This December I wrote a w I e l y- c I Article On the Inapplicability of Blockchain to any real problem. People were mostly opposed to the argument of technology, but rather hoped that Decentralization Could Produce Integrity .
Let's start with this: Venmo is a free dollar transfer service, and bitcoin transfers are not free. Yet, after writing an article last December saying that bitcoin had no use, any one [19459004 replied that Venmo and Paypal are raking consumers' money and that people should switch to bitcoin.
"It's both terribly interesting and interesting, terrifying"
According to VICE, TNW Conference is quite the event
What a surrealistic contrast between the non-utility / non-adoption of the blockchain and the conviction of its believers! It is so obvious that this person did not become passionate about bitcoin because she was looking for a convenient and free way to transfer money from one person to another and to discover the bitcoin. In fact, I would say that there is person who exists who had a problem to solve, who discovered that a solution blockchain available was the best way to solve it, and so became a blockchain enthusiast.
The number of retailers accepting cryptocurrency as a method of payment is in decline and its largest corporate boosters as IBM ] NASDAQ Loyalty Swift and Walmart long gone on but runs on the actual deployment. Even the largest blockchain company, Ripple, does not use the blockchain in its product . You read correctly: Ripple decided that the best way to transfer money across international borders was not to use Ripples.
A blockchain is a literal technology, not a metaphor
Why all the enthusiasm for something so useful in practice?
People made a number of improbable assertions about the blockchain-like future that you should use for AI instead of the -tracking behavior type that google and facebook do, for example. This is based on a misunderstanding on what is a blockchain.
A blockchain is not an ethereal thing in the universe in which you can "put" things, it's a specific data structure: a linear transaction log, usually replicated by computers whose owners are called new transactions.
There are two things that are cool about this particular data structure. The first is that a change in an invalid block each block after it, which means you can not alter historical transactions. The second is that you are only rewarded if you work on the same channel as everyone else, so each participant has an incentive to go with the consensus.
The end result is a definitive historical shared record. And, moreover, because the consensus is formed by each person acting in his or her own interest, the addition of a false transaction or the work of a different story simply means that you don? are not paid and everyone is there. Compliance is mathematically applied – no government or police force should enter and tell you that the transaction you have registered is false (or extort bribes or intimidate participants). It's a powerful idea.
So in summary, here's what's blockchain-the-technology:
Let's create a very long sequence of small files – each containing a hash of the previous file, new data and the answer to a difficult mathematical problem – and share money every hour among those who want to certify and store these files for us on their computers.
Now, here's what's blockchain-the-metaphor: "And if everyone keeps their records in an inviolable deposit that belongs to no one?"
An illustration of the difference: In 2006, Walmart launched a tracking system of its bananas and mangoes from one field to the other. In 2009, they abandoned it because of logistical problems so that everyone enters the data, and in 2017 they relaunched it (to a lot of fanfare ) on blockchain.
If someone comes to you with "mango eaters do not like to do data entry", "I know: let's create a very long sequence of small files, each containing a hash of the file Previous "is an absurd answer, but" And if everyone keeps his records in a tamper-proof deposit that belongs to no one? " answer at least the right question!
Blockchain-based reliability collapses in practice
People treat blockchain as a "stick of futuristic integrity" – have made a blockchain to the problem, and suddenly your data will be valid. For almost all that people want to be valid, the blockchain has been proposed as a solution.
It is true that storing data stored on a blockchain is difficult, but it is not true that blockchain is a good way to create data that has integrity.
To understand why this is the case, let's work from the practical to the theoretical. For example, consider a widely used use case for blockchain: the purchase of an e-book with a "smart" contract. The purpose of the blockchain is, you do not trust an e-book seller and they do not trust you (because you're only two people on the internet), but, because that's on blockchain, you will be able to trust the transaction.
In the traditional system, once you pay you are hoping you will receive the book, but once the seller has your money, he will not no motivation to do so. You rely on Visa or Amazon or the government to make things fair – what a recipe to be a mother-of-pearl!
In contrast, on a blockchain system, by executing the transaction as a record in a tamper-proof deposit that belongs to no one, the transfer of money and digital product is automatic, atomic, and direct, without intermediary needed to arbitrate the transaction, dictate the terms, and take a big cut on the way. Is not it better for everyone?
Hm. Maybe you are very adept at writing software. When the novelist offers the smart contract, you take an hour or two to make sure that the contract will only withdraw a sum of money equal to the agreed price, and that the book – rather than another file, or nothing at all – will actually arrive.
The audit software is hard! The most scrutinized smart contract in history had a little bug that nobody noticed – until someone noticed it, and used it to steal fifty million dollars. If cryptocurrency enthusiasts with a $ 150 million investment fund can not properly audit the software, how confident are you in your e-book audit?
Perhaps you would prefer to write your own counter-offer software contract, in case this e-book author has hidden a recursion bug in its version to empty your ethereal wallet of all your savings?
It's a complicated way to buy a book! This is not without trust, you trust the software (and your ability to defend yourself in a software-driven world), instead of trusting others.
Another example: claim advantages for a voting system in a weakly governed country. "Keep your voting records in a tamper-proof deposit that belongs to no one" sounds correct – but your Afghan villager will download the blockchain from a node to broadcast and decrypt the Merkle root of its Linux command line to independently verify that its vote was counted? Or will it support the mobile application of a trusted third party – such as the nonprofit or open source consortium administering the 39, election or providing the software? ]
It sounds like stupid examples – novelists and villagers are hiring electronic hackers to protect them from malicious clients and non-profit organizations whose intelligent smart contracts could steal their money and votes. – Until you realize that this is actually the point.
Instead of relying on trust or regulation, in the world of blockchain, Express are responsible for their own security measures. And if the software they use is malicious or buggy, they should have read the software more carefully.
The whole of the underlying world view blockchain is false
You see it again and again. Blockchain systems are believed to be plus reliable, but in fact they are the least reliable systems in the world. Today, in less than ten years, three successive higher bitcoin exchanges were hacked, another is accused the DAO demonstration contract was drained crypto price fluctuations are ten times higher than those of the world's most mismanaged currencies, and bitcoin, the "killer application" of crypto transparency, is almost certainly artificially born by Fake Transactions Involving BILL ] of literally imaginary dolla rs .
Blockchain systems do not magically render data about them or people who enter the data are reliable, they simply allow you to check if they have been tampered with.
A person who sprayed pesticides on a mango can still get into a blockchain system that mangoes were organic. A corrupt government can create a blockchain system to count votes and just allocate a million additional addresses to their mates. An investment fund whose charter is written in software may still misallocate funds.
How then, is trust created?
In the case of the purchase of an e-book, even if you buy it with a smart contract, instead of auditing the software, you rely on one of four things, each of them from the "old way": either the author of the smart contract is someone you know and trusted, the seller of The e-book has a reputation to support You or your friends have bought eBooks from this seller in the past, or you are simply ready to hope that this person will act fairly.
In each case, same if the transaction is carried out via a smart contract, in practice, you rely on the trust of a counterparty or a intermediate, not your right to self-protection to audit the software, each man an island to himself. The contract still works, but the fact that the promise is written in verifiable software rather than government-imposed English makes it less transparent, not more transparent.
Ditto for the counting of the votes. Even before the blockchain can get involved, you must trust that voter registration is done correctly, that votes are given only to eligible voters, that votes are made anonymously rather than purchased. or intimidated, that the vote displayed by the voting system is the same as the recorded vote, and that no additional vote is given to political buddies to cast.
Blockchain does not facilitate any of these problems and many of them are more difficult, but more importantly, solving them in a blockchain context requires a set of clumsy workarounds that undermine the basic premise. So we know that entries are valid, allow only trusted non-profit organizations to make entries – and you're back to the old-fashioned "classic" registry. In fact, if you look at any blockchain solution, you will inevitably find an awkward workaround to re-create trusted parts in a world without trust.
A crypto-medieval system
Yet in the absence of these "old-fashioned" factors – assuming that you actually tried to rely on the self-interest / self-protection of the blockchain to build a real system – you would be in a real mess.
Eight hundred years ago in Europe – with weak governments unable to enforce trustworthy, scarce and fragile laws and counterparts – theft was endemic, safe banking was a fantasy and personal security was at the point of the sword. This is what Somalia looks like now, and also, what does it look like to make deals on the blockchain in the ideal scenario.
Somalia express. That's the vision. Nobody wants it!
Even the most ardent crypto enthusiasts prefer in practice to rely on trust rather than on their own crypto-medieval systems. 93% of bitcoins are operated by managed consortia, but none of the consortia use smart contracts to manage payments. Instead, they promise things as a "long history of stable and accurate payments". It looks like a reliable intermediary!
Same with Silk Road, an online drug bazaar based on cryptocurrency. The key to the Silk Road was not the bitcoins (it was just to escape the detection of the government), it was the reputation points that allowed people to trust criminals. And the reputation scores were not followed on a tamper-proof blockchain, they were followed by a trusted intermediary!
On behalf of all blockchain stands, it is time to abandon blockchain
A decentralized and tamper-proof deposit seems to be a great way to check where your mango comes from, how fresh it is and whether it has been sprayed with pesticides or not.
In fact, the laws on food labeling, government or non-profit inspectors, an independent and reliable independent press, empowered workers to trust whistleblowers, credible groceries, the local market without profit, etc.
People who really care about food security do not adopt the blockchain because has more confidence than trust. Blockchain's mess of technology exposes its mess of metaphor – a software engineer pointing out that storing data a sequence of small choppy files will not get the eaters to accurately report if they are spraying Pesticides also highlighting why the peer-to-peer interaction without rules, standards, intermediaries or trusted parties is actually a bad way to empower people.
Like the farmers market or the standard of organic labeling, so many of true ideas are hiding in plain view.
Would you like there to be a type of financial institution that is safe and well regulated in all traditional ways, but that also has the integrity of being fueled by the people? The members of a savings and credit cooperative elect its directors and the transaction processing revenues are distributed among the members. Move your money!
Prefer a deflationary monetary policy? Central bankers are appointed by elected leaders. Do you want to make elections safer and more democratic? Help write an open source voting software, get out and register voters, or volunteer as an election observer here or abroad!
Would you like there to be a trusted e-book delivery service that charges lower transaction fees and distributes more revenue to the authors? You can already allow for redistribution rates when you buy music or books, buy directly from the authors, or create your own e-book site even better than that. ;right here! ]
Projects based on the elimination of trust have failed to capture the interest of clients because trust is so precious . An unscrupulous and mistrustful world where self-interest is the only principle and paranoia is the only source of security, it's not a paradise but a crypto-medieval hell.
As a society, and as technologists and entrepreneurs, in particular, we will have to be able to cooperate – to build trust and be trustworthy. Instead of directing resources towards elimination of trust, we should direct our resources to the creation trust – which we used a long series of sequentially hashed files as storage medium or not.