You Do Not Need Blockchain: Popular Use Cases and Why They Do Not Work

“A database and a contract”... but who owns the database? And who enforces the contract? And who owns the actual data?

Blockchain provides satisfactory answers to all those problems.

I agree 100% with the article in that blockchain is being ‘applied’ to a whole bunch of places that don’t need it. That doesn’t mean that it can’t work well in many other (legal!) scenarios.

HN Bandwagon, Monday: "Don't you understand that courts exist to make it so no one can break a contract without penalty?"

HN Bandwagon, Tuesday: "Lol don't go to court over $5, that's stupid."

I can imagine that for many non-first world countries where people wouldn't trust things to the legal system or contracts - I wouldn't necessarily define those things as illegal.

For example, when you are dealing with multiple small transactions where a potential for fraud on the buyer side is significant.

Also, if you want to build automated systems for money management, the barrier of entry will be significant in the legacy banking system.

Or managing electronic assets (stocks etc) - blockchain significantly lowered a barrier for entry in those cases.

It seems to me this could mean both:

1. Allowing illegal activity. (Eg when legal system can’t be used because the action in question is illegal).

2. Preventing illegal activity (Eg when legal system can’t be used because of difficulties to verify and/or execute).

Second, legality is subjective around the world. It is currently illegal in the US to gamble online, for some reason, even though casinos and lotteries are a thing.

It is illegal in many countries to transfer a certain amount of money out of the country, for some reason.

Certain sexualities are illegal in quite a few countries.

Illegal != bad

That's the only industry blockhain could disrupt, and it completely disrupted it. (I'm not sure about money laundering as I've never really know much about it).

1. Is my vote anonymous? (If not perfectly, owing to low level timestamps or transaction ids that can get cross-referenced with other data sources, at least for all practical intents?)

2. Can I be sure my vote got tallied the way I voted?

3. If I'd like to verify the result, is there a tamper-proof electronic paper trail that I can use to verify the result?

It's a surprisingly hard problem in practice, and to the best my knowledge the most promising venue to guarantee 2 and 3 without compromising 1 might be a blockchain-like distributed ledger. (You can solve 2 and 3 by using a git-like hash tree and letting the voter know their commit hash. But in doing so you're basically dropping 1 and inviting vote selling.)

Do you believe that this is a permanent state, or a temporary one? Is there a potential blockchain-like thing that could exist which would be better than a database and a contract?

Because to me, the current system leaves room for improvement:

- resolving conflicts across jurisdictions is extremely expensive

- resolving conflicts even within one jurisdiction is more expensive than many transactions are worth

Current blockchains are expensive and slow, but I think that we will see improvements over time which will eventually make blockchains (or something blockchain-like) look like appealing solutions.

Only if that contract is reasonably enforceable and all parties involved trust the party that controls the database - if there's such a single party controlling the database at all.

The most compelling use case in terms of supply chain management doesn't necessarily involve storing data from sensors or other IoT devices. It's doing away with the paperwork (customs documents, bills of lading, for example) involved in shipping physical goods and the friction it causes: https://www.maersk.com/en/news/2018/06/29/maersk-and-ibm-int...

I'm not sure if this is still the case but some time ago I read about an example where the paperwork involved in shipping a 20 ft container from Shanghai to Rotterdam was more expensive than the actual physical shipment of the container.

A blockchain solution could potentially help with reducing that cost. A simpler, database-based solution of course could do, too. However, there are numerous parties involved in the process not all of whom necessarily trust each other. A blockchain-based infrastructure could provide a common protocol everyone can agree on.

Except when banks are transferring money across borders. In order to have trust, they currently need what's called nostro and vostro accounts. Meaning, Bank A parks money in Bank B, and Bank B parks money in Bank A. So that if a transfer is fraudulent, there will be money to cover it.

How is that better than blockchain?

For example - banks could feasibly use blockchain for clearing trades.

Right now there is a 'single point of trust' for such things which even financial institutions want to break out of.

Blockchain could theoretically enable distributed exchanges.

The 'rule of law' is still essential in that context, but blockchain could work there.

This is only one example of 'regular real world use'.

FYI / caveat: the 'hardest part' about getting these more distributed systems going is getting large financial entities to agree on the nature of the exchange, and hammering out of the real world details. At that point, blockchain becomes a secondary and not necessarily essential component.

There exist many cases in which something is not illegal but is inefficient, unjust, lacks sufficient trust to reach a contract or lacks sufficient incentives to comply with a contract. There exist many other cases in which people cannot afford to hire a lawyer to enforce a contract, or cannot afford to hire as many lawyers of as high a calibre as the other party.

So presenting blockchains as a) databases that are b) only good for illegal activity is doubly incorrect.

There are also many bad and unnecessary uses of databases and contracts...

So the world works perfectly in your opinion?

The good thing about blockchain is it lowers the cost bar for crazy expensive business legalize. It of course needs more work but a proper smart contract setup placed in front of a judge leaves little need for a dozen lawyers and business consultants to see the intent of the contract.

The main issue is that the current very expensive and inefficient setup benefits middle men that produce very little value. Transitioning away from that will eventually happen and that will be the reason blockchain and smart contracts explode in value and usefulness.

With Ethereum you can build systems that are intra-national and connect for example all the real-estate records globally which cannot be done with a MySQL system. There are hundreds other examples

Not exactly. It's anything for which the legal system is not effective.

For example, you can have a perfectly legal contract, but the other party is in a corrupt foreign jurisdiction that would never find in your favor in the event of a breach. Then you can't contract with them because they have no incentive not to breach, without an alternative method of ensuring compliance that doesn't rely on their corrupt government.

You may also have jurisdictions (like the US) where the process may be more fair, but it's unreasonably expensive, so if you're transacting with parties with a high probability of getting into disputes, something that can resolve them programmatically without litigation is an advantage.

Then there are the false positives. You're not a criminal, but you have bad credit or are from a disreputable country etc., so you're treated as one by the government or the rules targeting actual criminals cause companies to not want to do business with you, and you thereby need some alternative way to engage in your legitimate activities.

What you're arguing is that a perfect system of government removes the need for any alternative. But we haven't got a perfect system of government.

There were people saying the same thing as you before the wheel was invented, and in 1550, and 1800, and 1900, and 1910 (guys, horses shit on the streets and you occasionally contract dysentary. But overwhelmingly you can get from point A to B. Guys, horse-drawn carriages work. It's how the world works!) and 1950 and 1990 and...

"This is how the world works" is not a valid rejection against using a _new_ technology.

And just like many email clients and many email servers work together, in the future, companies accounting systems will work together, and create a single-triple transaction, instead of a double entry at EACH company. You can swap out accounting systems at any time, and still participate in the standardized distributed database. Blockchains can be used to reduce redundancy in accounting. Not all blockchains need proof-of-work and fault tolerance turned up to 100%. Sometimes you can have parties that sort-of trust each other, but none of them want one of the others owning the whole system.

>can't use contracts and the legal system to ensure trust between the parties

I.e. where the majority of the world's population resides, developing countries where (sorry) Corruption Rules Everything Around Me. Or there's an appeals system where cases drag out for decades (hello Brazil!) Or where the judges are simply not sophisticated enough to adjudicate complex financial contracts.

I don't think crypto/blockchain solutions have a ton to offer the developed world, but there's an awful lot of humanity outside of those institutions. 'Our existing financial world is working just fine, thank you' is a very 1st world perspective. Kind of hilariously, a lot off the issues that crypto enthusiasts rail against (inflation, political central banks, etc.) are basically untrue for their own countries, but are true for others. I think a stablecoin pegged to the US dollar that's super-intuitive to use on mobile could achieve hockey stick growth in Latin America, Africa, parts of Asia, etc.

There's no question that it works. The question that blockchain-like solutions seek to explore, is whether it works better than a technological solution which can eliminate most of the layers you describe.

The world is deeply complex, more complex than any single human can understand. If operating in the world can be simplified to the point of being understandable by individuals, or if the size of the foundations you have to trust or rely on can be made significantly smaller, that could be worth it.

How about corporate stock?

You know how many third parties are involved with the markets and the added costs of those third parties? Even with a corporation with a stock ledger, stock trusts who own them, banks/brokers who handle all the buying/selling of stock...things don’t work.

Take the Dole case where the corporation had almost double the number of stock issued as actually existed.

Whereas every corporation could memorialize their stock on the Blockchain and each sale of stock would be completed via smart contract. Instant settlement, no stock trusts, no banks, no brokers...a peer to peer market. Stocks are a particular use case because unlike the authors examples of “real world counter parts” (supply chain, authorship, land registry) shares in a company can be represented entirely digitally allowing the peer to peer and trustless system (at least for purposes of transaction settlement).

what about transmitting value over the internet without relying on an external system? You know, like digital cash (but actually cash, not airline points that require a central actor to approve the transaction).

As an example. 2nd-hand digital assets.

The blockchain is a self-sustaining PKI network. It eliminates MITM attacks and facilitates the use of PKI technology by making it trivial for nodes to read/write/verify information that is sent over the network. On the economic layer, the fact that it pays its own way eliminates the ability for network operators to create information-layer monopolies (i.e. App Store).

If you think about blockchain as a database, you'll be stuck thinking about the use cases that involve a database. If you think about blockchain as smart contracts, you'll be stuck comparing them to real world contracts. Start thinking of decentralized app stores (which cannot impose constraints on the revenue models of their hosted apps) or advertising networks which let users put advertisements on any webpage. There are tons of reasons to pay a small fee to send information across a secure and tamper-proof network.

You're missing the point where blockchains are much more efficient and trustworthy than a court or government institution would be.

It's pure math versus interpreted law and it's brilliant.

"I've said this several times before on this site but will keep repeating it: there's exactly one use case where privacy is a superior (and, in fact, the only) solution: when you can't use contracts and the legal system to ensure trust between the parties. In other words, anything illegal".

I like to be able to buy stuff from people anonymously. Not because it's an illegal transaction, but because it's nobody's fucking business what I buy. In this age of marketing and surveillance data mining, it's better to be safe than sorry. Also, what's legal now might become illegal in a future administration.

Note that bitcoin or blockchains in general are not fully anonymous perse. Some are pseudo-anonymous (because addresses can still be linked to persons), some are almost 100% anonymous, such as Monero. See it as cash over the internet. Permissionless, tamperproof and private.

That's a fairly generalized statement. So just because the world works in a certain way we shouldn't change it?

Have you or anyone else noticed that the way the world works is massively in favor of anyone that has money?

How many tenants got cheated out of $1000 deposit and didn't have legal knowledge or a support system to get the landlord to court?

How many people got fees from Wells Fargo, Sprint, Comcast, PG&E, fuck even Etsy because they had power to pull from their accounts at any time? How many of them got everything back due to them? Fairly and morally?

How many people that DON'T have a massive blogger platform, podcast and wherewithal to start an _effective_ campaign against a multi-national because they simply are not well spoken. They are still cheated by the big guy but no one cares because it's not retweeted by Ariana Grande.

AKA your main point might hold up to 5 to 10% of disputes but hardly supports the notion that it "works". I think your statement should rather be "That's how the world currently operates" and that by no means rules out creating additional ways to operate in the world.

To start off, the reason cryptocurrencies have survived this long is probably due to the fact that the dark web thrives on it. That said it's certainly not a reason to outlaw it.

What about the situations where the legal system is questionable? Off hand I've read stories about a lot of poker players who've gotten cash confiscated when flying. What about [insert stories here]?

How about a means to store (and transfer) value, where you can be certain - given your measures of security is sound - that no one but you (or multisig) can access it? If I store cash at home I can get robbed. If I own property it can be destroyed (loopholes in insurance policies, betrayal of other forms, military state).

I remember the feeling I had a few years back when I had my own bitcoin in a paper "wallet" (actually a master seed with my personally devised cipher), protected by the (mental) measures of my choosing, it was mine. Yes, that caters well to illegal activities but likewise also empowers individual privacy, as well as removing any political, governmental or other influences. Power to the individual.

It's not the monetary system's role to regulate how people behave in society, merely to facilitate transfer of value. If that transfer method can't be trusted alternatives will spring up. On that note if there are better people on the planet the methods of value transfer matters less. If there was more trust in financial institutions there would be less need for cryptocurrencies. On HN people advocate having backups of backups, but how do you backup your money in the bank? You're trusting them.

Yes, drug lords exist and have existed in the past thanks to anonymous transactions, but... there is corruption in banking systems (offshore accounts) and whatever systems and we should/could question why there are drug lords in the world in the first place. They wouldn't have a place here if things were better organized. Either by more happy people (having less want/need for stimulants, given a bleak outlook on humanity), by giving the people the freedom to explore their minds more freely (psychedelics) or simply (as a step on the way) give the state the power to regulate as opposed to making everything illegal.

I would expect more of HN than to have this as a top comment. Let's just ban cash altogether because the only thing it's useful for is enabling illegal transactions. Sigh. Quite a naive way of looking at things. What you're suggesting is doing what they're doing in China (and US and other countries as well) with the credit ratings of everyone without any chance of living a normal life unless you're subscribed to the system in place. Add hyper surveillance à la mega corps and no one can escape. Please keep the beacon lit for at least some of the measures in place to insure personal freedom.

People say this in every blockchain related thing that pops up on HN but it excludes literally the only legitimate use case for a blockchain. That being the scenario where you don't have or don't want to rely on a trusted authority.

There are several concepts related to this in other areas: provenance, catalogues raisonnés, serial numbers, title registries, pedigree registries, among others. People who make or who deal in rare or expensive things often adopt some of these mechanisms to help answer questions like: which one is this? is it genuine? who owns it? who used to own it? is it stolen?

(There are lots of different threats, but some of these mechanisms help respond to each. Properly identifying and authenticating an individual object may be the hardest problem of all here—but that's potentially less of a database issue than the others.)

At the core of it, it is a transfer of power from larger organizations to the people.

If strong fines were sufficient to prevent tampering then the proposed blockchain solution wouldn't even be necessary; just fine dishonest actors, period.

> if every luxury Louis Vuitton handbag is tracked and you know precisely whether it's been sold

There is no way to accomplish this though. You cannot reliably track a physical object because there is no way that a computer can automatically verify the authenticity of an object.

- Ten years in, nobody has come up with a use for blockchain, https://hackernoon.com/ten-years-in-nobody-has-come-up-with-...

- and the followup, Blockchain is not only crappy technology but a bad vision for the future, https://medium.com/@kaistinchcombe/decentralized-and-trustle...

If someone hits me with a rubber hose until I give them my private key, do they get to then keep my house?

I agree about your first point: acknowledging only trust elimination and denying trust minimization is a simplification from my side. However, I have not seen successfull examples of "trust minimization" so far though it is always suggested in the context of blockchain. Maybe the reason is that the part on which the trust can be minimized by BC is usually not the weekest link.

I also agree that BC could prevent some percent of deed frauds. However, if you consider my argument about not decentralized example land registry BC maintenance you will agree that in many cases this may leed to a forgery, not possible in Bitcoin blockchain.

I completely disagree on a tokenization part. Unless we have a well-described and tested business model. these are more dreams and handwaving than a real use case. It is easy to say "tokenize this and that", the devil is in the detailes.

Say I have a blockchain that tracks births and deaths. Now if I see a record on there I can be assured it hasn't been tampered with. But that tells me nothing about how it was created - was the person entering the data acting with malfeasance?

All blockchain does is audit the data after its creation. It doesn't solve the issue of provenance of the original information. This seems to be where all these schemes and ideas (beyond crypto-currencies[1]) fall down when compared to current databases.

[1]slow and pointless. Money transfer is solved and current systems, while lacking the assured fidelity of the transactional data, offer so much more - fraud detction, chargebacks, etc etc

(You can sort of get away with it if it's b2b only or a legal requirement to audit, but that limits the use cases further)

1. Merkle tree or some other cryptographic append-only technology. (This is really old, by the way).

2. Proof-of-work. (This was, to my knowledge, first proposed as an anti-spam measure, which incidentally went nowhere because most spammers "borrow" other people's computers for free, and so it doesn't inconvenience them in the slightest).

3. Achieving consensus by saying that he who did the most work is right. (This, again to my knowledge, was actually the main innovation that Bitcoin brought to the table).

Many people pitch things only having the Merkle tree as being blockchain technology, because blockchain is in and Merkle trees are so 20th century technology.

Blockchains are generally defined by the original paper for bitcoin: https://bitcoin.org/bitcoin.pdf these would have a couple of key properties. They are trustless, distributed, and public through the use of cryptographic and computational algorithms. Most modern "blockchains" (that aren't currencies of some form) violate one of these properties.

> When I think "blockchain", I basically think of a git branch: history is verifiably immutable and using some external tools like a public rng, one can prove that a block was not created before a certain time.

The system you describe here involves trust. "Public RNG" implies we are talking about some sort of SSL certificate company's time server. Proof of work is stronger than that. It says it's impossible for someone to misrepresent the shared ledger unless they have more computational power than the entire system put together. And it's a fundamental part of how the ledger is structured (it's not external).

> When I think "distributed ledger/distributed consensus" I think of the practice of using basically properties of statistics to get a bunch of nodes to agree on the state of something.

Again proof of work is stronger than this. The nodes agree because the given branch is provably the strongest branch of truth. Distributed consensus is about getting the nodes to work together when you can trust they all want to, not when they are all trying to compete with each other.

> Neither of those things really seem to make sense as the author's definition of "blockchain". What is he referring to?

Because neither of your definitions fit a blockchain. Your definitions fit the broader cases of technology being passed off as "blockchain" in (the best light) an attempt to get these old companies to modernize (in a worse light) and take their money because they are idiots.

Things like distributed version control systems, distrusted consensus systems, and cryptographic ledgers are all useful, but they involve trust. And for a lot of these applications that's fine. A company putting out a cryptographic ledger (e.g. provable) for cosmetic item transactions is an improvement, but it's not a block-chain (it's not distributed or it's not trustless).

I mean the author discusses this: "Be careful! Today, digital signatures are often sold as blockchain. Perhaps a digital signature is all you really need and blockchain does not really suit your requirements." a digital signature system of arbitrary complexity (perhaps with a ledger of issued signatures, or an external time server, or agreement on which signature is the winner) is all most people in this space need.

The only reason one needs a block chain is if they are making a currency.

https://queue.acm.org/detail.cfm?id=3136559

But speaking of decentralization there are plenty of proposals like personal servers or federated co-ops that aren't blockchain related.

Can crypto projects figure out a way to build a working social platform without losing money?

The veterinary that comes to check it posts a validation mark on the blockchain. If you trust the veterinary, you should trust the birthdate.

The veal grows up to become a cow, and is sent for slaughter. The farmer stores an event on the blockchain and sends it to be cut into meat.

The slaughterhouse stores an event (with the weight) on the blockchain and sends it for distribution.

The butcher creates the packets of meat, with a QR-code which lets you check the whole list of events, with their dates and places, and of course, you can check that the same part of beef doesn't end up in two different shops. You have complete traceability of your meat despite all the actors not knowing each-others.

Op says it won't help authorship since earlier real author can claim he didn't use the blockchain but it's still helpful to prove something simply existed.

Blockchain-the-trustless-consensus-protocol has a fundamental challenge that makes it completely and utterly pointless for most applications — the oracle problem. You build up a whole system around a secure trustless chain-of-custody, but then require trust in some sort of outside entity for adding resources into the system. If you're willing to trust that entity, there's many simpler ways to sort out your chain-of-custody problems.

Cryptocurrencies "work" precisely because they don't need an oracle. They don't track anything that exists outside the chain.

Cross parties or even industries may be a better target.

One way the problem can be unsolvable is not to be literally unsolvable but philosophically unsolvable, which is why bitcoin itself is probably a legitimately good application of the idea. The anarchic ideal is to not trust anyone in particular with controlling money, and any actor who says "no trust me, I'll do it right" is probably less trustworthy for having said that, so it seems unsolvable. So a 'self-organizing' coordination is somewhat necessary, essentially for the same reasons we like democracies more than autocracies.

(uh but proof of work is evil, so, just cause it's a good usecase doesn't mean it should exist.)

Besides that, most of the 'coordination problems' that people purport to want blockchains for seem to be simple cases of glaciation and incompetence. If you can't reconcile accounts across banks / supply chains / etc efficiently, your industry just sucks technologically and needs to get it together, and it'll still suck when you have a blockchain making your IT more expensive, but at least then you don't have to reach consensus on protocols so good for you I guess?

I would love to hear of other useful cases of otherwise-unsolvable coordination problems, but I really can't remember any right now.

On the other hand, ETH-like cases are completely legitimate uses of blockchain-like things ('running code in the ether' is not something you can do any other way, basically by definition, and is also just _cool_), but they are rather different and not directly comparable.

So bitcoin solves the problem of not wanting governments being able to print extra money. The sibling comment [1] about timestamping the date of birth of veal is not a good use case, because it's perfectly possible and easier to set up a central authority that the veterinarian can report to. Which, according to a response [2], is exactly what happened, and solves the problem of timestamping veal just fine.

[1] https://news.ycombinator.com/item?id=19226935

[2] https://news.ycombinator.com/item?id=19226997

All a Blockchain is, is a public, append only database. That's it.

And no, it does not require "proof of work". People have released lots of Blockchains that do not have proof of work. They might even use a central authority to sign their blockchain transactions.

Public append only databases have existed for a long time, and are quite useful.

Someone else gave the example of git. Yes git is a Blockchain. Really.

There are a lot of reasons to use a public append only database, as opposed to a private database, hidden behind a central authority.

Let's say you get meat delivered by cooling trucks and this is mirrored in a public block chain. You publicly claim that all your meat is sufficiently cooled and every single delivery is tracked. If this data is in a public block chain, there is no doubt that you didn't input this data, it was in fact the delivery company, and if they cheated with their cooling sensors, the liability is on them. With a privately hosted database under control of the corporation (you), there would be suspicion that you manipulated it.

So it doesn't actually solve the problem, but you can legitimately claim that you did as much as you could (as far as using technology goes at least) to ensure the quality of the delivered meat.

Not really sure how you can back up this claim. After hundreds of interacts with blockchain enthusiasts, I have observed that most of them subscribe to at least one of false use cases listed in the article, especially #7 and very often #1-3 and #6 as well.

In 10 years when your blockchain is no longer supported by the developers and your new team has no idea how to manage it, it's showing it's age, it's breaking, you're going to be envious of people with those boring old databases.

https://lwn.net/Articles/512895/

Although here's a detail i didn't know:

The algorithm for FSS is based on "Forward Secure Pseudo Random Generators" (FSPRG), which comes from some post-doctoral research by Poettering's brother Bertram.

So that's just peachy.

The hash is already signed, then so as long as you can trust the keys used to sign it (a problem not solved by blockchain), then you can get it from anywhere, any untrusted source, because the trustability is inherent in the object itself.

There is still the chance that someone along the way consumes the real wine or sells it (at a loss?) to someone who doesn't care about authentication, and then sells on a fake bottle with the real certificate - but:

- at least in that case there would be a well-defined chain of owners that should make it much simpler to figure out who's doing the counterfeiting.

- you can only do this once for each real bottle that you purchase, since you can't forge the certificates.

I'd argue that it is the opposite since you can't receive 1 bitcoin and produce 10 bitcoins through the magic of a fractional reserve system (unless, of course, you run one of the exchanges and keep the transactions local).

If you have 1 bitcoin you can only spend/loan/destroy 1 bitcoin as the blockchain prevents double spending.