this post was submitted on 13 Nov 2024
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I’ve read that blockchain itself is a good technology. NFTs are a laughably absurd attempt to exploit that technology for profit.
Xitter op needs to shut up.
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.
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.
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.
Edit: you all are comparing money, banking, AND government regulation to crypto. They are not comparable and that's not a fair comparison. Crypto is a ledger, like QuickBooks or bank accounts. I'm not even arguing that it should have a great value, but technically it does have value and it serves its purpose. Crypto is only like 15 years old.
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.
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.
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
What problem does blockchain solve?
Having too much electricity and not enough CO2.
We recently developed AI for that purpose though which does the same thing but is useless in occasionally funny ways.
Apparently, it can be very secure. If “pieces” of a secure key are stored in multiple places, for example, only changing one link in the “chain” means it won’t match with the others. They ALL have to be changed at the same time, which is virtually impossible to do in secret.
Please note that I am far from an expert on the subject. I’m paraphrasing an article I read months ago.
Can’t you takeover a blockchain by owning the majority of a block chain, or by having a majority of the processing power to compute hashes?
Yes which is part of why the major chains are owned and controlled by companies, but then that makes the whole thing pointless. IMO, a company controlled blockchain may as well just be a DB cluster, it would be faster and more efficient.
Are you saying that they “solve” that by never giving up more than 49% stake?
That… seems like a bad solution
If you had 51% of the world's computing power (to blockchains using proof of work) yes you could forge records, from what I could wrap my head around about blockchains.
You don't need 51% of the world's power though, just 51% of the power of people who care about how the system works. Most people using block chain cryptos don't care at all, so the threshold is a tiny percentage of the user base.
Yeah you're right. I was thinking specifically Bitcoin and the astronomical amount of compute power that's behind it.
Essentially, verifiability (the token exists on the blockchain), de-duplication (each token can only exist once on the blockchain), and proof of ownership (only one account number can be associated with each token on the blockchain). There's nothing wrong with this idea in a technical sense and it could be useful for some things.
But... the transaction process is computationally expensive. For the transaction to be trustworthy, many nodes on the blockchain network must process the same transaction, which creates a whole bunch of issues around network scaling and majority control and real-world resource usage (electricity, computer hardware, network infrastructure, cooling, etc).
And beyond that, the nature of society and economics created a community around this unregulated financial market that was filled with... well, exactly the kind of people you'd expect would be most interested in an unregulated financial market - scammers, speculative investors, thieves, illegal bankers, exploitatitive gambling operators, money launderers, and criminals looking to get paid without the government noticing.
The technology can solve some interesting problems around verifying that a particular digital file is unique/original (which can be useful, because it's extremely easy to make copies of digital information) but it creates a long list of other problems as a side effect.
Intermediary free monetary transfer, lack of trust, transparency
It does only the last one and only partially.
Blockchain / NFTs do not solve proof of ownership. Just ask all the people who had their NFTs or crypto stolen or lost in scams.
In your example, technically title fraud is more difficult because it needs to be done in two places. In reality it becomes far, far easier because you've now opened up a gigantic attack surface that you have no control over, and made both systems of verification worth less. If someone manages to compromise either one, there goes your proof of validity. Which one of them is real and which one is fraudulent?
Don’t we already have systems for that? What about the vulnerabilities of blockchain takeover?
It's one of those things where scientists discovered something interesting and novel, and then a bunch of dumb grifters came in to try and make it their new snake oil.
A very, very long time ago, back when Bitcoin was viewed as a currency instead of an "investment" platform, Bitcoin kinda fulfilled the ideal use case for the blockchain. I think now the general public is just too soured on them for that to ever be the case, unless Elon makes Bitcoin the new currency of the U.S...
the way people use NFTs with art are certainly absurd, but even the core technology of NFTs is actually excellent
I agree completely!
It's a way of guaranteeing behavior when you shouldn't have to trust any individual to review it. It's a great tool for currency, but most people seem to prefer the system where we treat the companies behind the 2008 financial crisis as the trusted party.