[barnabee]

> The system we have today requires surveillance and control of governments to function. The parallel system or systems on the internet would also require some form of external, i.e. off blockchain, control to function as well as the current system.

Two issues here:

1. The assumption that such, let's call it "government style" control (or at leaast a significant part of it) is necessary for such a system to function as well as the current one (a whole other question is what "as well as" means here). That seems possibly reasonable, but is certainly an assumption worth testing.

2. The assumption that you need a government to exert this "government style" control. Maybe humanity hasn't invented anything better and never will. But also maybe such things can exist, especially within a limited field like finance, and even if they can't, I'd take the Democratically Elected Government of Cyberspace[1], should such a thing be needed/emerge, over the squabbling and overreach of nation state governments into the internet.

There are already plenty of projects experimenting with "on-chain governance" and there are a myriad areas of research into governance of decentralised systems. It is perfectly possible that a system of financial (or other) projects/protocols might emerge that all subscribe to a protocol for such governance, which could even go as far as enforcing collateral ratios, risk reporting, whatever, but would still be fundamnetally controlled by its users in a way outside of government control. Or perhaps individual protocol level governance will be enough. Either way it seems completely unlikely that the present system is the best we can do.

In this case, there would still of course continue to be the wild west of systems outside that regime, in competing regimes, or even working within the legacy financial system, but that freedom to innovate is a feature not a bug.

> Blockchain cannot in principle replace governments because governing comes down to use of violence. Unless, of course, you are advocating going back to times when barons fought each other with private armies.

This is why I qualified the goal with "on the internet". If you have privacy, pseudonymous participation, Tor (or Tor-like networks/blockchains, like Nym) , etc. and smart contract platforms that can issue, move, and lock up/control funds using composable code, run entirely on chain, then of course you can build protocols and systems that govern them that sit outside government control as long as they manifest themselves only virtually.

It is only at the edges, where you interact with and move to and from virtual (the internet) and physical society that you become subject to state violence. Blockchains and related technology might help organise the push for some kind of change to how governments work (as the internet itself has), but whatever happens, you can probably do what you like when it's purely online, and you will probably still need a good answer to questions like "where did you get that money?". I think that's OK.

[1] see https://www.eff.org/cyberspace-independence

[elchupanebre]

Let me repeat: any kind of government comes down to monopoly on use of violence. It does not matter if it's Henry VIII or Kim Jong Un or Democratically Elected Government of Cyberspace or Pablo Escobar. The core of any government is a monopoly on violence. If your Democratically Elected Government of Cyberspace cannot or will not use violence to enforce its rules then it's not a government.

Second: you can't eat blockchain, you can't fill your gas tank with blockchain, blockchain won't protect you from cold rain. You have to convert your cybercoin to real-world goods at some point. That means a contract "BTC 1000 for 1 loaf of bread". This contract has to be enforced off blockchain because 1 loaf of bread is not on blockchain (no, NFT is not a loaf of bread, you can't eat NFT). And you guessed it right: this contract has to be enforced with a threat of violence. That means off-blockchain government.

> There are already plenty of projects experimenting with "on-chain governance"

I bet you a $1 none of them will go anywhere. Like all those experimental applications of blockchain that IBM, Maersk, and many others played with. Hard no useful outcome, complete failure each and every time for fundamental reasons. Like a complete failure each and every time anyone tries to build a perpetuum mobile.

There is one ONE (hard 1, like in math) use case for blockchain: circumvention of regulations. Once regulations are implemented on blockchain, it would lose its one and only use case.

[barnabee]

> Let me repeat: any kind of government comes down to monopoly on use of violence. It does not matter if it's Henry VIII or Kim Jong Un or Democratically Elected Government of Cyberspace or Pablo Escobar. The core of any government is a monopoly on violence. If your Democratically Elected Government of Cyberspace cannot or will not use violence to enforce its rules then it's not a government.

There are things the government cannot know, and therefore things the government cannot control. Yes, they are ready to use violence to enforce their rules, no that doesn't help them read my encrypted data/messages/transactionds if I don't give them the key.

It doesn't matter if the governance on the blockchain can't use violence if it also controls how some system you wish to use works, as long as that control is sufficient to build a useful version of the system (which, again, from the above, can work on the internet without the support of a violent governmnet).

> Second: you can't eat blockchain, you can't fill your gas tank with blockchain, blockchain won't protect you from cold rain. You have to convert your cybercoin to real-world goods at some point. That means a contract "BTC 1000 for 1 loaf of bread". This contract has to be enforced off blockchain because 1 loaf of bread is not on blockchain (no, NFT is not a loaf of bread, you can't eat NFT). And you guessed it right: this contract has to be enforced with a threat of violence. That means off-blockchain government.

Once again: on the internet. I am not saying you can live a completely parallel physical life, and again, if the government of wherever you live ask where you got the money, you're going to need a good answer (and perhaps proof that breaks your anonymity). That's completely outside my point.

Firstly, you can choose to abide by the relevant local laws while also operating in a system that allows you the freedom to break the law. You do this when you drive a car within the speed limit or use end-to-end encrypted messaging legally. This alone is enough to justify building such systems. It is unacceptable to have compliance enforced on us as the current financial system does (and it's honestly crazy to me how many people who would not let governments agents regularly search through their stuff are fine with it when it comes to data or financial transactions), even if we intend to abide by all the rules under the threat of government violence.

Secondly, you may think a parallel online society/financial system is not useful if you can't turn its money into your government's favourite fiat currency, but I strongly disagree. There are many interesting and important uses, for such a system. These include organising activists, civil disobendience and protest, resistance of corrupt or authoritarian regimes, etc. as well as emerging online communities and "places" like the metaverse. (No, I can't think of any reason to NFT a loaf of bread either.)

> I bet you a $1 none of them will go anywhere. Like all those experimental applications of blockchain that IBM, Maersk, and many others played with. Hard no useful outcome, complete failure each and every time for fundamental reasons. Like a complete failure each and every time anyone tries to build a perpetuum mobile.

We'll see. I'd take that bet — I certainly expect some forms of governance (not necessarily government) to make sense on blockchains and work out to be pretty useful, though I'll reserve judgement on exactly what that will look like for now.

> There is one ONE (hard 1, like in math) use case for blockchain: circumvention of regulations. Once regulations are implemented on blockchain, it would lose its one and only use case.

Not that I agree with this statement, but if the alternative is round the clock surveillance and authoritarian enforcement of regulations then it's incredibly important that this use case succeeds and is available to everyone!

[elchupanebre]

> Yes, they are ready to use violence to enforce their rules, no that doesn't help them read my encrypted data/messages/transactionds if I don't give them the key.

You are mistaken. There is a technique called "rubber-hose cryptanalysis" which works wonderfully in cases like the one you described. Once applied, you will gladly give up your key and anything else they ask for. That's what violence means.

If you do not control real world then you do not control anything. There is no way around violence. At least for as long as humans have physical bodies and live off blockchain.

> unacceptable to have compliance enforced on us as the current financial system does

You are arguing that because the current system is excessively regulated, then a system with no means to enforce the rules will work better. The problem with that is that blockchain is a lot more expensive to operate per transaction that the conventional systems. Because of that it can only be used when the conventional system cannot be, specifically for circumventing the regulations, i.e. breaking the law.

> but I strongly disagree.

You say you disagree, but you actually agree. All the cases you listed are cases of "circumvention of regulations".

> We'll see.

It's been long enough to see. Believing otherwise is like believing that this contraption with a few more tweaks will produce perpetual motion.

> some forms of governance

It's either able to enforce the rules with real-world violence, or it is irrelevant. It's really that binary 0 or 1. Nothing in between.

> Not that I agree with this statement

It's basic math as in 2 greater than 1. It does not matter if you disagree with it.

> but if the alternative is round the clock surveillance and authoritarian enforcement of regulations

That's not the point. Blockchain is a tool that helps you circumvent regulations (good or bad authoritarian or not, does not matter). It's a tool which has only one use: to facilitate circumvention of regulations. The point is if blockchain is regulated then it's no longer a useful tool for breaking the law and consequently irrelevant.

[barnabee]

> You are mistaken. There is a technique called "rubber-hose cryptanalysis" which works wonderfully in cases like the one you described. Once applied, you will gladly give up your key and anything else they ask for. That's what violence means.

You aren't really engaging seriously. There is a difference between expensive targeted violence to coerce specific information from individual citizens, and dragnet surveillance and the power to freeze or seize money from anyone's account at will.

> You are arguing that because the current system is excessively regulated, then a system with no means to enforce the rules will work better. The problem with that is that blockchain is a lot more expensive to operate per transaction that the conventional systems. Because of that it can only be used when the conventional system cannot be, specifically for circumventing the regulations, i.e. breaking the law.

As one small example, to give a case where I actually know the numbers. I've done cost per trade analysis for major investment banks (while working at them, with full access to their internal data) and it's certainly not the case that blockchains always cost more per transaction, even with the current irterations of the technology. Not even close.

> You say you disagree, but you actually agree. All the cases you listed are cases of "circumvention of regulations".

Avoiding surveillance is not circumvention of regulations unless submitting to that surveillance is legally required. Certainly where I live, it is not. We can use cash, we can spend crypto, and if the government want to know what we did, they have to ask us (or coerce it out of us) with proper legal basis. There is no regulation requiring submission to constant financial surveillance that I'm aware of, but using the current financial system (ex. cash - so all electronic money and sll financial products) involves submitting to it anyway.

> It's been long enough to see. Believing otherwise is like believing that this contraption with a few more tweaks will produce perpetual motion.

Says who? I don't remember learning about a time limit to turn new technological develpoments into practical or useful inventions or companies. What about new aglorithms and research that have come about since the first networks were built, do they get to reset the timer and have a chance at it too or do they have to stop building because bitcoin didn't meet your targets by the cut off?

Really, there are many reasons massive technological change can, and usually does take a long time. Many layers of abstraction need to be built. Take the internet - we had networking, then TCP/IP, then many protocols some of which were "big" for years and are now dead, then HTTP, then TLS, and JavaScript and "Web 2.0", and cloud hosting, etc. etc. This literally took decades and is still going on! All the while the software was maturing, integrations were built, and adoption took off - first very unevenly and then everywhere.

I wouldn't be surprised at another 10-20 years to see really pervasive use of blockchain technology, but I see leaps toward that future all the time.

> It's basic math as in 2 greater than 1. It does not matter if you disagree with it.

Really no idea what you are on about here. Use cases are not mathematical. The technical use case for byzantine fault tolerance is to reach consensus on a set of facts (or operations or data or whatever) within a group of actors that you individually distrust, without needing to appeal to authority. If you are telling me you can (mathematically?) prove that the only possible use for that is to circumvent regulation, I'd love to see the proof, but without it I think it very much does matter that I see no reason to believe it.

> The point is if blockchain is regulated then it's no longer a useful tool for breaking the law and consequently irrelevant.

If "blockchain is regulated" goes as well as "speed limits on motorways are regulated" and "copying of digital media" is regulated, not to mention the war on drugs, then I think the application of regulation to it is likely to be of little practical concern to those who do want to use it to break laws.

[elchupanebre]

> You aren't really engaging seriously.

Do you really want to switch discussion to personalities?

> and dragnet surveillance and the power to freeze or seize money from anyone's account at will

You still miss the point. Crypto is money only if it can be used to buy real world goods. If I control the real world then you can have all the crypto you want and still not be able to buy a loaf of bread.

> I actually know the numbers

Actually no. You are comparing apples to oranges. A transaction in a centralized database is always cheaper than in a distributed one. No exceptions.

> Says who?

I do. All your arguments still miss the fundamental issue with the distributed ledger: it's more expensive to operate than a centralized ledger. It's really that simple. 2 > 1. No amount of research and algorithms will change the fact that 2 is greater than 1.

The only reason you would pay more if you cannot get it for less. In case of a distributed ledger you would use it only when the centralized one is not available. The only known case when the centralized is not available is when it's unlawful.

> This literally took decades

No. All the techologies you listed were immediately useful. Blockchain has been around for more than 10 years. It's still not used for anything but circumvention of regulations.

> Really no idea what you are on about here.

Yes, I noticed.