[padobson]

Yeah, this is what I don't understand from the naysayers. Anyone who says blockchain-driven assets don't have intrinsic value seems to ignore the value of trust - the ability to trust that the ledger is accurate seems extremely valuable.

The author of the article skips over the question entirely, maybe he's addressed it elsewhere, but if the crypto skeptics continue to ignore one of its primary value propositions, I have to assume either ignorance or bad faith.

[horsawlarway]

But that ledger isn't accurate. It's just distributed and difficult to change.

I technically am the owner of (quite a few) bitcoin that were being processed by MtGox when they imploded.

The wallet they were in at the time was emptied and no longer exists.

I still receive the relevant court documents as the case continues still.

As far as the ledger is concerned - they are no longer mine.

---

So question to you: How do you reconcile the theft of my property with the ledger at this point?

It turns out I have no ability to do so at all. The ledger is distributed and impossible to meaningfully change.

So while I trust that the ledger can't be changed easily - I don't trust the ledger to accurately reflect ownership (it can only represent possession, not true ownership).

So now what?

Now it turns out I have to turn around and trust a central authority anyways! That authority being the government that is handling the prosecution of MtGox for fraud and theft.

[CTDOCodebases]

“I don't trust the ledger to accurately reflect ownership (it can only represent possession, not true ownership).”

Possession is ownership on the Bitcoin network. Not ownership in the sense of it is written down in some legal document somewhere but ownership in the sense that you have the power to perform a transaction with what you say you own.

You were trusting a central party all along. If you didn’t you wouldn’t be in the position you are in.

[horsawlarway]

But the alternative here is that you have to place all your trust in an unknown and untrusted 3rd party to ever actually make an exchange.

Even the silk-road used an escrow service that required that the seller trust the buyer, and both parties trust the silk-road. (a buyer places coins in escrow with the silk-road, the silk-road confirms it has the coins to the seller, the seller ships the product, the buyer unlocks the coins escrow upon receipt)

So the whole things boils down to "trust" and it turns out that the ledger can't actually provide any trust.

[CTDOCodebases]

After enough confirmations a transaction is final and I can trust that the transaction is final and my account balance on the ledger is correct.

Present forms of digital cash do not offer this. A payment can be reversed if the buyer claims the transaction was fraudulent and the banks involved agree to reverse the transaction. Money can be accidentally withdrawn from my account and I have to ask the bank to return it. In both these cases if the institutions involved refuse to return my money then I have to take the issue to court and I am deprived of using or investing this money in the meantime.

If consumer protections are your concern these laws exist in many countries regardless of the payment medium.

[horsawlarway]

But the trust that a bitcoin transaction is final isn't enough trust to make an exchange!

Lets say you and I decide right now that we're going to use these comments to make an exchange. I will give you $5 of bitcoin in exchange for you mailing me a postcard.

Now what? How do we proceed in a meaningful manner?

How do we go about making that exchange happen if we assume that either party is self-interested, and not interested in actually completing the deal?

If I send the bitcoin first? - the second it hits your account you know for sure it's yours: No need to bother sending the postcard - that's just cash out of your pocket.

If you mail the postcard first? - Well, job's done for me, no need to send any bitcoin at all.

What if we both agree that we trust Bob, and you send him the postcard, and I send him the bitcoin, and he only forwards them along after he gets both? - Oops, now Bob can do all those things you complained about letting the bank do! He can send that bitcoin back and I won't ever get a postcard. He can mail the postcard back and you won't ever get any bitcoin (Transaction reversed!). Worse, he can take anything you give him and do what he wants while he has it (like disappear!) - or hold them much longer than you'd like after he gets them. (Freeze it).

How do you get your stuff back from Bob? Same way you would from a bank - appeal to the government.

Basically - Bitcoin without enforcement is only a ledger. The thing that keeps it in check with reality is an appeal to an authority somewhere, who provides trust that both parties in an exchange aren't getting screwed.

[CTDOCodebases]

"But the trust that a bitcoin transaction is final isn't enough trust to make an exchange!"

Correct. Who said it was?

"How do we go about making that exchange happen if we assume that either party is self-interested, and not interested in actually completing the deal?"

We don't make that exchange in that case. Or like you mentioned we both acknowledge that we don't trust each other and get a trusted third party involved who we both trust more that the each other. No payment method is immune to this. Notice though that regardless of how much trust that we have or don't have for each other we can both trust that if you do send me $5 of Bitcoin I will receive it. Provided I've taken the necessary steps the transaction will not be reversed. Also note that if I wish I can also be certain that no one can erase whatever I rightfully claim is mine from the ledger or transfer it to another address once I have received it. This cannot be said for any non crypto digital payment system currently.

Bitcoin is a shared digital ledger hosted on a transaction network that is not controlled by a single trusted third party. The thing that keeps the ledger in check with reality is the correctness that it guarantees to those who are using the network to send and receive payments.

If you say you are going to send me a 1700 sats to post a postcard to you and I deliver as promised but in reality you don't perform your part of the deal the ledger is still correct. You still owe me 1700 sats according the deal we made and I can confirm this by checking the ledger. The ledger itself does not know about the deal we made but we both know we made a deal and according to that deal you still owe me 1700 sats. Now with a traditional bank what happens if you claim you sent it and the bank says you didn't. How can I verify that the transaction took place? I can't. I have to trust what you or the bank tell me and I don't know who is telling the truth. Maybe the transaction got lost. Maybe you didn't send it. There is no way to discover the reality of the situation without having to make an uninformed choice about who I trust.

At present Bitcoin is still clunky and has many issues both technical and non-technical to overcome. It is unknown whether these issues can or will be overcome. It has a far way to go if it is to realise the creators vision in a meaningful way by gaining mainstream adoption and use as "digital cash".

[pcthrowaway]

You're overlooking defi, this is the thing being revolutionized right now; you can make all the transactions you can afford to pay transaction fees for, trade hundreds of assets, swap tokenized USD for tokenized EUR, all without an intermediary.

To be candid, you are generally trusting the contracts you're interacting with to be bug free, but you are able to audit the code just as easily as anyone else, and verify that the contracts are as advertised. Unlike dealing with a bank portal, all the logic running on the blockchain is visible and verifiable.

[chillacy]

Afaik markets use multisig now, so the facilitator never has access to the funds unilaterally.

[hirako2000]

Not your keys not your coins. Unless you trust some central authority to take care of you, which you should by now understand that doesn't always work, and when it doesn't work, it's usually a spectacular failure.

So to answer your questions. Although possible, no reconcile is the pure spirit of a trustless network. Now? you make sure to avoid custodian services and keep your keys safe. or stay away from crypto until/if it becomes as ubiquitous as the Internet.

[horsawlarway]

So we both agree - the ledger is "accurate" only in the sense that the ledger matches... (drumroll) the ledger.

Which is entirely true, and there are some useful properties to that, but the whole thing falls down the second you have a real dispute over the trade of goods for value (which I might remind you, outside of the pure speculation/gambling that occurs in bitcoin pricing, is the point of actually holding a currency).

So how do I go about safely spending these things? Oh - it turns out that still only works in the context of a central authority and the legal system they support.

[hirako2000]

the dispute concern is long solved. it happens every day with cash, but also with other form of payments. freight shows interesting practices. and, escrow is still an option.

Spending these things? I can show you how to hold securely some wallet with your own private keys (no custody), receive then "spend" these things for a few pennies per transactions and with the guarantee nobody will interfere with our exchange. from wherever you happen to reside. there is no central authority able to (practically) control many of the blockchain networks out there.

[horsawlarway]

> Spending these things? I can show you how to hold securely some wallet with your own private keys (no custody), receive then "spend" these things for a few pennies per transactions and with the guarantee nobody will interfere with our exchange.

Yes, and because no one can interfere in the exchange, no one can prevent either party from abusing the other, and no third party can later reconcile the dispute without an outside framework.

I find it pretty unbelievable how comfortable the crypto crowd is about just dismissing reconciliation, when it's literally some of the oldest history have, and one of the more important roles of a functioning government (we literally have 4 thousand year old stone tablets dealing with this: https://en.wikipedia.org/wiki/Complaint_tablet_to_Ea-nasir)

[nice_byte]

> Not your keys not your coins.

so the same thing as "code is law", which is a fundamentally bad idea.

[hirako2000]

No idea is perfect. I find that one preferable over the other popular alternatives where a few people's whim are the law. Note: code is law doesn't imply it can't evolve, adapt, improves. the idea of code is law is the same as being against retro active legislation.

[voldacar]

>Now it turns out I have to turn around and trust a central authority anyways! That authority being the government that is handling the prosecution of MtGox for fraud and theft.

In theory, DeFi can solve this. In practice it is hampered by poor UX and high transaction/gas fees. I think in the far future, the idea of ever having "your" assets in a wallet whose key you don't control will be seen as a ludicrous archaism. Sorry for your loss btw, that really sucks

[horsawlarway]

> Sorry for your loss btw, that really sucks

You and me both - 41 bitcoin at $4.17 a piece. Admittedly, if they hadn't been stolen I was planning on buying a 1/4 of weed with them, so I probably wouldn't be rich either way... shrug

Fun story though - I can honestly say I spent more than USD 10 million in bitcoin on weed in college. Only about $500 at the time.

[CTDOCodebases]

You know they recovered 150000 Bitcoin from a cold wallet and are going to repay holders?

[TheProbes]

You should be getting some of them back soon then right?

[JackFr]

This exactly.

Turns out there is some utility to a central authority.

[verdverm]

Proof of Authority systems

[BTCOG]

Not your private keys, not your coins. You CHOSE to gamble with your property when you gave it to someone else. Whether you understood this before you lost your property or not, is irrelevant. I've not lost any of my coin UTXOs associated with my own private keys. Unregulated, foreign Magic The Gathering trading card exchange use was never a wise choice from the day Jed McCaleb started that garbage database.

[betwixthewires]

I see your perspective. There's another perspective from which you could look at the details of your situation.

You deferred to a trusted party to secure your wealth and because that third party was untrustworthy, you have to defer to an intermediary.

Had you deferred to yourself to secure your wealth you wouldn't be in this situation. The ledger would be the canonical one of ownership and possession, and you wouldn't have to defer to anyone.

Basically, you kept your bitcoin in a traditional, legally enforceable arrangement instead of the bottom layer, algorithmically enforced environment and now have to defer to the traditional system to restore possession.

[horsawlarway]

Ok - so follow along with me here:

I owned no bitcoins at the time I desired to trade bitcoins for a physical product (in this case: ~7g of Cannabis)

What recourse do I have that does not require trusting a third party?

I do not own the required compute power to mine it myself (not technically true at the time, although certainly true today)

I'd like to have you walk me through the exact set of steps to acquire my bitcoin and use them to purchase that physical good, where I can magically avoid placing any trust in a 3rd party.

[betwixthewires]

1) generate a private key,

2) move it to the private key.

When you're ready to spend it, spend it. Those places where you were looking to buy cannabis have escrow services, at the time you'd have had to trust the platform only upon purchase, nowadays multisig escrow is standard, which requires significantly less trust in a single party.

[horsawlarway]

Move what to the private key? How do I get those coins in the first place?

[betwixthewires]

Move the bitcoin to your brigade key.

However you can.

Any time you make a purchase, of anything, you're trusting the seller. Leaving it in their custody is where you screw up. Imagine you bought bitcoin from me, but then asked me to hang on to it for you for free. Or a car. Or anything. It's absurd.

[MrMan]

They want you to go back to frontier days before specialization in the economy, you are supposed to hoard your wealth yourself and protect your family with a gun

[horsawlarway]

This exactly! (not to mention only ever making exchanges in person, because remote exchanges require trust)

Which is hilarious. Because that's actually all that bitcoin was good for: black market deals/trades, where enforcement is left up to you anyways.

Unfortunately, that makes it a (fucking terrible) medium of exchange for absolutely anything else, unless you add back in all the government regulation that the crypto folks hate.

[carpo]

You could have reduced the risk substantially by transferring off their wallet to yours right after purchase. You still could have purchased your weed too.

[horsawlarway]

There was no holding. It wasn't an asset I was interested in holding, it was a medium of exchange to purchase a good I couldn't otherwise get.

The coins would sit in the wallet for as long as it took me to figure out how to place an order on silk-road again, where I would buy down to as small an amount of bitcoin as I could.

I got unlucky the last time through and hit it right when the service went down.

Which is funny - because the attitude that I should be hiding my coins away as tightly as possible is exactly why I'm so non-plussed on bitcoin: It's no longer an medium of exchange, it's a speculative asset with price completely unhinged from utility (which in my opinion is basically just buying black market goods).

[matheusmoreira]

> How do you reconcile the theft of my property with the ledger at this point?

Authorities must find whoever received those bitcoins and make them transfer the funds back to you.

[throwaway21332]

You know, there is a reason why crypto people chant "Not your keys, not your coins".

[horsawlarway]

Sure, but value without an enforcement mechanism is not very useful.

People usually want to trade stored value in exchange for goods and services (at least in a functioning value store - I don't really believe bitcoin serves that purpose at the moment).

So lets say we agree that I pay you 10k in bitcoin in exchange for you remodeling my bathroom (and ignore how unlikely this scenario is with real crypto currencies). I pay you 50% up front (to purchase materials), and 50% on completion.

Then you run off with my initial 50%.

Now what?

----

Every solution I've seen is riddled with pitfalls and gotchas

- Use escrow? Wait - now we're just trusting a central authority again.

- Use Eth contracts? Well, maybe - but it requires a perfectly written contract or you're open to all sorts of strange edge behavior and side effects.

- Sue over the theft? Now the central authority is just the government again, and we're back at square one!

You see the disconnect I'm getting at? Eventually, if disagreements occur about how value was traded, there has to be a reconciliation mechanism. Right now, even in modern crypto - that reconciliation mechanism is still a central authority: Your government.

[throwaway21332]

You're conflating two issues with each other. One is having a decentralized currency with a fixed monetary policy. Another issue is the counterparty risk.

Bitcoin is not designed to solve the counterparty risk, it's just a digital cash that has a fixed emission schedule. It can be stolen just like regular physical cash can be.

Smart Contracts try to solve the counterparty risk issue, but it's just an extra layer around cryptocurrencies, that has it's pros and cons.

[horsawlarway]

See, I think you're disconnecting two issues which are inherently related.

Fraud is not going anywhere anytime soon. If you have no proposed mechanism to reconcile fraud, I'd argue there's not any true value stored.

If the proposed mechanism is "just use the existing government" then the whole house of cards in built on the back of that central authority enforcing ownership for you anyways in which case why not just use the currency that authority already sponsors and has a proven track record of enforcing?

[throwaway21332]

The reason I am disconnecting those issues is that Bitcoin was never designed to solve the type of fraud you're talking about. There is no proposed mechanism to solve it, because it's outside of it's scope.

It was designed to solve a specific set of frauds related with having a central authority though: censoring people from financial system, seizing your savings from your bank account and debasing the currency for the benefit of the political elite.

Counterparty risk is real, but there are other ways to solve it, besides having a central authority that has the power to revert transactions, which comes with it's own risks.

[BTCOG]

Not sure why you're being downvoted for providing a good answer here. When you use Bitcoin, or cash it is solely your responsibility to protect that counterparty risk via your own means. Without a contract and receipt, the same would happen to your cash if you walked into a business and the owner decided to keep a small sum of your money with no record of transaction. If you gave a shop owner or autobody mechanic $50-500 cash with no receipt he could very easily just keep your cash. You have no recourse. Call the police? Doesn't matter in real life because you have no receipt or contract. It's your word against his. Since I see that you've just replied and still want "recourse" if someone steals your money I'll just clearly spell that out for you. You cause the level of recourse of your stolen money that you require. Whether via violence or a counter-theft and damage to the thief equaling what was stolen from you. It's left up to you with Bitcoin. If you can't stand the heat, get out of the kitchen. We don't want government intervention.

[horsawlarway]

Except you just wrote a long comment telling me that I should be using government intervention if I want to actually trade bitcoins for goods or services.

You hinted that somehow a general user of bitcoin might have the power to influence or extort a third party to offset risk - but the reality of the situation is that the only entity I'm in contact with that can provide the resources to influence or extort a 3rd party is my government (doubly so if we assume I'm still bound by my local laws and rote violence isn't an answer).

[keyanp]

> the ability to trust that the ledger is accurate seems extremely valuable

Maybe it "seems" valuable, but why exactly is it valuable? For what use case and which situation (besides crime)?

I think the issue is that many don't see value in its "primary value proposition" because the features they want from banks are already there (stability, FDIC insurance). The only thing I personally see missing is no/low-fee instant transfers, but crypto hasn't solved that either (too slow and/or high fees).

[bobmichael]

One IMO realistic use-case is providing a wealth preservation mechanism for people living in a country with a corrupt government that's experiencing hyperinflation, for example Lebanon.

[webmaven]

> One IMO realistic use-case is providing a wealth preservation mechanism for people living in a country with a corrupt government that's experiencing hyperinflation, for example Lebanon.

Sure, but (like it or not) that's covered under the umbrella of "crime".

[munchler]

In that case, I think the point is that some "crime" is ethically justified and worth supporting technologically. The OP's statement implies that all crime is bad.

[webmaven]

Sure. But it is worth asking if this particular channel of support is worth enabling all the other forms of criminality that use cryptocurrencies.

[betwixthewires]

Yep, but all that means is that "crime" is a meaningless distinction itself.

[CyanBird]

> One IMO realistic use-case is providing a wealth preservation

Any other fiat currency already provides this such as usd, euro, Israeli currency etc and they are at least currently far easier to aquire and done have any gas feeds other than consumption tax if any

On Lebanon where electricity is unreliable seems like a particularly bad idea to use any sort of Crypto, let alone the user friction as a consequence of network gas prices

On real world scenarios, if a country is having issues relating to inflation or is a small market to begin with, consumer prices are denominated on Usd or some other currency anyway

[CTDOCodebases]

True but opening foreign bank accounts is difficult and like western countries physical cash can be legally seized by authorities even if it was acquired legally.

[floatboth]

Cryptocurrencies can also be legally seized. Anything can be.

[BTCOG]

This is only if the end user allows seizure. If I have only a 12-word seed in my memory and not a single private key written down anywhere in my house and no bitcoin wallet installed on any computer, you have absolutely no way of confiscating anything. It's something that a lot of outsiders do not even realize. Bitcoin is actually entirely un-confiscatable. If someone commits private keys to memory or entirely encrypts and off-sites private keys, exactly how can the money be confiscated? It cannot be confiscated. Any human in the world can move freely about the globe at this point in time with billions of asset value solely residing inside their brain. Import that memory into any mobile or desktop client wallet anywhere in the world, or recite the key secretly to someone else they trust anywhere in the world.

[CTDOCodebases]

True. But cryptocurrency gives people the option to resist seizure and suffer the consequences.

[giantrobot]

People living under a corrupt government and experiencing hyperinflation are no safer or necessarily better off with cryptocurrency. Conducting cryptocurrency transactions requires a non-trivial amount of infrastructure. Even "offline" transactions with a Rube Goldbergian number of mesh network components needs all those components to work.

A fortune in Bitcoin in a conflict/disaster zone is no more useful than a fortune in dollars in a bank if you can't access it readily. Your fortune means shit if you can't buy a loaf of bread.

Even if you can access the infrastructure necessary to spend cryptocurrency to buy a loaf of bread they provide no protection against localized inflation. Prices of goods in a conflict zone increase significantly due to dangers/difficulty associated with the supply chain or lack thereof. Sometimes they increase due simply to greed. Transacting in a cryptocurrency doesn't help at all with this. Your Bitcoin fortune can be wiped out just feeding your family since your only other option is to starve to death.

[betwixthewires]

> ...(besides crime)

First you have to define "crime." If by "crime" you mean "any activity outside the purview of regulatory authorities" then you're defining everything that isn't a bank account as crime. It is circular logic. "Its only use case is crime because using it is crime." If you more narrowly define crime as criminal acts besides just unregulated financial activities, then you can start to see the value proposition.

[keyanp]

That is a straw man. This is not my definition of crime, I was thinking things like money laundering, tax evasion, ransomware payments, and blackmarket purchases.

I'm genuinely not sure what a use case for unregulated financial activity would be that doesn't fall into those buckets.

Someone mentioned retaining assets in countries with hyperinflation. To me it appears a central bank digital currency would be more appropriate there.

[betwixthewires]

A straw man? I just wanted a definition of "crime".

"Blackmarket purchases" has the same problem "crime" does, it's self supporting.

[mitchdoogle]

Banks can give your money away without your knowledge. Happens all the time, and people have little recourse. Worse yet, it's seen as the victim's responsibility and not the bank's.

[swenger]

A blockchain doesn’t provide trust, though. A person who doesn’t understand technology doesn’t trust a distributed ledger, but they do trust their centralised bank because it’s regulated.

[hackinthebochs]

It provides "distributed trust", in the sense that you know no single person or group is in control and you trust the distributed consensus, in terms of ledger state and algorithm accuracy.

[lbotos]

I'm not fully up to speed but are modern blockchains still susceptible to a 51% attack?

[betwixthewires]

Current PoW chains, yes. Some other consensus schemes have higher threshold requirements to pull off a similar sort of attack, in particular you can look at Casper FFG and other byzantine fault tolerant PoS schemes.

There are some with lower threshold tolerance of these attacks based on the idea that they're unlikely and the added threshold doesn't actually add security. I don't know about that but some people seem to think so.

[floatboth]

Maybe no single entity is literally in full control but large mining pools and the developers of the software both have extreme influence over the chain.

[joshmarlow]

I would question how much of the layperson's trust is due to bank regulation and how much is due to familiarity.

[brandonmenc]

Probably nearly 100% due to regulation.

[core-utility]

There are plenty of non-tech people with investments in crypto that would disagree with you. Also, some exchanges are FDIC insured.

[eof]

They do though. A very small percentage of current holders of crypto have an understanding of the technology.

Trust will (continue to) come with time.

[throwaway6977]

You sound privileged enough to have access to a reliable and trustworthy bank. Many, many people aren't as lucky.

[rzanella]

So this person lives in a place they can't trust banks...

But they have access to computers, internet, enough money to pay the tx fees of cryptocurrencies... amazing

[throwaway6977]

Less snark would be preferred to elicit a response, but yes- there are more cheap computers than people in the world, and smart phones are near ubiquitous even in very poor places. You simply don't have the life experiences to make this criticism. i.e. PRIVILEGE

[floatboth]

Don't forget enough tech expertise to be able to use any of this crap in any "decentralized" way (if they all just use coinbase, where is that decentralization?)

[HelloNurse]

The article discusses pseudo-money, not generic decentralized databases. The main point is that even if a blockchain distributed database technically "works" it is highly inadequate for many practical money-like applications, particularly because trust has to include the real world.

[AnIdiotOnTheNet]

In some context I would agree, there is theoretical value to a decentralized trustless ledger[0]. What I can't agree with, however, is that entries in a decentralized trustless ledger are inherently valuable as cryptocurrency proponents would like us to believe. The entries in the ledger have no inherent meaning, they're just a number associated with another number and the only reason anyone equates that with a monetary value is that, for the moment, they can find someone else[1] to give them money to shuffle those numbers around. I think that, at best, one could say that BTC is backed by hype and speculation. I am not convinced that is a useful basis for a currency[2].

This is in contrast to fiat currencies which their various governments offer guarantees that they will honor.

NFTs, on the other hand, make even less sense to me. They seem like they are just cryptocurrency in disguise trying to fool people who otherwise question the concept of inherent value by claiming (falsely) that they are equivalent to ownership of digital goods[3].

[0] I have yet to hear a use case for which they are actually better than traditional alternatives, but I can imagine that one might exists.

[1] read: greater fool.

[2] Leaving aside all the energy wasted on PoW.

[3] And that's before we get into my conviction that attempts to force artificial scarcity into a post-scarcity space are backward and perverted.

[mitchdoogle]

Money in your bank account is just a number in a database somewhere.

[AnIdiotOnTheNet]

You must have missed a significant portion of my post if you do not see why I do not believe those are equivalent.

I'll reiterate: the number in the database represents an amount of tokens guaranteed to be accepted by the government of the country I live in. Cryptocurrency 'coins' carry no such guarantee, only the possibility of greater fools.

[gfodor]

It turns out in history lots of people committed crimes where the evil party was not the criminal, but the state deeming their actions criminal.

[the_gastropod]

Is trust in bank records generally low? Especially in moderately modernized countries?