There aren't that many uses for blockchains (2022)

The "1-2%" number the author repeatedly cites is misleading at best. These fees do not scale with the amount transacted. BTC tranfers are currently ~$0.80 whether you're moving $1 or $100k, which is a unique feature.

> SQL databases will continue to get faster as hardware speeds up - but blockchains only tend to get slower, as the volume of transactions grows.

This is also misleading, as there are systems like Solana which prioritize speed of confirmation, and do indeed get faster as hardware speeds up. It also allows for sub-cent fees (again, not based on a percentage of the amount moved).

My company actually does have a use case where a blockchain makes sense, and we are proceeding that with it. Unfortunately we have a buzzword trifecta of "blockchain", "AI", and "cloud" so we are careful about the words we use when we talk about it publicly.

We never utter the work blockchain because if you say "a blockchain" most people hear ** THE blockchain!! ** and either think we're a yet another bunch of scammers or worse, get tremendously excited thinking we're doing web3 or some other scam they want in on. Instead we say "we protect the data using Merkel trees."

We have the other buzzword problem too: we use some machine vision (for some safety matters) and use RNNs to determine some local operating parameters and to crunch data for some lab experiments. Even though we have two former AI research scientists on the team, none of us want to be lumped in with the big langage model folks, since that's not what we do (and the hype is insane).

The blockchain application: we have a shitload of sensors monitoring equipment we'll be deploying all over the world. Our revenue depends on the performance of this equipment. So every sensor is built into a little box that signs and timestamps its data. The data are aggregated by the equipment and streamed up to our servers (cough "the cloud"). Connectivity can be intermittent, so machines can offload data to topologically nearby installations.

It's actually pretty nice to be outside the hype bubbles. We just concentrate on our work instead, and mostly the prospective customers don't understand any of the tech, much less what those buzzwords mean.

This article lists international money transfers as a non-useful application of blockchains. USDT on Tron alone is now settling 1.25T$ (1/3 of Visa’s annual settlement volume).

Clearly some people do find them useful.

isn't git effectively a blockchain? Its got blocks, they are chained (or tree'd) (to some degree), it doesn't need verifiers or mining since it can have users signing their inputs, and that is the only thing to be cared about.

Blockchains are not intended to be a universal solution, they excel in different ways, particularly enabling trustless and censorship-resistant value transfer. Which, for many new chains, is still their most used function.

Blockchain came about because of the assumption that an internet currency must be zero-trust.

But let's look at these paragraphs:

> Blockchain stocks fail criterion #2: there being no trusted party to host the database. The fact is that if you're going to hold the shares of a company, you explicitly need to trust them - so you may as well trust them to host your database.

> For example you need to trust that their published financial statements are accurate. You also need to trust that they will try to return your investment. Traditional companies hold their own register of shareholders (they just outsource the trading) and it is a problem very, very rarely.

Currencies work because we trust that the government (IE, the thing that governs,) keeps a stable value in the currency. IE, currencies are built on trust.

Even Bitcoin relies on trust: You have to trust the source code. You have to trust that there isn't a large bad actor perpetuating a >50% attack. You have to trust that, at some point in the future, your bitcoin will be worth something. Governments have it in their best interests to keep their currency valuable. (Unless you're post-WWI Germany and it's in your best interest to hyper-inflate your currency to make your debt worthless. IE, Germany realized that hyper-inflation was preferable to the economic toll of paying off their debt.)

This lesson, that currencies only work through trust, really negates the point of cryptocurrency for general-purpose usage.

I've built consumer apps in the space since 2016. (See lab.dns.xyz for context).

At the end of the day, even if you gave the average person a venmo like UX that paid in any currency, instantly, for nearly zero fees, I still don't expect them to prefer it to a dollar bill or gold.

While the counterpoints regarding UX are very significant (lose all your money in one click, no undo, lack of support, difficult concepts that don't map to common consumer use cases), they can be solved through sheer effort. We did that on dns.xyz. Social login, gasless minting, rollup for fast interactions, all doable.

There is no escaping the fact that blockchains are slow databases. That they aren't particularly good at storing data. Much less private than one might think.

You do get consensus and attribution. You can use it as a sort of open standard or api where the items you've bought or the things you're written are open enough to be reused in the future.

None of these problems are pains that need solving. And they are inferior solutions compared with alternatives.

It is great tech. It is great intellectual exploration. It is a fun stack. It has made people money through unregulated speculation.

But it is tarnished, clunky, and not necessary.

Crypto is a way to store and exchange things over the internet without counterparty risk. Crypto has value for the same reason gold has value beyond its practical use. Think SVB type situations or needing to flee a country that just became a dictatorship.

The article espouses a very US centric view where the government is a trusted arbiter of all financial transactions and there is always a trusted third party to take on counterparty risk. This is obviously not the case all over the world.

The question is how much is that actually worth and can it support crypto's current market capitalization?

Crypto also has value as being able to create digital scarcity and ownership. For example, when you play games online today and you purchase cosmetic items or you play magic the gathering and buy cards, it's pretty silly that you only own a license to use those things for as long as the game exists and there is no way to trade them.

The above concept obviously falls flat when there is no effective scarcity, ie when everyone and their mother can produce nfts that are just jpegs with no actual use. Compare this to a magic the gathering or pokemon card that is just cardboard but still manages to maintain its value.

Blockchain is best thought not as database, but a authenticated linked list data structure. Or, AES in CBC mode if you will.

I've only ever seen bad-faith arguments about oracles. They set up the goal posts as if the goal was "You can trust absolutely nothing. You are born and will die trapped in The Matrix. You are in Descartes's proposal where everything you can possibly observe is a deception from a malicious demon. How do you set up a home-loan contract?" And then declare themselves clever by pointing out that any input to the system requires trusting that input.

That's not the goal of trustless contracts.

The goal is that some resident of an oppressive nation can get a loan without being denied all access to finance at the whim of government-controlled bank. Can't trust your region's banks? Crypto is a wild land. But, it's a better alternative for billions of people.

It's easy to say that crypto is useless when you are in the top 2% of global wealth, a well-regulated banking system is scrambling to serve you, your government doesn't frequently confiscate your assets or inflate your hard-earned money to worthlessness.

And, it's easy to complain that crypto didn't magically spring from bottom-up grass-roots overnight, solving all financial problems by the poor for the poor in a single step before enriching a bunch of already-rich tech bros.

Creating a new global financial system from scratch is a lot of work. It requires a lot of investment, a lot of losses, a lot of hard-earned lessons. Blockchains have been demonstrating utility in that endeavor for 15 years. Growing from nothing to being valued higher than the global market of silver in that time.

Maybe "global financial system" is a small number of uses. But, it's a small number of rather large, rather important uses.

(2022)

Some discussion then: https://news.ycombinator.com/item?id=32422082

Running programs in a decentralized, trustworthy way is useful for a million usecases.

One of the things this article gets wrong is how "facts about the real world" are made available to smart contracts.

It states that this is done via "a conventional program" and it makes the whole system "pointless".

Oracles can be set up in a way so that they rely on an incentive structure just like the rest of the system.

Example: The DAI stable coin does not hold its peg to the dollar because a conventional program feeds the DAI/USD price into the system.

There is room for only one blockchain app in the world we live in. And that is for Bitcoin.

Yeah, ultimately there is only one reason to use what people are calling "a blockchain", and that is when the system requires global unrestricted membership, where anybody can spin up any number of new nodes at any time if they want to. This is rare.

That one requirement is what triggers a exponential spray of additional features and complexity and tradeoffs, each one designed to curb the worst security-risks or performance-issues from the previous step until you get something not-too-horrible.

When you relax that requirement, everything can be reduced to a dramatically simpler, faster, easier-to-manage system, which often qualifies as a "traditional" distributed database.

_____

For example, take election voting records. Nobody actually needs to allow infinite/random nodes to pop up anywhere at any time simply to "Dude I saw that too" the data.

"Blockchain" proposals all carry serious risks, like: People losing their vote because they didn't stay at the polls for an hour to confirm that it went through and re-vote if it didn't; Some foreign government declaring their own National Botnet Day to fuck it up; Your own government pre-emptively investing bajillions in a short-term "defensive" CPU mob that you might not be able to trust either; etc.

In contrast, a far saner traditional approach: The election already relies on authorities for voter-rolls and candidate-choice. So have each US state runs 3-5 DB nodes, blend in 50 nodes from federal government agencies. That small networkof 200-300 computers get preloaded with one-another's public keys and IP addresses. The only other computers they need talk to are the ones reporting from respective state polling sites.

Safety comes from the fact that any attack (record tampering or plain day-ruining sabotage) would require an attacker to simultaneously hack, corrupt, or destroy many different groups/locations simultaneously, which is pretty unlikely. The system would be dramatically faster, cheaper, easier to audit, better able to tolerate local polling site connection outages, etc.

...Buuuut it doesn't drive the cryptocurrency PR hype machine. I'm OK with that.