I don't see why something like insurance needs a token on a decentralized blockchain. The Bitcoin blockchain needs a token because the token itself represents the value (BTC) inside the network. The token is also needed because it adds an incentive for nodes (miners) to support the network.
Note: this is my current view of it. If someday it turns out it is useful, I am happy to admit that I was wrong.
You're missing the forest for the trees. Bitcoin is broken and will never be more than a speculative asset with no intrinsic value. Blockchains can solve problems. Decentralisation can quickly become federation. Example: a global id system where the "miners" are countries. It removes the need of physical passports and their associated costs and delays.
> You're missing the forest for the trees. Bitcoin is broken and will never be more than a speculative asset with no intrinsic value.
I disagree. It's off-topic so I'm not going start an endless discussion about intrinsic value.
> Decentralisation can quickly become federation. Example: a global id system where the "miners" are countries. It removes the need of physical passports and their associated costs and delays.
As long as humans submit the external data to the blockchain someone can cheat with the data. Actually, cheating is a nice feature if you need double passports for diplomats, spies or informants. The result is a blockchain with permanent records with data you can not fully trust because the data did not exist on the blockchain in the first place.
I'm all for a digital solution instead of physical passports but I do believe this can be solved with distributed systems and international standards, instead of permanent records on a decentralized blockchain.
> As long as humans submit the external data to the blockchain someone can cheat with the data.
I am glad to see someone else who realizes this point. When people were all excited about supply chain blockchains (for example, a blockchain to verify a piece of fruit is picked in a certain place at a certain time, that the transportation truck maintains a certain temperature) I kept asking what stops someone from lying and putting in bad data or tampering with any sensors along the way? There seemed to be this idea that what was on a blockchain was automatically truth just because it was on a blockchain.
I think the only good case is with KSI, but that's not actually a blockchain even if they use the name in marketing.
In their case, they limit themselves to verifiable timestamped witness. Someone can still submit bad data, but now you have a log that at time T entity E submitted document D, and if it turns out to be fraudulent you can't backdate or put a different one for it (could be also used to detect tampering with sensors if you receive something that shouldn't pass a sensor that worked correctly yet you obviously have it)
I'm thinking of a blockchain where the ledger is public read (for verifications) and write-constrained. How can you verify the.legitimacy of the introduced data? Probably some other tool. But it being federated across countries would have the nice property of non-gatekeeping. There are politics in play, but if the UN is possible, só is such a system.
This is all just my theoretical assessment, anyway. And I agree that other standards and toolchain is necessary to add value. Blockchains don't do KYC nor identity verification and a lot of other things.
You’d have to get those countries to agree on a common set of governance rules, and inevitably some bloc of countries would eventually fork and go it on their own because they want a different set of rules (e.g. mandatory biometric data, inability to update passport data like gender, etc). I’m not sure it solves any problems that the diplomatic system doesn’t already solve.
This also ignores that the costs and delays associated with passports are frequently the point — you can’t have a corrupt official ask for a cash payment to “expedite” your passport / visa application if it’s fast to begin with, and doling out those kinds of patronage positions to the right people is often how you build a winning political coalition domestically.
> you can’t have a corrupt official ask for a cash payment to “expedite” your passport / visa application if it’s fast to begin with
And yet this happens. Theoretically the blockchain reduces the entry barrier more, while not compromising on compliance and security guarantees.
You're spot on that countries would have to agree, and different blocks could form. It's no different than trade and visa agreements. The blockchain doesn't solve the problem IMO,it just reduces the cost. Trust in institutions will never be replaced by the blockchain.
I’m not convinced that blockchains would actually reduce the cost or provide any benefit over a federated system where each nation (or group of nations like the EU) controls the data of its own citizens. I run into this problem with nearly every potential blockchain application I hear: it’s usually faster / cheaper / less disruptive to use a centralized or federated system governed by legal agreements that are hashed out in negotiations.
Politics underpins all of it — a lot of blockchain advocates look at blockchain as a way to sidestep political squabbles, when really the politics exist at a lower level of the stack upon which blockchain governance rules are built. A nation could unilaterally cease participation in any blockchain at any time, and use political pressure in other areas (trade, defense, etc) to get other nations to join them.
Blockchains can, and most likely will, be federated. Legal agreements can be managed via such a system. Bear in mind that the blockchain does not solve politics, and all the problems you mention are a problem of the currently most common implementation of a blockchain, which is cryptocurrencies.
But like, why? Sure, blockchain can do a lot of things, but it’s not clear that it’s better than an API for the vast majority of applications while being worse in a number of ways. You can put similar governance rules on an API without the complexity. The flexibility inherent in human interpretation of legal agreements is a key feature of a common law system like we have in the US.
To echo the author’s thesis, we’re no longer in the early days of blockchain. We’re over a decade in and nobody has gained traction with a use case that isn’t purely speculative. That in and of itself should say something.
Blockhains can be as simple as an API. See the 7 layer stack in the Nexus blockchain (you definitely don't need to go smart contract all the time).
I think the author exaggerates a bit the tone. Sure, 10 years is a lot of Internet time. But the steam engine took 50 years to become viable. Then the industrial revolution was a period of 80 years. Put that into perspective.
I guess, by speculative, you mean the cryptocurrency craze.and I can agree is a speculative bubble, an MLM scheme. But then you also have https://cyber.ee/resources/news/digital-identity-and-blockch... . You'll soon have CDBCs. And when it's here, you'll barely remember what this conversation.
I’ve done some work in the supply chain space around blockchain; the problem is that in many industries there is already an oligopoly of 2 or 3 companies that control things. They have no incentive to give up any amount of control; instead preferring to lock their customers in to their products and platforms. Governments are the same in an international sense.
The technical problems are solvable. The political ones are not.
> a global id system where the "miners" are countries.
Can I mine on this blockchain? If not, what stops me? If it's some permission I need, then what's the point of using a blockchain? Why not just have countries issue digital certificates for passports?
It sounds like you're in the "Blockchain not Bitcoin" phase that was all the rage around 2017 or so ("we're going to put cows on the blockchain!"). Most of us either moved on from that to purely on-chain financial chicanery (defi, nft) or became disillusioned with it.
I believe the promise of having an insurance contract publicly verified by a decentralised system is to reduce the inherent costs of the current regulated system.
In my country,and I assume in most it's the same, in order for you to sign a buy contract for a house, there has to be a notary involved. The whole process costs a significant percentage of your already heavy purchase.
A blockchain won't solve all the problems here, but it may cut a few middlemen. And it doesn't have to be on ethereum or bitcoin. The Estonian (or is it the Finnish?) Government already uses a blockchain for their digital id system.
The notary is a teeny-tiny portion of the expense in the homebuying process. And you'd still need a lawyer involved if your transaction involves mortgages (and likely you'd still want one anyway to construct the transaction). Putting deeds on the blockchain changes the homebuying process almost not at all.
As for state IDs... why not just a centralized database with a public API? What does decentralization achieve for a system that is fundamentally centralized. Nobody can issue an ID except the government in this case.
The promise of blockchain is to eventually remove lawyers and all middleman. It can be done already with existing tech. I can easily imagine a smart contract managing property rights, another one managing mortgages, etc. And of course all that has a back door so a court order can rollback a transaction.
if we are trusting courts to have backdoors, does it not completely negate the purpose of blockchains, i.e. trustlessness
if you trust the court, why not just have them store everything on some mysql database and execute all the ""smart"" contracts as regular java code? blockchains are necessarily orders of magnitude worse in terms of performance. why do you want to use an extremely slow linked list based DB?
No, because courts can be elected by voting on the blockchain which gives society a way to control them. And voting on the chain (if implemented right) cannot be controlled that easily by a government.
I’m all for the central database. To enter data into it the government will appoint an agency which in turn will appoint individuals after they pass exams or get their license. The said individuals will have to fill in regular reports that had to be somehow processed and analyzed. Also each such individual required to keep records in a safe manner, sometimes this means hiring a security and a compliance officer. At this point it is not clear if the cost of maintaining the agency and all that people is less than automating the agency of the blockchain.
i dont know how to explain this to you but the only thing that blockchains replace are databases like mysql. if, for whatever reason you needed a security and a compliance officer, then you would still need them even if you switch to blockchains. if you needed to file reports using a centralized db, then you would still need them with blockchains.
the only difference between centralized databases and blockchains is the property of trustlessness. everything else can be done much more efficiently by normal databases. if you dont need trustlessness then you dont need blockchains
> i dont know how to explain this to you but the only thing that blockchains replace are databases like mysql.
This is just one half. The other half is blockchain and smart contracts also replace all the people involved in controlling access to a central database. I can imagine a smart contract that would allow me to transfer ownership of my car to you and get paid in return. I cannot imagine an API to a central database that can do the same. One thing you can do to defeat my point is to show how such an API can be built.
You got me, lawyers can stay :) But a bunch of clerks and middleman are out.
Today the job of a middleman/clerk is to modify a centralized database in a regulated way. They got their licenses, exams, special education and so on. There is a government machinery behind every such database - agencies, controllers, educators, bookkeepers, etc. While you may be paying $4 for a notary signature you might be paying way more from your tax money to keep governing bodies running across the country.
My point is statement that a centralized database is cheap because it is easy to modify simply ignores governance cost which might be huge.
The reason why lawyers and middlemen are required is not because authority is too centralized into the relevant governing bodies. They're there for lots and lots of other reasons that blockchain can't help with.
The only reason why we have trusted middleman is because before bitcoin there was no scalable solution to Byzantine generals problem. Now we have it. Whenever this solution is better than having a central entity appointing middleman is remains to be seen.
Blockchains can reduce number of middleman we have to deal with. The open question is at what cost.
Mire important than a notary is title insurance. Title insurance is a form of insurance that protects lenders and homebuyers from financial loss from an improper title to a property, for instance someone selling you a property they don’t own.
This is the kind of thing at first glance people say is made for the blockchain, but in reality the incumbent solution is actually pretty reasonable and the actual gains from a new system are negligible.
> the incumbent solution is actually pretty reasonable and the actual gains from a new system are negligible.
This is especially true when you learn about the nasty edge cases title insurance helps with. A lot of people trying to drum up buyers for their hashes talk like the value comes from recording the chain of transfers when you're really paying for things like handling cases where, say, a surveyor made a mistake in 1952 and now two landowners have legal ownership of overlapping properties or some mistake in probate three owners ago meant that someone has a claim on 10% of it.
Title Insurance is indeed a racket at this point. Their payouts are a tiny percentage of their overall premiums. As you mention, this seems like a good option but in fact isn't a good one.
In order to replace title insurance and make it so anybody can verify the state of a property you need to first make all liens ever live on the blockchain. That's the hard part here. If it is possible to have a lien on a home without that appearing on a blockchain then there is still a need for somebody to review the title.
Further, there is no need for decentralization! The state can simply operate a centralized append-only database where transactions are recorded and liens are created and publish that to everybody.
It is true that the price of title insurance is very small compared to the price of the house. But their expected payouts are still a smaller percentage of their premiums than other insurance.
Torrens title is the boring have a database solution. It solves messy issues like courts having to determine if a lien is valid and recording it if so by changing the DB.
FWIW, I think a notary signature in the US costs like $4. If verification is the only problem that blockchain solves, it's not a very cost-effective solution.
For me, a US notary signature currently involved a 2 month wait time at the US embassy. At the notary I used back in San Francisco, it cost $30, not including the cost of going there.
> The Estonian (or is it the Finnish?) Government already uses a blockchain for their digital id system.
if the estonian government is operating and enforcing it, why do you even need the blockchain bit? just put the database onto mysql and and make a website for people to transfer ownership online
If home ownership was on a distributed blockchain, local regulators would rapidly discover a need for something like a notary to verify that the transaction has been done correctly on the correct blockchain by the people who actually own it, so as to ensure the consumer isn't sitting on the other side of the table with someone not bamboozling them about their ownership of the house, or bamboozling them about their transfer of ownership, or so and so forth. The notary would also validate that the transfer has successfully been completed on the blockchain respected by the local governing authorities, and has been filled out completely correctly.
You might think this is silly, but fake selling of homes is actually thing that happens! I don't just mean that regulators would do it for gatekeeping purposes, I mean there would be a real need for this. In the bizarre circumstance that this move to the blockchain actually happened for home ownership, the HN gestalt would rapidly be screaming for legislation and regulation around blockchain changes.
Which means, once again, that blockchain is solving a problem that doesn't exist here. The problem with home ownership and the problem notaries are solving was never that the authority was too centralized into the relevant governing bodies.
That's the reason why after 11 years blockchain has exactly one use case, and even that one is dubiously solved IMHO. It brilliantly solves problems we don't actually have.
I believe you're downplaying the potential here (and I'm overplaying it). A particular blockchain you could immediately verify home ownership online via some sort of signature with the public key from a seller seems like providing the same type of guarantees. Is it 100% safe? Certainly not. But considering your notary might be a fraud, a scammer or just not very good at what he does...
Compare the example with withdrawing money: you can go to an ATM and withdraw money for no fee, depending of the country. Do it in the bank, there I an associated fee.
The legal system would still have to adopt it though. And it's an industry less prone to digital innovation. And there is no financial incentive, as there is no narrow profit margin you need to optimize. So yes, it may never happen.
Typewriters had immediate value: buy one and you can produce easier to read documents faster — a very fast writer might do as much as 30 words per minute, which is like a third of a proficient typist’s throughput. Businesses bought them rapidly because it meant the same number of clerks could do more work and you reduced errors due to bad handwriting.
Put another way, the first commercial typewriter was sold in 1874 and was an immediate success. By the 1880s, typist was a booming field — especially for women seeking employment outside of the home.
Blockchains have been commercially active for 13 years at this point. If Bitcoin shut off tomorrow, the only reason anyone who isn’t involved in shilling it would know is that all of the speculators would be screaming for government bailouts.
The GP pulled one of the cryptobro rhetorical scams: X existing technology took Y years to catch on!
Besides the statements rarely actually being true they're nonsensical. A typewriter (or whatever technology they point out) has obvious utility. No honest assessment of whatever they can bring up will say that X technology is useless. Maybe at the time typewriters we're released fountain pen manufacturers or penmanship clubs said they were useless. But they have a vested interest in the status quo.
I don't think most anyone pointing out flaws in cryptocurrencies have a vested interest in the status quo. I certainly don't. I don't and doubt you have some sort of short against Bitcoin or own a bank full of fiat currency.
The cryptobros can't seem to fathom that they got sold on a bunch of useless shit. When they're not at the top of the Ponzi scheme they can't seem to conceptualize that they've been had. It's kind of sad to see. At the same time it's infuriating because their scam is literally wasting a small country worth of electricity to mint Geoffrey dollars.
> The cryptobros can't seem to fathom that they got sold on a bunch of useless shit.
I think it’s more that they can’t afford to acknowledge it: the only way cryptocurrency has meaning is if they can line up a buyer, and as soon as you allow that to be questioned those big dreams about becoming as rich as the people selling them on “web3” start to look pretty unlikely. A lot of these people have built their vision of the future on very high returns and the only way that happens is if they donate their time pro bono to the major investors backing these companies.
So your reasoning does not deal with anything we're discussing, rather you go on describing people as cryptobros, define their characteristics and then make a conclusion, based on what you think. So you didn't bring anything to the conversation other than your wrongly held opinions. I could go on my own exploration and conclude that you, speaking in such a way, don't know what you are talking about.
Not having to speak to anyone to do it. I don't know if blockchain is going to go anywhere but I think there's inherent advantages in not talking to anyone (and being able to do it programatically) to do banking-like things. What you get in exchange is lack of security, no recourse when things go wrong, and possibly being in the same space as criminals. But there's a palpable advantage to not having to interact with any humans in order to do things that historically require a lot of meat space interactions that now can be automated by anyone in their home.
It's like having access to a completely deregulated bank ran by the mafia that has an API anyone can use. I think there's use cases for that, though maybe not the ones the community usually mentions.
But like.....what kind of things can you do without interacting with people when using a blockchain? Name anything. My insurance policy I bought online and I can manage entirely online, change the address, the car, the add-ons, add and remove drivers as well as cars......what exactly is blockchain allowing me to do here that I can't do already?
Same with the bank. I don't think I ever had to speak to my bank in the 8 years I've been with them, or even been to their branch for that matter. You do everything online or in the app.
IMO it is because so many people have a kind of sexual fetish of technophilia.
They literally get off on new technology. It doesn't matter if it doesn't solve anything. It just needs to feel new and as if progress is being made. As long as it feels new and like progress the technophile will be happy to reinvent the wheel.
Even the word technophile has positive connotations as opposed to something deviant in our society. We don't even have a word for a deviant technophile , deviant over obsession with nonsense and "the next big thing".
With this attitude, nothing. I've compared it to an unregulated banking API. So for example you can launder money, do transfers that don't go through KYC, among other things.
By now you can also do things that benefit from the network effect of crypto enthusiasts, for example, you can sell JPEGs from a no-name artist for significant amounts of money, which would historically be difficult for outsider-art, regardless of the fact that you're not even selling the actual rights to the images. It also proved to be an interesting way to speculate on internet memes.
There's millions of people using this ecosystem, even if it ends up being overall net negative for the world and a temporary technological distraction, I think one should be able to neutrally assess what it's being used for. You may not like it but it's like saying a nuclear bomb has no use. You may not like what it's being used for, and it may be immoral or illegal, but to say there's no uses when clearly millions are engaging with it and doing "stuff", seems short-sighted for the purposes of discussion.
So it's only good for circumventing crippling social phobia? How many people suffer from those? And, hey, I've been using non-Blockchain-based online banking since around the turn of the century; can't recall when I last spoke to a bank teller, but it must have been well over a decade ago[1]. So even that use case is adequately solved without Blockchain.
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[1]: Except for buying some foreign cash before going on vacation, that may have been in 2012. Do the clerks at Forex count as bank tellers?
no they didn't ask the same question, because the electronic keyboard had solved some problems better than a typewriter.
I think there are problems that are suited to be solved on the blockchain - like land titles, domain names, etc. But the existing solution to those problems are adequate, and the sudden change is too costly.
It's worse than not serving any purpose. It's information about your life that is forever stored out in the open. Except for some limited cases, it's no ones business to know whether I am insured and for how much.
Agree, and once quantum comps are more readily available - re-analyzing the entire chain and profiling individuals will be so easy, an AWS quant rental will be able to decrypt and do it.
I don't even know if quantum is necessary for that. There's already blockchain analysis tools. All you have to do is slip up once and tie a wallet that you didn't want anyone to know about to your identity and then it's relatively easy for those tools to be used to see everything you've done.
I almost paid for something with bitcoin once because they weren't taking anything else. Nothing illegal but also something I wouldn't want the world to know I paid for. I ended up choosing not to because I didn't want that transaction forever stored on the blockchain.
