“In 2018 the blockchain/decentralization story fell apart”
OP here. A small clarification: there are some legitimate criticisms of the Register piece that I cited in the first tweet, but I merely cited it as an example of why I think the hype is calming down. The arguments I make are independent of that piece; the limitations I point out have always been there, rather than something new that happened in 2018.
I also wanted to add a couple of points that I didn't get to in the Twitter thread.
Economics. Blockchain technologists seem to overestimate the extent to which new insights in economics are needed to understand cryptocurrencies and blockchains, as opposed to applying basic principles from economics and game theory. For example, a recent paper shows that thinking about miners and attackers in terms of stock and flow exposes important limitations of the security of Proof of Work. [1] I learnt of many other such examples at a recent conference on the economics of blockchains. [2] So I think a lot of the "cryptoeconomics" hype is misplaced.
Privacy. It's often taken for granted that decentralized architectures will improve privacy. This seems obvious given everything we've learnt about Facebook, but a better way to think about it is that decentralized systems exchange one set of privacy problems with another. I coauthored a paper a few years ago skeptical of the "decentralization ==> privacy" story in the context of social networks [3], but I think many of the arguments in that paper apply to blockchain/dApps that are being built today.
[1] http://faculty.chicagobooth.edu/eric.budish/research/Economi...
[2] https://bfi.uchicago.edu/events/cryptocurrencies-and-blockch...
[3] http://randomwalker.info/publications/critical-look-at-decen...
Joel "Nostradamus" Spolsky in 2001:
> Your typical architecture astronaut will take a fact like “Napster is a peer-to-peer service for downloading music” and ignore everything but the architecture, thinking it’s interesting because it’s peer to peer, completely missing the point that it’s interesting because you can type the name of a song and listen to it right away.
> All they’ll talk about is peer-to-peer this, that, and the other thing. Suddenly you have peer-to-peer conferences, peer-to-peer venture capital funds, and even peer-to-peer backlash with the imbecile business journalists dripping with glee as they copy each other’s stories: “Peer To Peer: Dead!”
> The Architecture Astronauts will say things like: “Can you imagine a program like Napster where you can download anything, not just songs?” Then they’ll build applications like Groove that they think are more general than Napster, but which seem to have neglected that wee little feature that lets you type the name of a song and then listen to it — the feature we wanted in the first place. Talk about missing the point. If Napster wasn’t peer-to-peer but it did let you type the name of a song and then listen to it, it would have been just as popular.
I've thought about that essay a lot in the past couple of years. For all of the merits of ＢＬＯＣＫＣＨＡＩＮ I never found it very useful for conducting transactions. Sure, that's the machinations of the federal deep state lizard illuminati, but also it always felt like architecture and ideology were the point, and serving an actual need was an afterthought.
His points about blockchain are compelling but I disagree with “blockchain/decentralisation” part. Blockchain is a decentralised ideal, but so is BitTorrent, so is Tor, and so on, to some significant extent. To say that decentralisation failed because blockchain failed ignores all the other technologies which are serving people well.
I think the distinction between “decentralised” (i.e. federated) and “distributed” is important (as decentralised is often used as an umbrella term to cover both).[0] There are tons of federated projects out there from Matrix to Mastodon, and there are initiatives to make federated networks more decentralised (such as the integration of Kademlia DHT in BitTorrent).
No need for pessimism I think. :)
[0]: https://www.researchgate.net/profile/Jason_Hoelscher/publica...
The part I found especially compelling: "Blockchain proponents have a vision of _society_ in which centralized entities are weakened/eliminated. But blockchain tech is a way to build _software_ without centralized servers. Why would the latter enable the former? It’s a leap of logic that’s left unexplained."
The blockchain hype fell apart. Which is good, given that it bears no resemblance to reality, and came less from practical applications of the idea and more the one that blockchain tech was 'magic' and was going to magically fix every industry in existence. Companies sprung up based on blockchains and crypotcurrencies and what not that didn't need them in the slightest, and where their only reason for existence was 'get VCs to invest/hype up gulliable people on Reddit'.
But blockchains have their uses, and those where they do work well will hopefully be done better without the lunacy. Decentralisation isn't dead/falling apart either, and in that sense... well I think its time is still coming.
After all, privacy is a hot topic now. Facebook and Google are getting lots of bad press. Mastodon is (somewhat slowly) taking off. The ingredients are there for change, and at the end of the day, it's really just UI + network effect holding it back now. If someone made a good decentralised Facebook/Reddit/YouTube alternative, I definitely feel it could capture the market. Anger is building up with these sites, and the more they force ideologies/censor/shut down people and groups for corporations the more popular an alternative will be. Heck, I feel the time may be right for a decentralised Patreon competitor right now. Imagine a way to support creators which VISA/Mastercard have no easy way to stop, which makes PayPal and co irrelevant and cannot be shut down by angry Twitter posts. That may come up in a few years or so.
But yeah, blockchain hype fell apart, some decentralisation hype fell apart, but blockchain as a concept still has its uses and decentralisation could still have its time to shine.
OP used an argument I see too often: that the (current) market success of centralization is evidence of centralization's superiority with consumers. For instance:
> Open platforms can’t win by directly appealing to users on philosophical grounds, or even cost (see Linux on the desktop). Mainstream users have no good reason to directly interact with blockchain technology—or any piece of code—without intermediaries involved. Openness and decentralization matter to _developers_.
I think both centralization and decentralization can appealing to consumers, depending on the case and on zeitgeist.
For instance, personal computers were decentralization of computing power, back in the days when the Mainframe (centralization) was dominating. Apple is a decentralized computing company. Often decentralization can become businesses through products, read more https://staltz.com/layers-of-the-internet-economy.html
There are also other "stealth" success examples of decentralized software and protocols that are directly appealing to consumers, such as the Camera and Gallery apps on smartphones and the use of JPEG (open standard) and Bluetooth (open protocol) to create (offline-first) and socially share pictures.
The problem with "decentralization" in 2018 is that it was a buzzword related mostly to blockchain technologies, and software built with those were often shadowing and imitating the recent success that tech giants have accumulated. But decentralization goes way back and its success cases are so ubiquitous that we take them for granted and leave them out of the discussion.
I wouldn't read too much into this. The authors don't want to release neither the report or even which the 43 use cases are: http://merltech.org/blockchain-for-international-development...
> The purpose of this blog was NOT to address the use of blockchain, or any DLT, for digital crypto-currency or even financial applications, nor was it to disparage, debunk, or dispel ANYTHING. We were, and remain, technology neutral. If anything, we would say that more testing is warranted, but would advocate that the results of those tests be publicly and fully available.
> There is no report. The only product that resulted from our research process is this blog, as Linda Raftree correctly pointed out.
> A “use-case” is very different from a “case-study”, the former being more conceptual and the latter requiring significant data for research purposes.
> Regarding sharing the list of the 43 use cases, Linda was also correct that the purpose of the this blog was not to “name and shame” and doing so risks distracting from the work we felt has achieved its goal, to motivate conversation around these issues.
Two projects are linked from the blog post:
I have not heard of either before.
This tells us nothing. Basically they have randomly picked 43 out of thousands of projects and won't even publicize which these projects are, or the methodology they used.
Sure it is true - the "business cases" for blockchain are all rubbish.
But it is not for the reasons listed; there are no parallels to airlines or gold mining and so on.
Decentralization for cryptocurrency is about making them resistant to legislation: With properly decentralized cc you can pay your druglord, terrorist, launder money, gamble, insider trade, hype pump and dump a scam ... and the government can't shut it down or prove that you own any.
That is the killer use case. And the only one.
I'm not at all convinced by the argument about centralization happening because that's what people want. In Israel, for example, there is, in fact, a conspiracy. Though not a hidden one at all - just one which is very hard to defeat.
Israel has a very centralized market controlled by just a handful of oligarch families. The same guys control the insurance companies, pension, the fuel supply, the banks, etc. The prices are too high and the service isn't great not because that's what people want, but because competition is stifled, in cooperation with the politicians, who need the oligarchs to keep funding them.
I don't think a decentralized currency would be a magic trick which would instantly solve this larger problem of economic centralization, which people most certainly do not want - but it could certainly help break the existing cycle by taking away power from the politicians.
It's a mistake to conflate "decentralization" with "blockchain". One is not necessary for the other and decentralization has not fallen apart. I'm not even talking talking about mastodon either. I don't use it. The many to many relationship that torrenting is the epitome of decentralization, is very effective and has been around for nearly two decades at this point.
I'm just a random guy on the internet but who is this guy to talk about these subjects in such broad terms? Lay off the misused hyped up tech, please.
If blog posts published as Twitter threads make you as impotently outraged as they do me, try this: https://threadreaderapp.com/thread/1079759096272818178.html
The irrational blockchain/decentralization hype story fell apart and good riddance!
The technology trudges along, a lot slower than the hype beasts would like you to believe.
The Fediverse is a successful case of decentralization.
You can't say that decentralization as a whole is a failure or, worse, that blockchain is synonymous to decentralization; saying so would be an insult to e.g. the original World Wide Web.
I think we are entering a cryptocurrency winter for much the same reason the first AI winter happened: too much promised too fast, and hand waving away really massive unsolved problems.
I still have trouble understanding how a system designed to facilitate global consensus can be considered decentralized. Sure maybe the hardware is decentralized but the resulting data structure is just like the centralized systems it aims to replace. Call me when your cryptocurrency is offline first.
There must be some law or corollary to the effect of "In any decentralized network, 20% of the nodes will control 80% of the transaction value (Pareto Principle)."
Critical mass adoption of blockchain will just trigger major capital investments by existing centralized agencies.
FYI: I've collected the best of tweets from two top crypto / blockchain critics. See Best of Bitcoin Maximalist - Scammers, Morons, Clowns, Shills & BagHODLers - Inside The New New Crypto Ponzi Economics [1] by Trolly McTrollface and Crypto Facts - Decentralize Payments - Efficient, Low Cost, Fair, Clean - True or False? [2] by Nouriel Roubini
[1]: https://bitsblocks.github.io/bitcoin-maximalist [2]: https://bitsblocks.github.io/crypto-facts
The 'blockchain decentralization' story is hurting, but the 'decentralization' itself, as a concept, is still gaining momentum, though it has few real vectors of enablement, i.e. few vanguard products.
There is a very basic argument, not against decentralization per se but about its real power: even imagining a future where you can decentralized social networks like Facebook, at the end people interacts with the service through an application and this application dictates what the user sees beyond the protocol.
For example, OpenBazaar is a decentralized marketplace but if people search for products in the GoogleBazaar site, GoogleBazaar can sort or hide the items as they wish not matter how perfect the decentralization protocol is.
Would blockchain have evolved differently if it’s first major implementation was not Bitcoin? BTC generated a huge amount of wealth from nowhere, and it seems like most blockchain ideas where just trying to duplicate it’s success. To the general public blockchain and BTC are synonymous.
This is an extreme "we told you so" moment, isn't it? But then successful completion of the project was never the goal, just selling blockchain tech to enterprises to generate BTC price rises.
One way to look at the decentralisation is to look at what happened to Internet’s first decentralised platforms such as Youtube. It started as anybody can have a channel but what ended up happening is organisations and full time youtubers ended up garnering most attention on the platform.
Centralisation is an inevitable outcome of human groups. I wrote more on this on my blog https://invertedpassion.com/decentralization-continuum/
Blockchain tech and decentralization are orthogonal.
This is a very sane and down to earth rebuttal of crypto
ActualMoney sucks for a lot of reasons, crypto is addressing very few of them and adding several problems on top of it
I've taken a step back from crypto-startup news in 2018. Are there any bright spots? Interesting projects to follow?
It failed because i couldn't buy 20k BTC with 1 pizza now.
sure
Cryptocurrency is just alchemy for the internet age. Same failures, same etiology, same promise of unexpected insights in another, future form
Nothing fell apart, its all part of the process, just like the dot com bubble and bust, crypto/decentralisation is not going away. Economics always wins. Someone will make a better, regulated version, that works.
Success rate of blockchain project is not 0%. Many people have became rich this way. Many people use cryptocurrencies actively.
