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by wildsatchmo 3178 days ago
Looking at all these pessimistic comments I can't help but wonder if this is what the op eds in the newspaper looked like while the internet was being built. "its too slow, and even with our best compression transferring a movie would take a month. Not gonna happen. Computers are too expensive for most households." etc.

If you want to keep middle men in between most things that we could potentially do programmatically, thats cool. I'm on the hype train.

- low tx rate? not for long - high computational cost? Security feature. Makes fraud/hacks very expensive. If you think energy conservation is more important, other chains don't have this cost (proof of stake). - high node storage cost? mining fees & block reward more than outweigh this. not everyone needs to run a full node (but anyone can). - no way to reverse transactions? feature. you can always add arbitration / escrow. openbazaar does this very nicely

If you go the traditional route, you will always have a company in the middle, taking their cut or selling you out behind the scenes.

6 comments

> I'm on the hype train

That’s the intellectual blind spot which is making this so hard to understand: you’re invested in the technology and want to see it succeed, which means you’re inclined to minimize every downside and boost every possible use without asking whether something is better in addition to being possible.

Being old enough to remember when the internet was starting to go mainstream, there were op-eds like that but they got plenty of pushback because there were so many new things which you could do on the internet which were either impossible, unaffordable, or too cumbersome before. Yes, a modem connection was too slow to play a movie but you could read newspapers around the world, send email to anyone and have it arrive in seconds, download software or photos instead of having to drive to the store, research and trade stocks, chat, etc. and there was a clear path for technological improvements making that experience better over time. The average person could easily see things they’d like to do and the costs were getting more approachable every year.

In contrast, we have a ton of blockchain hype without a single legal use which solves a problem normal people care about better than existing, well-tested technology. There’s a lot of “that’ll change once these fundamental design flaws are solved in a way we don’t yet know how to do” hype being peddled by people who stand to profit if everyone buys in but, as during the dotcom bubble, that should inspire more rather than less skepticism.

I think the key thing is that even without understanding the technology most consumers could see "before I couldn't get access to this information/correspondence/map/ticket/catalogue/advice/news/opinion/porn and now I can" as an obvious life enhancement in a way which having anonymous miners as counterparties rather than the company providing the service and their bank isn't (not even if expressed in terms of a 3% fee reduction). Whereas with blockchain it seems like it's often the evangelists not understanding the consumers: to use examples from the article, I really care that flight delay information is easily available which is why the internet was much better than call centres but I really don't care whether it uses a distributed database or not and wouldn't fly with anyone I worried wouldn't honour the terms of my ticket. I care that ridesharing services have good availability, routing and safety, I really don't want them to be transparent about my location and payments to any interested party.

Now, there are many technologies which are very useful for certain use cases despite the consumer failing to grasp what's going on behind the scenes, from Java VMs to graph databases to torrents, but certain things tend to be true of them (i) they weren't as exciting opportunities as the internet even if billion dollar businesses were built on them (ii) the developers explaining why existing solutions were good enough if not more optimal in many respects were often right.

Exactly – during the 90s I heard from a ton of companies looking to get on the web. They needed help understanding the technology but in most cases there were clear benefits from making things easier to find, customize, etc.

I’ve seen the same trend for blockchain evangelists to have gone deep into that technology but have only a cursory understanding of the businesses they’re trying to enter. A great example is the retail purchase model which always comes up in Bitcoin discussions, which ignores the fact that most people think credit cards are just fine and like things such as fraud protection more than the hypothetical chance of a fractional overhead reduction. There might be room there but it’s an uphill fight and the value is capped at the lowest Visa, et al. are willing to drop their merchant fees to.

I think your comment about selling tech is also important because the model puts some unusual constraints on it: you can sell to developers by focusing on tech details but how many developers are paid to work on problems which require trustless distributed systems and low transaction volumes? Most big systems require the opposite.

>>In contrast, we have a ton of blockchain hype without a single legal use which solves a problem normal people care about better than existing, well-tested technology.

Maybe this is your blind spot? You assume it has to be legal to be useful.

But in any case, there are legal use cases that work today: sending money with very little friction, including no need to provide a trusted third party or the payee your personally identifiable information.

With Ethereum, we'll soon have social networks and markets that participants can trust will not have fees increased and terms changed once the platform has become dominant. So you can have monopolies without monopolists.

> Maybe this is your blind spot? You assume it has to be legal to be useful.

I'm looking at what it takes to go mainstream — if it's predominately used for illegal activity, that'll deter normal people and legitimate businesses from adopting it and increases the likelihood of government regulation. As a simple example, how many people would use a tumbler if that started being seen as probable cause for a money laundering investigation?

> But in any case, there are legal use cases that work today: sending money with very little friction and with no need to provide a trusted third party or the payee your personally identifiable information.

How many people care enough about removing the trusted third party that they will use this instead of Google Wallet, Square, Venmo, etc. (and, soon, Apple Pay)? Some people value that but it seems unlikely that it's enough to make up for the smaller network, processing delays, and exchange fees.

You're overlooking the millions (perhaps billions) of people on the planet who do not currently have access to Western banking infrastructure.
This is a common Bitcoin talking point, but it's not a good one.

There are over two billion people in the world who have no bank account or access to even basic financial services; “banking the unbanked” is much discussed in international development circles. Around 2013, Bitcoin advocates started claiming that Bitcoin could help with this problem.

Unfortunately:

* The actual problems that leave people unbanked are the bank being too far away, or bureaucratic barriers to setting up an account when you get there.

* Unless they use an exchange (which would functionally be a bank), they’d need an expensive computer and a reliable Internet connection to hold and update 120 gigabytes of blockchain.

* Bitcoin is way too volatile to be a reliable store of value.

* How do they convert it into local money they can spend?

* 7 transactions per second worldwide total means Bitcoin couldn’t cope with just the banked, let alone the unbanked as well.

* A centralised service similar to M-Pesa (a very popular Kenyan money transfer and finance service for mobile phones) might work, but M-Pesa exists, works and is trusted by its users – and goes a long way toward solving the problems with access to banking that Bitcoin claims to.

Advocates will nevertheless say “but what about the unbanked?” as if Bitcoin is an obvious slam-dunk answer to the problem and nothing else needs to be said. But no viable mechanism to achieve this has ever been put forward.

What subset of those people aren’t using a mobile-based banking system like Mpresa but do have the IT infrastructure to operate a cryptocurrency?

I’m all for helping spread modern infrastructure around but it seems like the current cryptocurrencies are taking on significant overhead to solve problems which aren’t pressing for very many people.

Those millions also need to be well-versed with modern security protocols to keep their cryptosavings from being stolen, and accept the fact that not only the transactions are irreversible (which I guess is okay, considering that neither are Western Union's or Moneygram's), but sending to non-existing null addresses does not return an error, so any typo, a garbled message or a man-in-the-middle attack is also irreversible.
Those people often don't have access to reliable internet or electricity, bitcoin does not solve any of their problems. Further, bitcoin is not spendable money for 95% of human needs, especially in the aforementioned regions. Exchanging bitcoin for spendable money in person is risky, inconvenient and expensive. Bitcoin is a terrible option for this population.
>>As a simple example, how many people would use a tumbler if that started being seen as probable cause for a money laundering investigation?

Filesharing is arguably in this category and maybe shows that it's possible that something not generally used for legal purposes and not in the mainstream can nonetheless become widely used. But yes there is certainly a risk.

>Some people value that but it seems unlikely that it's enough to make up for the smaller network, processing delays, and exchange fees.

Right now cryptocurrency is in its infancy, so it has a lot of drawbacks, but it has obvious advantages that anyone can see, like being able to send money from your computer, without first registering with Google Wallet, Square, Venmo, etc, to anyone, anywhere in the world who also has the software installed on an internet connected device. This is a fundamental innovation in money transfer. You're right that it may not be enough to overcome the advantages that large trusted third parties can bring to make it go mainstream, but the advantages it has are obvious enough that people can see it potentially doing so.

> Right now cryptocurrency is in its infancy.

Bitcoin is, what, ten years old. It predates the iPhone. I’d hardly call it still in its “infancy”

Distributed consensus through proof of work was new in many more ways than the iPhone was in 2007.
> If you go the traditional route, you will always have a company in the middle, taking their cut or selling you out behind the scenes.

The free market sure seems to be okay with this. Those middle men provide valuable services like chargebacks, lines of credit, the ability to quickly provide large sums of money without using wheelbarrows to cart them around.

> I'm on the hype train.

You, and almost every other blockchain proponent are so blinded by hype and greed you can't see the very real, very fundamental flaws in bitcoin and "the blockchain". Bitcoin attracts the perfect intersection of people who don't understand economics, math, computer science, finance, business, sociology, or politics. Bitcoin is deeply flawed in all those areas.

> Bitcoin attracts the perfect intersection of people who don't understand economics, math, computer science, finance, business, or politics. Bitcoin is deeply flawed in all those areas.

i can somewhat +1 this just based on anecdotal evidence. a bunch of guys released an ICO and gathered about 15 mil in funding who ive met. i expected them to be extremely smart but i've found that they lucked out and simply wrote up some docs coding barely anything. the idea...seems cool? but i think they're in way over their heads based on what i've gathered from speaking with them. ICOs seem like a crazy scam

This one makes me a little sad. I was very into bitcoin and blockchain ideas early on and the ICO fever has poisoned the well a bit. The money is attracting the types you're describing but IMO the only people who knew anything about BTC in the early days were exactly the kinds of people who knew a lot about about economics, cryptography, finance, business, government, politics, and philosophy. It seems obvious to me that the intersection of these things informed bitcoin's core design concepts. Some people think the system we have now is deeply flawed and needs a redesign, others don't. Those who don't might find it hard to see the utility in bitcoin.
> IMO the only people who knew anything about BTC in the early days were exactly the kinds of people who knew a lot about about economics, cryptography, finance, business, government, politics, and philosophy.

No, it was founded by, and primarily attracted, weird conspiracy theory spouting goldbugs whose motivation was that (a) they thought a gold standard was still workable (b) they had a pathological aversion to the concept of credit in a banking system. Literally, conspiracy theory. https://davidgerard.co.uk/blockchain/the-conspiracist-gold-b...

The scammers didn't come along just this year with ICOs. Scammers have been endemic in Bitcoin as soon as they were tradeable for anything else at all. Bitcoin was founded by starry eyed naifs and this always attracts predators. Sometimes, e.g. pirateat40, the naifs are also the predators.

If you think the desire for sound money is weird you'll never understand why we need bitcoin. The hard core gold bugs in the Libertarian forums circa 2008 STILL don't trust bitcoin because they can't hold it in their hand. You think these are the folks that invented it? They're typically not computer savvy in the least and would rather invest in canned food with a 90 year shelf life. In that diverse group there were a small subset of cryptography nerds who had worked on several digital money theories and iterations before actually inventing bitcoin. Those people knew a lot about finance, economics, politics, etc. People like to flatten groups into one personality and call them weird or fringe to auto-win an argument when the reality is a bit more complicated than that. I'll remind you that the early days of the internet attracted some weird characters too. Doesn't mean they were wrong to be excited, and it doesn't mean the people who actually invented it wore spiked collars and combat boots either.
> If you think the desire for sound money is weird you'll never understand why we need bitcoin.

If you assume your conclusion, then your conclusion follows. I understand the desire, but a wider need doesn't follow, because a pure gold standard hasn't been adequate to the economy we actually have since the late 1600s. One of the big problems bitcoin has always had is that wishing doesn't make it so.

> I'll remind you that the early days of the internet attracted some weird characters too

Often literally the same characters, the cypherpunks.

I see Bitcoin an amazing store of value as it is. Of course I'm excited for the improvements that are coming to it (ring signatures being used to increase privacy of the system, Schorr signatures to make multiple signatures aggragatable).

Cryptography is going through a new booming period.

Just skip the hype part and look at the math part..if an improvement is not using cryptography (for example the elliptic curve group directly), it most likely is not critical for scalability of the system.

> If you think energy conservation is more important, other chains don't have this cost (proof of stake).

Those chains don't exist yet in any meaningful sense; at this point, AFAIK, it's not been proven that an energy-efficient PoS system even can be created theoretically. If it turned out it could be done and then if it was done, I'm sure lot of the negativity would disappear.

The underlying sentiment behind pessimism, at least for me, is that it seems that in the blockchain ecosystem, all the incentives are aligned in such a way to have the market push us into stupidly wasting huge amounts of electricity, storage and bandwidth for no tangible benefit. No need to wait for energy-efficient PoS or other things - you can earn your money right now.

There are actually lots functional proof of stake coins like byteball and NEM for example (but I share your skepticism about long term viability of proof of stake BECAUSE it doesn't cost anything). I think the energy "waste" isn't waste because it serves a purpose. For someone to forge a transaction they would need to control a huge amount of hash power which would cost a fortune. On the other hand, there's always ideas like gridcoin that use that hash power to do scientific computations at the same time (best of both worlds?).
Thank you for your comment. Looking at all the doubt and hate about blockchain & cryptocurrencies on HN lately, I personally can't help but wonder where have all innovators gone.
Confirmation Bias at work. You're invested, so you want it to take off.

Yet none of those blockchain enthusiasts could tell me a single USP that blockchains had over storage in a normal database on any concrete use case, with the sole exception of cryptocurrencies.

And the reason is simple: all those applications have none of the properties and problems the blockchain solves - which is an elegant niche solution tailor made for mutually mistrusting entities working together on a distributed ledger. That barely exists in real life.

Centralized systems are what you want in 99% of cases. They're more reliable, better controlled, have infinitely more throughput and usually, you want to be able to roll back transactions under certain conditions (fraud, mistakes, etc.)

Sure, you could store anything in a blockchain. Sure, something yada yada blockchain could "replace Netflix". It's just that apparently nobody can tell me _why_.

My only concern right now is that I can't short Blockchain technology because the relation of hype to actual usefulness and potential is so incredibly large that it will drag a big chunk of the tech sector down the drain.

In stark contrast to AI which is just as hyped, but isn't just supposed to "change everything" since years - it's actually starting to do so on a spectacular timeline.

> Yet none of those blockchain enthusiasts could tell me a single USP that blockchains had over storage in a normal database on any concrete use case, with the sole exception of cryptocurrencies.

> And the reason is simple: all those applications have none of the properties and problems the blockchain solves - which is an elegant niche solution tailor made for mutually mistrusting entities working together on a distributed ledger. That barely exists in real life.

> Centralized systems are what you want in 99% of cases. They're more reliable, better controlled, have infinitely more throughput and usually, you want to be able to roll back transactions under certain conditions (fraud, mistakes, etc.)

While we're high on the hype cycle for blockchains and crypto currencies, it's easy to find actors that do not understand the limitations of the technology. It has heavy drawbacks when compared to centralized systems. That is true, I agree with that part of your comment.

What your position misses, are the huge unrealized upsides of blockchain tech. It's natural, because they are potential, unrealized and, as such, difficult to defend. Let me try my hand at it anyway, as high level as possible so we don't get lost in use case minutiae.

Blockchain allows you to eschew the need for a single central trusted party. This allows for fluid ecosystems, removing the need for a monopoly/oligopoly in scenarios that today require one. This removal of a market deficiency is known to increase innovation, through competition.

If you find it difficult to imagine use scenarios for blockchain, look for deficient markets caused by the need for centralized trust: monopolies and oligopolies. In each, you'll find an opportunity to create a more competitive market through blockchain.

> If you find it difficult to imagine use scenarios for blockchain, look for deficient markets caused by the need for centralized trust: monopolies and oligopolies. In each, you'll find an opportunity to create a more competitive market through blockchain.

How? This is just vague handwaving that doesn't actually explain how the blockchain can solve real problems. As of now, bitcoin is the only demonstrable use case for a blockchain, and while I don't think anyone could convincingly argue that bitcoin is useless, it's not going to cause an economic revolution like the advent of the internet.

> How? By simply eliminating intermediaries. A middle man always takes a cut somehow. If you can eliminate him, both parties can enjoy better rates. Here are some non vague ways blockchains can help real problems:

- What if a kind of youtube existed where advertisers paid content creators directly instead of youtube taking a large percentage? And it was censorship resistant. - What if we could build app stores that don't take a 30-50% cut. - How about an entire p2p marketplace without fees like ebay? openbazaar.org - What about getting paid for things that are impossible right now because of CC tx fees? This unlocks microtransactions & an entire attention economy (see yours.org, steemit.com, more incoming) - How about p2p digital rights management to allow artists to keep more of their income? Several in the works. - How about any service that exists to keep records? I would love to see the day Pacer was replaced by a blockchain. - What if a kind of reddit could exist without centrally moderated channels and armies of fake users? - What if p2p rented data storage could be a fraction of the price of dropbox without selling your data? - What if you could rent computing power in a p2p fashion? - What if network/VPN rules could be tokenized in the hardware and network access could be metered and charged per minute in crypto? - What if you could receive payroll as a minute by minute stream? - What if the lottery was provably fair and 1000 times less of a ripoff? - What if we could replace obviously flawed political polling with prediction markets?

I could write this list all day. Not vague handwaving, all of these things are being worked on or already exist.

> What if a kind of youtube existed where advertisers paid content creators directly instead of youtube taking a large percentage? And it was censorship resistant.

Youtube taking a large percentage has nothing to do with the nature of the technology and everything to do with the fact that they have no competition due to insane network effects and highly optimized research driven UX. Also hosting, indexing, and reliably streaming hundreds of TB of high quality video is not a trivial problem. Further, you cannot escape censorship when your concern is advertising revenue.

> What if we could build app stores that don't take a 30-50% cut.

Once again, this is not a technology problem: Google and Apple will never allow app store competitors on their platform, otherwise someone would have already done this (and it was done during the early iPhone days with the Cydia store available only by breaking Apple's security - no blockchain required)

> What about getting paid for things that are impossible right now because of CC tx fees?

The same problem exists with bitcoin tx fees such that all the proposed solutions to this problem involve finding a way to avoid the blockchain at all costs.

> This unlocks microtransactions & an entire attention economy (see yours.org, steemit.com, more incoming)

Microtransactions are not practical on the blockchain and most microtransaction concepts are DOA because nobody except crypto-enthusiast wants to pay 10 cents to upvote memes and cat pictures when they can do that for free, with a better selection, on sites like reddit. There is probably some limited potential for microtransactions when it comes to gaming or maybe publishing content, but once again, the real problem has very little to do with technology and much more to do with the fact that most content is crap and people don't want to pay for it.

> How about p2p digital rights management to allow artists to keep more of their income

Once again, not a tech problem. People would happily pay the artist if the artist self-published, but most don't do that because publishing through a platform or another distributor is the only practical option for discoverability. Once you're discovered, the payment aspect is a non-issue, e.g. famous artists who already deploy "pay what you want" style stores (Radiohead, Louis CK, Humble Bundle etc).

> How about any service that exists to keep records? I would love to see the day Pacer was replaced by a blockchain

Why? What problem does this solve? Storing records is already a solved problem. There are plenty of non-blockchain techniques for storing, auditing, and cryptographically verifying and securing records without any of the PoW drawbacks. Please offer even one practical example.

> What if a kind of reddit could exist without centrally moderated channels and armies of fake users

First of all, the blockchain does not solve the "fake user" problem, so I'm not sure what that means, but centralized moderation is not a problem for most people who just want to browse content and don't really care if someone gets banned for spamming "nigger" in comments. For those that really care about totally unbridled free-speech there are already non-blockchain alternatives like voat.co... what does a blockchain bring to the table?

> What if p2p rented data storage could be a fraction of the price of dropbox without selling your data

Economics of scale guarantees you'll never be able to beat a centralized solution like AWS when it comes to this type of thing. You might see some cheaper options for a time, but once the market catches up to the fact that AWS is achieving orders of magnitude cheaper storage than a faux meshnet of consumer harddrives, you'll find that this idea is totally impractical.

> What if network/VPN rules could be tokenized in the hardware and network access could be metered and charged per minute in crypto

Interesting idea, but nobody wants this.

> What if you could receive payroll as a minute by minute stream

Interesting idea, but there's no reason that employers would adopt this.

> What if the lottery was provably fair and 1000 times less of a ripoff

Not really a concern for those that operate the lottery.

> What if we could replace obviously flawed political polling with prediction markets

Vague, impractical and fraught with its own flaws.

> I could write this list all day.

Yes, but like 99% of blockchain related ideas, the problems that are actually solved are already solved without the insane drawbacks of PoW.

> the huge unrealized upsides of blockchain tech

We also miss the upside of emailing everybody a huge Excel file, which would also accomplish distributed replication. It doesn't necessarily mean that most people fail to grasp the concept and enormous potential for sending a large Excel file, it's just that for their use case they have access to more performant tools.

> Blockchain allows you to eschew the need for a single central trusted party. This allows for fluid ecosystems, removing the need for a monopoly/oligopoly in scenarios that today require one.

Except that the system is designed for centralization towards the entity that has access to the cheapest and most subsidized electricity. While most popular cryptocurrencies have escaped that route, you can look into the variety of lower-league shitcoins, that are generally limited to a handful of miners - the rewards are just not there to compete with a giant centralized GPU farm.

What on earth tells you I'm "invested" ;) ? I'm just curious. I still don't know why you're so vindicative, I don't like either when companies use the buzzword "blockchain" in a wrong way.
> you want to be able to roll back transactions under certain conditions

Yup, refunds are the basis of customer service.

Ok look, I have a stake here because I run a crypto fund but let's just be clear: in the beginning of money, refunds involved going to the person you wanted a refund from and demanding the return of your currency. It's not that different from how crypto works right now except that the transaction is much more provable. Over time, institutions that look a lot like banks will provide the refund abstraction on top of crypto, BUT that doesn't change the value of an immutable changelog for money.

Think of it this way, if you were building money for computers, it would have atomic transfers and a changelog. Those properties, it turns out, are very useful, mostly because people dramatically underestimate how many transactions are between semi-untrusted parties (I would argue it is the majority of transactions). Yes, right now, crypto is a step backwards for many transactions, but that's because institutions that would traditionally support currency can't properly model the risk so only the brave entrepreneurs who accept unbounded risk participate. Over time, like any technology, traditional institutions will accept it as the regulatory regime becomes more clear.

The analogy to the beginning of the internet is obvious (the only real question is whether governments decide to ban it).

Refunds not a big deal and no different than paying cash. Online stores have a reputation and reviews so if there's retailers out there scamming people the internet will find out quickly.
To be fair -- and I'm no blockchain booster -- transactional rollbacks should be modeled as separate operations and replacement transactions on an immutable log (or loggish thing, anyway). You can use bitemporal tracking to model invalid belief states, but your system should never be allowed to drop transactions.
Yep, they generally are in modern payment systems. A chargeback is a separate transaction that has to be initiated, submitted and paid for.
Most of the practical use cases are illegal developed nations (because fundraising should be guarded for the elite). But there will be a developing nation that adopts the token economy, allowing for global crypto liquidity to flood in and be put to productive use. Stocks, bonds, notes, everything will be tradable on the global marketplace without KYC AML garbage. Just the free flow of capital to where it's needed most.
> where have all innovators gone

They have enough sense to see that blockchain ecosystem is 1% innovation, 99% hype.

Just dig in the interesting 1% then. What do you think was teh internet back then ? Dot-com bubble anyone ?
Blockchain is only innovative if you ignore the decades of DBMS development. There are very few cases where distributed consensus is needed (versus master/slave relationship), and even those cases can be served by a variety of consensus protocols with better throughput and performance characteristics.
I don't think the parent is a luddite for questioning very emphatic and rather baseless claims. The strawman you build is unwarranted IMO.

Household computers were a thing in science fiction long before they were possible and I don't recall anybody doubting you could eventually transmit movies over the internet in a reasonable amount of time.

Then you continue with the usual hand waving when people point out weaknesses in the bitcoin architecture. Because the last thing we want is for the hype to die and the speculation to crash, am I right?

>If you want to keep middle men in between most things that we could potentially do programmatically, thats cool. I'm on the hype train.

You can do things programmatically without using the blockchain. Actually nowadays I'm pretty sure that for the vast majority of transactions online no human is the loop.

>- low tx rate? not for long

What makes you say that? If you think about segwit/lightning and friends I'll wait until I see them working in practice. I'm still skeptical that these solutions will manage to reach high amounts of transaction without losing the decentralized nature of bitcoin.

>- high computational cost? Security feature. Makes fraud/hacks very expensive. If you think energy conservation is more important, other chains don't have this cost (proof of stake)

You make it sound as if proof of stake was actually a thing. Has any serious blockchain successfully implemented PoS at this point? I know many people are talking about it but it's still very much theoretical as far as I know.

>- high node storage cost? mining fees & block reward more than outweigh this.

I don't understand this argument. Nodes and miners are two different things. If you do serious transactions on the network you should run a full node. Are you saying that people who run full nodes should invest in a mining rig to offset the cost? What if they live somewhere electricity is not cheap enough to turn a profit?

>- no way to reverse transactions? feature. you can always add arbitration / escrow

Yeah by using a... trusted third party. How would you scale this? Well, I can think of a way, you could set up organization who would take a small fee to act as trusted third parties. With a high enough volume of transactions these organizations would have a low incentive of cheating for any given arbitration since loss of trust would mean the end of their business and they could be sued. They could also offer loans and other things the blockchain can't provide on its own. You know, like a bank.

>If you go the traditional route, you will always have a company in the middle, taking their cut or selling you out behind the scenes.

The bitcoin network takes its cut as well and these days it's not exactly cheap. And what do you mean by "selling you out behind the scenes"? Privacy issues?

> Has any serious blockchain successfully implemented PoS at this point?

Decred has, in production for months: <https://docs.decred.org/mining/proof-of-stake/>.

True, it's a hybrid Pow/PoS system, not a pure PoS one, which is indeed probably not workable: <https://docs.decred.org/research/hybrid-design/>.

It's not really clear to me how PoS is providing any security in Decred above that provided by the PoW.

If a single entity is able to get 51% of the hashrate why can't they effectively control which PoS tickets are selected?

Since the overall reward & transaction fees are distributed between both PoS & PoW, it seems to follow that at there will be fewer PoW miners resulting in less overall security vs. a pure PoW protocol.

Regarding third parties, on a blockchain you don't have to trust them to hold your money. You can set up a 2-of-3 scheme where if the two primaries agree then the third party never gets involved, and if they disagree then the third party decides where the money goes, and only then gets a cut. Advantage: in the absence of a dispute, this system is free.
Since when is the blockchain free? You still have to pay a transaction fee.

And with your scheme there's still the problem of how do you scale it? Even if you hope that you'll be able to settle the transaction without disagreement you still have to select a third party "just in case". I can't see working at scale unless you have "professional" third parties with good reputation who will be able to oversee a big number of transactions without being tempted to cheat the system. Why would these third party accept to work for free?

Maybe those parties would accept to be paid only in case of dispute but in this case (if the number of disputes is a very small proportion of all transactions) they'll probably ask for a significant amount of money to break even. You want this third party to be very reputable and hard to corrupt after all, that means that they must have a significant amount of money at stake. You don't want some dude doing it as his weekend project in his basement.

Furthermore the one contesting the transaction will have to be the one who pays the company because how could they force the other one to give money? In turns that means that this neutral third-party becomes biased, it has an incentive to side with whoever paid them to weigh in on the transaction since they've effectively become their customer.

That's kind of my problem with this entire blockchain thing, people are reinventing the wheel, telling everybody they're going to "kill the banks!" but they never stop to wonder why our current system works the way it does. I'm not saying that things are perfect as they are but if you don't learn from past mistakes you're doomed to reproduce them.

Yes, there's the standard transaction fee, but on Ethereum that would be about a penny. My point is there'd be no fee to the third party, in the absence of a dispute. In that case the third party would do no work. They don't even have to know about the transactions where they're designated "just in case."

The fee when there is a dispute would have to be higher; I'd argue that this isn't terrible, since it gives the primaries a stronger incentive to work things out on their own.

Obviously it would help to have some kind of reputation system for arbitrators. That doesn't necessarily have to be on chain; anything that lets both primaries agree on an arbitrator is fine.

The contract is what forces the payment; the money in question is held by the contract, and if the arbitrator makes the decision, the contract automatically deducts the fee from the held funds and pays it.

You're right that sometimes people ignore why the current system works, but the flip side is dismissing blockchain solutions without first understanding how they work.

> this system is free.

Free? Who pays for the blockchain? Last I looked into it, each transaction requires about enough electricity to power a house for an entire day. That isn't very free.

That's an average including all the mining rewards, it's not actually paid by people issuing transactions. A simple transaction on Ethereum costs about a penny.

I agree the energy consumption of present-day blockchains is a problem; hopefully proof of stake will fix it.

I feel the same. I can't fathom the lack of imagination, and IMHO that's what it is. I've loaded Lemonade Stand on an audio cassette, and with the same fingers, I now type this on a black wafer on a plane.