I donât see any actual practical use cases described here that make mainstream adoption of blockchain tech make any sense. Or any concrete arguments about how it improves current systems. And the weaknesses of blockchain are glossed over or ignored. And âitâs never been hackedâ is the frankly pretty toothless argument in favor of its security. Basically this is a weak article for Y Combinator to be publishing. If this is the best they can come up with, then blockchain has worse prospects than I thought.
PG/YC started a revolution: They suggested a way through which programmers came into money.
Now, with Bitcoin and Cryptocurrencies: Programmers are creating money itself.
This article makes a bull-case very articulately, with sprinklings of realism. I am looking forward to this series. Being a blockchain cynic is the norm these days, and I appreciate when someone takes the trouble to lay down a well-reasoned and well-researched argument - great job rrecuero.
Clearly, there is irrational optimism/scams abound, but we can often forget that the mass-irrationality can be decoupled with the 'actual' promise of the idea. And the fundamental promise of the idea (Bitcoin, Cryptocurrencies, Blockchain etc) is for us to rethink 'how things work the way they work and why' and attempt to improve it. The Bitcoin paper should atleast get us to think about what is money. It matters less whether these "blockchain things" ultimately succeed or fail -- the fact that something NEW is being attempted, has to be applauded (Ofcourse, it would be great to figure out a way to do this without harming people using their credit cards to buy shit coins).
I love reading about blockchain ideas/projects. Like many, I too am jaded by the scams - but I think it is worth maintaining some optimism through this.
This article doesn't even touch upon some very important use-cases like: moving money across borders and money being seizure resistant etc. I think there is was, and has always been a market for a product that allows us to store value in a way that is cross-border, govt resistant and anonymous (whether it is a $500B market or $5B market is less interesting than appreciating that a product was invented to fulfil this use case). There are plenty of interesting use-cases to explore here.
In the section on Tokens, the article says: "contributors can transfer their assets instantly and easily to other people (pending regulation)" while referring to securities. IF this becomes a reality, it would be huge.
I see a lot of upside if even a fraction of the promise of this tech is realized.
Iâve reacently read the Burnskie book about crypto assets in the hope that I might come away more enlightened about the market and how to assess it. The opposite was the case. After reading the book and looking into it more, itâs very hard to see these things as assets at the moment, or to see much utility in the technology. Donât get me wrong, there certainly is some and it is certainly âcoolâ, but right now blockhain feels like a solution looking for a problem.
The nature of single things is decentralized. Therefore every new era starts with decentralization. The internet started off quite decentralized, for instance.
But do we really have a new era here? I'm not sure if with 32 years of age I'm already too old to recognize the New and grog it. I don't feel it. I feel there's a lot of buzz around blockchain, sure. But it looks like it would be all. Bitcoin is just as centralized as banks are, for instance.
And here is where the other stuff starts. When single things start systems these systems tend to be quite centralized. That is the natural order of systems. E.g., people could manage their own bitcoins on their laptop, but they choose to have an Exchange take that effort of their hands.
Seeing centralization take a foothold and not seeing anything real besides buzz, I'd argue the bet is still against.
On the other hand I'm seeing Amazong completely automating logistics in more and more areas of life. Shouldn't that be something to look into?
The phenomenon of decentralization won't slow until the wildly inefficient businesses of Washington, Hollywood, New York, and Silicon Valley have been broken into thousands of pieces.
Bitcoin and the rest are coming for New York/Silicon Valley money managers, which only exist for gatekeeping and rent seeking. The finance industry will be eliminated by new exchanges and equity crowdfunding.
I feel like proof of work blockchains don't actually solve the problem of "who to trust". Nodes just automatically assign trust to whoever mined the best hash that they know of, which turns out to be whoever holds the most mining power.
But not even that: If you're in China and the original blockchain is censored and all your node will ever see is the StateChain, you have misplaced your trust.
> However, right now you need to install browser extensions like Metamask to interact with websites that enable âcrypto functionalityâ. They are still really clunky and the average user does not know they even exist.
This is not true, you can already build (and people are) dApps that run in the browser (no extension) using the latest native Web Crypto API that we've made easy to use:
https://hackernoon.com/so-you-want-to-build-a-p2p-twitter-wi...
Dominic Tarr and the Beaker Browser guys with SSB also have even webasembly-ified libsodium which is highly rated ( #4 ranked on GitHub https://github.com/topics/cryptography ).
It is just that a lot of investors are caught up in hyped-up vaporware scams, rather than real technology that already exists and works and is available for developers to use today.
> traditional banking that takes days and charges high fees
Only in the USA. And that is hopefully changing in the next month or two with the upgrade in the ACH system.
Wow. This blog post literally parallels what my colleagues and I have been writing and working on for the past 6 months at Intercoin.
I mean, look at the video right here: https://intercoin.org/
It even uses the same terms, such as "Power to the People". https://qbix.com/blog/index.php/2017/12/power-to-the-people/
I am glad that these challenges in crypto are finally being recognized and publicly written about at YC. Perhaps we should apply!
> Chris Burniske and Jack Tatar suggest that crypto assets have low/negative correlation with traditional asset classes
The DJIA and Bitcoin charts seem well correlated, at least over the past month: DJIA: https://www.marketwatch.com/investing/index/djia Bitcoin:https://bitcoincharts.com/charts/bitstampUSD#rg30ztgCzm1g10z...
In my opinion people treat it as they would any speculative asset.
It's not a new asset class. Most cryptocurrencies are junk bonds. Those have been around for ages.
If the coiners (what do you call this tribe?) accomplish "Permissionless Innovation" though, they will have did something great.
Happy to answer any follow-up questions here
Blockchain is a real innovation, sure, but I don't think it will bring evolution to how money is used. There are many other uses.
Not surprising that an investor is seeing it as the future. Investing is regulated and libertarians often see bitcoin as a good thing.
The reality is that bitcoin is volatile, and nobody wants an economy that is built on instability.
> I think the same is true with Bitcoin: traditional banking that takes days and charges high fees can be easily implemented on Bitcoin, but the opposite is not true.
"Easily" here seems like major exaggeration. If that were true, projects like Lightning wouldn't exist.
"nobody can destroy or seize your coins"
"keeping your investment safe is not simple"
Hmm...
As others have commented, this sounds like more power to central authorities, with higher levels of fidelity than ever before.
The first and second point are inherently at odds with each other.
The first point concludes that we need simpler gatekeepers/service providers to make it easier for normal people to use the Asset class
The second point concludes that bitcoin makes it easier to be decentralized.
But I think these sections are the light weight part of the article. I think the other points raised are more material and impactful.
Source 5 is a broken link. It should be:
https://www.barrons.com/articles/the-bitcoin-consensus-yes-i...
re: "The question is not whether [databases] are going to be hacked or not, the question is when. These are natural honeypots for hackers."
This is not a good argument for cryptocurrency.
Just like a regular wallet attracts pickpockets, a Bitcoin wallet is a natural honeypot for hackers.
Just like a bank attracts bank robbers, a crypto exchange is a natural honeypot for hackers.
Really, the issue here is money. Money attracts thieves. The money is the honey, and the computer is the pot.
So far there's no evidence that cryptocurrency reduces theft, and quite a lot of evidence that it encourages theft.
> When Satoshi Nakamoto released the Bitcoin Whitepaper he defined it as a peer to peer electronic cash system.
How do we know Satoshi is a he?
Or it's like all the other services we have, it evolves from decentralized to centralized: email, search, forums,...The case could be made even for governments. The only limit was technical, now you can control the cabs in all the cities from one place. The future is definitely more and more centralized, just look at the money distribution.
My guess is that we're having our geeky dreams without thinking what's the reality happening around us. It's very comfortable to be utopist when thinking of bitcoin, instead of seeing that it's still the same winner-takes-it-all scheme.