whatisweb3

Oracles that connect to off-chain data are usually understood as points of centralization, I don’t think Ethereum or it’s developers are selling otherwise.

Most Ethereum developers are advising against relying on bridges across security zones that would be upheld by multisigs and oracles, they are vulnerable to attacks. A better model than a bridge to sidechain would be a rollup - posting proofs on chain without giving the sequencer the ability to steal or control user funds.

What makes finance a failure here? Blockchains are still facilitating billions of dollars in volume per day across financial applications - DeFi - even with the drawdown. The projects collapsing are not using transparent blockchains or smart contracts, they are using centralized promises and opaque mechanisms, basically CeFi.

why? FTX can buy all the dying CeFi platforms if they want. nobody needs to use them as long as DeFi continues to exist and improve

Zk rollups are about as fast as visa network - and recursive zk snarks can scale further if needed. The benefit is that they inherit the security of the main network - users can withdraw tokens from them trustlessly, and at no point can the rollup owner steal user funds or block them from withdrawal.

For financial services like lending and swaps this is great and avoids some of the CeFi and CEX problems we are seeing. For other apps like art sales, public groups, and ENS domain name aliases, it allows ownership of assets to be held non custodially rather than a single company’s servers and records.

It is easier to build centralized on top of decentralized than the other way around. This is the whole idea.

People trend to centralization but it doesn’t mean: let’s give up on decentralization and just give one company, or a select few, the keys to the entire kingdom.

besides, as uximproves it will be easy to just use the blockchain directly. like using an on-chain long or short position, or staking some value, rather than only doing it on a centralized exchange.

> So the hustlers are always going to be one step ahead from regular folk.

I don’t disagree. This is always going to be the case in any global market with information asymmetries - grandma’s investments are not going to do as well as a hedge fund with a team of 50.*

The difference is: the people entering CeFi are having access to their funds revoked, and a counterparty failing to repay debts while fleeing to Dubai. while the people entering DeFi have not had access to their funds affected, and are not worrying about counterparty risk.

This is why it is a shift in power - the users retain control of their funds and leveraged positions, as opposed to placing that power entirely in the hands of tradfi and CeFi companies.

* ironically a lot of big players like 3AC are getting wiped out too, so it isn’t always true

I loosely agree with you but am a little more optimistic. I see centralized lenders and services like Celsius and 3AC collapsing and running off with money, or blocking withdrawals - this would not occur had the loans been made on-chain through smart contracts, and DeFi platforms like Aave are holding up just fine during this downturn. This is an example of a shift of power away from incumbents and toward the people en masse, should they choose to actually understand and use the decentralized blockchain.

> If we get something wrong, it may be impossible to change, unlike normal human systems.

It's not far fetched that blockchains will change as humans adapt to new challenges. An example is already happening: Eth is transitioning from PoW to PoS and moving to a layer two centric ecosystem to meet block space demand.

There are real concerns with adding functionality on top of the blockchain without understanding its immutability - like the ridiculous suggestion of putting twitter or a period tracking app on-chain.

what is the cynic mindset here? It will crash to $8K and stay put forever? Or keep going down to zero?

It’s hard to imagine the value will go to zero. Harder to imagine that these networks will not continue to improve and find new use cases each year or decade. Ten years ago there was no stablecoins. Five years ago it was hard to imagine how ZKP could reshape blockchain privacy and scalability. Two years ago there was no concept of optimistic and zk rollups that many chains are now adopting.

What happens in the next 5 years? 10? 50?

I think commenter is suggesting a non custodial wallet with internet access would work fine, which is true. The problem seemed to be cell signal, not internet, as they were able to use the coinbase app or website.

> if you do have a technological solution to an economic and politcal problem, you have created a new political problem (for yourself): getting everyone to use and understand your solution

Many of th problems crypto aims to solve are not only political and economic, but also technological. The technology in this case may end up being a driver for new political and economic systems.

Similar thing happening with digital payments - like Apple Pay - that are overtaking cash and card swiping in many parts of the world primarily because of a tech innovation that allows for convenience, security, and privacy. Crypto stands to overtake some aspects of our economic activity in a similar way, regardless of what politicians ask for.

lol @ goalposts. the conversation has gone from “blockchains have no application” to “ok, blockchains have an application, but it probably only concerns a few.”

there are many users who would be happy to have systems of value transfer that don’t require routing all value and personal data through a central US company.

Passport fraud is slightly more illegal than turning off your browser cookies.

No - zero-knowledge Succinct Non-interactive ARgument of Knowledge (zk-SNARK) was first outlined in 2012[1] and the first real production implementation of it in the wild was Zcash (development of which started in 2013).

The ZK proof protocols being used today in blockchains are very different than those envisioned in the 80s. Specifically they are "non interactive" and "succinct" (proof is very short and easy to verify). Most of the massive leaps in development of ZK proof technology recently has been led by crypto currency space.

[1] https://dl.acm.org/doi/10.1145/2090236.2090263

I like how your comment points out cannabis.

> The US government exercises this power all the time. It's why most cannabis dispensaries and growers are forced to deal with cash because they're excluded from the banking system.

The US tried to ban the use of cannabis. The result was not that cannabis stopped being used or that it significantly reduced the levels of cannabis use - instead, recreational cannabis users and those with legitimate reasons for using it were forced into more dangerous black market activity, and often criminalized and put behind bars. Millions of dollars of state funding was spent exercising this drug war, which most people now see as a colossal failure, and finally some states are decriminalizing and legalizing cannabis use so long as it falls within government regulations.

No single country can do much to take the network offline by banning mining. If all countries in unison decided to criminalize mining and enact a PoW-war, and were successful the blanket removal of PoW mining, then maybe the network would suffer to remain online, and users would be forced to migrate to more resilient consensus mechanisms like Proof of Stake.

So? Most of this is negligible, and can be shielded if the donor cares about this level of privacy - using a VPN, disabling cookies, spoofing your browser client.

The OP is probably talking about personal data such as mass collection of users photo ID, passport, email address, home address, full legal name and gender, telephone number, date of birth. In a standard non-blockchain crowdfund, these are the sort of things each donor would need to first share with PayPal Holdings Inc. - or a similar company - in order to have their donation fulfilled.

The international group of donors does not need to give up any personal data to read a tweet and decide to deposit some of their tokens into a crowdfund contract.

why does the entire thing need to be without a company?

User A posts on Twitter that they are crowdfunding an idea or project. Users X which may be one, two, or thousands are willing to support and pay for that. Same could have occurred on FB, WhatsApp, Discord or anything, none of those apps are facilitating the exchange.

various issues in this post, but to examine the central question:

> Someone, please show me an application where blockchain is essential. That is, a problem that could not have been solved without blockchain that can now be solved with it.

Application:

User Alice and Bob want to swap domain names they own, but using an escrow to facilitate the trade safely and mitigate counterparty risk - and they want this exchange to settle in mere seconds or minutes, without the need to share private data with a third party, and without the need to pay a % commission to a rent-extracting centralized corporate entity*.

This application can and already is being achieved by recording these domain name properties and their records of ownership on a public distributed ledger - a blockchain.

The application of blockchain is as it always has been: creating a decentralized and permissionless ledger.

* most blockchains use transaction fee markets to mitigate spam. In this blockchain app, a small fixed transaction fee must be directed to all users upholding the protocol - which, importantly, may include Alice and Bob themselves as token holders, block producers, and/or delegators within the network.

Edit: lol at downvotes. author literally asked for an application - the downvotes end up hiding my comment and help to maintain the HN echo chamber.

The advertised benefits - non custodial ownership and peer to peer exchange - still work fine. Privacy is not a design goal of every chain but even on a public chain like Eth it’s easy to use privacy solutions like Tornado and now Aztec to achieve a level of privacy most of us would say is adequate - a similar level as Tor and E2EE messaging apps.

This regulation does little except to add an extra hurdle and unnecessary additional costs for average CEX users who want to withdraw assets to a wallet on the network.

This is pretty brutal regulation as it basically forces users to pay twice - once to transfer to a non custodial wallet they own and have KYC’d, and then again on-chain to transfer out to the desired beneficiary to maintain the receivers privacy. It’s the kind of cookie popup law that does nothing to stop bad actors, but does everything to make the average user experience worse.

The regulation here feels invasive and poorly constructed - no surprise it is coming from the EU which is also attempting to put surveillance mechanisms into E2EE chat apps.

EDIT: to the OP, Coinbase is not the promise of crypto. The promise of crypto is non custodial access to digital assets and peer to peer exchange. but it can be nice to have easier, cheaper, and privacy preserving on and off ramps into this ecosystem, something this kind of stiff regulation is fighting against.

> both Hilton and Fallon have changed their Twitter profile photos from the Bored Apes that once united them. Although, to be fair, both maintain the “.eth” suffix that keeps them a part of the conversation, and Hilton is still minting her own NFTs.

So this fluff article basically tells us that celebrities have changed their profile picture, but haven’t stopped using crypto? Did we expect them to keep an ugly ape as their profile picture for their entire lives?

User Alice and Bob want to swap domain names they own, but using an escrow to facilitate the trade safely and mitigate counterparty risk - and they want to do this instantly, without sharing private data online, and without paying a % commission to a rent extracting corporate third party entity.

Blockchain enables this use case, for a small fixed fee that is directed to users upholding the protocol - which may include Alice and Bob themselves as token holders and block producers.

Sure they do - these protocols define digital assets that can be owned in a non-custodial manner, and exchanged and escrowed via peer-to-peer mechanisms without fear of double-spend. These are the goals of the protocols, and both BTC and ETH have succeeded wildly at doing this specific task, facilitating billions of dollars worth of transfers for several years without any notable record of a double-spend or network downtime.

This says nothing about their USD spot trading price, or the practicality of securing large amounts of wealth with a 24-word private key, or the expectation that these technologies should somehow replace all corners of the world's financial transactions.

Notice that Tor was also in my list, and it powers the criminal dark web - driving a lot of negative externalities - but it is rarely called useless. HN crowd generally appreciates privacy, peer-to-peer systems, and end-to-end encryption, but does not apply the same standards when it comes to digital ownership and value exchange.

> No it doesn’t.

This statement verbatim is regularly repeated on HN - users pointing to Stripe, PayPal, Venmo, Apple, whatever as being better solutions than the proposed crypto/web3 ideas.

> “Centralised” isn’t a problem.

Not for you, maybe.

Some users will be happy to manage the additional complexity and risks of handling non-custodial assets on Ethereum L2s in order to achieve lower fees and take-rates, privacy preservation, censorship resistance, and programmable composability.

A very simple example is a domain name. Outside of blockchain networks, we have no mechanism for non-custodial ownership and peer-to-peer transfer of a domain name asset - like you would exchange cash where two parties simply swap the bills directly without the need for a third-party to oversee the exchange and potentially extract rent.

Some issues with this report:

> The challenge with using a blockchain is that one has to either (a) accept its immutability and trust that the programmers did not introduce a bug, or (b) permit upgradeable contracts or off-chain code that share the same trust issues as a centralized approach.

This paints the issue as binary, although there is more to it. Look at the WETH contract in which we both (a) accept its immutability and trust there are no bugs, but also (c) can migrate to a fork at a later point if desired through social consensus. There is another option (d) which is a less developed area: governance models that are not entirely centralized, see Uniswap and Aave.

> The number of entities sufficient to disrupt a blockchain is relatively low: four for Bitcoin, two for Ethereum, and less than a dozen for most proof-of-stake networks.

The Nakamoto coefficient relates to validator pools colluding to form a 51% attack. In Ethereum PoS this count is a bit higher, around 25-35[1]. Important to note the extreme costs of these attacks, and the defense mechanisms of PoS. If enough validators collude to 51% attack a PoS chain, users can follow a fork and have the attackers coins burned. Attacker would have to continually re-purchase coins to re-attack the new soft forks.[2]

> For a blockchain to be optimally distributed, there must be a so-called Sybil cost. There is currently no known way to implement Sybil costs in a permissionless blockchain like Bitcoin or Ethereum without employing a centralized trusted third party (TTP). Until a mechanism for enforcing Sybil costs without a TTP is discovered, it will be almost impossible for permissionless blockchains to achieve satisfactory decentralization.

This is based on the Kwon paper which defines "full decentralization" as a set of specific numerical constraints, and demonstrates that it is theoretically impossible for any permissionless system currently known to mankind to satisfy these constraints. Kwon makes no claims about whether this degree of decentralization is "satisfactory" or even necessary for a blockchain. A system that is distributed across thousands of nodes and highly resistant to 51% attacks and collusion is likely enough for it to be considered "decentralized" for practical purposes.

[1] https://shsr2001.github.io/beacondigest/notebooks/2021/07/19...

[2] https://vitalik.ca/general/2020/11/06/pos2020.html

The “second wave” of crypto uses are already present for those using these networks. For average mass market appeal, we will not see it until PoS and privacy enabled scalable L2s reach maturity.

> it promotes a broken business model that neither solves old problems nor offers new problems with novel solutions

Have you looked at recent crypto currency research? ZK snarks and starks, multiparty computation, new polynomial commitment schemes and ZKP-friendly hash functions, new BFT consensus mechanisms. These are all novel solutions to age old problems.

The use cases are niche, partly because the technology still has a long way to go before it becomes user friendly. We are only on the cusp of seeing stablecoin regulation - a few years from now, with robust stablecoins, PoS, and scalable L2s, the applications and use cases might look entirely different.

> Many crypto projects are interesting from a purely technical perspective, but mass market adoption isn’t driven by admiration of a technical implementation.

BitTorrent and Tor are interesting and useful but lack mainstream mass market adoption, but these do not make daily rounds on HN front page with dozens of “this technology is good for nothing” comments.

I disagree with the author - ETH might be money-like but it’s use cases are broader than that, and the assets including stablecoins are more like shares or digital gold than state money. To those who use crypto a lot, all of these are just different assets with different uses and degrees of custody, be it fiat or crypto or stocks or physical gold.

> To the end user transaction fees paid to miners don't feel any different to a fee charged by a bank on a transfer except maybe in magnitude.

Part of this is lack of education. In ETH part of each fee is burned, providing value to all ETH holders by reducing supply. In PoS chains, the fees are redistributed to all staking validators - with delegation it means all users can also be, over long time periods, beneficiaries of these protocol fees.

The statement always takes the form: there are no use cases that aren’t better solved by (some centralized company). The goal of crypto is to avoid that last part, and solve some of these problems without the need to place trust and lock value into a single entity.

Uniswap as the author mentioned is a good example, in that it provides an exchange that allows users to trade tokens without reliance on a central company like Coinbase. This allows users to hold and exchange USD pegged assets like USDC and DAI in a non custodial fashion, and also take part in defining, improving, and even forking the Uniswap protocol if they want to, as it is not privately owned.