[coralreef]

Society doesn't really "need" blockchain technologies...

That is, until the government screws up the economy and something like hyperinflation occurs.

Or some system gets hacked, and information or money gets leaked/lost.

The appeal in Bitcoin/crypto isn't capacity or speed, its security (from the state, from bad actors, etc.) That has a very high-value proposition and is worth investing in. In time, I think scaling solutions will make crypto much more practical.

[fastdev]

> Or some system gets hacked, and information or money gets leaked/lost.

I am not sure how blockchain/decentralized technologies allow protecting from hacks or money loss. They seem to be as susceptible to hacks as non-decentralized systems (e.g. the DAO) and lots of crypto money was lost in many different ways.

> its security (from the state, from bad actors, etc.)

This is right. Decentralized systems should give more security, but what about a cryptocurrency like NEO? It is significantly faster, but many criticize it because it is somewhat centralized (selected nodes voting for transactions instead of mining). Does it provide less security than Ethereum? If yes, in what cases is this difference critical?

> I think scaling solutions will make crypto much more practical.

This is true as well. But it seems that no-so-decentralized crypto (NEO, Ripple) can give practical benefits and provide higher performance. If Ethereum can scale, cryptocurrencies like NEO can scale as well. Are there any practical cases when using these solutions would be not enough, and developers would have to resort to a potentially slower but fully decentralized network?

[ploxiln]

The security situation is inverted.

For a typical bank account, the security is up to the Bank and the Government, and there's nothing you can do about it.

For a crypto-currency wallet, the security is up to you.

Some people are dismayed that the common person is enabled to fuck it up - gamble, invest in ponzi schemes, leave control of their wallet to a sketchy third-party. Some people are very excited that they're finally able to take control of their own accounts and make their own security guarantees, and not worry about identity theft, paypal policies, FBI or IRS freezing accounts due to a bureaucratic mix-up, etc.

[zaarn]

In a cryptocurrency wallet the security is up to you and the developers of the wallet and the developers of the blockchain.

If you run some chain like IOTA then chances are you get hacked despite doing the best security possible under the circumstances because the underlying chain sucks.

[coralreef]

RE: decentralized network security

The 51% attack, or control over the network by a state or group of actors, basically destroys the integrity of the blockchain, as this group can now decide to move money from any account, restrict transactions, etc.

The more likely a 51% attack can occur (via centralized systems) then the less secure we can call that network.

[hobofan]

> as this group can now decide to move money from any account

That's not accurate. They can double-spend, which can have equally bad effects, but without a way to forge transaction signatures (which is only possible with a broken cryptohash function), they can't just drain accounts.

[threeseed]

> They seem to be as susceptible to hacks as non-decentralized systems

Actually far more so.

Banks can afford to spend whatever it takes to secure their infrastructure. Open source projects can't. Likewise banks and other financial services are subject to (at least in most countries) stringent regulations. Open source projects aren't.

And in countries in Australia we have consumer protections which protect the consumer in the event of fraud, theft or security beach (irrespective of who is at fault). Unlike say Bitcoin where we have seen staggering amounts of money, "go missing".

[coralreef]

Banks can afford to spend whatever it takes to secure their infrastructure. Open source projects can't.

Isn't that a benefit of the blockchain? Since its inception in 2008, Bitcoin's database has never been hacked. They don't need to spend money on security, because mathematics is the security. The chain's integrity is powered by decentralized nodes and proof of work. At scale, while Proof of Work is increasing in cost, it is still probably cheaper and more secure than the aggregate cost of securing money at banks, servers, overhead, etc. And there are opportunities to make it cheaper through concepts like Proof of Stake.

[zaarn]

It was hacked atleast once and the hacker assigned themselves a couple million coins.

Last time I worked out the numbers, Proof of Work runs about the same cost as the average US state's bureaucracy. All of it. And the US state's paperwar machinery does a lot more than bitcoin.

Centralized systems have much better options at running efficiently, decentralization is necessarily inefficient.

>They don't need to spend money on security, because mathematics is the security

Everyone working on quantum computers disagrees. The security of current wallets hinges on QC not existing since the ciphers aren't QC-secure.

And until we find something that is provably NP-complete in QC and normal computers while also being easy to use for cryptography, there will always be the hovering Damocles Blade of "your crypto has been cracked".

[fastdev]

It seems like Bitcoin network has never been hacked, but distributed applications were hacked with spectacular monetary losses, for example, "The DAO": https://www.coindesk.com/understanding-dao-hack-journalists/

Blockchain technology has different attack vectors like:

* Bugs in smart contracts/DApps

* Bugs in a client software

* Incorrect handling of private keys by users/admins

All these vulnerabilities were exploited numerous times.

[fooker]

You are comparing apples to oranges.

Plenty (all?) bitcoin exchanges have been hacked and their coins never recovered. You do not need to 'hack' the blockchain to steal bitcoins.

[coralreef]

A bitcoin exchange is not a decentralized system. It is a centralized one.

We are discussing the security of decentralized systems, aka the blockchain.

[fooker]

If only such decentralized systems could exist in vacuum!

The thing about security is that you just need to exploit one weak link in the chain.

[fastdev]

Hacking a crypto exchange is not the only way to steal coins. Decentralized applications/smart contracts on a blockchain can be attacked as well.

[jonny_eh]

Do we know for sure Bitcoin's blockchain has never been hacked? How do we know that some mysterious organization doesn't own a majority of nodes? (honest question)

[coralreef]

I suppose we don't. But if word ever got out that it could be under attack, the value of BTC would crash, and an emergency hard fork would occur. It would take a large investment to try and control/manipulate the hash power to do that, and so to throw away all that money to kill a blockchain that can be simply forked with a new hashing algorithm seems low probability?

[FLUX-YOU]

>Or some system gets hacked, and information or money gets leaked/lost.

Blockchain is worse for theft because someone can't arbitrarily pull money from a bad account and put it back. The amount of security you also need to take on to protect your private key is a vast increase from what you need to currently do for banks.

[coralreef]

Well, depends on the context of "theft". A government could freeze your bank account and seize your assets quite easily, with no recourse. They can't do that with crypto.

But yeah, the immutability of the blockchain has its tradeoffs.

[threeseed]

Sure but most people aren't getting their assets seized. And in that situation even if you had your assets in Bitcoins the government can still seize them if you've kept a record or wallet somewhere.

Likewise if you're a person who is in the business of getting your assets seized then money is probably the least of your worries i.e. you're quite likely to be facing jail time.

[woah]

PayPal is one of the few centralized ways to receive money over the internet, and the web overflows with stories of people who have had large sums frozen for a very long time.

[coralreef]

Most people aren't getting their assets seized, that is until a national crisis occurs, ex. Greece:

https://www.youtube.com/watch?v=9gW2UnmVuwI