Topic: Try to answer the difficult questions... (Read 3209 times)

Distributed =/= decentralised (can be but doesn't have to)

If you have to trust 'validator' and cannot enter the system as equal party, then such system is centralised.

I'm a bit tech-handicapped myself and I don't quite understand how such 'blockchain' would work, what would be incentive for participants and what would protect it from infinite-loops and bad actors. To my understanding, it has to be centralised, or be closed to any untrusted 3rd parties.

The author of the article (you quoted) clearly states that BTC blockchain and coinless-blockchains are very different ideas, and if the latter are successful they could only 'highjack' only part of BTC blockchain abilities.

I think all these guys saying "blockchain is good, bitcoin is meh" are just trying to sound intelligent and don't really get it. This pic does sum it all up:

Let's be clear I'm not saying that BTC can't rise in value again. I'm just saying that one possible reason for it can't be "because the blockchain".

Some simply say:  "blockchains cure cancer ( ), and since bitcoin is necessary for the blockchain to function, that means bitcoin -> moon". This logic is flawed.



I think the only way BTC can rise in value and "be successful" is if it becomes some kind of gold 2.0 store of value out of pure speculation (part of gold's marketcap is simply speculation as well for example). I think it's kinda unlikely, but possible.

Not as a "currency for the internet", not as an efficient way to transfer value (POW is not designed to be cheap, and transactions are not exactly fast), global currency/replacement of fiat (let's be realistic), "because blockchain" or whatever other reason.

From my understanding: It's not "centralized". It's distributed. Just because the validators are known doesn't mean it's "centralized".
Distributed ledgers (the "permissioned" ones Tim Swanson is describing) are cryptographically verifiable.

Quite different from existing "centralised data-transmission systems".

I'm not an expert but pretty sure Eris Industries products (for example) are "working", you can use them right now.

So they created yet another centralised data-transmission system and called that 'blockchain' to get some attention? Proved that blockchain can exist without native token, just by stretching the definition of the "blockchain"?

Wake me up when it's decentralised and trustless (and working).

Two very good reports on the "blockchains without bitcoin" trend.

Tim Swanson: "Consensus-as-a-service: a brief report on the emergence of permissioned, distributed ledger
systems":
http://www.ofnumbers.com/wp-content/uploads/2015/04/Permissioned-distributed-ledgers.pdf


"‘BLOCKCHAIN WITHOUT BITCOIN IS NOW A THING"
http://prestonbyrne.com/2015/04/08/blockchain-without-bitcoin-is-now-a-thing/




A few quotes from the Tim Swanson report:

"The coin (bitcoin) is an integral part of the network’s incentive mechanism to
maintain its security; the two have an existential symbiotic relationship.
But that is not to say you could not start from a fresh “mulligan,” taking part of the toolkit –
some of the cryptographic primitives and concepts – and start over with something tailored to
specific use-cases.

"unlikely that financial service providers like banks will have a need for cryptocurrency systems"


"Stems such as Bitcoin use anonymous validators and are unable to be a legally official register of assets."



Basically:

"From "Trustless" to "Verifiable""

Normally, money has nothing to do, nor with economic results, nor with politics.  Money is an asset that is used to exchange against goods and services and to store value.  Whether things go good or bad, whether you have a lot of wealth or not much at all, shouldn't matter.

What is amazing with the Euro is that, since gold was not used any more in international economic relations, a state can go bankrupt without first screwing its own currency, as the Euro is not related to a state.

In fact, the Euro could even be used by non-European countries if they want to.  Even if 3/4 of European states went bankrupt, that wouldn't - in principle - not even affect the Euro too much as a currency.  Of course, the Euro would loose value, but not because states are in trouble, but rather because the economies are in trouble and hence what you can buy with Euros is reduced (reduced production).

As far as incentives for such a technology - Namecoin is useful, the technology exists to secure the value of domains with it ( I think ).
I wonder how value plays out with that token.

That's what I mean, you can't have countries with different political interest using the same monetary policy, an easy monetary policy will stimulate the hard working nation but crash the leisure seeking nation, but both a way of living and different view of life: In the long run we are all dead, some people will enjoy the life while others will work hard until they die

Even if Venture Capital money is dropping their money and interest in the blockchain itself and not Bitcoin, it doesn't change the fact Bitcoin is the original implementation of the blockchain. It will always be the "to-go" reference.

And beyond that, what you propose is still the scam fiat scam plastered all over the blockchain. Im on Bitcoin because I know there is a limited supply and it's all fair game. This will never be the case with goverment issued currencies.

I see where I missed your point now, thanks for your patient explanation-
I thought you meant 'market-cap' to be the value of the items lodged in the
blockchain/notebook.

You mean it as the sum of the value of the tokens.
The act of writing to the notebook is an (increasingly?) non-free competition
with tokens as reward.
The ability to write to the notebook is protected by 2 components:
1) The value of the bitcoins/tokens
2) crypto-difficulty

If the reward/token 'value' diminishes to a point <= cost of
participating in the competition...what happens?
Collapse or the value of the tokens must increase.
Or something we have not thought of.
Perhaps fewer will still compete.
But devaluation is addressed in the protocol by scarcity,
we just do not yet know if that will work as we only have 1 datapoint
re: blockreward reductions. But the datapoint is a nice one thus far,
there has been an explosion of mining even after the block reward
halved.

So if we try to answer OP's question:
Such a technology's existence and continuation would have to leverage
some force equal-to or greater-than human self-interest.

Existence and persistence of the ledger is woven to the valuation
and is not seperable ( without collapse ).
The value of the token gives rise to the ledger, is intrinsic to the scheme.
So token value, which I'm seeing as fundamental, has to be replaced by *something*.

That something will have to be human-nature proof to overcome
governments and wealthy theives/cheaters.
What is stronger than their collective might?
Self-interest, which is fundamentally human.

VC money is more interested in the blockchain, certainly,
but they already have wealth.
They appear to be pouring money into investigating how to
build this thing out.

Bitcoin just aligned the aims of Ukraine and Russia-
they both decided they need to squash it.

The block chain being decentralized, the ONLY security it has is the cryptographic impossibility or difficulty for it to be forged or altered.  That difficulty can be overcome, but at a price, and that price is exactly the financial cost of the proof of work that went in it.  In other words, barring smart improvements or strong technological advance, the proof of work in the block chain that secures it cryptographically, can be overcome only by producing MORE proof of work and hence spending a LARGER financial cost than the one that is securing the current block chain.

Let me put it like this: say that the current block chain (I'm taking arbitrary numbers) is protected by a proof of work of 10^22 hashes (the integrated proof of work).  If you are capable to do 2 x 10^22 hashes, then you can re-write the block chain entirely, from the genesis block onward.  Those hashes come with a certain cost, and assuming that the cost of mining equals the reward of mining, and assuming that the price of a bitcoin is constant, then the total cost spent to produce these 10^22 hashes is equal to the total price of all mined bitcoins, which is nothing else but the market cap.
Now, of course, the cost of mining in reality is LOWER than the reward, which means that it did cost LESS than the total market cap to produce 10^22 hashes.  Also, the bitcoin price ROSE a lot, so the early mining was *cheaper* than the current price of the then mined coins.  These two arguments go in the direction of telling you that the cost of 10^22 hashes is in fact LESS than the total market cap of bitcoin.

So for a price less than the total market cap, you can ENTIRELY REDO THE BLOCK CHAIN.  So the upper limit is the total market cap.  If you are willing to plunk down the market cap, you can redo the block chain.

In order to obtain bitcoins, that would be totally ridiculous.  But things secured in the block chain might be worth more, and then there's an incentive to do so.

A centralized recording doesn't have to have this property, because the security of it doesn't come from the price of proof of work, but rather from the trust you can put in that central authority, and the law enforcement, that will make that it cannot be modified by any individual plunking down some money on the table.

Suppose that in a municipal record is written down that association X possesses a building that's worth 10 million dollars, and the notebook in which this is written down costs only $5.   In bitcoin speak, it would be sufficient to buy another notebook of $5, change the owner of that building in that notebook, and hey, it is yours !
But you can't do that with a municipal record, because the employees guarding that notebook will not allow you to replace it.  If you insist, they will call the police who will come and stop you from replacing the notebook.

However, in bitcoin or in any other block chain, the notebook can be replaced by anybody.  The only thing that you have to do, is pay more Proof of Work (or proof of stake).  The block chain IS the $5 notebook.  If you buy a new notebook, you can replace it.  The ONLY reason why you don't, is that the proof of work costs more than anything that is in the notebook.  The only thing that is in the notebook (the block chain) are bitcoins.  The price of the book (the proof of work to make a new one) is about equal to the total price of everything that is in it.  In fact it is somewhat lower.
So as long as there's not more IN the book, than the cost of a new book, there's no point in doing so.  

But the day that there's something IN the book that costs more than the book itself, it is worth changing it !

In fact, a central ledger also has a price to be modified: the price of bribing all the authorities that are supposed to guard it.  If you can plunk down enough money so that all the authorities guarding the municipal record allow you to change it, then you've also broken the security of the system.

The security of a block chain is in its proof of work.  If you can buy more proof of work, you can corrupt it.  The security of a centralized ledger is the authority guarding it.  If you can buy that authority (bribe it), then you can corrupt it.

I think this is a great discussion.

By removing the value of the token the OP may have removed
or rendered optional some required foundations for a crypto...
and a lot of other human endeavors.
The theoretical technology indicates that a desire must exist
to transmit value.
So it follows that the mechanism must exist.
And that mechanism must persist.

How about this:
Suppose we have a technology at our disposal where we can
communicate or contact people or show them what we see, or
have seen?
Everyone finds this to be a great idea, let's have that.
Must the underlying technology have any value?
Short answer - yes, it must, because people are unlikely
to go turn rocks into gold nano-filiments in any sort of
usable volumes just because they felt some whimsy.
Email and videos would have a hard time existing if not for
the infrastructure, which costs. Somewhere in every scheme
there must be something someone wants, or why bother?

So Incentivization is crucial - yet your theoretical technology can
be spun up by anyone, offered by any party.
What dictates success of any such offering? Lots of factors,
but the basic human drive to enrich one's self must be taken
into account, otherwise only those directly enriched will bother
with it. Voluntarily.
But a lack of incentives will surely lead to failure,
including for bitcoin when the subsidies of new coins fall off,
as lucasjkr mentions. With luck the taper will be sufficient
to see it through, we'll see how that works starting next year...

Reducing signal/noise and shenanigans is important as well:


Dinofelis, can you explain further?:

...because the combined value of all the assets of a municipal records dept
including salaries, building, land etc. does not even come close to
the value of the property recorded therein. The Blockchain is a (hopefully)
immutable abstraction of wealth, among other things.

About this:

Seems like any sidechain worth its salt would provide the security for whatever
they are doing. The part where the bitcoin blockchain is involved is just what gives
the side chain more accepted, world-wide legitimacy, ultimately.
If a car manufacturer runs their own blockchain and generates all sorts of identifiers
for a new car, binds them to the car's electronic brain, hashes them into one of their
block and then registers that block via a miniscule amt to the btc blockchain it
seems to me that security is enhanced because 2 different chains must be compromised.



I either disagree with this, OR I'm not understanding:

Decentralization is also crucial because therein lies fault tolerance,
where 'fault' is spelled: attempts to deny/control/be overbearing,
aka governments. Distribution means if China wants to stifle the
network... well, go ahead and try.  As johnyj mentions,
 "US can not force Germany to use USD as currency..."
People will do what people do, like censored Iranians circumventing
 their ISP's and accessing the world anyway.



My understanding is limited, but this is a problem ethereum proposes to solve.
The assets are verifiable through the chain and the code which deals with
those assets is also verifiable. And immutable except to those with the keys.
OP says:
"Correct me if I'm wrong but Ethereum and Ripple and not dependent on their native cryptotokens for their network to work."
My understanding is that ethereum is consumed by the code over time - run out of ether, code evaporates. And there is some
limited amount of ether, but mining it is asic resistant.
However, my understanding is quite limited on the topic, could be wrong.

Bitcoin is beautiful because it encapsulates so many aspects of modern life,
seems like your question illuminated a lot of the beauty.

In fact, the Euro, as a currency, is behaving amazingly well.  Those in trouble are STATES, not the money itself.  States who gave up their fiat currency to become *normal* economic agents under a currency they don't master themselves makes them go bankrupt, because they were used to reap in all the cheating that happens with a state fiat currency (essentially reaping in all the seigniorage of counterfeiting).  The most corrupt states (the south) suffer of course more than the less corrupt states of the north.

The biggest danger for the Euro is, as usual, political mixing in the monetary policy, which, according to its statute, shouldn't happen.

The Euro is not on the verge of collapsing.  Some European states are.  That's different all together, exactly because the Euro is not a state fiat money, but an inter-state fiat money.

Several states didn't realize the amount of power they gave out of hands when creating the Euro.  I'm personally happy for that, but I think some regret it.

The Euro doesn't have the status of the US dollar yet, in the sense that I don't know of any foreign country where Euro's are actually used as actual means of payment instead of the local fiat currency.  And the weak economic situation of the Euro zone at this moment is not bright either, but that has nothing to do itself with the currency itself.

The uncoupling of monetary issues from economic policy and policy in general is the best thing that could happen and I only know of the Euro in recent times that did such a thing.  The Euro is not as good as gold, but its principles are more sound than that of a state fiat currency that is much more exposed to political manipulation.

Nobody would blame gold to be the culprit of a state going bankrupt (as was almost the case with France under Louis XV after inherting the state from super spender Louis XIV).  In the same way, the Euro is not to be blamed for countries like Greece to go essentially bankrupt.  They were simply not used in keeping the books in order.

i wonder how many contradictions i just read in that post...

What OP suggested is similar to Euro, a single currency across boarder, and you see how much trouble it has now  

US can not force Germany to use USD as currency, because printing currency is the biggest robbery power central banks hold, they will never give up that right to anyone else, so what OP suggested would never happen in the form of a decentralized system, since a decentralized system do not allow centralized control of money supply.

From consumer point of view, the closest result is like VISA or paypal, you do the transaction in a third party payment processor network, and they do the real settlement afterwards

Blockchain technology itself worth nothing, because once invented, you can duplicate it thousands of times. Anything with unlimited supply will definitely worth nothing

But bitcoin is limited, and the cost to mine coin and maintain the network is very high, that indicated the competition to get bitcoin is also very high. Without that huge amount of infrastructure investment, the bitcoin blockchain is as useless as thousands of other altcoins, just some lines of code in github, a freeware

And I have never understand that smart contract thing, how could you ensure the validity of the promised assets in those contracts? These contracts have no legal validity and the counter party can just run away or claim to be hacked as we have seen many times in this space. The only thing blockchain can ensure is the ownership of bitcoins, if bitcoin worth nothing, then those ownership will have no meaning

So the most important thing is bitcoin's blockchain, you can not separate these 2 concepts

I wrote:


Your understanding of the historic international trade system, that worked for centuries, is totally off the mark. The system that worked for centuries, was decentralized. In fact, the free market economy is decentralized by definition.

The defects of the current system:

Fiat systems are centralized, because there is one entity that issues money. They have each worked a few years, then collapsed.

The current fiat system consists of different systems that are interdependent through the defects of the current main stream economists, and the fact that central banks cooperate.

A new thing is the loss of anonymity, the anonymity is a requirement for free individuals who comprise the free market system.

A new thing is government control of the payment system, enabling governments to step in and destroy free trade between any two free actors. They can do this without entertaining the government law system.

We have never in history had a basically world wide fiat system, never has a fiat system inflated to the current degree without imploding.

So we are in desperate need for a new system. Sadly, bitcoin is years away from having the necessary expansion to be able to take over. Brace yourself for a period of money system confusion, as new systems are brought about from people who understand nothing.


---

When the central banks cooperate, there are not 100+ fiat systems any more, rather one, meaning more centralization.

The degree of anonymity in bitcoin depends on how many of the addresses can be linked to individuals. When most addresses are linked to individuals, many of the others can, with some work, be traced to the trade partners of the known individuals. When just a few addresses have known owners, the remaining addresses can not so easily be traced to individuals.

I think there is a good chance that the future situation will be that only a few addresses have known owners, therefore the system as a whole will be largely anonymous.

It's a flaw that central banks cooperate?


For all intents and purposes, once the mainstream adopts bitcoin, anonymity will be next to nonexistent. Not because there'll be any changes made to Bitcoin. But bitcoins pseudoanonomyity only works for people now who understand what it is and isn't and take active steps to remain anonymous. For the mainstream, the record keeping of the blockchain will yield the same, if not more, information as is collected by banks and credit card issuers. Except, instead of it being only in the hands of those companies, everyones transactions will be out in the open for EVERYONE to examine.

I don't see Bitcoin as being the winner in that case. Yes, right now, small group of knowledgable users, yes, it wins, but only for people who proactively take steps to preserve it.

Your understanding of the historic international trade system, that worked for centuries, is totally off the mark. The system that worked for centuries, was decentralized. In fact, the free market economy is decentralized by definition.

The defects of the current system:

Fiat systems are centralized, because there is one entity that issues money. They have each worked a few years, then collapsed.

The current fiat system consists of different systems that are interdependent through the defects of the current main stream economists, and the fact that central banks cooperate.

A new thing is the loss of anonymity, the anonymity is a requirement for free individuals who comprise the free market system.

A new thing is government control of the payment system, enabling governments to step in and destroy free trade between any two free actors. They can do this without entertaining the government law system.

We have never in history had a basically world wide fiat system, never has a fiat system inflated to the current degree without imploding.

So we are in desperate need for a new system. Sadly, bitcoin is years away from having the necessary expansion to be able to take over. Brace yourself for a period of money system confusion, as new systems are brought about from people who understand nothing.

Depends on your definition of 'usefulness'. Getting around strict capital controls (e.g. China), politically motivated restrictions of payment processing (e.g. donations to Wikileaks), or legal restrictions (e.g. dark net marketplaces) are clear cases where decentralization is useful, I have little doubt about that.

Whether there will be a wider appeal than the cases above (e.g. contracts in general that are not subject to enforcement/regulation by a central authority, or the often invoked 'store of value' usage case) is something we're in the process of finding out. I don't think it's a given those broader usage cases will be based on the Bitcoin network, and not some other (possibly centralized) crypto, but I'm also pretty skeptical towards the opposite claim, that it's a given it won't happen. Hence, speculative activity all around.