All about Blockchain, Cryptocurrency, Digital Transformation

Discussion in 'Off Topic' started by Dr. AMK, Jan 7, 2018.

  1. Dr. AMK

    Dr. AMK The Strategist

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  2. Dr. AMK

    Dr. AMK The Strategist

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    My 133 favorite quotes from “The Bitcoin Standard”
    I selected this quotes from this amazing book by Saifedean AMMOUS. Of course, this is nothing compared to the full book that is an absolute must read.


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    1. “Bitcoin can be best understood as distributed software that allows for transfer of value using a currency protected from unexpected inflation without relying on trusted third parties”

    2. “While Bitcoin is a new invention of the digital age, the problems it purports to solve — namely, providing a form of money that is under the full command of its owner and likely to hold its value in the long run — are as old as human society itself”

    3. “People’s choices are subjective, and so there is no “right” and “wrong” choice of money. There are, however, consequences to choices”

    4. “I like to call this the easy money trap: anything used as a store of value will have its supply increased, and anything whose supply can be easily increased will destroy the wealth of those who used it as a store of value”

    5. “For something to assume a monetary role, it has to be costly to produce, otherwise the temptation to make money on the cheap will destroy the wealth of the savers, and destroy the incentive anyone has to save in this medium”
    6. “The monetary media that survived for longest are the ones that had very reliable mechanisms for restricting their supply growth — in other words, hard money”

    7. “The choice of what makes the best money has always been determined by the technological realities of societies shaping the salability of different goods”

    8. “Human civilization flourished in times and places where sound money was widely adopted, while unsound money all too frequently coincided with civilizational decline and societal collapse

    9. “Whether in Rome, Constantinople, Florence, or Venice, history shows that a sound monetary standard is a necessary prerequisite for human flourishing, without which society stands on the precipice of barbarism and destruction”

    10. “History shows it is not possible to insulate yourself from the consequences of others holding money that is harder than yours”

    11. “Some of the most important technological, medical, economic, and artistic human achievements were invented during the era of the gold standard, which partly explains why it was known as la Belle Epoque, or the beautiful era, across Europe”

    12. “World War I saw the end of the era of monetary media being the choice decided by the free market, and the beginning of the era of government money”

    13. “Government money is similar to primitive forms of money and commodities other than gold, in that it is liable to having its supply increased quickly compared to its stock, leading to a quick loss of salability, destruction of purchasing power, and impoverishment of its holders”

    14. “[About WW1] With the simple suspension of gold redeemability, governments’ war efforts were no longer limited to the money that they had in their own treasuries, but extended virtually to the entire wealth of the population”

    15. “Had European nations remained on the gold standard, or had the people of Europe held their own gold in their own hands […], history might have been different. It is likely that WorldWar I would have been settled militarily within a few months of conflict”

    16. “The cause of the Great Crash of 1929 was the diversion away from the gold standard in the post-WWI years, and the deepening of the Depression was caused by government control and socialization of the economy in the Hoover and FDR years”

    17. “All spending is spending, in the naive economics of Keynesians, and so it matters not if that spending comes from individuals feeding their families or governments murdering foreigners: it all counts in aggregate demand and it all reduces unemployment!”

    18. “In essence, Bretton Woods attempted to achieve through central planning what the international gold standard of the nineteenth century had achieved spontaneously

    19. “Hyperinflation is a form of economic disaster unique to government money. There was never an example of hyperinflation with economies that operated a gold or silver standard”

    20. “With government money, whose cost of production tends to zero, it has become quite possible for an entire society to witness all of its savings in the form of money disappear in the space of a few months or even weeks”

    21. “Hyperinflation is a far more pernicious phenomenon than just the loss of a lot of economic value by a lot of people; it constitutes a complete breakdown of the structure of economic production of a society built up over centuries and millennia”

    22. “Even if the textbooks were correct about the benefits of government management of the money supply, the damage from one episode of hyperinflation anywhere in the world far outweighs them”

    23. “Hanke and Bushnell have been able to verify 57 episodes of hyperinflation in history, only one of which occurred before the era of monetary nationalism, and that was the inflation in France in 1795, in the wake of the Mississippi Bubble”

    24. “The constantly increasing supply means a continuous devaluation of the currency, expropriating the wealth of the holders to benefit those who print the currency, and those who receive it earliest. This is termed the Cantillon Effect”

    25. “Whether it’s because of downright graft, “national emergency,” or an infestation of inflationist schools of economics, government will always find a reason and a way to print more money, expanding government power while reducing the wealth of the currency holders”

    26. “It is ironic, and very telling, that in the era of government money, governments themselves own far more gold in their official reserves than they did under the international gold standard of 1871–1914”

    27. “A sound money makes service valuable to others the only avenue open for prosperity to anyone, thus concentrating society’s efforts on production, cooperation, capital accumulation, and trade”

    28. “The twentieth century was the century of unsound money and the omnipotent state, as a market choice in money was denied by government diktat, and government-issued paper money was forced on people with the threat of violence”

    29. “Sound money is an essential requirement for individual freedom from despotism and repression, as the ability of a coercive state to create money can give it undue power over its subjects, power which by its very nature will attract the least worthy, and most immoral”

    30. “Sound money is a prime factor in determining individual time preference, an enormously important and widely neglected aspect of individual decision making. Time preference refers to the ratio at which individuals value the present compared to the future”

    31. “Economist Hans-Hermann Hoppe explains that once time preference drops enough to allow for any savings and capital or durable consumer-goods formation at all, the tendency is for time preference to drop even further as a “process of civilization” is initiated”

    32. “While microeconomics has focused on transactions between individuals, and macroeconomics on the role of government in the economy, the reality is that the most important economic decisions to any individual’s well-being are the ones they conduct in their trade-offs with their future self”

    33. “The better the money is at holding its value, the more it incentivizes people to delay consumption and instead dedicate resources for production in the future, leading to capital accumulation and improvement of living standards”

    34. “The move from money that holds its value or appreciates to money that loses its value is very significant in the long run: society saves less, accumulates less capital, and possibly begins to consume its capital”

    35. “Civilizations prosper under a sound monetary system, but disintegrate when their monetary systems are debased, as was the case with the Romans, the Byzantines, and modern European societies”

    36. “What matters in money is its purchasing power, not its quantity, and as such, any quantity of money is enough to fulfil the monetary functions, as long as it is divisible and groupable enough to satisfy holders’ transaction and storage needs”

    37. “The best form of money in history was the one that would cause the new supply of money to be the least significant compared to the existing stockpiles, and thus make its creation not a good source of profit”

    38. “Had government money been a superior unit of account and store of value, it would not need government legal tender laws to enforce it, nor would governments worldwide have had to confiscate large quantities of gold and continue to hold them in their central bank reserves”

    39. “The fact that central banks continue to hold onto their gold, and have even started increasing their reserves, testifies to the confidence they have in their own currencies in the long term”

    40. “Sound money is money that gains in value slightly over time, meaning that holding onto it is likely to offer an increase in purchasing power”

    41. “Unsound money, being controlled by central banks whose express mission is to keep inflation positive, will offer little incentive for holders to keep it”

    42. “With unsound money, only returns that are higher than the rate of depreciation of the currency will be positive in real terms, creating incentives for high-return but high-risk investment and spending”

    43. “Savings rates have been declining across the developed countries, dropping to very low levels, while personal, municipal, and national debts have increased to levels which would have seemed unimaginable in the past”

    44. “One of the most mendacious fantasies that pervades Keynesian economic thought is the idea that the national debt “does not matter, since we owe it to ourselves”

    45. “Only a high-time-preference disciple of Keynes could fail to understand that this “ourselves” is not one homogeneous blob but is differentiated into several generations -namely, the current ones which consume recklessly at the expense of future ones”

    46. “The twentieth century’s binge on conspicuous consumption cannot be understood separately from the destruction of sound money and the outbreak of Keynesian high-time-preference thinking, in vilifying savings and deifying consumption as the key to economic prosperity”

    47. “It is an ironic sign of the depth of modern-day economic ignorance fomented by Keynesian economics that capitalism — an economic system based on capital accumulation from saving — is blamed for unleashing conspicuous consumption — the exact opposite of capital accumulation”

    48. “Capitalism is what happens when people drop their time preference, defer immediate gratification, and invest in the future. Debt-fueled mass consumption is as much a normal part of capitalism as asphyxiation is a normal part of respiration”

    49. “The only cause of economic growth in the first place is delayed gratification, saving, and investment, which extend the length of the production cycle and increase the productivity of the methods of production, leading to better standards of living”

    50. “This move from sound money to depreciating money has led to several generations of accumulated wealth being squandered on conspicuous consumption within a generation or two, making indebtedness the new method for funding major expenses”

    51. “As H. L. Mencken put it: “Every election is an advanced auction on stolen goods””

    52. “As politicians sell people the lie that eternal welfare and retirement benefits are possible through the magic of the monetary printing press, the investment in a family becomes less and less valuable”

    53. “The majority of the technology we use in our modern life was invented in the 19th century, under the gold standard, financed with the ever-growing stock of capital accumulated by savers storing their wealth in a sound money and store of value which did not depreciate quickly”

    54. “The contributions of sound money to human flourishing are not restricted to scientific and technological advance; they can also be vividly seen in the art world”

    55. “In times of sound money and low time preference, artists worked on perfecting their craft so they could produce valuable works in the long run”

    56. “Modern artists have replaced craft and long hours of practice with pretentiousness, shock value, indignation, and existential angst as ways to cow audiences into appreciating their art, and often added some pretense to political ideals, usually of the puerile Marxist variety”

    57. “As government money has replaced sound money, patrons with low time preference and refined tastes have been replaced by government bureaucrats with political agendas as crude as their artistic taste”

    58. “The Use of Knowledge in Society, by Friedrich Hayek, is arguably one of the most important economic papers to have ever been written”

    59. “In a free market economic system, prices are knowledge, and the signals that communicate information”

    60. “Prices are not simply a tool to allow capitalists to profit; they are the information system of economic production, communicating knowledge across the world and coordinating the complex processes of production”

    61. “Any economic system that tries to dispense with prices will cause the complete breakdown of economic activity and bring a human society back to a primitive state”

    62. “The fatal flaw of socialism that Mises exposed was that without a price mechanism emerging on a free market, socialism would fail at economic calculation, most crucially in the allocation of capital goods”

    63. “In an economy with a central bank and fractional reserve banking, the supply of loanable funds is directed by a committee of economists under the influence of politicians, bankers, TV pundits, and sometimes, most spectacularly, military generals”

    64. “Creating new pieces of paper and digital entries to paper over the deficiency in savings does not magically increase society’s physical capital stock; it only devalues the existing money supply and distorts prices”

    65. “Only with an understanding of the capital structure and how interest rate manipulation destroys the incentive for capital accumulation can one understand the causes of recessions and the swings of the business cycle”

    66. “The business cycle is the natural result of the manipulation of the interest rate distorting the market for capital by making investors imagine they can attain more capital than is available with the unsound money they have been given by the banks”

    67. “Contrary to Keynesian animist mythology, business cycles are not mystic phenomena caused by flagging “animal spirits” whose cause is to be ignored as central bankers seek to try to engineer recovery”

    68. “Economic logic clearly shows how recessions are the inevitable outcome of interest rate manipulation in the same way shortages are the inevitable outcome of price ceilings”

    69. “Monetary history testifies to how much more severe business cycles and recessions are when the money supply is manipulated than when it isn’t”

    70. “A capitalist system cannot function without a free market in capital, where the price of capital emerges through the interaction of supply and demand and the decisions of capitalists are driven by accurate price signals”

    71. “The central bank’s meddling in the capital market is the root of all recessions and all the crises which most politicians, journalists, academics, and leftist activists like to blame on capitalism”

    72. “Imagining that central banks can “prevent,” “combat,” or “manage” recessions is as fanciful and misguided as placing pyromaniacs and arsonists in charge of the fire brigade”

    73. “Central planning of credit markets must fail because it destroys markets’ mechanisms for price-discovery providing market participants with the accurate signals and incentives to manage their consumption and production”

    74. “It is typical of the Milton Friedman band of libertarianism in that it blames the government for an economic problem, but the flawed reasoning leads to suggesting even more government intervention as the solution”

    75. “Only when a central bank manipulates the money supply and interest rate does it become possible for large-scale failures across entire sectors of the economy to happen at the same time, causing waves of mass layoffs in entire industries”

    76. “In a free market for money, individuals would choose the currencies they want to use, and the result would be that they would choose the currency with the reliably lowest stock-to-flow ratio. This currency would oscillate the least with changes in demand and supply”

    77. “It is an astonishing fact of modern life that an entrepreneur in the year 1900 could make global economic plans and calculations all denominated in any international currency, with no thought whatsoever given to exchange rate fluctuations”

    78. “The combination of floating exchange rates and Keynesian ideology has given our world the entirely modern phenomenon of currency wars”

    79. “Hard money, by taking the question of supply out of the hands of governments and their economist-propagandists, would force everyone to be productive to society instead of seeking to get rich through the fool’s errand of monetary manipulation”

    80. “Under a sound monetary system, government had to function in a way that is unimaginable to generations reared on the twentieth-century news cycle: they had to be fiscally responsible”

    81. “For those of us alive today, raised on the propaganda of the omnipotent governments of the twentieth century, it is often hard to imagine a world in which individual freedom and responsibility supersede government authority”

    82. “The fundamental scam of modernity is the idea that government needs to manage the money supply. It is an unquestioned starting assumption of all mainstream economic schools of thought and political parties. There isn’t a shred of real-world evidence to support this contention”

    83. “Having the ability to print money, literally and figuratively, increases the power of any government, and any government looks for anything that gives it more power”

    84. “By placing a hard cap on the total supply of bitcoins, Nakamoto was clearly unpersuaded by the arguments of the standard macroeconomics textbook and more influenced by the Austrian school, which argues that the quantity of money itself is irrelevant”

    85. “Societies with money of stable value generally develop a low time preference, learning to save and think of the future, while societies with high inflation and depreciating economies will develop high time preference as people lose track of the importance of saving”

    86. “With sound money, the government’s war effort was limited by the taxes it could collect. With unsound money, it is restrained by how much money it can create before the currency is destroyed, making it able to appropriate wealth far more easily”

    87. “Unsound money is a particularly dangerous tool in the hands of modern democratic governments facing constant reelection pressure. Modern voters are unlikely to favor the candidates who are upfront about the costs and benefits of their schemes”

    88. “Unsound money is at the heart of the modern delusion believed by most voters and those unfortunate enough to study modern macroeconomics at university level: that government actions have no opportunity costs”

    89. “It is no coincidence that when recounting the most horrific tyrants of history, one finds that every single one of them operated a system of government-issued money which was constantly inflated to finance government operation”

    90. “Unsound money makes government power potentially unlimited, with large consequences to every individual, forcing politics to the center stage of their life and redirecting much of society’s energy and resources to the zero-sum game of who gets to rule and how”

    91. “In the world of fiat money, having access to the central bank’s monetary spigots is more important than serving customers. Firms that can get low-interest-rate credit to operate will have a persistent advantage over competitors that cannot”

    92. “Banking has evolved into a business that generates returns without risks to bankers and simultaneously creates risks without returns for everyone else”

    93. “In a world where central banks allocate credit, the larger firm has an advantage in being able to secure funding at a low rate which its smaller competitors cannot get”

    94. “Bitcoin was the first engineering solution that allowed for digital payments without having to rely on a trusted third-party intermediary. By being the first digital object that is verifiably scarce, Bitcoin is the first example of digital cash”

    95. “Whereas in a modern central bank the new money created goes to finance lending and government spending, in Bitcoin the new money goes only to those who spend resources on updating the ledger”

    96. “Difficulty adjustment is the most reliable technology for making hard money and limiting the stock-to-flow ratio from rising, and it makes Bitcoin fundamentally different from every other money”

    97. “Bitcoin is the hardest money ever invented: growth in its value cannot possibly increase its supply; it can only make the network more secure and immune to attack”

    98. “The security of Bitcoin lies in the asymmetry between the cost of solving the proof-of-work necessary to commit a transaction to the ledger and the cost of verifying its validity”

    99. “The Bitcoin ledger of transactions might just be the only objective set of facts in the world”

    100. “Bitcoin is the first example of a digital good whose transfer stops it from being owned by the sender”

    101. “As the digital age has introduced improvements and efficiencies to most aspects of our life, Bitcoin presents a tremendous technological leap forward in the monetary solution to the indirect exchange problem, perhaps as significant as the move from cattle and salt to gold and silver”

    102. “Without a conservative monetary policy and difficulty adjustment, Bitcoin would only have succeeded theoretically as digital cash, but remained too insecure to be used widely in practice”

    103. “Bitcoin’s volatility derives from the fact that its supply is utterly inflexible and not responsive to demand changes, because it is programmed to grow at a predetermined rate”

    104. “As the size of the market grows, along with the sophistication and the depth of the financial institutions dealing with Bitcoin, this volatility will likely decline”

    105. “As long as Bitcoin is growing, its token price will behave like that of a stock of a start-up achieving very fast growth. Should Bitcoin’s growth stop and stabilize, it would stop attracting high-risk investment flows, and become just a normal monetary asset”

    106. “Bitcoin is the cheapest way to buy the future, because Bitcoin is the only medium guaranteed to not be debased, no matter how much its value rises”

    107. “The strict digital scarcity of the Bitcoin tokens combines the best elements of physical monetary media, without any of the physical drawbacks to moving and transporting it. Bitcoin might have a claim to make for being the best technology for saving ever invented”

    108. “Any person who owns Bitcoin achieves a degree of economic freedom which was not possible before its invention”

    109. “For the first time since the emergence of the modern state, individuals have a clear technical solution to escaping the financial clout of the governments they live under”

    110. “Bitcoin, and cryptography in general, are defensive technologies that make the cost of defending property and information far lower than the cost of attacking them”

    111. “If Bitcoin continues to grow to capture a larger share of the global wealth, it may force governments to become more and more a form of voluntary organization, which can only acquire its “taxes” voluntarily by offering its subjects services they would be willing to pay for”

    112. “Contrary to popular depictions of anarchists as hoodie-clad hoodlums, Bitcoin’s brand of anarchism is completely peaceful, providing individuals with the tools necessary for them to be free from government control and inflation”

    113. “The invention of Bitcoin has created, from the ground up, a new independent alternative mechanism for international settlement that does not rely on any intermediary and can operate entirely separate from the existing financial infrastructure”

    114. “Bitcoin can be seen as the new emerging reserve currency for online transactions, where the online equivalent of banks will issue Bitcoin-backed tokens to users while keeping their hoard of Bitcoins in cold storage”

    115. “Bitcoin’s advantage is that by bringing the finality of cash settlement to the digital world, it has created the fastest method for final settlement of large payments across long distances and national borders”

    116. “Bitcoin can be best understood to compete with settlement payments between central banks and large financial institutions, and it compares favorably to them due to its verifiable record, cryptographic security, and imperviousness to third-party security holes”

    117. “Bitcoin, having no counterparty risk and no reliance on any third-party, is uniquely suited to play the same role that gold played in the gold standard. It is a neutral money for an international system that does not give any one country the “exorbitant privilege” of issuing the global reserve currency”

    118. “If Bitcoin continues to grow in value and gets utilized by a growing number of financial institutions, it will become a reserve currency for a new form of central bank. These central banks could be primarily based in the digital or physical worlds, but it is becoming worth considering if national central banks should supplement their reserves with Bitcoin”

    119. “The first central bank to buy bitcoin will alert the rest of the central banks to the possibility and make many of them rush toward it. The first central bank purchase is likely to make the value of Bitcoin rise significantly and thus make it progressively more expensive for later central banks to buy it”

    120. “While central banks have mostly been dismissive of the importance of Bitcoin, this could be a luxury they may not afford for long. As hard as it might be for central bankers to believe it, Bitcoin is a direct competitor to their line of business, which has been closed off from market competition for a century”

    121. “The modern central bank business model is being disrupted. Central banks now have no way of stopping competition by just passing laws as they have always done. They are now up against a digital competitor that most likely cannot be brought under the physical world’s laws”

    122. “If the modern world is ancient Rome, suffering the economic consequences of monetary collapse, with the dollar our aureus, then Satoshi Nakamoto is our Constantine, Bitcoin is his solidus, and the Internet is our Constantinople”

    123. “Should it achieve some sort of stability in value, Bitcoin would be superior to using national currencies for global payment settlements, as is the case today, because national currencies fluctuate in value based on each nation’s and government’s conditions”

    124. “Bitcoin is the only truly decentralized digital currency which has grown spontaneously as a finely balanced equilibrium between miners, coders, and users, none of whom can control it”

    125. “After years of watching altcoins get created, it seems impossible that any coin will recreate the adversarial standoff that exists between Bitcoin stakeholders and prevents any party from controlling payments in it”

    126. “It is high time for everyone involved in Bitcoin to stop concerning themselves with the question of the identity of Nakamoto, and accept that it does not matter to the operation of the technology, in the same way that the identity of the inventor of the wheel no longer matters”

    127. “No single altcoin has demonstrated anything near Bitcoin’s impressive resilience to change, which is down to its truly decentralized nature and the strong incentives for everyone to abide by the status quo consensus rules”

    128. “Contrary to a lot of the hype surrounding Bitcoin, eliminating the need for trust in third parties is not an unquestionably good thing to do in all avenues of business and life”

    129. “A non-Bitcoin blockchain combines the worst of both worlds: the cumbersome structure of the blockchain with the cost and security risk of trusted third parties”

    130. “It is no wonder that eight years after its invention, blockchain technology has not yet managed to break through in a successful, ready-for-market commercial application other than the one for which it was specifically designed: Bitcoin”

    131. “The most common potential applications touted for blockchain technology — payments, contracts, and asset registry — are only workable to the extent that they run using the decentralized currency of the blockchain”

    132. “All blockchains without currencies have not moved from the prototype stage to commercial implementation because they cannot compete with current best practice in their markets”

    133. “Any application of blockchain technology will only make commercial sense if its operation is reliant on the use of electronic cash, and only if electronic cash’s disintermediation provides economic benefits outweighing the use of regular currencies and payment channels”
     
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  3. Dr. AMK

    Dr. AMK The Strategist

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    How blockchain will end data breaches
    By incorporating the best aspects of cryptography, blockchain allows for the creation of an immutable, decentralised ledger that could finally spell the end of data breaches.
     
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  4. hmscott

    hmscott Notebook Nobel Laureate

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    Blockchain is not only crappy technology but a bad vision for the future
    Blockchain is not only crappy technology but a bad vision for the future. Its failure to achieve adoption to date is because systems built on trust, norms, and institutions inherently function better than the type of no-need-for-trusted-parties systems blockchain envisions. That’s permanent: no matter how much blockchain improves it is still headed in the wrong direction.
    https://medium.com/@kaistinchcombe/...-is-actually-a-medieval-hellhole-c1ca122efdec

    "This December I wrote a widely-circulated article on the in-applicability of blockchain to any actual problem. People objected mostly not to the technology argument, but rather hoped that decentralization could produce integrity.
    Let’s start with this: Venmo is a free service to transfer dollars, and bitcoin transfers are not free. Yet after I wrote an article last December saying bitcoin had no use, someone responded that Venmo and Paypal are raking in consumers’ money and people should switch to bitcoin.

    What a surreal contrast between blockchain’s non-usefulness/non-adoption and the conviction of its believers! It’s so entirely evident that this person didn’t become a bitcoin enthusiast because they were looking for a convenient, free way to transfer money from one person to another and discovered bitcoin. In fact, I would assert that there is no single person in existence who had a problem they wanted to solve, discovered that an available blockchain solution was the best way to solve it, and therefore became a blockchain enthusiast.

    There is no single person in existence who had a problem they wanted to solve, discovered that an available blockchain solution was the best way to solve it, and therefore became a blockchain enthusiast.

    The number of retailers accepting cryptocurrency as a form of payment is declining, and its biggest corporate boosters like IBM, NASDAQ, Fidelity, Swift and Walmart have gone long on press but short on actual rollout. Even the most prominent blockchain company, Ripple, doesn’t use blockchain in its product.

    You read that right: the company Ripple decided the best way to move money across international borders was to not use Ripples.

    A blockchain is a literal technology, not a metaphor
    Why all the enthusiasm for something so useless in practice?

    People have made a number of implausible claims about the future of blockchain—like that you should use it for AI in place of the type of behavior-tracking that google and facebook do, for example. This is based on a misunderstanding of what a blockchain is. A blockchain isn’t an ethereal thing out there in the universe that you can “put” things into, it’s a specific data structure: a linear transaction log, typically replicated by computers whose owners (called miners) are rewarded for logging new transactions.

    There are two things that are cool about this particular data structure. One is that a change in any block invalidates every block after it, which means that you can’t tamper with historical transactions. The second is that you only get rewarded if you’re working on the same chain as everyone else, so each participant has an incentive to go with the consensus.

    The end result is a shared definitive historical record. And, what’s more, because consensus is formed by each person acting in their own interest, adding a false transaction or working from a different history just means you’re not getting paid and everyone else is. Following the rules is mathematically enforced—no government or police force need come in and tell you the transaction you’ve logged is false (or extort bribes or bully the participants). It’s a powerful idea.

    So in summary, here’s what blockchain-the-technology is: “Let’s create a very long sequence of small files — each one containing a hash of the previous file, some new data, and the answer to a difficult math problem — and divide up some money every hour among anyone willing to certify and store those files for us on their computers.”

    Now, here’s what blockchain-the-metaphor is: “What if everyone keeps their records in a tamper-proof repository not owned by anyone?”

    An illustration of the difference: In 2006, Walmart launched a system to track its bananas and mangoes from field to store. In 2009 they abandoned it because of logistical problems getting everyone to enter the data, and in 2017 they re-launched it (to much fanfare) on blockchain. If someone comes to you with “the mango-pickers don’t like doing data entry,” “I know: let’s create a very long sequence of small files, each one containing a hash of the previous file” is a nonsense answer, but “What if everyone keeps their records in a tamper-proof repository not owned by anyone?” at least addresses the right question!

    Blockchain-based trustworthiness falls apart in practice
    People treat blockchain as a “futuristic integrity wand”—wave a blockchain at the problem, and suddenly your data will be valid. For almost anything people want to be valid, blockchain has been proposed as a solution.

    It’s true that tampering with data stored on a blockchain is hard, but it’s false that blockchain is a good way to create data that has integrity.

    It’s true that tampering with data stored on a blockchain is hard, but it’s false that blockchain is a good way to create data that has integrity.
    To understand why this is the case, let’s work from the practical to the theoretical. For example, let’s consider a widely-proposed use case for blockchain: buying an e-book with a “smart” contract. The goal of the blockchain is, you don’t trust an e-book vendor and they don’t trust you (because you’re just two individuals on the internet), but, because it’s on blockchain, you’ll be able to trust the transaction.

    In the traditional system, once you pay you’re hoping you’ll receive the book, but once the vendor has your money they don’t have any incentive to deliver. You’re relying on Visa or Amazon or the government to make things fair—what a recipe for being a chump! In contrast, on a blockchain system, by executing the transaction as a record in a tamper-proof repository not owned by anyone, the transfer of money and digital product is automatic, atomic, and direct, with no middleman needed to arbitrate the transaction, dictate terms, and take a fat cut on the way. Isn’t that better for everybody?

    Hm. Perhaps you are very skilled at writing software. When the novelist proposes the smart contract, you take an hour or two to make sure that the contract will withdraw only an amount of money equal to the agreed-upon price, and that the book — rather than some other file, or nothing at all — will actually arrive.

    Auditing software is hard! The most-heavily scrutinized smart contract in history had a small bug that nobody noticed — that is, until someone did notice it, and used it to steal fifty million dollars. If cryptocurrency enthusiasts putting together a $150m investment fund can’t properly audit the software, how confident are you in your e-book audit? Perhaps you would rather write your own counteroffer software contract, in case this e-book author has hidden a recursion bug in their version to drain your ethereum wallet of all your life savings?

    It’s a complicated way to buy a book! It’s not trustless, you’re trusting in the software (and your ability to defend yourself in a software-driven world), instead of trusting other people.

    Another example: thepurported advantages for a voting system in a weakly-governed country. “Keep your voting records in a tamper-proof repository not owned by anyone” sounds right — yet is your Afghan villager going to download the blockchain from a broadcast node and decrypt the Merkle root from his Linux command line to independently verify that his vote has been counted? Or will he rely on the mobile app of a trusted third party — like the nonprofit or open-source consortium administering the election or providing the software?

    These sound like stupid examples — novelists and villagers hiring e-bodyguard hackers to protect them from malicious customers and nonprofits whose clever smart-contracts might steal their money and votes?? — until you realize that’s actually the point. Instead of relying on trust or regulation, in the blockchain world, individuals are on-purpose responsible for their own security precautions. And if the software they use is malicious or buggy, they should have read the software more carefully.

    The entire worldview underlying blockchain is wrong
    You actually see it over and over again. Blockchain systems are supposed to be more trustworthy, but in fact they are the least trustworthy systems in the world. Today, in less than a decade, three successive top bitcoin exchangeshave been hacked, another is accused of insider trading, the demonstration-project DAO smart contract got drained, crypto price swings are ten times those of the world’s most mismanaged currencies, and bitcoin, the “killer app” of crypto transparency, is almost certainly artificially propped up by fake transactions involving billions of literally imaginary dollars.

    Blockchain systems do not magically make the data in them accurate or the people entering the data trustworthy, they merely enable you to audit whether it has been tampered with. A person who sprayed pesticides on a mango can still enter onto a blockchain system that the mangoes were organic. A corrupt government can create a blockchain system to count the votes and just allocate an extra million addresses to their cronies. An investment fund whose charter is written in software can still misallocate funds.

    How then, is trust created?

    In the case of buying an e-book, even if you’re buying it with a smart contract,instead of auditing the software you’ll rely on one of four things, each of them characteristics of the “old way”: either the author of the smart contract is someone you know of and trust, the seller of the e-book has a reputation to uphold, you or friends of yours have bought e-books from this seller in the past successfully, or you’re just willing to hope that this person will deal fairly. In each case, even if the transaction is effectuated via a smart contract, in practice you’re relying on trust of a counterparty or middleman, not your self-protective right to audit the software, each man an island unto himself. The contract still works, but the fact that the promise is written in auditable software rather than government-enforced English makes it less transparent, not more transparent.

    The same for the vote counting. Before blockchain can even get involved, you need to trust that voter registration is done fairly, that ballots are given only to eligible voters, that the votes are made anonymously rather than bought or intimidated, that the vote displayed by the balloting system is the same as the vote recorded, and that no extra votes are given to the political cronies to cast. Blockchain makes none of these problems easier and many of them harder—but more importantly, solving them in a blockchain context requires a set of awkward workarounds that undermine the core premise. So we know the entries are valid, let’s allow only trusted nonprofits to make entries—and you’re back at the good old “classic” ledger. In fact, if you look at anyblockchain solution, inevitably you’ll find an awkward workaround to re-create trusted parties in a trustless world.

    A crypto-medieval system
    Yet absent these “old way” factors—supposing you actually attempted to rely on blockchain’s self-interest/self-protection to build a real system—you’d be in a real mess.

    Eight hundred years ago in Europe — with weak governments unable to enforce laws and trusted counterparties few, fragile and far between — theft was rampant, safe banking was a fantasy, and personal security was at the point of the sword. This is what Somalia looks like now, and also, what it looks like to transact on the blockchain in the ideal scenario.

    Somalia on purpose. That’s the vision. Nobody wants it!

    Even the most die-hard crypto enthusiasts prefer in practice to rely on trust rather than their own crypto-medieval systems. 93% of bitcoins are mined by managed consortiums, yet none of the consortiums use smart contracts to manage payouts. Instead, they promise things like a “long history of stable and accurate payouts.” Sounds like a trustworthy middleman!

    Same with Silk Road, a cryptocurrency-driven online drug bazaar. The key to Silk Road wasn’t the bitcoins (that was just to evade government detection), it was the reputation scores that allowed people to trust criminals. And the reputation scores weren’t tracked on a tamper-proof blockchain, they were tracked by a trusted middleman!

    If Ripple, Silk Road, Slush Pool, and the DAO all prefer “old way” systems of creating and enforcing trust, it’s no wonder that the outside world had not adopted trustless systems either!

    In the name of all blockchain stands for, it’s time to abandon blockchain
    A decentralized, tamper-proof repository sounds like a great way to audit where your mango comes from, how fresh it is, and whether it has been sprayed with pesticides or not. But actually, laws on food labeling, nonprofit or government inspectors, an independent, trusted free press, empowered workers who trust whistleblower protections, credible grocery stores, your local nonprofit farmer’s market, and so on, do a way better job. People who actually care about food safety do not adopt blockchain because trusted is better than trustless. Blockchain’s technology mess exposes its metaphor mess — a software engineer pointing out that storing the data a sequence of small hashed files won’t get the mango-pickers to accurately report whether they sprayed pesticides is also pointing out why peer-to-peer interaction with no regulations, norms, middlemen, or trusted parties is actually a bad way to empower people.

    Like the farmer’s market or the organic labeling standard, so many real ideas are hiding in plain sight. Do you wish there was a type of financial institution that was secure and well-regulated in all the traditional ways, but also has the integrity of being people-powered? A credit union’s members elect its directors, and the transaction-processing revenue is divided up among the members. Move your money! Prefer a deflationary monetary policy? Central bankers are appointed by elected leaders. Want to make elections more secure and democratic? Help write open source voting software, go out and register voters, or volunteer as an election observer here or abroad! Wish there was a trusted e-book delivery service that charged lower transaction fees and distributed more of the earnings to the authors? You can already consider stated payout rates when you buy music or books, buy directly from the authors, or start your own e-book site that’s even better than what’s out there!

    Projects based on the elimination of trust have failed to capture customers’ interest because trust is actually so damn valuable. A lawless and mistrustful world where self-interest is the only principle and paranoia is the only source of safety is a not a paradise but a crypto-medieval hellhole.

    As a society, and as technologists and entrepreneurs in particular, we’re going to have to get good at cooperating — at building trust, and, at being trustworthy. Instead of directing resources to the elimination of trust, we should direct our resources to the creation of trust—whether we use a long series of sequentially hashed files as our storage medium or not."
     
    Last edited: Apr 18, 2018
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  5. Dr. AMK

    Dr. AMK The Strategist

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    Dr. AMK The Strategist

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    UK Reveals New AI Rules for Businesses
     
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  7. Dr. AMK

    Dr. AMK The Strategist

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    Dr. AMK The Strategist

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    hmscott Notebook Nobel Laureate

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    I don't think this is what you think it is, that is if you think it is investing in blockchain or cryptocoin, as it's not about that at all.

    This is banks adding automation to their process for signing up customers and setting up their accounts, and sucking as much money from them as possible by sizing up their net worth and signing them up for as many services as they can convince them is "normal", normal being whatever the software considers they can handle.

    This isn't a good thing.

    Think of it as Wells Fargo on an automated industry wide scale, doing what WF was just fined $1BN US for doing through their human "software".

    There are indeed articles describing Fintech with blockchain and cryptocoin or bitcoin sprinkled in the text, but that chart came from this article, and it mentions nothing about blockchain or *coin.

    Marcus by Goldman Sachs: The Future of CX + Fintech in Banking?
    https://thefinancialbrand.com/71955/marcus-goldman-sachs-fintech-platform-banking-lending-strategy/

    Fintech is another automation "bum-rush" tricking customers into thinking they are all about block chain and cryptocoin and all the other wizzie-bang technology, when they are just emptying your pockets with services and fee's. And, tricking banks into doing it to reap the "profit's".

    Remember, Goldman Sachs and the lot were the ones behind the sub prime mortgage lending, and garbage roll-up MBS mortgage packages and derivatives that took down the world economy back in 2007/2008, and ever since they've been waiting for another opportunity, and the US Government has recently relaxed regulations and stopped over watch of the financial industry... and now this along with other scams are sure to follow.

    Beware, the Wolves are being let out into the sheep's pen again, without supervision.

    Really, Fintech, blockchain, and cryptocoin are scam worthy buzzword's farmed to pluck money from suckers. :)
     
    Last edited: Apr 21, 2018
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  10. Dr. AMK

    Dr. AMK The Strategist

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    Nice finding as always. If I posted something about subject it's not means that I agree with it or accept it. The whole digital transformation activities ostensibly it has benefits to humanity, and from inside lies the dangers that only God knows.
    All what I'm doing now is just trying to minimize the damage and try to take advantage of what's coming as far as possible, by understanding the events well and trying to spread that thoughts and any necessary awareness.
    History repeats itself, and whoever manipulated the former world economy will be able to do it again, and whoever has power is dominant, and no one but God can stop and judge him.
     
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