The skepticism of blockchain technology is borne out of a lack of specific problems it solves. Which happens to also be the bedrock of the conventional startup wisdom -- value derived from solving a problem or exploiting an opportunity.<p>So much of the blockchain hype is focused purely on the technology and the valuation of the tokens / coins. Not the problem it solves.<p>It's distributed trust. That's the problem it solves. It's incredibly cool technology. That solves a specific problem.<p>The analogy to the early internet is not a good one. The internet solved a huge number of problems -- of distribution, of speed to deliver value to the customer, of freedom of information, of transparency, of fidelity of communication, and more. That's why it's changed society.<p>I would love to know which societal problems can be reduced to a distributed trust problem. That would convince me that I'm wrong about blockchain technology.
Speaking as a longtime skeptic, A16Z has actually produced the single clearest answer I've seen to that question: blockchains may be good for <i>bootstrapping new network effects</i> by giving early participants in a network (in a Metcalfe's Law sense of network) an incentive to participate. Pure utility tokens can be like call options on the eventual value of the network if it gets off the ground. It's a novel way of solving a collective action problem.<p><a href="https://a16z.com/2017/12/08/summit-crypto-alex-rampell/" rel="nofollow">https://a16z.com/2017/12/08/summit-crypto-alex-rampell/</a><p>Kind of like Kickstarter or Groupon, at least in their original incarnations?
> Trust is a new software primitive from which other components can be constructed.<p>This kind of talk is extremely misleading. At the end of the day, we're still people buying and selling goods and services from other people. The most blockchain can do is remove some types of middle-men (financial or otherwise), but the endpoints will always be human. Trust between humans will always be a requirement to buy and sell goods and services.<p>Just like chatting with someone over an encrypted channel can't make you trust the person you're chatting with, only the channel itself.<p>Perhaps blockchain's "killer app" is an automated escrow service. How exciting... :-/
Trust isn't really a feature of blockchains, nor is it a byproduct (or "software primitive") of blockchains. Bitcoin was designed to avoid a need for trust, so it really just steps around the issue of trust in a distributed ledger.<p>This is a critical misunderstanding that a lot of people are still preaching and perpetuating. You can't really build systems that rely on trust on top of a blockchain, and those who have tried are mostly just moving (human/corruptible) authorities of trust to more obscure places. You <i>can</i>, however, build systems that do not require trust on top of a blockchain, though there are some very serious limitations that confine those systems/applications to digital-only transactions.<p>In other words, I can be reasonably assured that the Bitcoin you sent me is spendable by me (that it hasn't been double-spent) and that a government can't just issue 21 million more Bitcoin tomorrow, but that tells me <i>absolutely nothing</i> about whether or not I can (currently or in the future) "trust" your address on the blockchain, nor can it be tied to any kind of meaningful identity without reintroducing a real-world authority that requires my trust.<p>Bitcoin has proven itself to be useful on the payment side of transactions, but I'm unconvinced that blockchain tech will ever be able to facilitate the delivery side of transactions (unless it's a digital asset being delivered) without compromising the fundamental aims of Bitcoin.
> In an era in which the internet is increasingly controlled by a handful of large tech incumbents, it’s more important than ever to create the right economic conditions for developers, creators, and entrepreneurs.<p>I'm happy to see that people are taking decentralization seriously. Blockchain has its place as a public ledger, but as everyone knows, scaling it has issues.<p>Recently, MaidSafe released a new whitepaper for a new decentralized consensus mechanism, called PARSEC, which they detailed in their blog post[0]. It does not use a blockchain. I'm surprised it didn't get more attention. I'd like to see some serious peer review on the paper.<p>Perhaps A16Z should get in touch with them?<p>[0] <a href="https://medium.com/safenetwork/parsec-a-paradigm-shift-for-asynchronous-and-permissionless-consensus-e312d721f9d8" rel="nofollow">https://medium.com/safenetwork/parsec-a-paradigm-shift-for-a...</a>
There's some serious kool-aid going on here, which is unfortunate, because they at least wrote that they're focused on non-speculative use cases. Contrary to the announcement's characterization, crypto-powered platforms don't inherently fulfill the promise of equitable decentralization and immutability.<p>Ethereum has already demonstrated that one is wise to worry if the rules of the game will change later on. And blockchains enable distributed, trustless consensus, but accomplish it with the majority (50%+1) of vested nodes in agreement, which manifests as either a tenuous truce based on human trust to avoid mutually-assured destruction, or as an anything-goes monopoly where the largest cartel wins. Hardly any different from easier, cheaper ways of accomplishing the same thing.<p>Bitcoin's innovation was incentive in the PoW block reward, Ethereum's was embedding a VM in the client. Everything else has been minor variations on prior art, or speculative bullshit.
More and more traditional money will flow into Crypto, not because Crypto is the answer for everything, but people just want to bet on the something that might in some form change everything in the future.<p>I really get surprised by the boolean arguments whether blockchain is of any use arguments on HN. I mean there's so much activity, money, talent in Crypto since last year. Goldman Sachs CEO said actually in the nicest way that Crypto is not gonna be the future [0]. I wonder why we can't have arguments like this instead of behaving like a know-it-all.<p>[0]- <a href="https://www.bloomberg.com/news/videos/2018-06-19/goldman-s-blankfein-says-he-s-not-worried-about-cryptocurrencies-in-systemic-way-video" rel="nofollow">https://www.bloomberg.com/news/videos/2018-06-19/goldman-s-b...</a>
So have we completely lost the battle for the meaning of the word "crypto"? Because I clicked this link expecting to read about a new kind of cryptography.
Or crypto is just another hype that will burst like the dot com bubble. However, I have to say, compared with the companies of the dot com bubble the blockchain space has very little to offer. The other day I saw an ad for an IoT ML ICO.
If you’re an insider, there’s a somewhat big technical mistake in there that kind of undermines their credibility.<p>> Blockchain computers are new types of computers where the unique capability is trust between users, developers, and the platform itself.<p>Trusting somebody implies they’re in a position to hurt you, which makes it undesirable in a secure system. Unfortunately, trustless systems tend to be cumbersome and impractical. What makes Bitcoin interesting is precisely that it’s a remarkably practical system built on a trustless base.
> <i>If there is another “crypto winter,” we’ll keep investing aggressively.</i><p>This is how the good investors win. They have real definable thoughts of their own about technology. The truth is that most VCs aren't much more than bad money managers that chase other bad money managers around in circles.<p>It's not that VCs are stupid. It's that <i>new</i> technology is complex and very few people at all understand it. Even very good technologists can't understand more than a few areas with any level of expertise.<p>I really believe that decentralization will blow up the entire VC world itself but even this phenomenon will be a huge opportunity for some small number of VCs to profit from. Probably firms doing stuff like this.
The problem w money is that it represents the fruit of human labor but also allows speculation. We have arrived at a point where accumulated wealth through speculation that human labor ( and therefore self worth ) are devalued. That money from financial investments (speculation) can be ploughed back into speculation removes the human effort that generated the money in the first place. To restore human value we need a simple restriction. Capital gains should only be spendable on real stuff - things, services, etc. whereas money from human work should be unrestricted. The block chain is a perfect tool to keep track of monetary transactions and would allow automatic enforcement of this regulation
Blockchain technology itself is not that novel. All the technologies it used have already been there for a while, even the PoW.
But after reading all the arguments and discussions, my opinion is that blockchain simply reflects the human's desire for a more transparent, secure and fair IT systems.<p>Current IT systems work, just it is not transparent, so people do not know whether it is doing as it claims.<p>Since there are strong requirements, there will be one revolution. Imagine if the government adopts such transparent and fair system, who cares whether it is centralized or not?<p>So blockchain is simply a strong desire.
This just strikes me as wrong. His chain of logic does not lead to distributed ledgers. Mainframes, PC's, iPhone, distributed ledgers? Before I dive in I must say that the new trend for people to use blockchain as a noun describing the underlying system of Bitcoin and other coins is highly annoying and cringey. None the less, blockchain is not a peice of technology. It's a contract backed up by probablity and the nature of the internet. The contract is a big lumbering thing that has a life of it's own -- for each implementation of this "tech" you are stuck with that beast which, if you are even able to get enough people to feed it, will fluctuate wildly in many capacities before eventually dying. It's not like a new mems accelerometer where once it's out you can now just pump out thousands of units. The nature of Bitcoin (i refuse to use the blockchain noun) lends itself much more to being a global complement to centrally managed monetary systems (or stand on it's own as the world's currency, but I don't think that would be optimal).
I totally agree with A16Z here. Blockchain skepticism is not hard to find on HN and beyond. First, the ecosystem is vast and evolving quickly. If you've "tuned out" by dismissing blockchain, then don't be surprised when your industry gets disrupted in 5-10 years. I think we'll begin to see business logic open-sourced on the blockchain. For example, existing SaaS model incentivizes closed-source, centrally managed repositories. For example, a CRM-focused blockchain might place the business logic for managing customer relations and sales on-chain and enable competing clients to build on the protocol. A CRM built in this way might enable multiple "thin clients" to build and an ecosystem to develop around it. I think we're a ways off, but that sort of thing is just one of the use-cases that excites me about it.
> This trust emerges from the mathematical and game-theoretic properties of the system, without depending on the trustworthiness of individual network participants.<p>I'm very uncomfortable with the idea of game theory as the base of trust. Mathematics as used in cryptography is a pretty solid base, but game theory feels like something entirely different.<p>How do I know that there isn't a participant in the game that is willing to just smash the board? The existing blockchains like Bitcoin do have a certain amount of centralization, so this is not about a very large number of individuals where you could find some comfort in statistics. What if a state actor decides to smash the board, they could probably exert enough pressure on the large players?<p>What if there are more subtle ways to extract short term gains that game theory didn't anticipate?
I'm a bitcoin skeptic turning to bitcoin owner. For me, it's worth to look at bitcoin from gold perspective. You can pose similar questions to gold and try to answer them.<p>Can I transact with bitcoin/gold?<p>Is bitcoin/gold a good value storage?<p>What problem does bitcoin/gold solve?<p>Is bitcoin/gold solving trust problem?<p>Any answer for gold can be interpreted for bitcoin. Bitcoin is better than gold in many ways.<p>Bitcoin, like gold, is real. Crypto technology is real and works. Bitcoin is limited. There's a computer network running to support it. Bitcoin is not tulip.<p>Gold is still around. I don't think we'd ever ditch it. Why do we value bitcoin? I don't really know for sure. But I feel certain that bitcoin is real. And we need to do more work to understand it.
As we currently stand the tradeoffs for Blockchain based companies make no sense in the business world. The author's conceit is that Blockchain based businesses trade scalability for "trust" and that new business opportunities will be unlocked due to this capability. The problem with this idea is that trust is currently not a limiting factor for most businesses. Centralized services are trustworthy enough for the majority of consumers and are far cheaper to run at scale.<p>Every single blockchain based business idea I've heard of would be better suited as a centralized service. It is my strong belief that a16z will lose their shirt on this fund.
I hope for all of our sakes that it's more profitable for a16z to invest in real blockchain startups and leverage their experience to uncover exciting, legitimate applications of the technology than it is to just day-trade cypto assets.
Hacker News never gets crypto and never will until they are put out of a job by it.<p>It’s like trying to get newspaper men to understand what the internet was going to do to their business.
> Second, the space is developing extremely rapidly, partly because the code, data, and knowledge is largely open source, and partly because of the increasing inflow of talent.<p>They seemed to conveniently leave out the biggest driving force behind blockchain technology: greed. I don't see how you can talk about the "rapid development" of blockchains and not mention ICOs and the type of armchair investors who gravitate towards them...
The problem with the blockchain is that it is distributed, so it can be inefficient and difficult to gather all of it in one place.<p>Imagine all the data already stored in one place. This base is private, entirely yours and it can be encrypted. Only authorized users have access.<p>This base of data -- I wish there was a better word -- is going to be the next big thing.
I cannot think of a single a mass-market problem, which a blockchain tries to solve, which can't be implemented more elegantly and efficiently WITHOUT a blockchain!
prefer they invest in companies than tokens, tokens have been dropping so much recently <a href="https://www.coingecko.com/en" rel="nofollow">https://www.coingecko.com/en</a>
“This can lead people to dismiss them, in the same way people dismissed early smartphones because they traded off computing power and screen size for portability and new sensors.”<p>Right ...
More breathless fawning rhetoric and nebulous jargon, but I guess the target audience is blockchain enthusiasts so that makes sense. At the end of the day it's their money, so what I do I care?<p>I find it frustrating when I hear comparisons of the blockchain to internet and cellphone communication platforms. The potential use cases for the internet and cellphones were immediately obvious (instant remote communication) and available on day one, compared with blockchains which has given us bitcoin and nothing else of unique value. I actually think bitcoin is pretty damn cool and a marvel of software engineering, but it's a fact that it's mostly useless for the vast majority of people and certainly not in any way comparable to the impact of cell phones or THE LITERAL INTERNET; the insinuation is absurd and intellectually lazy based on blockchain's track record.<p>> <i>We believe that just as the last three megatrends -- mobile, social, and cloud -- intersected and reinforced each other, so will the next three megatrends -- next-gen computing devices, AI, and crypto.</i><p>This kind of rhetoric inspires derision.
a16z is just responding to market demand. Regardless of your personal beliefs in crypto, investors have made a killing, and are convinced that more nuggets must be out there in those hills... If you can raise a $300M fund and charge 2%/yr to maintain it, that's $6M worth of headcount luxuriously plugging away up on Sand Hill Road.<p>Keep in mind: Venture Capitalists mostly invest other people's money, and charge a great deal to take care of it in the mean time.
Here's what I don't understand: if you're a crypto project, why wouldn't you raise funds through an ICO yourself? What benefit does a16z give you? One of the biggest assets of crypto is the ability to self-fund. Also, since the space is relatively new, I have my doubts about the ability of a16z to provide any useful crypto experience.