had less price movement from top to bottom (which might take months or even years to fully play) than any normal month for Bitcoin.
Finally, indeed Diversification can include crypto, my point was that for wealth protection purposes you can simply diversify with traditional assets to create a robust wealth protection mechanism - just as I protected myself from the 2008 crash by merely spreading my assets across different banks in different countries - (unless, that is, you're trying to protect yourself from something so bad the S&P 500 dies, in which case as I explained above and in my previous post, it's down to stuff like hard cash, gold and bartering) and crypto won't actually add any security to a diversified wealth protection portfolio, quite the contrary since it's too infrastructure dependent to work in the worst situations and too volatile to maintain a steady value in normal times and mild to bad situations.
Compared to "traditional" Finance assets, crypto's wealth protection ability is somewhere between Stocks and Derivatives and the latter are generally not sold to customers who aren't considered sophisticated (exactly because Derivatives can be very risky).
There is absolutely nothing "natural Ponzi-scheme" about cryptos inherently. They're obviously used as pump and dumps all the time but this is not inherent to the technology.
Glad you're somewhat familiar with the history of trade.
Hence if currencies die again, cryptocurrency is a viable alternative as a currency, which barter goods are not an adequate replacement for.
Idk, satellites don't really require daily maintenance in a best case scenario, nor do undersea cables, I fully expect the internet to outlive humanity altogether.
I simply don't agree with any of this whatsoever. Again, gold and bartering won't make good currency, currency is currency - like cryptocurrency or fiat currency - diversifying so not all your currency is directly dependant on the government is pretty sound financial principle. You can invest into gold but in catastrophies your attempt to barter or otherwise liquidate these assets will be troublesome. It just makes sense to me, but I'm not econ or finance, I'm a compsci.
Nevertheless I appreciate your perspective, you've definitely given me some food for thought for hedging my bets in the future.
There's scams with fiat currency, but you don't show that as evidence that dollars aren't ready for mainstream. When people get scammed out of their crypto it's not blockhain's naivety, it's the victim.
When people get scammed in traditional currency, you can revert the transaction. You cannot revert anything with blockchain, and that's a feature, which means if you get scammed out of your bitcoin, there's nothing you can do. That money is lost, and the scammer keeps it.
Also, when I try to scam someone using my bankaccount, my bank goes "Uhhh, please show us that this isn't a scam". My bitcoin wallet doesn't care.
The difference is the government exists to step in and punish scammers, and regulates markets to
one of many benifits of the blockchain is that there are ways of using it without directly giving up your name or government ID. A minor side effect is that scams will exist using it.
What schemes exactly? I know there are schemes using fiat currency, but that’s quite different from the currency itself being a scam.
The blockchain doesn't prevent a run on the "banks." If everyone decides to cash out at the same time out of fear of a crash then the currency crashes and there isn't enough money to liquidate everything (until it has no value). It isn't an improvement for that. If anything, it's a negative. Banks can implement policies to prevent it, but you can't really do so with crypto.
It would be useful for things like deeds and contracts. Instead of having a bank hold it and provide proof you could store it on the blockchain. There are a handful of good uses for it, but it's generally not useful for the stuff most people think it would be.
Well, you can't do fractional-reserve banking with bitcoin (or any other coin I know of), so in that way, a "run" on a bitcoin can only ever exhaust the supply. lending out more than you have requires trust, and that's not available in a blockchain structure.
On the other hand, fractional reserve banking is the foundation of all modern financial systems, so it's not really a thing we're going to scrap.
Well, yes but no.
There's a lot of problems with blockchain deeds, and one of the big ones is confirming the first owner. What's to prevent me from minting a smart-contract that says I own your house? Or that I own a house that doesn't even exist? In the real world, we've solved those problems (and MANY more) with notaries and central registration systems. At the interchange of digital-ownership and real-world, physical assets, you're always going to need a trusted party to verify that the two match. And at that point, you don't need the blockchain at all.
Sure the currency itself isn't resistant to a run on itself but having some wealth in the currency will cushion a run on the real IRL banks for fiat currency.
Except that it's so incredibly volatile that from one months to the next you literally don't know if your crypto wealth will be worth twice as much or half as much.
If what you're trying to protect yourself from is runs on banks, you'de be better of with gold, works of art, even stocks (which are less volatile than crypto) or, even simpler, spread your money over several banks, ideally in more than one country.
Interesting. Good to know. Thanks!
Blockchain is effectively a distributed database. Almost always a good centralized database functions better.
Nah. the commenter above is just wrong. It's just that anyone who isn't selling bullshit uses their real name- Merkel trees - which are fundamental to modern software development (git).
That's a similar but different concept. Blockchain adds a way to determine consensus of the correct tree. While git is distributed, it's generally not trustless, there's generally a trusted version of the repository.
what? Git is very much distributed and while you can have a main branch, you can set as many up streams as you want and merge things sideways.
It's trust less in the sense that commits can't be easily forged and are signed with cryptographic keys and identities.
Consensus is just a pull request.
I'm pretty sure being able to verify that the person responsible for a push is an actual maintainer is the opposite of trustless.
How is it any different than verifying that a transaction occurred?
How is a trusted repository different from a hard fork?
Isn't "proving someone is a maintainer" just an IRL proof of stake?
With a centralized trust source (bank), you ask for the records.
Because you check who owns and maintains it. A notable example was with Simple Apps for Android, earlier this year the main repo was sold to a company. Trust was lost, thus a fork was created to keep the original stuff.
Right, but isn't the "main chain" of Ethereum based on a similar principle wherein it's the main chain because it's the one the devs use?
What about BTC vs BTC lightning.
I'm genuinely failing to see a distinction here, and, again, the wiki article says that blockchains are special cases of Merkle trees.
No clue, I don't keep an eye on that, I'm partially aware that there are several similar forks (and eth classic was a result of scammy shenanigans) but, afaict, none try to pretend they're the "real" ethereum.
A distinction between trust and trustless? Because my initial point was that git isn't trustless, because it works just like any other online system that requires a login, where a central server/database checks if the user sending inputs was properly identified by some mean (password, cryptographic key, something else). Implementing a Merkle or any other hash tree doesn't make something trustless
does git require authentication with a central server? I know that's common practice and true of github, but my recollection was that it was meant to fix the problem of distributed kernel development via an email listserv in the early 2000s. This stack exchange post discusses how it's not really centralized
Not being centralized has nothing to do with being trustless. The fediverse is also decentralized, yet you, me and everyone else has to log in to a specific server. If I try to login via lemmy.world, it'll fail. I have to login via programming.dev. Does that make lemmy and the fediverse trustless? No.
Even the top answer on that SO question explains that the use case of hash trees for git is different from that of blockchain
yeah, but this SO post has many up voted comments supporting my points as well.
183 votes for your "similar but not the same" and 103 votes for "they are the same". At the very least, I'd say this is far from settled fact
https://arxiv.org/abs/1803.00892