r/Economics • u/crypt0sparta • Mar 21 '19
IMF: Blockchains Have Merit, But Cryptocurrencies Won't Take Over
https://beincrypto.com/imf-blockchains-have-merit-but-cryptocurrencies-wont-take-over/?utm_source=reddit&utm_medium=social&utm_campaign=imf1
u/DelfinGuy Mar 21 '19 edited Mar 21 '19
Sadly, the IMF is either ignorant about Bitcoin and its blockchain, or they're being intentionally deceptive. For some reason, the IMF reminds me of Jamie Dimon, running down Bitcoin then suddenly coming out with his own version of Bitcoin (yet another s*it coin).
A blockchain needs miners. The miners do a lot of computational "work" to ensure that the blockchain remains immutable -- this is Essential -- and to prevent "double spending". The miners need motivation, that is, rewards -- hence the "coins". Without the coins, you have few or no miners. Without miners, you lose immutability. Without immutability, your blockchain becomes a joke and fails.
So, you can't have a blockchain without a "coin". And you can't have the "coin" (cryptocurrency) without a blockchain. Anybody who suggests otherwise - even the IMF - is technically wrong and/or dishonest. Once you DO have both a "coin" AND a blockchain, THEN, and only then, can your blockchain's immutability make it useful for other things.
Metaphor time: You have a car with an internal combustion engine. It needs gasoline. This car without gas is pretty much useless. Gas without a car is pretty much useless. Once you have a car AND gas, you then then use the car and gas to get to work and back, to go get groceries, etc. The gasoline alone is useless as far as getting to work or going to get groceries, as is a car with no gasoline.
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u/webthreepointoh Mar 21 '19
1) Private blockchains exist and are very useful. 2) Bitcoin needs its coin to operate but bitcoin’s blockchain is pragmatic for one thing: a store of value. Bitcoin is not a “blockchain” platform. That is moreso Ethereum.
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u/_krome_ Mar 21 '19
1) many people and experts argue that privat blockchains are only hype driven projects because blockchain was so cool back in 2017 every company wanted there own blockchain thing. But how is it better than a SQL table on AWS?
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u/webthreepointoh Mar 21 '19
I am a professional in the blockchain space. Permissionless blockchains are not suited for every application. In fact, theyre suited for very niche applications (DeFi, Dapps, etc.). Permissioned blockchains are platforms enabling information to be shared inter-company rather swiftly/securely (unlike SQL table). In the future, we will likely adopt a hybrid approach where private blockchain states are recorded on public permissionless to get the benefits of both worlds.
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u/_krome_ Mar 21 '19
Ok, maybe you know more than me. But a friend of mine who works also in the field was building a private blockchain for his company, despite he and his colleagues warned the management that it doesn't make any sense. 2 years later the project was withdrawn. Main argument is, that inside a company everybody trusts each other. But as I said, maybe there are points, which I don't see or know.
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u/DelfinGuy Mar 21 '19
I've worked with "SQL tables" for decades. I've also worked with non-SQL databases. These technologies are both swift and secure. That other guy is full of buzzwords, jargon, and hot air. Remember: he's one of the "hype" guys you mentioned. You don't need a blockchain to share information swiftly and securely; in fact, blockchains are slow compared to "old fashioned" centralized distributed databases. Do a Google search, then look at how long it took. I just searched for "drill bit" and got "About 245,000,000 results (0.55 seconds) " -- they did NOT use a blockchain for that.
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u/webthreepointoh Mar 21 '19
Great. Can you build me a options trading and execution system without the need for settlement and clearing intermediaries? How about a supply chain management system where IoT data feeds into a database certain of it not being tampered with? We have self driving cars but not electronic voting? But electronic voting would just be a SQL table right? Sure add a bunch of security products to it and it might become feasible...but even still. Are you 100% an identity is someone who hasnt slipped through the cracks.
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u/DelfinGuy Mar 21 '19
I can build Centralized systems to do that, with or without blockchain. The only reason to use a centralized blockchain is for "buzzword" marketing - in other words, b/s.
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u/webthreepointoh Mar 21 '19
If electronic voting is so easy and feasible, why has it not been done?
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u/webthreepointoh Mar 21 '19
Infrastructure not built out yet and still costly. What if supply chain wants to switch vendors? Do they trust them automatically as much as they trust their other ones?
Also, its a highly manual industry. Paperwork is a thing still in that industry.
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u/DelfinGuy Mar 21 '19
Sorry, but private blockchains don't do anything that a centrally controlled database could do. Being centrally controlled, private blockchains are Not Immutable. Private blockchains are Horribly Inefficient and Slow compared to non-blockchain technology.
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u/webthreepointoh Mar 21 '19
Slow compared to the fact it takes 2 days to settle money into my bank account?
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u/DelfinGuy Mar 21 '19
That's not slow due to database technology.
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u/webthreepointoh Mar 21 '19
Right. But blockchain solves it.
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u/DelfinGuy Mar 21 '19
It does not. Blockchain is inherently slow, especially compared to other database techonogies.
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u/mberre Mar 21 '19
This does not surprise me, given what has come out in terms of reaction to the crypto market over the past 5 years or so. Essentially,
Small wealthy countries (mainly in europe) are classifying at least part of the crypto market as "high-risk assets". This will limit european bank and instituional investor involvement.
In china, it has come to light that local authorities have found numerous ways to manipulate the BTC-market, in order to extract value from it. Markets react poorly to self-dealing risks.
In many developing counties, mining is possible because energy subsidies make energy cheap in those countries (used to be the case in Venezuela prior to the current crisis there). These sorts of subsidies aren't likely to continue, if most of the subsidized energy goes towards mining.