More arguments against blockchain, most of all about trust

Here are more arguments about blockchain from Kai Stinchcombe, here is one ouch:

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!

And:

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.

Here is the full essay, via Chris F. Masse.  Here is Kai’s earlier essay on blockchain.

Comments

'Auditing software is hard!'

Apparently, so is checking the front page of a web site. Man, the level of competence on display is so typical of GMU in the past that is creating a certain nostalgia, especially when reading what the people involved in such a redesign write about themselves.

These days, it really is about the signalling, and not actual competence, isn't it? Well, at least some places, apparently.

that could be your motto cp: "really is about the signalling, and not actual competence"

I guess my hobbies are not shared by too many people - after all, most people don't really care about what they see on the screen, much less what is going on behind the scenes.

Nonetheless, it is refreshing to finally see that the chairman and general director of the Mercatus Center acknowledging his connection to one of the world's premier public policy institutes, which rents its office space on the GMU Arlington campus.

This having to activate js to respond is definitely an inconvenience - and not one likely to be improved. Though who knows, the way that one returns to the top of the comment thread, even when using js, just might mean that someone will look into the sort of cursor positioning that could be a feature, not a bug.

Ethereum has security problems. There are new attempts to make platforms with formal verification like Tezos or Rchain. It is very irresponsible to criticize a new technology without enough knowledge the way Kai did. There are legitimate criticisms, especially about volatility in the lobg term(will it continue to be high or be closer to gold?), but not the way he did

+1. Auditing software is hard. The programming language for Ethereum made it extremely hard. The authors ignored all the progress in creating formally verifiable programming languages when they built it. Their claims- embodied in the language's misleading name, 'Solidity' - was a joke to anyone who had read any paper on formal verification written in the past twenty years.

I am a retired engineer who thought verification dead-ended years ago. Care to post a paragraph or two? Real verification would be bigger than blockchain, imo.

Take a look at Coq. It's not perfect, and it of course necessitates some limitations, but the progress is real.

https://coq.inria.fr/tutorial-nahas
https://en.wikipedia.org/wiki/Coq

1989. An interactive theorem prover.

That seems a good distance from a general purpose code verifier, or the meat of this article, a data structure verification.

Coq can output ocaml. You write your proof as the program itself.

Once seigniorage dries up and the demand for bitcoins stabilizes, the only reliable source of revenue for miners will be commissions. Why would a user pay a large fee to a miner? What additional security does this buy? Why not pay a tiny fee and free ride on the blockchain's security? And if everyone free rides, who will pay for mining? But without expensive mining, how secure will the chain be?

Does anyone think that Venmo is free to use? But I agree that Bitcoin's particular set-up and economics is likely not the last word on the whole subject.

WWHD (What Would Hamilton Do)? He was definitely a believer in markets, including what could be called "speculation". He also believed in a strong central government, public credit, and the central government's monopoly on the issuance of currency, which to Hamilton were essential to a stable financial system and a growing economy. Indeed, the dominant feature of the financial system before the adoption of the constitution was instability, as the states and many private banks issued their own currencies, creating all manner of chaos. Hamilton is credited with creating the "architecture" for our financial system. If supporters of cybercurrencies have their way, the new architecture for the financial system will be shaped like a pyramid.

How would changes in computer technology affect the price and security of bitcoin. If computers get faster, can crack what was previously thought to be unsolvable problems because a digit can simultaneously be 0 or 1, will the coin become worthless.

Not much, if at all. Bitcoin has a built-in difficulty metric which is automatically adjusted as more computing power is used to mine it. That's why when dedicated ASIC miners came out, capable of 100x what a video card could mine, the difficulty of the problem being solved just adjusted over time, rather than any negative consequences overall.

Bottom line, the blockchain is designed so that if it suddenly becomes easier to solve the math underlying it, the math is automatically made harder until it gets back to the planned stable equilibrium.

FYI, there are public key cryptography algorithms that are not vulnerable to quantum computing.

Different anonymous than 8:28am, same as 9:5am

I find the article harsh but fair.

Auditing of accounting systems is also hard, if it done with the requirement that it somehow prevent management fraud or other white collar crime. Which is why auditor opinions included with financial statements are formulated around ideas requiring much less certainty and avoiding issues of white collar crime almost entirely. (The big stories about audit failures in finding such crime tend to revolve around due diligence definitions - seeing evidence of fraud during audits but ignoring them on the basis of flimsy management cover-ups with issues revolving around representing the public's interests (shareholder interests mostly) or the managements'. Note it is usually the management that decides which public accounting firm gets their business.) There are however companies that specialize in ferreting out employee crime, at all levels. Perhaps not surprisingly they seem highly secretive. Most of what I've seen about them is they mostly tend to run scams past employees and see if they want to join in. It might be interesting to see if some of those are daring enough to try to publicly advertise they're available for auditing the security of software. Perhaps they already have.

Old-world accounting systems also have the chances of fraud+abuse scale with the chance of being detected. An insider can probably steal $5000 but not $5,000,000. Plus the systems are reversible.

The author is correct about the current problems of blockchain. But he is completely wrong about the desire and motivation to create a system that does not require trust. Trustless systems have always been used for transactions where commercial law is murky or unenforceable with great success. The unrevokable letter of credit, used for international sales of capital equipment, is an example of a non-technical version of such. Blockchain is merely the attempt to create a computerized version of such systems.

The author also arouses considerable suspicion on my part for his boosterism of existing institutions and his advocacy of "trust", which is nothing more than a transparent boosterism of existing institutions. The reason why things like blockchain even exist is because the established institutions and players have shown themselves to be so shamelessly corrupt and ineffectual that many of us feel compelled to become autonomous from them in the conductance of our own affairs. This is the underlying motivation for the creation of blockchain in the first place. If Kai wants us to go back to trusting the established institutions, those institutions must put forth the effort to earn our trust. They seem to be doing the exact opposite of this, thus driving even more interest in things like blockchain.

Blockchain can be considered the first generation computer technology to deal with the problem. Being first generation, it works in some ways but sucks in others. This has always been the case with first generation versions of any new technology. Second generation is better, and the third generation is the one that fixes all the bugs and actually work. Thus, we should have a true decentralized trust-less system that work around, say, 2030. Until then, caveat emptor.

Kai brings up real technical problems with regards to a first generation technology. However, his criticism of the motivation underlying the desire for such technology in the first place makes clear that he is nothing more than a shill for the existing corrupt establishment.

If you are relying on irrevocable letters of credit as comparable to blockchain as a trustless system, you will have a problem. Although a bank is technically obligated to pay on presentment of documents, what happens in the real world is that there are misspellings, delays in shipment which alters shipping documents, etc. So, in the end, it turns on the customer asking for a waiver, modification, or engaging in discussions with the issuing bank.

Nothing works perfectly when humans and mother nature are involved. Unless things are hardwired, works perfectly, and there is a legal or other dispute resolution system, trustless systems are probably illusory.

Of course there is no perfection in this world. I never said there was. I am defending the right for people to associate and do business with each other as they see fit, using any kind of system they choose. Blockchain is simply another form of system and, thus, represents an additional option people may use to interact with each other. There is no legitimate argument against this liberty at all.

It is true that two individuals dealing with each other can babble reassurances until the sun expands. But at the end of the day, they either trust each other or they do not.

You will also note that I called blockchain a first generation technology. You know as well as I do that the first generation of any new technology is clunky and generally sucks. The second generation form is better and it is usually the third generation technology that actually works.

My criticism of Kai is not that he is wrong about the flaws of bitcoin (a first generation technology) . But rather his criticism of those who seek to create a new system of interacting with each other that exists independently and in parallel to existing institutions. That Kai would criticize such efforts, In principle, makes abundantly clear that he is nothing more than a shill for existing institutions. This, in turn, suggests to me that he is a parasite.

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.

Other people have to earn the right to be trusted. This requires that they not be the corrupt, rent-seeking parasites that the existing system has degenerated into. Of course Kai does not say this because he is a shill for the existing system and, by extension, corruption and rent-seeking parasitism (which is what "left" economics is about).

Author is correct except for one thing.

People DO want Somalia. At least for some transactions.

I can think of another valid use of bitcoin, which is the current implementation of blockchains. I have been using a pharmaceutical compound (for hair growth and maintenance) that I have ordered from an international pharmacy for the past 15 years. In all of this time, this pharmacy (which is the descendent of Libertarian Solutions) has been 100% honest and reliable. Up until a year ago, I used credit card payment. However, about a year ago, their merchant account was shut down, for political reasons, and they were no longer able to accept credit card payments. They do, however, accept bitcoin payments. After using cashiers checks a few times, I finally set up a bitcoin account and now use bitcoin to order my compound.

Now we have this Kai guy who says that bitcoin is no good because its a system based on non-trust. I think Kai is full of it. I suspect he has never personally used bitcoin the way I have. So, he is clueless about its utility and how it works.

So Satoshi Nakamoto pulled off one of the world’s greatest cons !!!

I wonder what the correlation is between block chain enthusiasts and conspiracy theorists. Both of my friends who ascribe to the latter are fervent block chain supporters. Could an underlying concern of trust be a shared root commonality?

I don’t think you could really point towards Blockchain technology, as it is massive and is going to be the future! We just need to make sure we have our investment in right place, which is what that will ensure things right. Many years ago, it was Bitcoin that got things notice, now a similar thing (in terms of concept), but far greater in the potential is here “ SHECOIN”, it is the hottest deal out there and something just not to be missed with incredibly low price value!

Best coin ICO is running

As I mentioned previously, I use bitcoin as a method of payment in certain cases, not as investment or speculation. It has worked very well for me for this purpose, much more convenient than cashier's checks and certain cheaper than a wire transfer.

I use bitcoin not because I rejected the system for my transactions, but because the system (e.g. credit card merchant account) has rejected my transactions.

So, I say Kai's arguments are full of it.

There are loopholes in everything, so that doesn’t make things bad. In fact, it’s easy to see everything moving towards the Blockchain. The latest addition is gaming industry. With Luckydozens, it is going to be lucky time for all! As with them, there will be NO LOSERS! Their token sale has started from 1st April and will run till 30th June 2018, so right now it’s IDEAL time to join in! The special part is the coupon code “T101”, it gives 5% discount on purchase!

I congratulate the author for writing something that people shared. As for substantive critique, it did a very poor job and reminded me of Clifford Stoll. As Kevin Owocki put it: "The author has not only failed to understand the vision of blockchain technology, they have not even tried." https://medium.com/@owocki/blockchain-is-a-groundbreaking-technology-with-a-empowering-vision-of-the-future-11dc5b5e2f25

I am sorry but I am not into these arguments. I believe time has ALREADY proven how great Blockchain technology is. There is not really much else required to say. Now things are only getting better with projects like XefoCoin, as it’s fabulous with not just simple in terms of concept but also got lovely structure allowing us to convert XefoCoin into the local currency with their XefoCoin card, as it’s possible to use through ANY ATM with Visa option available. They are currently on ICO sale with $0.06 price with 35% bonus, so that makes it pretty cool thing to get into!

IF anyone got any argument regarding the Blockchain technology, then I believe that is the silliest thing EVER. It is the growing thing and nothing seems stopping it. More and more lanes are joining in with recent rise of ABEE; it’s just make it so much better. It is a blockchain based Rideshare platform, which enables easy dealing for all involved and with doubling the earning opportunities. It not just pays MORE than Uber/Lyft, but it also is SIMPLER to use with no extra cost. This is why Blockchain got such bright future ahead!

I think some arguments are likely to remain no matter what. So, if you really think that everyone is going to love it then that’s not happening and not even possible. It is fair to say Blockchain is amongst the most influence technologies of present and likely continue that way. There are projects like DeskChain, which just confirms it. I believe there is massive future for Blockchain and projects like DeskChain!

I think some holes are meant to be here with humans. The thing PERFECT doesn’t exist. But the stuff close to it does. That’s what I call Blockchain Technology. Then even closer comes StakeNet (XSN) coin, it is the project that is going to create HISTORY IF it not already has.

It is the FIRST of its kind Trustless Proof of Stake (TPoS) Coin and is meant to open up doors, which never were even knocked before. It is here to solve your issue for Financial Privacy, no longer having to trust random people! It is here to be the revolutionary digital currency project, which is going rewrite the history books! Join the biggest 2018’s creation before you are left to collect leftovers!

I would never buy some of these arguments. I believe it is absolutely crucial that we understand how much importance blockchain holds. Every industry is slowly but surely shifting towards the Blockchain industry. One such top notch option is DeskChain, it is really designing the classified industry. It is what makes them so special and blockchain technology only increases its popularity.

Comments for this post are closed