Dynamite piece from the World Economic Forum - you know, the Davos people - that just arrived in my inbox. In it, Aengus Collins writes about a healthy dose of skepticism that should be applied to all things blockchain.
Maybe he's been watching the ICO bubble, or taking a look at crypto prices over the last few days; or, maybe more accurately, he spends his time looking at the technologies themselves and trying to figure out one of the best questions you can apply in any discipline.
What business problem are you trying to solve?
It's a great piece, and I highly recommend you read it - during a break from trading crypto and posting on Steemit - to know how the other side is thinking. There are a few jarring lines:
"Looking down the wrong end of the telescope"
Quoting: Anecdotal evidence suggests that a growing number of organisations are looking down the wrong end of the telescope at DLTs: instead of bringing their problems to the table and assessing whether DLTs might help, they are bringing DLTs to the table and looking for problems to which the technology might be applied.
If you think in the context of the ICO bubble, you can see where this is going. If you spent any time around IT executives in the past dozen years, you have probably heard "in the cloud" attached to hordes of things - many of them that may not have actually needed to be...in the cloud.
Wild, crazy assumptions that the blockchain will solve a ton of problems also begs the question: are we creating problems that don't exist, just to use blockchain to solve them?
Using a sledgehammer when you need a stapler
Another quote: "what might the unintended consequences be if the idea took root of replacing socially grounded methods of generating trust with technologically distributed methods?" The author talks about "troubling consequences, such as echo-chamber phenomena that have contributed to levels of fragmentation and polarisation serious enough to have prompted concerns about the health of democracy itself."
Think of this in the vein of the US election - Hillary had the political and technological machine necessary to slam dunk her way into the presidency; but, like an internet of things gone awry, it turns out all the toasters and coffee machines were talking to each other about how great they were, while a good chunk of others were gravitating toward the other candidate. You know what happened there.
Bringing me to a point of my own: this bubble mentality around blockchain, bitcoin, cryptocurrency and the like runs the risk of creating an uber-niche that has its own language and culture and systems and processes, but is so outside of the mainstream that it shuns those who don't speak the lingua franca and becomes its own uber-bubble.
The Gold Bugs!
The other point I want to make - my own point, not represented in the article - is the risk that we are becoming like the gold bugs. Gold is the only true currency! Gold needs to be in everyone's safe! You need to store your gold offshore! You should look at gold mining stocks! When the BLANK hits the fan, you'll want to own gold!
Is bitcoin and its ilk becoming the new gold? Maybe. Are we in our bubble talking about it with the same fervor of the gold bugs - many of whom get dismissed by professional traders and investors? Maybe.
Is that a bad thing?
Well, if the narrative goes off the rails so much that we become akin to those who quote a sitcom and only one sitcom in all of their conversations - you know the types - then we're likely running that risk.
A New Narrative?
Let's think about this. What narrative makes sense for blockchain technologies, for bitcoin, heck, even for Steemit?
Is it technological - e.g. "distributed ledgers allow everyone to double-check the work, and keeps systems from being gamed by the man?"
Is it sociological - "connect, trust, use social proof and digital proof to show your value to the world?"
Is it economical - in the "global macroeconomic" sense of the word - "it's the new central bank?"
Let's talk about this...what are your thoughts? Let me know in the comments.
I think it's an important discussion to start having.
Thanks for this, and I hope it doesn't go completely unnoticed in the Steemit echo chamber. I think these are questions that are really worth asking! I think something that probably compounds the problem is that there seems to be a really deep misunderstanding among crypto nerds about some fundamental facts about decentralization.
I hear way too often that "decentralization is more efficient than centralization." That is, nearly by definition, not true. Decentralization comes with significant costs; see Ethereum, for example. Ethereum has many thousands of GPUs available to it, but the Ethereum Virtual Machine can only process one instruction at a time. That's an extreme consequence of the particular flavor of decentralization that the blockchain forces you into.
Of course, decentralization confers benefits as well, but in choosing the decentralized architecture, you've got to weigh the costs.
Thanks agains!
The decentralization means that we can remove the inefficient intermediaries (banks, lawyers, notaries, clerks, courts...) and replace them with computer hardware.
So ether can only do one instruction a second, try buying a house and see how much beurecracy is involved. Try buying one on the other side of the globe and you will be burried by documents. That is inefficient, not ether.
If that house was listed on a public blockchain you could make the exchange in minutes and pay next to nothing in comission and you could trade that house globally.
You're essentially saying that blockchains are more efficient because they let you dodge regulations? I'll grant you that, and it does make it harder to analyze.
But it's really tricky to disentangle these things, and I'd argue that it's not so much decentralization that enables these things as much as it is automation. A centralized entity could just run a blockchain themselves, right? Why don't they? Because other database structures are better if you have access to the advantages of centralization.
If you're saying that it's the blockchain itself that gives efficiency, then you need to come to grips with the fact that a blockchain is just a very inefficiently-designed database. That's all it is. It's designed inefficiently to allow for decentralization; its inefficiencies are necessary because when you decentralize you lose all kinds of robustness.
And admit it - your example of the house is a straw man. What does "list a house on a blockchain" even mean?
I don't mean dodging regulations. It's possible to keep all standard regulations on the blockchain but without all the paper work using smart contracts.
That way you avoid all the corrupt middle-men like the lawyers and government clerks.
Why do you need it public? So it can be audited.
Why do you need it distributed? So a copy can be obtained and kept on every computer giving it credibility and robustness.
Why do you need decentralisation? To avoid corruption. The little computers doing PoW are securing the network from corrupt humans.
Why is it efficient? Because having offices in downtown, employing tens of thousands of humans that audit, test, check, read, sign documents is not efficient and makes no sense when computers can do it better, faster and a lot more secure.
It's not a strawman example, read about colored coins, they allow listing any asset right on the Bitcoin blockchain. It's possible, problem is that it has no meaning nowadays but if governments decide to list assets on the blockchain than turning all that paper records (or sql databases) to a public record listed right there on the bitcoin blockchain and secured by PoW is easy and each owner will have a private key or a P2SH address proving his ownership with no doubt.
Suggested reading:
http://unenumerated.blogspot.co.il/2017/02/money-blockchains-and-social-scalability.html
"Of course, decentralization confers benefits as well, but in choosing the decentralized architecture, you've got to weigh the costs."
It's tough to compare these, because while you can quantify the technical efficiency costs (power usage, hardware costs, etc.) you cannot quantify the benefits. That's because the benefits are almost entirely confined to "removing the need for trust / trustless system". In theory, a system with fully ethical actors would see minimal gain from the increase in trust. A wild west, snake-oil kind of system would see huge benefits.
How do you quantify the greed of mankind?
Great points, these.
There's an ebb and flow between how Facebook grew up and became big and then became ubiquitous - and did certain things with the implied levels of trust along the way.
Most everyone getting involved didn't fully realize that "it's free and always will be" ended up meaning that, to borrow someone's adage, if you aren't buying the product, they're profiting off your data.
This is a great discussion...
Yes, but necessary, IMO.
There is a theoretical framework for this called the "Price of Anarchy"; it was introduced by some theoretical computer scientists about 20 years ago and it's attracted quite a following among the engineer/computery game theorists out there. Essentially, it tries to measure just that - how do you measure the harm of greed?
For the past couple years I've been studying the price of anarchy in some network routing systems, and I agree with you that it's a hard problem - but I think it's an interesting and important one nonetheless.
Did you see Vitalik's post on Reddit yesterday about his take on the democratization of Bitcoin vs. Ethereum? It was quite interesting - his point was that Satoshi might have done more harm than good by making Bitcoin very democratized, perhaps over-decentralized. Scattered, if you will.
Conversely, while I do agree with all you say about Ethereum, Vitalik's (semi-invisible) hand means that there's the ability to sorta kinda change the rules when they make sense to change. Within reason - see ETH v. ETC.
Appreciate the convo. Following you now...
It also creates a huge failure point, as we saw with the Vitalik death hoax.
Yeah, failure points are a problem...
...then again, like a Martha Stewart, where the person is the brand, the person can do lots to make sure that the brand can continue without them.
That's a good point, and one of the fundamental strengths of decentralization is the whole Hydra effect - cut off one head and two more grow to replace it.
@davevandewalle the guy who wrote the piece is in a lost world because Blockchain and AI are creating new industrial revolution and here to stay. Those sitting on the fence will come in when price is so high however still room for all
I'm not totally sure he's "on the fence."
I think he's asking the right questions - and he could actually be asking those questions while at the same time personally and/or professionally doubling down on these technologies.
I see analogies to questioning one's religion: I'm a Christian, but I don't have all the answers and I do keep asking the why behind a variety of doctrinal and existential questions. Doesn't make me any less of a Christian, and, in the long run, actually helps strengthen my faith.
But, like anything else, I could be wrong.
And, in Christianity as in blockchains, asking "why" will invite accusations of apostasy from some corners. :)
Plus, it almost always leads to no good answers and no progress for anyone. That took me quite awhile to learn.
The honest truth is, you can defeat almost any illogical argument (speaking hypothetically here) by just asking "why" over and over, until eventually the other person will simply end up giving you their fallacy, rationalization, or "feelings based justification", conceding the argument. It, uh, doesn't exactly win them over though, although you may captivate the hearts and minds of onlookers.
The truth is we are very ego-invested in our opinions, and when we run out of legitimate logical (or illogical) defenses, we will play the race/apostate/no-true-Scottsman card to protect ourselves from cognitive dissonance.
Yup.
Good point
He got one thing right. All these private blockchains are BS.
I am not into blockchain to get rich. I want to make the world a better place and public blockchains can do it.
And...
You could conceivably make the world a better place, use public blockchains to do it...AND get rich in the process.
Sure but it's not my motive. I did wireless hacking, writing sw that does things that IMO are not right. I could make a lot more money by still doing it and it's all legal.
I rather forget about it and start from nearly scratch learning about blockchain and hopefuly help develop it.
I'm in the same boat, actually...I ran a startup from 06-09 that was in the college/university admissions recruitment space. I competed with some really unsavory characters, and I refused to stoop to their level.
A lot of the practices were - and some still are - all legal. But sleazy as heck.
It sounds like you might actually live by one of my guiding principles: do that which allows you to sleep well at night.