Today in Dunning-Krugerrand News

Blockchain's Two-Flavored Appeal

A recent story in Medium describes yet again quite well why blockchains don't solve any real problems: Blockchain is not only crappy technology but a bad vision for the future.

So what is their irresistible appeal?

Bitcoins remind me of a story from the late chair of the Princeton University astronomy department. In 1950 Immanuel Velikovsky published Worlds in Collision, a controversial best-selling book that claimed that 3500 years ago Venus and Mars swooped near the earth, causing catastrophes that were passed down in religions and mythologies.

The astronomer was talking to an anthropologist at a party, and the book came up.

"The astronomy is nonsense," said the astronomer, "but the anthropology is really interesting."

"Funny," replied the anthropologist, "I was going to say almost the same thing."

Bitcoin and blockchains lash together an unusual distributed database with a libertarian economic model.

People who understand databases realize that blockchains only work as long as there are incentives to keep a sufficient number of non-colluding miners active, preventing collusion is probably impossible, and that scaling blockchains up to handle an interesting transaction rate is very hard, but that no-government money is really interesting.

People who understand economics and particularly economic history understand why central banks manage their currencies, thin markets like the ones for cryptocurrencies are easy to corrupt, and a payment system needs a way to undo bogus payments, but that free permanent database ledger is really interesting.

Not surprisingly, the most enthusiastic bitcoin and blockchain proponents are the ones who understand neither databases nor economics.

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5 Responses:

  1. Other Jamie says:

    The most interesting thing about bitcoin is that it is an infectious mutation of goldbuggery.

  2. Kyzer says:

    Blockchain is useful in certain applications, e.g. the Merkle tree voluntarily used by CAs prove that they have issued specific certificates. But that alone doesn't prove they've issued no other certificates, nor does it prove that they didn't just replace the entire list tail when changing the list head, so it still needs further enforcement from third parties, both to check that the latest list still contains the expected previous history, and to go hunting for certificates in the wild that are issued by the CA but not found on the list. And even with that technology, it's still administered by humans and only works by threat of human punishment; e.g. worldwide de-trusting the CA if they're caught breaking the rules they agreed to. In turn, that de-trusting is only a threat to CAs because the majority of computer users trust Microsoft, Mozilla, Apple and Google to tell them which CAs to trust.

    Blockchain ledgers are similarly just as based on third party trust as other forms of currency. They exist only to let two humans engage in a financial transaction without either having to trust the other because they both trust the mediator. In this case, what has the mediator done to deserve trust? It's a bold step for transparency to have a completely open and auditable ledger, but the idea of letting one node, or a group of conspiring nodes control what they deign to sign off, just because they completed a complex brute-force problem, is troubling. And it brings us back to trust models like CAs vs web-of-trust. Web-of-trust is a stronger form of trust but it just doesn't scale. The only way we've found so far to get trustable entities is to limit the number of people we trust, and watch those people like a hawk, and give them strong incentives not to abuse the trust we place in them. Even then, we still get abuses, but comparitively fewer than if we give up and trust strangers because some new tech is involved.

    • Nick Lamb says:

      The Merkle Hash Tree dates back to the 1970s - it's Blockchain the way Elvis Presley is Brit Pop.

      The existence of useful technologies that kinda sorta share some basic elements with "Blockchain" validates crypto currency nonsense to the same extent that the existence of transistors validates Crystal Healing Magic.

      And CT is not voluntary any more. Continued trust by Google now requires proof of logging. In principle it would be possible to be a CA member of CA/B without being trusted by Google, and it's certainly possible to be one of the dozen or so Nation State CAs that aren't members but are trusted in Windows, but no CA you care about or should trust is holding out.

      The biggest proponents of opt out or redaction schemes was Symantec, who have exited the CA business late last year.

  3. Tim Bray says that by now, we should see some compelling blockchain apps, and he hasn't, which to him is a good argument that this isn't going to go anywhere. Bitcoin looks as dumb as I though it did almost a decade ago, if only I'd realized how big it would get before it popped. ;-)

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