[seibelj]

So many articles about Bitcoin and cryptocurrencies today! I've devoted a lot of my career to blockchain, and here is my brief summary:

- Blockchain typically means a tamper-proof, distributed database.

- Smart contracts are like stored database procedures.

- Blockchains allow you to transact valuable assets - even billions! - without needing to trust your counter-party.

- However, you must trust the underlying software! This is a fundamentally different risk from usual financial transactions where you trust the institutions servicing the exchange, but not necessarily the counter-party. This turns finance upside-down!

- People can create financial products and services - even extremely complex ones - without any governmental permission, or if they need a real-world presence, permission from a regulatory body that is very amenable. And once granted, it's very easily to transact globally!

- If your curiosity is piqued, check out my blog post I wrote a while ago on MakerDAO and their decentalized stablecoin. It's fascinating! https://medium.com/@james_3093/the-dai-stablecoin-is-a-game-...

- Cryptocurrency and blockchain are some of the most debated, and IMO misunderstood technologies of 2019. They are interesting from not just a pure computer science perspective but also economics, philosophy, and psychology.

[dragonwriter]

> However, you must trust the underlying software! This is a fundamentally different risk from usual financial transactions where you trust the institutions servicing the exchange, but not necessarily the counter-party. This turns finance upside-down!

No, this is just normal finance: most of the financial service industry is providing exactly what blockchain provides—a way to have a trusted set of institutions and processes in places of trusting counterparties.

It's different that the crypto world likes to pretend it's just the automated processes embedded in software that need to be trusted—until those processes produce unacceptable results which requires social intervention, revealing that, yes, ultimately it's still trusting people—whereas traditional finance is overt about social constraints backstopping blind process.

[seibelj]

It's not the same. If the bank messes up a multi-million dollar wire transfer, you have recourse. If you mess up your multi-million dollar Bitcoin transfer, you have no recourse! Period!

[__MatrixMan__]

I agree that there's a bit of hippocracy around the way crypto communities claim that they're trustless until something goes terribly wrong, at which point various key people in those comminutes are trusted to author a hard fork that will undo the damage.

But hippocracy aside, I still think it's a better system than the one you find in fiat currencies. At least in the crypto case the people in the trusted position have something to lose--if they behave badly, people will lose faith in the currency and go elsewhere. It doesn't take much to move your assets between cryptos. If you control enough hashpower (assuming POW) or coin (assuming POS) you could easily lose it all overnight if you support a malicious fork.

In a fiat currency there's way more friction keeping people entrenched. This means that the banks can behave badly and still bet on a majority of their users sticking with their platform.

Besides, Bitcoin just proved the concept. If you don't accept that its fork mechanism has merit as is then I hope you can at least admit that there could be a system that is more effective than our current bureaucratic mess. And whatever that system is, it seems likely that one of the fledgling next-gen cryptos will find a way to make it happen.

I was reading about decred the other day, for instance. Voting on potential forks and then healing the partial schism caused by the vote is baked into their protocol. Apart from the necessary bit about trusting other stakeholders to vote reasonably, I think that in a scenario like that the trust placed directly in the protocol is not insignificant.

[1996]

TLDR: software is eating finance.

BTW something I've read here and I adopted as my tagline: it quite fun to come on ycombinator and read every single time the rambling of all the people predicting the doom of bitcoin -- you know, the thing that has managed without venture backing to become more valuable that ALL the ycombinator companies PUT TOGETHER.

TLDR2 : Sour grapes :)

I remember reading about a swedish guy that said he had seen the light and converted all of his savings in BTC. He was torn to shred by so many posters.

Funny thing: I haven't heard about him since, but I sure have read the moaning of the same people who had predicted he'd end up destitute. I think he's doing ok while they aren't.

I sure wish I had seen the light like he did, but I don't blame him for his hindsight. And after I saw most of the negative posts as sour grapes who just regretted they didn't act on the information that was available to them, I decided to act. Like you did.

Maybe more people should follow your example and stop misunderstanding the problem. Yes it needs economics + philosophy + psychology, but it can be learned. For those who don't want to learn, please don't blame those who do. Even more important: don't try to strop those who want. We need fewer sour grapes. Not more.

EDIT: Came from another thread to apologize when I saw my karma going to new lows. Sorry for rubbing it in. Downvote if it makes you feel any better about yourself and your past action.