Blockchain, the amazing solution for almost nothing

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That’s a relief. I was afraid I was going to have to really sit down and fully understand how it works at some point.


Called it. Everyone said blockchain was the answer to everything; no one could explain why.

And as they say, if you can’t explain it so people can understand it, you don’t understand it yourself.


As Mark points out, the idea that bank regulations and functional state institutions protect money so we don’t need blockchain is certainly missing the point. For cryptocurrency enthusiasts, the whole point is that they are independently secured by math and don’t require fallible and fragile humans to do anything. It’s especially appealing for anti-government types who loathe the fact that currently, functional states are the only decent way to have a currency. If you want to eliminate government completely, as many misguided zealots do, blockchain is a dream come true.

Aside from that, I agree it’s mostly a very clever solution in search of a problem.

There are also legit environmental concerns about it, which is a weird thing to say about an algorithm. Planet Money (it’s me again- the Planet Money link lady) covered a study that found if we switched over to bitcoin, there would be substantial increase in climate change because of the ever-increasing demand on electricity required to compute every transaction. It’s also a boat anchor on the economy because it hampers free flow of commerce. Many of those flaws are specific to bitcoin’s implementation and I’m far from knowledgeable on cryptocurrencies so take all this with a grain of key salting.


There are some legit uses for those ledgers like how Walmart uses them to track food from the seeds a farm receives to farm sending out grown food to a processing plant to a warehouse to a Walmart warehouse and finally into a Walmart to keep better tabs on food safety. They also have great potential for fighting money laundering with tracking transactions that are sent between countries.

But it’s not some sort of miracle cure for society’s ills. It only gives details about a history of a particular object, idea or concept.


I have never heard of a bank simply taking money from someone’s account. If a bank did something like that, they would be hauled into court in no time and lose their license. Technically it’s possible; legally, it’s a death sentence.

Guess that explains why Wells Fargo no longer exists?


This is literally how banks operate.

Your money goes in and the bank uses it to pay off their debts, expenses, and grant loans to others all while hedging that there won’t be a bank run of everybody withdrawing all their money at once thus bankrupting the bank.

This is how millions of people got wiped out during the Great Depression, and why the FDIC was created.


Which is to say its in their best interest to make it seem like this is a solution to everything that’s currently done by the very governments they want to destroy.

Every time someone has said “if everyone just listened to me and did it the way I want, everything would be solved!” what they’ve meant is “If everyone just did things exactly as I said to the letter, things might be marginally better for everyone but more importantly they’d be much better for me!”


It’s too bad the folks who designed Bitcoin didn’t understand how currencies actually function in the real world. They seem to have mostly based their ideas on warmed-over goldbug nonsense. An economy based on Bitcoin would not grow.


There is a bit more nuance to why blockchain is only a “solution” for money or things very much like it.

The only thing blockchain solves vs standard cryptographic signing is providing a global ordering to prevent double spending.

If you don’t need a globally unique order (which is more than just timestamping), you don’t need blockchain and all the associated proof of work cost. Very few applications require that and do not have a natural single serialization point.


And here I was just about to sell all my investments in internet portals and go full blockchain.


Saw a great talk a while ago that was picking apart blockchain as a concept. The main thrust of it was that, a lot of what people are trying to do with blockchain is already more effectively and efficiently implemented using other methods. The basic gist being, if you need encryption, use encryption. If you need a shared ledger, use something like a version control system. Etc. There are very few cases where you really simultaneously need all the affordances that blockchain provides, and the computational cost associated with it usually doesn’t make it worthwhile. This doesn’t mean that there are no reasons use blockchain – just very few that aren’t better addressed by other, cheaper and more accessible, technologies.


No one can take bitcoin without having the private key to authorize a transaction.

This is what makes blockchains for asset ownership useless in practice. Like it or not, ownership is decided by laws, courts and states, not by possession. Creating currency that can’t be confiscated is fine for distributed networks of anonymous hackers, but regulated financial services companies can’t get away with it.


“That’s what they want you to think! FREEEDOM!”
– every techno-libertarian dude ever


Blockchain tech disintermediates trust.

If you fail to see the potential arising from that simple statement, I really can’t help you.


Of course they’re overlooking that in order to have servers, and especially the connection infrastructure between them you definitely need governments as well.





with blockchain you don’t have to trust ANYBODY