I’ve read several technical, non-fluff books on the topic, and I’ve developed smart contracts on Ethereum for decent hourly wage (paid out in fiat).
And I’ve still come to roughly the same conclusion as you. Either my reading comprehension is poor, or there is little actual value in the vast majority of blockchain applications. Digital cash, as defined in the Bitcoin whitepaper, still seems like the only real use case.
Other uses are fun for a developer to read and learn about, but that’s just about the only real value you can extract from them.
Well, and making quick developer buck, which is the equivalent of selling shovels to prospectors in a gold rush. The main difference being that it’s merely a jpeg of a shovel.
But even 'digital cash' doesn't need this, for most definitions and use cases.
Even if we're talking about smuggling money out of authoritarian regimes, or buying soft drugs, or hiring hitmen online, I'm not sure it makes any actual sense compared with alternatives.
Feels like a way for people who've been convinced that government doesn't work to feel like they're re-inventing government with extra steps, mixed with a cult/mlm/ponzi scheme.
You can also use it to buy goods from oversea retailers without paying exorbitant fees, bad conversion rate. If you live outside of America and Europe, banks charge a hefty amount of fees for international transactions.
The world is volatile. Syria, Afghanistan, Ukraine, Russia, and in the future who know if China and Taiwan won't become a crappy place to be. The needs to store your wealth and get out of the country quickly is very real. You can't just queue for ATM and holding dollars and gold bars come with significant risk of confiscation or being robbed.
We're not talking about tax evasion. If you don't have hundreds of thousands of dollars in assets, then banks have all sorts of fees that they ding you for just like the phone company when you travel, and they won't waive them as they have no incentive to keep your business. Folks with lots of money who track every penny are often unaware of the landscape for these fees, because banks actually do have an incentive to keep your business and they do waive them without even asking.
If you think there's something illicit about seeking to pay the least in fees and with the broadest reach, or if you think that paying fees to every company who comes along that gets to play middle-man is exactly the same as paying your fair share in taxes then I'm not sure what I can do to dissuade you of this notion.
You know I would not actually mind seeing all the gov budget spending get tracked on a blockchain. I often wonder where the trillions in budget spending goes.
Don't you want some verifiable continuity in those books?
How do you guarantee that continuity breaches are easy to spot when they're "books" and you can publish as many of them as you want, or skip one if it turns out we don't want transparency somewhere because of "national security"?
This argument always seems to start with "there is no application for blockchain" and then moves the goal post to "that application doesn't NEED a blockchain" when we didn't even want ONLY that one application, we came for the whole package.
Do you really trust the government to publish accurate data if there is no transparent mechanism to keep them accountable for their accuracy? What is your alternative proposed mechanism for ensuring that the books are not cooked? (Is it another law, this time that says "books SHALL be balanced" and links to the RFC that provides specific definitions for modal verbs like MUST, SHALL, MAY, COULD?)
We certainly COULD invent another system that all tax money passes through, which ties out and all tax revenue is required to pass through, but how far will you stretch the spec in the opposite direction just to make sure that we didn't use "blockchain" which I'm assuming you consider as "scam tech" and you are apparently convinced that we don't need?
What's realistic is a policy of "no backsies". You can't prevent a party from lying (without remaking the world so that everything happens on your favorite blockchain, which ain't gonna happen), so what you do is you catch them in their lies.
Just so you understand me, I have basically zero expectation that anyone is going to choose "my favorite blockchain" for their next big project and send the price soaring. It's just not going to happen.
With that out of the way, what stops the government from implementing their own CBDC and saying "tax revenues SHALL be paid downstream via the US-CBDC Token" and requiring approved vendors to implement it for their US-Gov Receivables? This seems very likely to happen. I would actually bet on it.
You're telling me on one hand, the problem is solved (example TLS) and on the other hand, I need to be realistic about my expectations, since it doesn't solve the whole problem... which seems to indicate to me that your solution is actually not solving the problem you expected me to have, which is there is no effective or continuous transparency about how much money our institutions have in-flight and where it's going or gone, and there is no sponsored route for institutions to "opt in" to such transparency and actually enforce it permanently.
That's what the blockchain is for.
What's un-fixably wrong with the blockchain solution exactly? I fully expect this US-CBDC is going to look nothing like I wanted my blockchain to look (it won't be in any way decentralized at all, it will have some government-sponsored "oracles" instead of user-sponsored nodes, so that it will be a blockchain in name and in function, but you won't be able to mine it, and it won't be "ours" – it might actually go on Ethereum, but I doubt it will and I definitely won't hold my breath. It will probably be super green for the environment, whatever it is.)
So how can you simultaneously believe this is a solved problem, which can't be solved, and yet already has been solved by Blockchain (but we don't need it?)
> without paying exorbitant fees, bad conversion rate
What the hell would you call gas fees, then? And if you don't already have assets in the crypto coin of your vendor's choice, you're going to pay conversion fees, too.
I was convinced government doesn't work and indeed that is the only reason I am interested in blockchain applications. Watching first hand how badly the entire affair has gone has been very useful into getting insight into why government doesn't work, which I still firmly believe. However I am no longer under the illusion doing away with it and replacing it with a blockchain based substitute is either cheap or easy, and if we skipped a hundred years into the future and it turned out that the end result looked almost indistinguishable from what is presently described as government I would not be altogether shocked. I would however consider that amongst the worst possible outcomes.
It may well be that there is a necessary deadweight economic loss to pay based on the nature of human social interaction at scale and this loss cannot be avoided entirely, only minimised to a certain extent.
So, at no point did you consider that you were wrong in your base assumption and government does in fact work? Because it looks like you examined anarchistic alternatives to government, found them all worse than government, and then didn't do the (to me) obvious thing if updating your "government can be good" possibility.
> So, at no point did you consider that you were wrong in your base assumption and government does in fact work?
Of course, many dozens of thousands of times throughout my life, desperately wished for that to be the case. Unfortunately there is no evidence for this and immense amounts of evidence for the contrary.
> Because it looks like you examined anarchistic alternatives to government, found them all worse than government
I didn't say I found them worse than government at all, I said the first hand experience was very useful for seeing directly why government is as broken as it is, because all the same "incentive of last resort" mechanisms are typically in play in blockchains. It still turns out to be much better so far if measured by deadweight economic loss for economic coordination between a given transaction volume.
This is also why I said I would not be too surprised if it just becomes the next iteration of government. People who think that the government is desirable and its political structures are useful, parliamentary democracy, voting, departments that run projects and are accountable to elected officials, all of that kind of thing. You could clone it with a blockchain much more reliably and with much more auditability than you have with the multi-century old variations thereof running on some variant of "trust me" that we have currently.
Thus you could at least say "Yeah sure this is bad, but at least we can prove that everybody is following the rules on all elections, transactions, etc, and we have all the signed blocks to prove that from genesis" rather than the current trust-free alternative of an endless propaganda machine spinning whatever it wants people to believe at any given point in time with zero proof whatsoever.
> Of course, many dozens of thousands of times throughout my life, desperately wished for that to be the case. Unfortunately there is no evidence for this and immense amounts of evidence for the contrary.
I think the fact that 7 billion people live overwhelmingly under a multi-hundred-year improving standard of living [1], leveraging low-friction global trade, commerce and communication in among the most peaceful period in human history [2] is a pretty clear indication that government does in fact work.
Is it perfect? No, nobody will say that. But of course the solution to problems in any overwhelmingly complex system with a long track record is not re-invention but continued optimization. [3] Takes a long time to turn a big boat, and anyone promising you otherwise is selling you a crock.
Blockchain based systems over the duration of their existence by contrast have killed nowhere near as many no matter how you scale it, and although I believe the system to be rife with fraud and inefficiency, the amount of capital growth that has taken place is breathtaking pretty much any way you look at it.
I believe the state as a structure needs to die and blockchains so far look like the obvious sword. Nothing else has even come close.
It’s the largest preventer of death lol. Citation needed there. People will always die. Government minimizes this to the best of our abilities. How many do not die each year because of government?
As in software testing we don’t often measure the impact of our work in terms of things that don’t happen because our system exists. It is far easier to count instead the failures. But this misses the whole point. Count the deaths that don’t happen.
Meanwhile bitcoins thirst for coal kills thousands per year and achieves literally nothing.
Blockchains can only represent true state of things wholly representable on chain, which is why only currencies actually work. As soon as you try and ledger things off chain reality gets in the way and reality supersedes the chain.
> How many do not die each year because of government?
I'd honestly like to see any kind of attempt to quantify that, I've seen a few for example that gave credit for removing lead from fuel to the government and then tried to by extension say that the positive externalities from that should be attributed to government. Which of course runs afoul of the point that the government was responsible for promoting leaded fuel to begin with, right up to the point of suppressing alternatives. Which in turn begs the question, what will the government actually do generally speaking? And as far as I can tell the answer is work in its own interests and accrue benefits to those on the inside at the expense of those on the outside, and that's all. If hundreds of millions die in the process, that's totally fine.
That almost everybody accepts that entity should have a monopoly on violence and basically unlimited power strikes me as increasingly crazy as every year goes by and it does progressively more insane stuff and we slide closer and closer to the possibility of an extinction level event war.
> Meanwhile bitcoins thirst for coal kills thousands per year and achieves literally nothing.
I'm not interested in defending BTC generally speaking, as I despise it. I should however point out that proof of work has no intrinsic "thirst for coal". Merely the lowest possible cost of energy, right up to the point of subsidising alternative renewable low cost energy projects, which many POW miners have done and why hydroelectric power is such an oft-constituted part of their energy supplies.
My point in the first half is that you can’t look solely at the costs without looking at the benefits - unless you evaluate both you can’t make a meaningful judgement on the efficacy of a system. Yes for sure the government is the largest source of death — but only because the government stamped out all other sources of death. Removing the government would shift that death to elsewhere and not remove it. And if history is anything to go by, dramatically amplify it. That’s why government needs to be iterated on not removed.
Re: renewables in bitcoin, it’s all greenwashing. Every kWh wasted guessing nonces on renewables isn’t spent decarbonizing the grid where we do actual productive things. While generating inordinate quantities of e-waste. I mentioned in another reply 97% of all bitcoin mining hardware will be thrown out, burned, crushed or buried all without ever mining a block successfully in its entire useful life.
I know there are other consensus mechanisms but they just rely on feudalistic control of the supply and just create systemic inequality without accountability.
There’s no good that comes of this. In basically every case decentralization and permissionlessness is not what anyone actually wants or needs.
> My point in the first half is that you can’t look solely at the costs without looking at the benefits
There is no benefit from a political authority wielding entity which has not been provided by an entity that does not wield political authority. Therefore the political authority is not necessary for those benefits.
> Removing the government would shift that death to elsewhere and not remove it.
Removing the hundreds of millions of people who were killed in the name of national security and the maintenance of political authority would not magically make them die for some other reason instead.
> That’s why government needs to be iterated on not removed.
Whether you call providing the benefits of typical governments without their horrendous costs an iteration or a removal is semantics. My concern is that it gets done.
> Every kWh wasted guessing nonces on renewables isn’t spent decarbonizing the grid where we do actual productive things.
This would assume that those energy forms restricted to specific geographic locations are not so restricted. This is not true.
> I mentioned in another reply 97% of all bitcoin mining hardware will be thrown out, burned, crushed or buried all without ever mining a block successfully in its entire useful life.
Most e-waste won't mine a block successfully in its entire life. If it could contribute to the peaceful destruction of the state, hard to imagine a better use it could've been put to, given the statistics.
> I know there are other consensus mechanisms but they just rely on feudalistic control of the supply and just create systemic inequality without accountability.
You mean like being born economically so deep underwater it's impossible to ever even break even because of the economic mismanagement of your political authority wielding organisational unit? At least ledgers using those consensus mechanisms only levy debt on people who choose to participate.
> There’s no good that comes of this. In basically every case decentralization and permissionlessness is not what anyone actually wants or needs.
It's clearly what a whole lot of people want, as to whether they need it or not, time will tell. For all the aforementioned reasons, I think the case couldn't be clearer that they do, however.
> Removing the hundreds of millions of people who were killed in the name of national security and the maintenance of political authority would not magically make them die for some other reason instead.
Citation needed. This institutionalized protection system is actually exactly how we got government in the first place.
But also, in the last 50 years, which hundreds of millions have died? If there's clear trajectory that deaths are decelerating, why are we now more than ever eager to overthrow the system?
> Whether you call providing the benefits of typical governments without their horrendous costs an iteration or a removal is semantics. My concern is that it gets done.
Again you only speak in terms of costs and refuse to speak to or quantify benefits. That's not an objective evaluation. It's like saying computers are bad because people get hacked, and therefore we should throw out computers and start over from the abacus. You must quantify the good and the bad to evaluate.
> You mean like being born economically so deep underwater it's impossible to ever even break even because of the economic mismanagement of your political authority wielding organisational unit? At least ledgers using those consensus mechanisms only levy debt on people who choose to participate.
I reject the former premise and the latter isn't a reason to participate in a distributed ledger system.
> It's clearly what a whole lot of people want, as to whether they need it or not, time will tell. For all the aforementioned reasons, I think the case couldn't be clearer that they do, however.
Respectfully disagree. The overwhelming majority of participants are just speculators. They couldn't care less so long as number go up. The overwhelming majority of holders bought on an exchange (off-chain) and never, ever transact. They may as well hold micro BTC futures.
> Citation needed. This institutionalized protection system is actually exactly how we got government in the first place.
I'm not even sure I understand your hypothesis here. In the absence of the organisational units that engage in the mass killing of their citizenry in order to sculpt their polities to the ideology which holds sway within their murderous structure, those people will still die because "reasons". Please expand on "reasons" here.
> But also, in the last 50 years
Nobody ever did anything wrong if you can arbitrarily timeslice it in order to make your case. And even there, if you look at the things done under colour of political authority in the past 50 years, you'd still be hard pressed to find a bigger villain on the planet. It just looks good in comparison to the preceding 50 years.
> Again you only speak in terms of costs and refuse to speak to or quantify benefits.
Because once again, no benefit provided under the banner of political authority has ever failed to be provided absent the banner of political authority. When the apparatus in question reduces to an entity that has a monopoly on force in order to compel people to engage in transactions that they otherwise would not of their own free will, it is hardly surprising that all of the good things that apparatus has ever provided might in fact be easily done by the free will of the participants in question.
> I reject the former premise and the latter isn't a reason to participate in a distributed ledger system.
You can reject it all you like, but you're wrong based on the mean economic output per capita vs their debt calculated at birth plus their lifetime cost. And that is indeed a reason to participate in a distributed ledger system, the former basically guarantees collapse, it is only a matter of time, therefore moving to a system not so afflicted of your own free will is access to an easy yield in the meantime.
> Respectfully disagree. The overwhelming majority of participants are just speculators.
The participants in question is not the reason I say it's clearly what a whole lot of people want, it's because of the amount of times the exact conversation we're having about destroying the state being the exact reason any given participant in the cryptosphere is there, including myself. There is indisputably a great degree of desire to do away with political authority.
I believe audits and transparency are amongst the tools that can and do improve 'government' / 'democracy'. I can see ways that crypto (in it's old generic sense) can help but I don't particularly see any way that blockchain tech can help though?
Probably much the same way you can see that crypto in its old generic sense could do these things, with the additional security of the applications running on a blockchain, and the assurances about transaction integrity, censorship resistance, availability etc.
You can have a cryptographically secure platform for whatever governance platform you like, but if it's running on a traditional centralised server infrastructure within a political jurisdiction, it's completely vulnerable to tampering of government agencies within that political jurisdiction. This is a well acknowledged issue referred to as "data sovereignty" with the limitation that the way to ensure it's handled is to pick a reliable jurisdiction.
If we acknowledge that no jurisdiction is reliable, however, blockchains are the only choice.
That seems a bit of an unwarranted leap and very hand-wavy.
Why would blockchain be better than a decentralized, non-blockchain tech, hosted in multiple jurisdictions for transaction integrity, censorship resistance, availability and so on?
And why is a blockchain a better alternative? If the blockchain assumptions fall (51% control) then it's game over. Even the founding fathers were a step ahead of that and trying to prevent tyranny of the majority (probably code for "the rich staying rich", but that makes it an even better analogy) It all feels a bit like wishful thinking to me.
No matter where FAANG host their infrastructure, if a particular set of states want to tamper with, censor, or surveil that infrastructure, they will be able to do it.
The legal structures and the ability to identify ultimate beneficiaries guarantees this for pretty much any legal corporate structure organised under a state. The only chance this has of not being true is a blockchain, the ultimate beneficiaries can't be identified, the infrastructure is not linked to a particular legal structure. There is no guarantee the state can identify the appropriate necks to apply the appropriate boots to.
If an organisational unit is to exist that will destroy the state, at the moment the only candidate for its infrastructure is blockchain.
It was you that claimed blockchain could improve the state, now you've switched to only blockchain can destroy it? And replace it with "an organisational unit" which is apparently, not a state/government/democracy?
None of this sounds like a good idea, even in theory.
Monarchy was an improvement on despotism, maybe constitutional republics were an improvement on democracy, etc etc etc. The organisational units could be considered destroyed, or they could be considered reconstituted, the point is that the functions handled by the OUs in question went to another ostensibly more efficient instance thereof. This is much easier if the new OU does not rely on its underlying infrastructure from the old OU.
Things should improve somewhat is a pretty hard ask for something that doesn't sound like a good idea, letalone in theory. Of course, it's an open question as to what the end result of all of this will actually be, and maybe it will indeed be the worst catastrophic case of making the largest cause of non natural death in the past century even worse, but you'll excuse me if I find that hard to believe and think clearing that particular hurdle ought to be pretty easy, especially because this would be a non violent form of revolution, and the only competition is war. In a world of weapons of mass destruction that's a horrendous problem space to be working with.
You don't want a national system to be truly decentralized because if it is, adversaries can simply co-opt and control it. If you have to look out for that and roll off onto a different system (and have a mechanism to do so) then its by definition centralized and you can skip the whole blockchain chicanery.
You can just throw up a tamper-evident log based system. [1]
I dont think its much of a selling point in favor of government that the considered so far "anarchistic alternatives" are worse. That is by no means a recommendation
"What is a lose-lose situation?" Seriously, the idea that every option available is a bad one is not that difficult. Hell, even voting in the US is sometimes described as picking the lesser of two evils by those who don't feel well represented by the de facto realistic candidates.
Government is formed as a way to manage a society/community of people, if blockchain/crypto gets big enough to have hundreds of thousands of adherents, you'll also need a way to manage that "society". Some people think "the algorithm rules all", but as we've seen the algorithm is messy and has bugs and allow for thefts where you lose everything in a split second. It'd be like joining a society where muggers are free to roam and mug you, and to mug them back you have to find a cleverer exploit as your knife.
A blogger I read once laughed that an exchange/crypto-coin who suffered such a hack decided, to get their money back, they would contact... the police/FBI. Yeah, so much for that "We can't trust the government!" mentality.
The nihilist position that e everything is broken, except for a highly volatile system of digital signatures that require massive “fiat” capital investments to function.
The latest trillion $peso$ spending "package" has less of a direct impact on $globalrupee$. Hurricane $Chucky$ in $greentown$ does not as directly impact the $globalrupee$. If that is starting to sound more like an insurance policy, and less like a bunch of tin-foil hat wearing conspiracy theorists talking about "muh freedoms", well maybe that's because it is.
If you've developed smart contracts, I'm surprised you don't consider the capability of trustless financial instruments (peer-to-peer lending and pooled lending, for example) to be pretty useful as well
Your smart contract is only smart inside your Blockchain.
As soon as you use it for anything outside of it, you have the same issue.
How do I proof to someone else that I did what I should have done to get paid? By trust. Your smart contract can't verify that I did my part of the contract if it is outside of the Blockchain.
So what did you win?
Nothing.
Now you can work up a network of trust but you know this concept is much older than crypto and doesn't need a Blockchain.
And certain blockchains are looking for trust worthy entities to decentralize their own blockchains.
Now you even splitting up your trust in independent trust areas.
Do you know what trust system already exist? Which unites a lot of people? And is based on PoS?
Our current fiat and geopolitical system. Is it perfect? No. But we develop this system for a long time now
The current state is, roughly: Government-backed contracts are ultimately enforced by litigation, which is judged by a judge, who is appointed and judged by the state government, who are appointed and judged by the governor, who is appointed and judged by democratic elections.
A couple factors make the current system powerful:
- Each decision-maker is roughly motivated to seek truth and behave honestly by the judgement of the next level up, so i.e. impeachment of judges should be rare
- The hierarchical structure makes enforcement exponentially cheaper than every human voting on every contract outcome.
Neither government contracts nor smart contracts can offer 100% correct validation of every contract. All they can do is attempt to set up a structure which tries to motivate the right thing and tries to make litigation somewhat cheap.
It seems a bit silly, though, to think there's no room for improvement there, both in performance and correctness.
1) By making all decisions public, you can make judging those decisions easier
2) By making all decisions public, you can easily reuse a single judgement in many decisions
3) By using machines instead of humans, there is dramatically more bandwidth for a much broader range of contracts
4) The topology of this network only really lets people vote at a single point – where a governor is elected every n years, which is hardly robust feedback.
etc.
I mostly agree with your conclusion on most parts of crypto but we shouldn't thing that "government is a solved problem" is a sweeping rebuttal of all smart contracts.
Of course there's room for improvement, what's silly is thinking a coal-powered linked list is an improvement :)
You don't want true decentralization for state level activities such as voting. If it's truly decentralized and permission less, allowing anyone to control the ledger, your adversaries will take control. If you have to build a system that accounts for that, you rely on a central authority to switch you over, which invalidates the permissionless and decentralized premise.
There's a reason we've been talking about killer applications of the blockchain for 14 years and zero of them have taken hold - they're all fundamentally flawed. Like concert tickets! Should be easy, everyone hates Ticketmaster. Killer NFT use case right? Of course not, because the venues are owned by LiveNation, the performers are managed by LiveNation and TicketMaster is owned by, wait for it, LiveNation. You can throw up a ticketing system on AWS in like 5 minutes flat, that's not the reason TicketMaster has been successful.
> Of course there's room for improvement, what's silly is thinking a coal-powered linked list is an improvement :)
Again, Proof of Work is not the only consensus model for blockchains (and while I dislike PoW, it's worth noting that while there's a lot of "greenwashing", many mining farms have legitimately been moving towards using more renewable energy)
That renewable energy is still a net negative for society because it’s not being used to decarbonize the actual grid we do productive things with - while generating mountains of ewaste.
You know 97% of all bitcoin mining hardware will be thrown out without ever mining a single block in its entire useful life? Just heating up the ol planet.
It’s an embarrassment that we even try to justify any aspect of it as a profession. Society needs us to step up and call this emperor nude.
You know every time the price goes up, the waste budget does too, and the perverse incentive is miners are rewarded for wasting more.
Trustless financial instruments are not very useful to begin with, because finance requires trust (as does any economic activity). For example, there is no way to actually do financing (that is, trading future consumption for present consumption) without a trusted authority that has the power to re-allocate assets.
If you’ve ever written code, and if you’ve ever written a bug, then you will understand that code as law is terrible idea, especially when it comes to finance.
Yikes. Wasn't aware of that one. Thanks for sharing it.
I like smart contracts but you really have to be super careful with them, and ideally they should all be audited by a third party before launch, to help catch stuff like this. But even that's not a guarantee crap like this won't happen sometimes.
1) Upgradeable - where an authority has the right to replace the live contact at any time and rug-pull everyone. That's not trustless, and it's no better than running an app in AWS.
2) Non-upgradeable - where you simply have a self-funding bug bounty waiting to get popped. Even if they're audited.
They're not smart, and they're not interesting, to me anyways.
Re: Upgradeable contracts, there is often some governance method that removes the power from just one person, but there's usually also a time-delay, so that in theory at least, users of the contract can see that an upgrade has happened and remove their interaction with it if they don't like the new contract.
This is quite different from having money in a bank where policy changes and government seizures or freezes may happen without warning.
If there's some actual benefit, then crappy code that can be iterated is fine. Anything you do today with computer code was likely done worse in the past with worse code.
So what is the actual benefit of "peer-to-peer lending and pooled lending" that blockchain technology provides that makes it worth iterating through these early mistakes?
I'd guess the answer usually involves dodging regulations in some way. Which isn't blockchain specific, lots of 'innovations' in tech or business are basically workarounds that let you dodge taxes or regulations or exploit externalities.
The whole point of the legal system is that whilst it's defined as clearly as possible, there is always going to be some flexibility and interpretation, and a human element, so if someone finds a technical loophole but is clearly defrauding everyone they can still be put in jail. Of course, it isn't perfect, but the idea of law being absolute (as in code is law) is absurd as we lack the capability to consider every eventuality when we release code.
Yeah, but it's the absolutism that's the issue, not the buggy code.
When designing automated replacments for any business process you have to deal with the same 'exceptions'. You could just accept "computer says no" as the desired outcome in exchange for the efficiency, and let hackers take your money because "hey, they beat the system! It's theirs now" but that's a choice, not a limitation of the tech itself. Unless the tech's only benefit is that "computer says no" or "hacker took your money" is final, which doesn't actually sound like a benefit.
The problem is that if you allow overrides in the computer absolutism, corrupt governments will use these overrides to their benefit. And you’re back to the square one.
If the government is corrupt, then you've got problems regardless.
The general solution to this issue has been more and better democracy, which despite a lot of effort being spent undermining it, still seems to be the best solution available today.
I am a laymen who is skeptical of cryptocurrency tech, mostly because of what I'm seeing (hype, greed, fomo, and apparently no real use-cases).
If... crypto were to be able to reverse transactions... would that completely undermine the whole point of it and make it look absolutely stupid?
Do you think the solution to irreversible transactions would be to then have some kind of algo that would then send back a mistaken transaction after getting checked by some intermediary checkpoint? Would that then make the whole point of cryptocurrency also completely pointless?
What on earth are people dumping resources into all this as digital currency or even investment/ speculation vehicles if they don't address the irreversible transaction part, or try to compensate for it somehow? It seems utterly anxiety inducing otherwise, where you'd have to quadruple check, then quadruple check again, and then sleep on it and then quadruple check 4 more times before you do any kind of sizable transaction.
> It seems utterly anxiety inducing otherwise, where you'd have to quadruple check, then quadruple check again, and then sleep on it and then quadruple check 4 more times before you do any kind of sizable transaction.
That's mostly due to transactions being non-interactive. If the receiver has to prove their ability to spend the received funds before being allowed to receive them, then most of this anxiety disappears. Certain blockchain designs require transactions to be interactive in this way.
> If the receiver has to prove their ability to spend the received funds before being allowed to receive them
If I want to send you some crypto money in exchange for you mowing my lawn, how do you prove that you can spend the received funds? And if I accidentally send it twice, why would I care that you can spend them twice, unless I have some way to compel you to send half back?
> how do you prove that you can spend the received funds?
You prove it by producing a partial signature for the transaction (a transaction essentially requires a multisig by both sender and receiver).
> And if I accidentally send it twice
You couldn't send it twice because the transaction consumes an input utxo. Paying twice would require two different transactions with two different multisignatures.
> You prove it by producing a partial signature for the transaction (a transaction essentially requires a multisig by both sender and receiver).
Oh, ok, I misunderstood what this meant.
> You couldn't send it twice because the transaction consumes an input utxo. Paying twice would require two different transactions with two different multisignatures.
This assumes the receiver is trust-worthy, that they counter-sign the transaction if it was accidental. So if I accidentally pay twice for a single item, the seller can just sign both transactions and send me only one item, and I can't do much about it. Of course, they can also send 0 items, which is why blockchains can't secure transactions in a useful sense - you need the law and insurance and other social mechanisms for that.
I don't know exactly what you mean by 'code as law', and I'm sure there are extremists that think smart contracts make law obsolete, but they are just wrong. Fraud via smart contract is still fraud. Theft via smart contract is still theft.
There's nothing about having automatic processing of transactions that means you get to just ignore the legal system in your country.
And that's fine, proper and good. Automatic processing of complex transactions is phenomenally useful, even if it doesn't make legal systems obsolete.
Simplest example - with smart contracts transacting assets where the canonical record of ownership is on the blockchain, you can have a smart contract act as escrow for you, making sure that the transaction happens atomically without having to pay someone to hold the assets for you and release them once they have both. It is a better, more efficient solution than any that the traditional financial system has been able to come up with.
In fact, it is exactly linking the legal world and the blockchain world that means that you can apply some of the same benefits of immediacy and atomicity to more assets in the real world. All that is needed is for the legal system to recognise blockchains as the canonical record of ownership of real assets. The real world legal system makes blockchain technology more useful, not less.
With smart contracts there is only the code. There is no external trusted documentation that says what the intention of the code is. If the contract allows for an action to occur, then that action is permissible.
It's the old quote taken to an extreme, "The good news about computers is that they do what you tell them to do. The bad news is that they do what you tell them to do."
If there is a 'bug' that allows anybody to empty a smart contract, well it turns out that you were just hosting a complex coding competition with a prize.
> There is no external trusted documentation that says what the intention of the code is.
Working out what both parties intended a contract to mean and what it should mean, sometimes in contradiction of what it actually says is exactly what the legal system does.
You can't evade the legal system by writing your contract in a different form. Weirdly I think this idea comes from thinking law is code when it isn't.
A judge is supposed to read the smart contract source code and determine the intent?
The parties are frequently anonymous and have never interacted outside of the publication the smart contract to the blockchain and another party interacting with it. There is no basis for determining intent besides the code itself.
Are you thinking that the contracts have analogs to legal contracts? Usually (exclusively?) they only mediate transactions and behavior that is contained within the blockchain itself. There isn't an exchanging of assets that exist externally to the blockchain like real estate.
Although I think crypto fanatics think that the world will trend that way. Truly programmable money has never existed before. If more of our monetary infrastructure migrates to blockchains it will be interesting to see how current contract law adapts and is applied.
If you want to argue with 'code is law' proponent, ask them how they feel about the DAO hack and ensuing hard fork of Ethereum. That was an interesting case where the ETH community as a whole decided that code was not in fact law.
>A judge is supposed to read the smart contract source code and determine the intent?
If it's hard for a judge, it's presumably also hard for anyone using the smart contract.
>There is no basis for determining intent besides the code itself.
I'll bet you any frequently used contract has an associated website.
Basically, conducting your business on a blockchain doesn't exempt you from the law. You - the squishy human at the end of the transaction - are not on the blockchain, and neither is the author of any smart contract you might use. As long as the law recognizes blockchain assets as valid consideration in contracts, contract law trumps blockchain law.
Does participation in a smart contract imply any kind of legal agreement? You're essentially interacting with an api/bot that's being hosted by whatever blockchain community at large. Anybody can publish anything, and any unrelated parties can interact with it.
Here's a thought experiment for you.
If I were to publish a public webpage where you entered a routing number into a textbox and money was immediately transferred from my account to the specified account for the purpose of sending money to a friend of mine, but somebody else found the website and entered their routing number and drained my account. Would I have legal recourse?
This is essentially the Parity wallet exploit. The API was only slightly more complicated than the example above, initWallet().
It's an interesting paradigm shift. If contracts are automatically enforced, what features of the existing legal system are obsolete? If monetary/financial contracts are completely logically unambiguous in their execution and there is no need to appeal to a designated wielder of physical force to ensure their execution...
I think that notion, which sounds unrealistic to me, is what appeals to lot of crypto absolutists. It fails in a lot of the ways that smart contracts currently struggle, how to computationally, and in an unbiased way, relate crypto to the world outside of the blockchain. A good example of this is oracles, which are so flimsy in so many situations.
As you said we don't exist on the blockchain, the physical world doesn't exist on the blockchain, so how can we do away with our existing systems for mediating disputes, determining intent etc?
> how can we do away with our existing systems for mediating disputes, determining intent etc?
I think everyone in this conversation fully agrees on this point. As I said earlier, "I'm sure there are extremists that think smart contracts make law obsolete, but they are just wrong." We absolutely shouldn't do away with our existing systems for mediating disputes and determining intent.
I think perhaps the crux of the disagreement is that I think we need to apply those systems to smart contract systems in a sensible way and I take it that you think that the fact that we won't do away with our existing systems means there's no reason to use blockchain at all.
I don't think we're in disagreement; I'm more or less agnostic on the points I brought up, just thinking out loud. My original intent was to explain what I think the ethos is behind, 'code is law', which was in response to your statement, "I don't know exactly what you mean by 'code as law'".
But I do think there will be technical difficulties in applying the existing legal system to smart contract execution if there is no other artifact related to its execution (e.g. website, documentation, communication b/w parties etc.), which probably represents the vast majority of such contracts.
I've seen contracts representing complex derivatives, and some insane things like collateralized NFTs. The financial ecosystem within crypto is becoming incredibly complex. Many grey area strategies within traditional finance have been recreated within crypto, e.g. HFT and front-running, and there are some complex strategies like vampire attacks a la sushiswap that I don't think have analogs.
If one participates in complex smart contracts and get hosed, in a lot of cases I think it will be essentially impossible to differentiate between fraud vs. speculation, bugs vs. proper execution, exploitation vs poorly understood secondary effects. I'm curious to see how the legal system will try to keep up. Then again, I'm not sure it has kept up that well with the traditional financial system to begin with.
> A judge is supposed to read the smart contract source code and determine the intent?
If necessary, they can call on experts to provide testimony in such cases. It's probably not necessary all that often though because there's usually more relevant auxillary information to help work this stuff out. Who wrote this smart contract? Why are the parties using it? What information persuaded them to use it? Was the outcome of using the smart contract different to what a reasonable person would have expected?
This is exactly what courts are for! The fact that some of the procedure of the interaction has been mechanised does not mean the participants get to ignore the law.
>All that is needed is for the legal system to recognise blockchains as the canonical record of ownership of real assets.
Then theft via smart contract can't be theft because it acted on the canonical record of ownership. This also causes tons of other problems. What happens if someone loses access to their wallet? Now there's a house that simply can't ever be sold?
> There is no external trusted documentation that says what the intention of the code is.
No, if someone fraudulently updated a canonical record of ownership, then the legal system can provide remedies. If it were me, I'd write the smart contract to enable corrections in case of a legal decision but that's at the choice of whomever sets up the smart contract that provides the canonical record of ownership.
Same situation for if someone loses their keys. All these problems can be solved with appropriately written smart contacts.
OK, so ... which courts of which legal jurisdictions can correct which contracts? Are courts in Guinea-Bissau allowed to correct contracts between counterparties in the US?
This stuff is all normal when you're dealing with international contracts - it's not like nobody thought of doing international deals before satoshi.
Some of the answers do depend on the specifics of course. If the asset being traded is US real estate for example I would expect the smart contract to be set up so it requires a US court decision to correct the register.
My point is that there's an entire subbranch of the law, generally called private international law, that has been created to deal with conflict of laws and jurisdictional issues. You're implying that there are simple deterministic rules to determine those kinds of questions but in fact it's a meta-problem.
It sounds like we agree then. I'm not saying it's simple or deterministic, I'm saying it's not new and it's not made inapplicable just because the systems we're using have changed.
The problems that are raised as if they are uniquely issues to blockchain solutions are not in fact specific to blockchains at all. We can and should apply the same rules to blockchain transactions and smart contracts give us a fantastic way of encoding those rules. For example you can have a token that represents proof that you have been kycd by a particular authority and you can restrict transactions of particular assets to those between addresses holding one of those tokens.
A terrible idea, or just terrible in practice, and in particular with the current state of tooling and understanding etc.?
For every lawyer relishing a loophole there's surely another wishing for a more codified less ambiguous language than even Legalese English.
(I'm no cryptocurrency advocate, hold a small amount, have never written a 'smart contract', I just find it interesting and somewhat compelling. As an idea at least, yes I've written bugs.)
"If you’ve ever written code, and if you’ve ever written a bug, then you will understand that code as law is terrible idea, especially when it comes to finance."
If your argument is that there could be bugs in the code, then how is this different from the law today? The legal system is rife with abuses and injustices. It most certainly has bugs as-is.
^ you will understand that code as law is terrible idea, especially when it comes to finance.
Why are we relying on code for controlling Safety-critical system? e.g. Nuclear Reactors, Autopilot of aircrafts, docking of two separate free-flying space vehicles, and weapon of mass destruction launch and control machines. All of them use "code", is finance more critcal than systems which are kill capable.
Why are we relying on code for controlling
Safety-critical system? e.g. Nuclear Reactors
Because humans can't perform calculations quickly enough to compute math millions of times per second?
Computers work well when there are a finite set of fixed, quantitative inputs and outputs: if x < 20, do y
Many parts of law are a lot more complex and can't be reduced to such formulas. Suppose you're suing an employer for wrongful termination. They say your job performance sucked and that's why you were fired. You say it was a hostile workplace, and when you tried to point that out you were fired in retaliation.
Go write some code to evaluate that. Let us know when you're done. Should be pretty exciting. Hopefully we can retain all of the judges and lawyers now that they're not needed any more.
All of that code usually has a human override, and it can be turned off, fixed and upgraded. Also, it isn't (in the main) in the public and under constant probing attack.
In the cases of those I'm familiar with, most code in the system does not need to be bug-free for safety, and the code that does is kept simple and heavily reviewed at the binary level.
For most contacts, it is not financially feasible to use the techniques developed for safety-critical software.
Well, nuclear reactor use dumb electronics overrides, and each time an operation is done inside, each operation is done with human supervision. Override mechanisms are regularly tested and used. If your override is not dumb/simple enough, and you rely on code, you have the 380 max.
What are the override, who are the supervisors for cryptocurrency?
If you have digital cash, you might want to spend it somewhere.
Services tailored to work with the system from the ground up, then later they can be absorbed into conventional companies.
When I first heard about Ethereum I figured the value it would bring was incentivising everyone to create a worldwide supercomputer of the sorts we've never even seen before that can do really amazing computational work as opposed to bitcoin which just seems to crunch numbers entirely pointlessly. Any ideas why that never happened?
For one, the computational work for checking everyone's transactions on everyone's computer (i.e. blockchain) is consuming the computing power of the people interested.
Until sharding provides a tunable level of security, we will see this waste of computing power.
Then, that might enable more payments for cheaper, which might let you pay by the minute and such.
But the second main brake in adoption is legal. Many countries' jurisdictions require lots of bureaucracy to earn money from various places of the world. For example, EU has VAT, which requires bureaucracy for EU country-to-country payments even if you are exempt (Register of Intra-Community Operators). This negates pretty much all the advantage of trustless/decentralized businesses (ease of payments).
>For one, the computational work for checking everyone's transactions on everyone's computer (i.e. blockchain) is consuming the computing power of the people interested.
With ZKP there won't be a need to run every transaction on everyone's computer
> Digital cash, as defined in the Bitcoin whitepaper, still seems like the only real use case.
IMO the big breakthrough of crypto past bitcoin is that we figured out that cryptocurrencies can use money incentives to run other applications than just payments. People are doing all sorts if things, many scams but also many useful applications.
I don’t believe the OP was asking if people are doing things or if there are useful applications, but rather if there are useful applications that can only be done, or done better, in crypto.
I think electronic cash such as Bitcoin indeed has value. A decentralized world computer such as Ethereum imo can also have tremendous value, but NFTs are.. pretty dumb. The ecosystem is still in its infancy. Whenever a new technology appears, it takes a while for people to discover good use cases. This process involves a lot of trial and error. I believe most crypto projects out there today will be dead within a few years. Similar to what happened with the internet around the dot-com bubble.
And I’ve still come to roughly the same conclusion as you. Either my reading comprehension is poor, or there is little actual value in the vast majority of blockchain applications. Digital cash, as defined in the Bitcoin whitepaper, still seems like the only real use case.
Other uses are fun for a developer to read and learn about, but that’s just about the only real value you can extract from them.
Well, and making quick developer buck, which is the equivalent of selling shovels to prospectors in a gold rush. The main difference being that it’s merely a jpeg of a shovel.