[darkFunction]

> (1) has no I/O functions

Input: User identity, money.

Output: Digital services, site subscriptions, digital assets, in-game items, NFT's representing real world assets held by trusted companies (wine, event tickets, tokenized securities).

None of this requires oracles and exists today.

Your mistake is thinking that just because the base layer is decentralised that we're somehow not allowed to connect to companies we choose to trust, just like we all already do.

Then it becomes interesting because there's a programmable market for these assets/services that didn't previously exist because the underlying value was not represented in an exchangable form. The outputs are also inputs.

Ethereum is the trustless, standardised substrate on which trusting parties can interact.

HackerNews will continue to fail to see the utility of this system for years to come until it's mature and undeniable. It will be an interesting case study into how experts missed the potential of emergent technology in the same way we look back on yesterday's commentators not realising the disruption of Amazon or the internet.

As to your second point, it's unlikely the end user will ever want to transact on layer 1. Layer 2 technology is making steady progress. See l2beat.com for examples.

[dperfect]

> Output: Digital services, site subscriptions, digital assets, in-game items, NFT's representing real world assets held by trusted companies (wine, event tickets, tokenized securities).

> None of this requires oracles and exists today.

While I only mentioned oracles specifically, I should have clarified: I'm referring both to oracles (making queries to external data sources and providing the results to the blockchain), and to external code that interprets data stored on the blockchain and acts on it. I'm not sure if there's a name for it in common use (I'd call it something like a "performer"). Either way, the issue is the same as that with oracles; whatever decentralization or smart contract guarantees you had on the blockchain disappear as soon as you have external code interpreting blockchain data to then make decisions in external systems (digital services, site subscriptions, digital assets, in-game items, NFT's, etc). If oracles provide inputs to the blockchain, these non-blockchain pieces of code provide the real-world outputs.

Example: even if somewhere in the blockchain I can prove that I should own something in the real world, it's still up to your site/service/app/whatever to honor that through external code. If it doesn't honor it, I'm stuck relying on traditional legal means to intervene, just as with any other standard contract. That legal system – as flawed as it is – tends to work for contracts written on the back of a napkin, stored in a SQL database, or coded in a smart contract (though that's probably the most questionable at the moment).

If I'm wrong, please correct me, but I've been interested in this stuff for a while, and I haven't found anything that actually solves the fundamental problem of oracles and the interpretation of blockchain data. That problem is important because it undermines many of the primary selling points of smart contracts.

> Your mistake is thinking that just because the base layer is decentralised that we're somehow not allowed to connect to companies we choose to trust

So, honest question: why care about the base layer being decentralized if in the end, you choose to trust those companies? What did the decentralization do for you in that interaction?

[EugeneG]

Yep. Blockchain says I own this case of wine... but the other guy wont give me my wine! Who do I call? The physical, centralized police and the centralized legal system that back it. Without that legal system recognizing and honoring it, it's worthless. And if it all depends on my centralized legal system, then who cares about the decentralized blockchain. Might as well put it in a table in a database instance running on AWS, or in a written contract.

[tshaddox]

You could say the same thing about property deeds, contracts, etc. The fact that the laws of physics still apply in the world and thus people can still physically take things from you, harm you, etc. is hardly an argument against any specific method for establishing and recording ownership or contracts.

[lottin]

No, the basic problem is ownership rights over physical objects can't be enforced without coercive power, but blockchains and smart contracts can't use coercive power, therefore they would have to rely on an external entity to enforce such rights. But then the system is no longer "trustless", "permissionless", or "censorship-resistant", and therefore we have none of the supposed benefits of blockchains but we do have all of the inconveniences, which means at this point we're better off with a centrally-managed registry which at least is cost-effective.

[darkFunction]

This is a strawman. The entire ecosystem does not have to be 100% decentralised. There is massive utility in a trustless, permissionless, censorship-resistant contract layer connecting disparate centralised entities. A centrally managed registry would never be suitable for this task for a multitude of obvious reasons.

[lottin]

> There is massive utility in a trustless, permissionless, censorship-resistant contract layer connecting disparate centralised entities.

No, there's no utility in that, if ultimately enforcement relies on an entity that needs to be trusted and can override the blockchain.

> A centrally managed registry would never be suitable for this task for a multitude of obvious reasons.

Centrally-managed registries are already in use and have been in use for a long time, they exist in every single country, and entire markets depends upon them, but somehow they "would never be suitable for obvious reasons"? They have already been shown to be suitable, what on earth are you talking about?

[biztos]

What if they could have that power?

Imagine something like Robocop hooked up to the EVM, if you put your RealID in the escrow contract and then the ubiquitous camera network is unable to verify that you honored the transaction, well then you have 15 seconds to comply…

[pjc50]

I worry that this is the endgame; you say "distributed organisation", I say "autonomous cyberweapon".

We're not that far from having a DAO that can bid on zero-days and use them against a list of targets of its choice. If a DAO can make POST requests it can launch exploits. A script kiddie without the kiddie.

[tshaddox]

Sure, but if you had a sufficiently powerful robot you could also circumvent traditional means of enforcing ownership and contracts.

[ThomPete]

Blockchain governs the DIGITAL sphere and in there can actually enforce. People who are trying to combine crypto with physical assets are a shrinking number. Focus on digital and its absolutely enforcable, to an extent not even governments can accomplish.

[lottin]

Not at all, blockchains can't enforce intellectual property rights either. For example, how is a blockchain going to stop an individual from using unlicensed content on their website?

[mbesto]

> Focus on digital and its absolutely enforcable, to an extent not even governments can accomplish.

The Winklevosses came up with an elaborate system to store and secure their own private keys. They cut up printouts of their private keys into pieces and then distributed them in envelopes to safe deposit boxes around the country, so if one envelope were stolen the thief would not have the entire key.

https://www.nytimes.com/2017/12/19/technology/bitcoin-winkle...

[peoplefromibiza]

> Blockchain governs the DIGITAL sphere and in there can actually enforce.

how?

it's all based on cryptographic keys, if I stole the keys, how can blockchain block me, without someone intervening?

[lmm]

> You could say the same thing about property deeds, contracts, etc. The fact that the laws of physics still apply in the world and thus people can still physically take things from you, harm you, etc. is hardly an argument against any specific method for establishing and recording ownership or contracts.

On the contrary, it's a strong argument for using those methods of establishing and recording ownership that are blessed by the relevant local legal system (or, sure, ultimately by those who control local violence, if you want to go all the way down). It's the reason why you get lawyers still insisting on using faxes rather than emails.

[cormacrelf]

> This <legally enforceable contract> says I (should) own this case of wine... but the other guy wont give me my wine! Who do I call?

Answer: You have a cause of action for breach of contract. In UK/US/Aus/Canada/etc, you can "call" / take it to a court, and they may grant you the remedy known as specific performance, which is essentially a court order to do the thing that was promised. This remedy is available because the thing to be done was the transfer of property. The remedy is part of the law of Equity, a set of doctrines and principles that has been in development since the 13th century. It got its big break with people complaining to the King of England that "the law is too harsh, it should be fair!!!" and went from there, eventually becoming a huge body of law about exactly what it means to make the law fair, what principles to follow when doing that, and how to deal with the many categories of unfairness that come up regularly.

You might look at the DAO hack in this context and think, the Ethereum folks really threw out the baby with the bathwater when they decided to invent a new financial system that didn't have to play by the existing rules. Many people talk about ICOs etc taking us back to the 19th century and the Wild West, but smart contracts take us back hundreds of years further back, with echoes of literally the first people to complain to the King demanding a writ to remedy the injustice of the Common Law. If since then blockchain enthusiasts have come up with something better than Equity, I would ask that they let us know.

Main message from the people in The System to you: We have thought of all of these problems before, and we have solved them all before, and if ye who have spurned the legal system come running for help, ... we will actually welcome you with open arms, like we aspire to do for everyone else.

[themacguffinman]

It is an argument against unnecessarily elaborate and complex methods of recording contracts like crypto.

A lot of important, trusted systems often don't have particularly sophisticated security in every single layer. Homes and mailboxes have simple locks. Online transactions have fairly basic digital integrity checks (ie. you connected to a bank's server using HTTPS with a secret cookie). Credit card chips and card readers are riddled with vulnerabilities. We still sign legal documents with like, pen and paper and a scribble that even children can forge.

These systems are still trusted because trust isn't established by infallible recordkeeping processes, it's the humans and the organizations and the written/spoken promises we make that matter. A legally recognized scribble is as trustworthy and useful as a foolproof NFT. Crypto's complexity adds very little in practice.

[UncleMeat]

Sure. You need a state to enforce property rights.

But the point is that the centralized system that managed property deeds does not require an absolutely gargantuan amount of computation to be performed to do a basic transaction. And since I already need the state to enforce property rights, why not have the state also be involved in the recognition of who owns what?

[darkFunction]

> So, honest question: why care about the base layer being decentralized if in the end, you choose to trust those companies? What did the decentralization do for you in that interaction?

My trust extended only as far as a single interaction/asset. The rest of my wallet and the assets within are completely unaffected. A company might rip me off, and I might have legal recourse, or I might not. Such is life. We won't ever be able to decentralise away all trust. A single entity isn't able to manipulate all my assets, or print more tokens, or confiscate my money. The network is solid even if all the 'performers' are not.

To build a centralised 'universal API' on which applications can communicate and exchange value is a terrible idea. Who would own it? But such an API is surely a useful technology.

We do need reliable oracles for external data feeds- prices, weather, news... can all feed into contracts for extra utility. This is a hard problem being tackled by ChainLink and others.

[apatters]

Let's say everyone on the planet is Ethereum enabled tomorrow. What is the business case for the winery to use it in your example? I get that Ethereum or any other crypto can be another payment option for their customers. Beyond that what use does a winery have for a programmable substrate underlying its transactions with customers or suppliers? I'm not saying there is none but if you're going to rip on HN users, frankly it's hard to parse what this language even means.

[bsnsmsksjs]

I’ll bite. A winery could sell ownership of wine stored or wine yet to be made. The purchaser, if sold via an NFT, could resell that ownership with no interaction with the winery until claiming the wine at a later date.

This means both parties no longer need any relationship between the initial sale and claiming the eventual goods. The winery will simply be able to wait for someone to return with proof of ownership at a later date.

If the winery gave out certificates or built some app it would need to verify and maintain that. With an NFT there is very little work on their end.

Ultimately this turns these type of products into highly liquid assets. This will greatly increase their value to a potential customer and the initial purchase price. Which will make the winery more money for the wine it sells.

This can effectively be done with anything that can be claimed at a later date after initial purchase.

[EugeneG]

The question is can you really make it simultaneously cheap to trade and decentralized and always on. Or is the overhead of all that just make blockchain tech very awkward and suboptimal (especially since ultimately there's a centralized winery that honors the "claim" with actual wine - so no real need for decentralization). Instead why not just have a little centralized company that lets companies create ledgers of asset ownership for $300/month. If it's a real use case, any winery can sign up, etc.

Issue is blockchain tech doesn't actually solve anything

[diveanon]

Transactions on most L2 chains these days are less than a penny.

There are dozens of popular mobile wallets that make viewing, sending, receiving coins / nfts trivial.

The problem that it solves is that there is no need for you imaginary ledger company to exist at all in a blockchain model, the winery cuts out a rent seeking service and the user gets a more secure and portable product.

Automation isn't just going to hit manual labor, blockchain and web3 will allow for the emergence of fully autonomous "companies" that operate via smart contracts.

[cyounkins]

Is this secondary market of goods yet to be produced something that people actually want to have?

Today the way this works is usually with a ticket or a receipt. The guy with the email receipt on his phone gets the food he ordered. The guy with the ticket gets into the concert.

There IS a secondary market for event tickets. Legitimate transfers frequently happen everywhere else e-commerce happens. Questionable transfers happen on the street in what I assume is low volume.

[biztos]

People buy unbottled wine all the time, so maybe?

https://www.winemag.com/2019/10/01/a-beginners-guide-to-wine...

I’m not saying blockchain makes this any better, except in one sense: a lot of people with a lot of money are enthusiastic participants. If I had a winery you bet I’d be selling wine future NFTs, just to try and get the price bid up.

[dmitriid]

> A winery could sell ownership of wine stored or wine yet to be made.

Ah. You mean "a centralized entity creates a centralized way of providing and verifying ownership of wine"?

1. How does blockchain factor into this?

2. As always, descriptions like this betray how little crypto-peddlers know about real world. Buying future wine has been a thing as long as there has been wine https://www.winespectator.com/articles/buying-futures-3495

[darkFunction]

That's great! Hey look I would like to send you the rights to my crate of wine. You're the 1000th customer to my site. Or maybe you want to trade it for your in-game weapon. Or I just like you and it's a gift, anonymous internet user.

Of course I could just transfer directly to your Ethereum wallet. But why do that when I could explain you need to sign up to 'winespectator.com', I'll email them to arrange the ownership transfer, and if you're trading that weapon let's both sign up for a pre-agreed escrow service online and pay them a commission to arbitrage. How many forms do we need to fill in, and who is processing that data? I currently own my crate anonymously- only the person who eventually burns the token will need to provide details to the company for delivery.

As always, descriptions like this betray how little engine-peddlers know about horse breeding. Managing a stable has been a thing as long as there's been horses.

[dmitriid]

> Hey look I would like to send you the rights to my crate of wine.

You truly believe this can't be done without blockchain?

> You're the 1000th customer to my site.

You truly believe you can't track customers without blockchain?

> Or maybe you want to trade me for that in-game weapon.

You truly believe it's impossible to implement in-game trading without blockchain?

> Of course I could just transfer directly to your Ethereum wallet.

The only thing you could transfer is some meaningless numbers. What makes them meaningful is some central, trusted authority that will accept these numbers as proof of something. But then, since you depend on that authority to verify this... you don't need blockchain.

[darkFunction]

I think instead of reading what I wrote, you read "you need a blockchain to do this".

The anti-blockchain narrative on here is constantly attacking the strawman of "literally everything must be decentralised".

I'm arguing that a decentralised medium of exchange through which separate points of centralisation can interact is still a useful construct.

You're comfortable with your assets being codified in a thousand different databases in a thousand different representations but the concept of having a common database representing them as "meaningless numbers" is suddenly unacceptable.

[biztos]

The interesting thing is not that you would need a blockchain to trade wine futures — obviously you don’t.

The interesting thing is that if you can sell the futures as (for example) NFTs then you put them into this Wild West of crypto enthusiasts where

1) All kinds of unpredictable things might happen to the token between sale and redemption! And

2) The culture of crypto enthusiasts might very well lead to much higher prices for your wine than people who actually know about wine think it’s worth, cf. Beeple.

Either or both of these things might motivate a winery to give it a shot, tokenize a few thousand future cases of their weakest plonk, and see what happens.

Just because your market works fine without the blockchain doesn’t mean there’s nothing to be gained by trying.

On the other hand, it might be illegal because: alcohol.

[koonsolo]

You can do all those things without a blockchain. It's just more practical using a blockchain.

I used to survive without a cellphone. It wasn't hard. You just called your friends when you and they were at home.

[nkuttler]

If you rely on a trusted entity (winery) you don't need a blockchain to do anything you just described.

[maccolgan]

How are you going to transfer the right to have a wine bottle? By continuously signing legal documents?

[amunicio]

Stock brokers track perfectly the transfer of people rights to stocks millions of times a day without any decentralized ledger. In fact, a SQL DB has worked quite well for many years now.

If the wine cellar wants their customers to trade wine, I'm sure a centralized ledger based on a SQL DB would be much easier and cheaper to implement and scale to millions of transactions.

[maccolgan]

Yeah, that's surely trustless. And I totally trust the wine company to perpetually maintain and pay for such a thing, and totally not restrict the secondary market as has happened all the time.

[ShamelessC]

> In fact, a SQL DB has worked quite well for many years now.

When you allow people to write their own smart contracts, bugs will happen. This can't be fixed, only dampened with a weakened interface to the blockchain.

When a bug in a smart contract happens you may now have a dispute, across borders, over the intent of the smart contract and the actual behavior.

Who handles this situation?

[koonsolo]

Can I trade my wine in the weekend? Ah no, sorry, stock market is closed then.

Can I trade my wine at 5pm? Ah no, European wine stock market is closed then.

When you really 'own' the ticket, you can trade it anywhere you want, without being dependent on some exchange that's only open whenever and takes some fixed cut without any competition.

[chipotle_coyote]

Yes, this is probably what you'd do in this hypothetical case, and it's hardly unheard of for contracts to be written up with transferability clauses. Given that we exist in a world where digital signatures also exist, it's unlikely to be particularly onerous.

("Continuously" is probably not the right word, unless you are envisioning the rather unlikely case of this transfer happening on an annual basis!)

[lmm]

Sure, or if you're willing to trust an electronic database you can put it in an electronic database. How do you think wholesalers buy and sell wine at the moment?

[lottin]

Are you seriously claiming Ethereum has invented futures contracts? Futures contracts have been around for decades, maybe even centuries.

[derac]

Excuse my ignorance, how does the buyer of the token know it hasn't been redeemed yet?

[darkFunction]

You burn the token to redeem it.

[maccolgan]

Embedded expiry, it can't be redeemed before the wine is ready anyway.

[boc]

What happens if the wine goes bad? Who/what arbitrates in that scenario? Because from the winery's perspective, whoever currently holds that contract owes them money for the wine at a fixed price that was determined and sold in the past.

If I hold that contract and have to take delivery of rancid wine instead of fresh wine like I imagined, what's my recourse?

Basically how do you ensure the state of the real-world asset remains fixed throughout the duration of the contract?

[biztos]

In the case of wine, the real-world version of “going bad” is just that it’s not very good. When you bought the future wine, you were betting that it would be very good wine and you could resell it for more. The winery was selling it to you for “cheap(er)” because you assumed that risk.

So for actual wine, right now, you have no recourse: you bought the risk. I don’t think this would be any different with NFT-wine. Now and in the NFT case you already paid the winery, you owe them nothing more.

Now if they cheat and give you water instead of wine… I guess whatever real-world contract says you can exchange this token for wine would say which wine?

Most likely the first N wineries to do this would do it as a publicity stunt, and if it proved useful then there would be some precedent. Much of the wine world operates on reputation and trust.

For the vast majority of physical products that are not like wine: you’d need real-world contracts to back your smart contracts and the latter would only be useful for decentralization of the secondary market.

[CJefferson]

The problem with this type of thing (to me) is always what happens when reality meets the blockchain?

What is someone steals my NFT? I would expect a court would say the wine is still mine, so the NFT doesn't represent ownership any more.

What is someone loses the private key to their NFT? Do we just throw the wine down the drain? Again no.

[biztos]

The NFT is supposed to work like a bearer bond. You have to trust the issuing entity to honor it, but beyond that, possession is 10 tenths of the law.

https://en.wikipedia.org/wiki/Bearer_bond

IIRC with wine futures you have to either collect your wine or pay for its storage, if you abandon it then at some point (per the contract) it belongs to the winery. At least with wine I think there is a lot of precedent here, there are norms you’d want to fit your crypto doings around.

[CJefferson]

Thanks, that's a solid reply.

Personally, I don't want the world to go back to "Bearer Bonds", and given they were banned I'm guessing the US government (and I imagine other countries) doesn't either. However, I'm glad to hear a basis for NFTs.

[ipaddr]

What does facebook give it? A free marketing page and limited discussion board and the ability for anyone to find it.

Ethereum would give it another payment option for customers. But also another payment option for suppliers. Could open a new hidden supply chain where a middlemen is not required.

It doesn't solve physically shipping but it does resolve one problem. Prompt payment resolution. A check can take 7 years to bounce.

[serverholic]

> A check can take 7 years to bounce.

The longer I live the more insane the current system feels. I really don't understand why we put up with this stuff.

[kryptonomist]

A winery could assign a token to each physical bottle, and lets its customers freely buy (winery is involved) and then exchange their tokens based on the supposed bottle value ups and downs (winery is not involved any more). Then, from time to time, they come to the winery to take back a real bottle from a token.

Admittedly, there is little to program, but we can imagine all sorts of auctions, games (tokens becoming playable items in a virtual world, but still exchangeable for real bottles), etc., around those tokens.

[ipaddr]

Why would any of this need cryto? If you trust the winery to hold the wine you could trust them to rule the exchange. Each bottle could still have a token. Values could still rise and fall. All stored on a central exchange. These tokens issued by a trusted entity could perform the same function and can be cashed out.

The key feature of cryto is around connecting trustless entities. Once you centralize on a physical product stored in a trusted location by a trusted party you lose point involving cryto. Who cares how secure the token is when the winery can switch labels?

[tshaddox]

> Why would any of this need cryto? If you trust the winery to hold the wine you could trust them to rule the exchange.

That’s a little like saying “why would the winery need Apple to make computers for them, the winery could just develop their own computer hardware and software.” It doesn’t make sense for most wineries to develop its own online exchange system, and the fact that it’s technically possible for a winery to develop its own exchange system doesn’t mean that all existing exchange systems are pointless.

[chipotle_coyote]

The critique being made in the original article, I think, is that it's extremely hard to find a hypothetical use case for blockchain technology that can't be done without blockchain technology. A wine exchange seems to pretty clearly fall into the "things we can do pretty well without crypto" category, so one needs to explain what crypto is bringing to the party that makes it a marked improvement. In this particular example, both "trustlessness" and "decentralization" are off the table (e.g., there is only one winery and you are trusting them to hold the physical goods).

[koonsolo]

The difference is that you can pick the exchange where you trade your token. Because the ownership of the token is really yours.

If the central party charges 1% transaction fee, it's a 1% transaction fee. If they only open on weekdays, you can't trade in the weekend, etc.

When it's your token, you can trade it wherever you want.

[solomonb]

The point is that there are multitudes of other technological solutions readily available which solve the stated problem far more simply then a blockchain.

[tshaddox]

Of course there are alternatives, and some alternatives may be better or worse depending on the features and qualities you desire. Again, there’s nothing unique about blockchains here. You could say the same thing about any random pick out of the top 50 CSS frameworks.

[kranke155]

HN users only see an inferior tech stack, but fail to understand that an inferior tech stack might have Greater Utility for the common people.

HN users earn their living by being the best at what they do and choosing the best tech stack is a part of it, which is why they don’t understand blockchain. It’s an inferior tech stack, but it beats every other stack on game theory, which is not the usual purview of the average developer. Hence they reject it as “inefficient” because they keep looking at it through the prism of tech instead of society.

For society trustless distributed systems are better, but if you keep looking at it from a tech/throughout perspective, you’ll never get it.

[kranke155]

HN mostly doesn’t think NFTs work or have a purpose, even though they have 1 million+ users or so. They’re denying gravity after Newton at this point.

All the arguments here are tech stack obsessions instead of looking at real world use.