You can repeat it all the times you want, but it it is still a shortsighted view.
“A database and a contract”... but who owns the database? And who enforces the contract? And who owns the actual data?
Blockchain provides satisfactory answers to all those problems.
I agree 100% with the article in that blockchain is being ‘applied’ to a whole bunch of places that don’t need it. That doesn’t mean that it can’t work well in many other (legal!) scenarios.
> but who owns the database? And who enforces the contract? And who owns the actual data?
> Blockchain provides satisfactory answers to all those problems.
What problems? I mean your arguing like something like public transportation is an impossibility without blockchain backing because: "Who owns the stations, who enforces the schedules and who owns the actual busses?"
Those are not problems. They are all just questions that are always insanely easy to answer in the specific case.
With your banking credits, who owns the database? the bank, who enforces the contracts? the legal system? And who owns the actual data? Depending on law, there's ownership relations between yourself and the bank.
You an way to many crypto proponents are arguing like ownership rights, legal systems and databases don't exist outside of blockchain based solutions.
We are talking about ownership, which of course doesn't matter in your example because you don't own the buses or the stations.
If you own a house, where's the record? The title is with an insurance company. Why? Because your ownership of this house can be questioned at any time since there's no equivocal record. It's recorded in a bunch of "databases", some of which you and your insurance company may not know exist.
Blockchain offer no satisfactory solutions to this, houses can change, people can lose access to identification, people can be evicted, people can make mistakes. The last thing I would want is to be evicted with (by design) no chance to get my house back because my computer got hacked.
I cannot understand how at the same time lots of people are worried about "superintelligent machines eating the world" and proposing to remove humans from all important decisions in our lives.
Next step is to build a social graph on blockchain?
In the US there's only one real estate database per county, maintained by the county government. Owners can purchase title insurance to protect against other claims or liens, but the insurance company doesn't hold the title. And title insurance is quite cheap because in practice the risk is miniscule.
"SWIFT was founded in Brussels in 1973 under the leadership of its inaugural CEO, Carl Reuterskiöld (1973–1989), and was supported by 239 banks in fifteen countries. It started to establish common standards for financial transactions and a shared data processing system and worldwide communications network designed by Logica and developed by the Burroughs Corporation. Fundamental operating procedures, rules for liability, etc., were established in 1975 and the first message was sent in 1977. SWIFT's first United States operating center was inaugurated by Governor John N. Dalton of Virginia in 1979"
SWIFT is a messaging system, not a settlement system. Its also far slower than blockchain, more complex, and more prone to error. I think around 6% of transactions just disappear.
I'd be interested to see actual numbers for transaction volume, latency, and reliability of SWIFT and blockchain in practical use cases.
I worked on a payment system using the UK's Faster Payment Scheme a while ago. The SLA for latency is two seconds end-to-end, and is usually much faster than that, was simple enough for a gang of underpaid COBOL programmers to implement it successfully, and didn't have a mechanical error rate worth bothering about. In January it moved 186.1 million payments and 161 billion pounds:
FPS is UK-only, but there's nothing about the technology or the commercial and legal machinery that wouldn't work internationally. If SWIFT is really as bad as you say, it could be replaced with a better instance of the same technology; it doesn't require a haunted git repository to fix it.
I used to work for SWIFT. The 6% error rate is incorrect as errors are detected and resent using different methods, so more like 0.0001% error rate. Sometimes SWIFT transfers trillions of dollars in a single day, so yes, it is the largest trading volume in the world
In 15+ years of building and maintaining SWIFT-connected systems that run SWIFT-provided software, I’ve never encountered a situation where a SWIFT message has “just disappeared”.
I can't speak to banks, but I have some personal experience with this sort of thing in the case of trading. I'm guessing it's at least somewhat similar to how it works among banks.
All the big players have got real-time feeds they're sharing with each other to keep track of who's made what transactions, and they're constantly reconciling them against each other, to make sure that everyone's looking at the same picture. There are also daily reports summarizing the previous day's activity, and they are also reconciled as a second check. The proactive parties work together to sort out any discrepancies they find as soon as they find them.
None of this is strictly necessary, because there is a central source of truth that you can rely on. But it tends to operate much too slowly for a lot of people's needs, and mistakes do happen, and they can be costly, so it pays to be proactive. Meaning that, in general, nobody's actually relying on the central authority to keep this organized.
The actual real-time feeds are log-structured: You can add new records, but not delete old ones. If you want to reverse a transaction, you just add a new entry to the ledger to back it out.
In that sense, it works a lot like how a blockchain would work. The only difference is, nobody's bothering with all that crypto stuff, because all it would do is make the whole thing more expensive. Like, literally, that's the only impact I can see. It won't help with preventing errors - when mistakes happen, it's invariably because of an error at the boundary of the system, and fiddling around with hashes of the previous message when sending new ones does nothing to guard against that. All it would do is slow both the throughput and latency of transactions by introducing more spots where synchronization must occur together with a bunch of ancillary computational load.
In a world where time is money, that sure sounds to me like a $100 solution to a 1¢ problem.
And what if a lowly peasant like me wants to synchronize with the big trading firms' feeds? Do I need to sell a kidney to play on the same field?
Blockchain does exactly this without everybody having to sort out discrepancies. Everybody getting the same picture is built in. Just the possibility of there being discrepancies in the ledgers you described would have me looking for a better way.
I would much rather have the option of connecting to a decentralized feed that is the same for everybody regardless of resources.
> And what if a lowly peasant like me wants to synchronize with the big trading firms' feeds?
It's all pretty highly regulated, and you'd need a license before you're allowed to even think about hooking directly into an exchange. If you've got lowly peasant money to work with, it would be much more cost effective to go through the retail channels, just like every other person who isn't a corporation.
> Blockchain does exactly this without everybody having to sort out discrepancies.
No, it doesn't. The nature of the discrepancies that cause trouble in practice, and the ways they sneak in, are simply not things you can solve by chaining hashes and throwing a proof-of-work algorithm into the mix. The very suggestion puts you one blue suit and some pointy hair away from being able to star in a Dilbert strip about trying to use buzzwords to solve problems you don't understand.
Nobody said proof-of-work. Bitcoin is not the only game in town. Ledger consensus can be reaches without wasting resources on a proof-of-work algorithm.
> All the big players have got real-time feeds they're sharing with each other to keep track of who's made what transactions, and they're constantly reconciling them against each other, to make sure that everyone's looking at the same picture.
That is exactly what blockchain is. It is literally doing that.
> None of this is strictly necessary, because there is a central source of truth that you can rely on.
But who is running that? And why do you trust them not to change things around every so often?
> it works a lot like how a blockchain would work
Except there's no central source of truth because no one trusts anyone. Which is why its so strong. There's no need to trust.
> The only difference is, nobody's bothering with all that crypto stuff, because all it would do is make the whole thing more expensive
That's what makes blockchain immutable. You can't alter it without an enormous amount of resources. And even then, the actions of the rest of the network work to discourage that sort of thing. In PoW, everyone else is checking the non-altered data, and in consensus, everyone else has already agreed on non-altered data.
"That is exactly what blockchain is. It is literally doing that."
It isn't: it's a chain of hashes with signature. Those predate blockchains that do things like wasteful mining. An example was Surety's timestamping service. A hashchain using standard primitives is way less wasteful, supports higher transaction volume, is cheaper, and can take advantage of hardware acceleration in client and server devices.
One of reasons I oppose blockchain tech is that you get better cost-benefit ratio out of high-performance, centralized protocols with decentralized checking. We also have some of that mathematically verified for correctness down to assembly. So, they will be more secure than complex, decentralized protocols.
There are more blockchain consensus algorithms than just Proof-of-Work. Its probably the most inefficient, and that's well known. I personally prefer Ripple's consensus algorithm.
In every jurisdiction I can think of, this was answered decades ago. Each country has a national association or clearinghouse. In some it's government operated, in some it's a consortium of businesses. The US has NATCHA.
Trusted third party owned by the banks, or providing audited services to the banks. Banks trust the third party because contracts are enforced by law as well as federal and industry regulations.
Ain't no judge gonna throw up is hands and go "well, the smart contract says so, my hands are tied!". Blockchain doesn't solve anything where there is a functioning legal framework.
You can't use technology to solve a problem that isn't a technology problem.
> And who enforces the contract? [...] Blockchain provides satisfactory answers to all those problems.
No, it doesn't, not if the contract touches on anything outside the blockchain. At the very least this includes anything physical (physical objects or physical services) and currencies not based on that particalur blockchain.
Moreover, blockchain isn't even allowed to be a satisfactory answer to all those problems, except when you're operating in an extra-legal environment.
Because, if a court decides that a transaction was illegal and orders you to reverse it, answering, "But the blockchain. . . !" is a great way to land yourself in jail.
Which, granted, plenty of anarchists and criminals have moral or practical reasons why they would rather operate in an extra-legal environment. But here we come to the reason why skipping the "as a..." line in your user stories is such an anti-practice: Those are two very specific user profiles. Most the rest of us would like to see QuadrigaCX's clients get their money back.
In some respects this is particularly useful in a criminal setting due to the US legal systems doctrine of un-clean hands. You can't sue your drug dealer for failing to deliver as agreed, for instance. As such, the blockchain is effectively the stand-in as you can't get sued by your counterparty over illegal transactions anyways, and the judge won't order you to reverse them.
But if you are dealing drugs, and the judge says to hand over the funds, you better believe that no amount of "blockchain" will keep those funds under your control.
> Blockchain provides satisfactory answers to all those problems.
Sort of:
> who owns the database?
Whoever has the most computational resources, in most implementations.
> who enforces the contract?
Depends on the contract. If I sell my house via a blockchain contract, a computer isn't going to come and evict me. If I sell you some heroin, or an action figure, or a rare in-game skin, it's still not going to help.
> who owns the actual data?
Nobody, and that's a problem when data needs to be removed.
To be fair, I think most people who have given blockchain an honest 30 minutes of brainstorming aren't arguing for real world assets connected to a chain.
I would argue that there is potentially a use case when it comes to things that can be completely represented digitally e.g. money.
> To be fair, I think most people who have given blockchain an honest 30 minutes of brainstorming aren't arguing for real world assets connected to a chain
You say that, and then look at the number of companies selling blockchain based services promising exactly that, and enterprises paying for projects...
It's understandable why as well. Pure "digital world" businesses that blockchain can deliver like provably actuarially fair gambling exist, but they're pretty niche.
I'd question whether money can be completely represented without recourse to the outside world - what gives money relatively stable value is the real world enforcement of contracts, debt obligations and taxes. Take those away and whilst your blockchain can validate the integrity of some numbers you hold, you can't guarantee anyone actually exchanges it for anything actually useful in future.
No doubt that there are a lot of people selling those services, but I think they are capitalizing off the fact that a lot of people don't know/spend the time to understand where blockchain actually improves things - and it's no fault of those people.
From my understanding, blockchain is essentially "cheap trust" . You can pay the system a fee to trust math rather than a human. Once I learned that, I realized there are very few scenarios where cheap trust is needed.
So perhaps I should adjust my first statement with "people who understand blockchain" - although even that's not necessarily fair as it assumes that I "understand" it.
I suppose what I'm getting at is that I think it's unfair to look at the number of scammers/people selling "blockchain" services and make an assumption on the industry as a whole. Most of the developers in the space that I know completely write off those people and don't even consider them in the industry.
On whether money can be completely represented without recourse to the outside world -> Agreed, I should again amend my statement to say "value". There is no doubt that 1 Bitcoin represents a certain amount of "value" right now and that value has so far proven to be un-censorable. Whether it will be successful money is a different question.
>To be fair, I think most people who have given blockchain an honest 30 minutes of brainstorming aren't arguing for real world assets connected to a chain.
The comment above says that the blockchain provides a satisfactory answer to enforcement of contracts. People really do seem to think that contracts made on the blockchain will magically enforce themselves in the real world.
Slightly ridiculous. Blockchains enforce the contract on the blockchain.
The contracts don't, and can't, concern themselves with anything that is off the blockchain. Once the ether is in your account, the contract is complete.
They enforce the contract on the blockchain, but that's pretty much irrelevant, since breaking a contract usually doesn't involve anything a blockchain solution would control.
As an example, fradulent fish is a huge problem in the fisheries and food industry. At every step of the supply chain, there is temptation to substitute expensive for cheap fish. Most Chilean sea bass you buy isn't actually Chilean sea bass, for example.
A lot of people are hyping blockchain as a solution to this serious problem, not appreciating the fact that the technology cannot actually tell different types of whitefish apart. I really would like a solid counterexample where blockchain actually would help, but I've never heard one.
I'm not sure I'd necessarily call those problems - it's a weird definition I know, but perhaps tradeoffs?
1. On Electricity - It needs to be expensive to try to cheat or steal from the system. Currently with gold you would need to hire a private army to steal from and break into vaults - that's so expensive and crazy that I don't think most people are willing to undertake that risk. Currently I think electricity is the best way to make digital native things expensive. I'm not sold on anything else yet (definitely open to new solutions, but I'm not convinced think PoS is a viable one).
2-3. I think this is an interesting tradeoff. The way I look at it you pick 1 of 2. Either you trust someone or some people to return lost funds/remove "problematic" data or you trust the system in which case those things can never be recovered/removed.
I think calling those "problems" might be premature as they could actually be "benefits" depending on how you look at them.
Re 1: So why again are we wasting an entire country worth of electricity to secure some numbers? Because we haven't found a good replacement yet doesn't cut it. It's like saying why am I dumping dioxin in the rain gutters? Oh, well, I haven't figured out a better plan so back off, socialist :P
Re 2-3: Tell that to customers of Quadriga and MtGox and the countless scammed, those who paid ransom to kidnappers. Everyone who lost their keys. It's a problem, let's face some reality here.
I frequently see commercials that must have cost millions of dollars to create and place that make the opposite argument. If what you're saying is true, the whole industry is just selling snake-oil, and (I think?) people are buying it. The more likely scenario, it seems to me, is that lots of these people actually believe in good faith that this is actually useful technology. If you assume that's the case, it makes sense for people to continue pointing out why that may not be true.
> The whole industry is just selling snake-oil, and (I think?) people are buying it.
No, not people in the sense of end user customers. The industry is selling snake oil and some investors have bought into it and subsequently promote it.
10 years down the road and they're still trying to find a mainstream use case, but they won't find it because in the end using a blockchain makes everything harder if you are a legal enterprise.
>A trusted authority with legal obligations of honesty.
It doesn't even need to be that trusted. You can stipulate in the contract that they must stream the log to you and then scream bloody murder if they try to monkey with anything. A blockchain is just a trendy write-ahead-log.
You could do this on pretty much any database I know of, but it's a kind of dumb idea.
"Blockchain provides satisfactory answers to all those problems." - mostly by hand waving. The blockchain model works in the case of cryptocurrencies - because it is subsidized massively by the block rewards. It is very elegant solution - every party can join the system and leave when it wants, no need for any contracts. It is also very surprising that this can be done and that ignited the imagination, but none of the non-currency blockchain projects that I have heard about want to use that model - because of the enormous cost. They want something called 'private blockchains' with no PoW or any other mechanism relying on coin minting - but if the blockchain maintenance is not subsidized by new coins - then you need contracts for that. And it gets much less elegant. Blockchains are also very complex systems with huge attack surfaces, because they are build around complex incentives structures. Private blockchains don't have the elegance of the public, free to access for everyone blockchains, but they still have the complexity.
Why do you (and others) call the technology itself 'blockchain', singular? The Bitcoin blockchain and the Ethereum blockchain are fully separate so to describe a set containing both I'd say 'blockchains'. If someone asked my what technology they used, I'd say 'a blockchain'. But my usage is not what I see from advocates.
“A database and a contract”... but who owns the database? And who enforces the contract? And who owns the actual data?
Blockchain provides satisfactory answers to all those problems.
I agree 100% with the article in that blockchain is being ‘applied’ to a whole bunch of places that don’t need it. That doesn’t mean that it can’t work well in many other (legal!) scenarios.