Whatever happened to the blockchain/smart contract 'revolution' we were told about?
Whatever happened to the blockchain/smart contract 'revolution' we were told about?
73 comments
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Vaporware turns out to be vapor. Shocking.
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trackerware corporations couldn't maintain their monetization stranglehold
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Not an expert, but IMO, it’s because it was misused. Cryptocurrency is just one application of blockchain technology, but people equated blockchain to crypto, and crypto was turned into an investment scheme instead of an actual currency. Then came NFTs, which people turned into rugpull scams. And news of the volatility of cryptocurrency and all those NFT scams drove away any chance of regular people adopting anything blockchain-related.
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misused
Give me an example of a real world problem that was either unsolved before blockchain solved it, or blockchain solves it better than existing alternatives.
I'll go ahead and save you "decentralized currency/finance between untrustworthy entities" (i.e. cryptocurrency) because it doesn't actually (and can't actually) solve that in the real world. Humans are too error-prone, and an immutable ledger presents too high a risk for business-ending mistakes for any business with any alternative options to adopt it for their primary revenue pathway.
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Give me an example of a real world problem that was either unsolved before blockchain solved it, or blockchain solves it better than existing alternatives.
International online payment without a company telling you that your legal adult entertainment is morally wrong
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i’ll give it a crack
in australia, we have various credentials provided by the government to attest to a persons fitness to work with children (i’ll just refer to these in bulk from now on as WWCC: working with children checks). there are many of these - one per state for individuals, plus teacher’s accreditations per state, and a few more. they’re ongoing certifications, so can be revoked if anything happens
it’s a legal requirement for businesses who engage in activities involving kids to ensure anyone they employ - including volunteers - is appropriately vetted
needless to say, this gets quite complex for national organisations!
i was the engineering lead for a startup that organisations could add their workforce into the system, with the credentials, and the system checked periodically to check that everyone’s credentials are valid, about to expire, etc and notify people if something goes awry
of course, that doesn’t need blockchain BUT
in cases of child sexual abuse, things tend to only come out after 30+ years on average (according to the royal commission into institutional responses to child sexual abuse). organisations need to be able to prove that they were doing everything they possibly could to protect the kids under their care. 30 years on that’s no small task! our company might not even exist in 30 years!
along with our automated checks, we also published an event to the eth blockchain: a hash of the card details as an index (ie if you know the card details, you can look up all instances of validation), and a hash that proves the check took place
what’s that hash? well, i won’t get too into the weeds but essentially we push a payload to IPFS which contains:
- a link to a kind of “template” of an HTTP archive for a typical request to the validation service
- a diff that allows you to reconstruct the HTTP archive of this instance of the request given the original template
- various pieces of the HTTPS handshake with the validation service that allow you to essentially validate after the fact that the content of the HTTP archive was exactly what the validation service sent at the time - HTTPS is essentially signed information after all, so we have a chunk of HTML attesting to the validity of a card that’s been signed by the government! cryptographic proof - not just “take my word for it”
we also published a page on IPFS that allows people to enter card details and load all this information and produce all the technical details to prove what happened (we also had plans for some kind of hardware pack with pinned versions of things because browsers and technology change)
you might be able to do this by relying on the date header that the server sends, but to be really sure, writing the hashes to the blockchain proves that the event given happened at a very specific time and date
blockchain shouldn’t be big and flashy: it’s a very niche use-case, but for those niches there’s really nothing like it
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Like I said, not an expert. Also, regardless if it’s a revolutionary solution to something or not, it doesn’t negate the point that it was made to be used for something, but it’s being indirectly used for something else instead.
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If we take that example to be true there are still issues with it. Just look at any of a dozen stories of people who had millions in crypto currency stolen from them. The police and feds will just sort of go "us not being able to do anything about it was the point."
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I'll give you a couple examples of use cases for Blockchain technology that no other technology solves.
As currency:
- Payment system without content restrictions. You might say "But MasterCard said they're not blocking it", but they could, they could pressure Valve into removing other games, or something similar. Such a thing is impossible in Blockchain, there's no single owner that can impose limits to what you can/can't buy with it.
- International transactions without restrictions. We talked about how payment processors can stop transactions, banks and governments can do the same and while they use this power less often it's still generally a pain in the ass to move money from one country to another.
As smart contracts:
- International car ownership deeds. In most countries car ownership has to be registered into the DMV equivalent, this means that moving a car from one country to another is problematic. A smart contract ledger would be an excellent solution to this, countries could use the ledger to transfer ownership and that transfer would be understood by any country that already uses the same ledger as a source of truth, without any of the countries having to trust in the systems built by the other countries.
- Something similar for phones could also include known stolen IMEI numbers that can be blocked internationally without any regulatory organization needing to trust one another or rely in a centralized controlling agency.
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Turned out that those in control of the tech could control the tech, so contrary to the hype nothing was free, decentralized and scalable. Never.
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The money behind the hype went into "AI" instead
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I've also heard the theory before that even GPUs went pretty much straight from mining cryptocurrencies to then be used for training LLM models.
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So whenever there's a new tech innovation, there are two instances of it.
The first is the actual tech innovation, that often finds a specific use in a few industries, then just becomes part of how things are.
The second is the venture capitalist innovation. It has nothing to do with the technical stuff (as long as the tech is complex enough to impress the average 5th grader). It's more a concept or an idea, and a lot of big promises of unending potential. And as soon as the potential is there, stock prices go up. And that's the only point.
The second one blows up big, then deflates quietly when the next thing takes everyone's attention away. The actual tech innovation usually just finds its niche and quietly chugs away.
Any time anybody talks about a "tech revolution" or some similar word vomit, they're presenting the second thing. Currently we're on "AI" (i.e. LLMs), which will become a niche novelty when the next big thing comes along (I give it a few more years).
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From what I've heard, the biggest problem is the inputs. You can write a 'smart' contract that says 'if I get a pizza, user9000005 pays user30000004 XXX bitcoins' but there's no direct sensor for 'user9000005 has a pizza.' Someone has to manually put it in. At that point, it's not automated. It's just a payment processor with way less certainty, so why bother?
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Why less certainty? It's more certain and less censorable than any other digital payment method.
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It's harder to doctor, but that's not really the big worry with a contract. Contract disputes are usually more along the lines of 'he didn't pay me' or 'she didn't deliver the goods.' It's much rarer for it to be an 'I signed a contract that said BLAH, but they forged a contract to say BLAGH and faked my signature on it.' As for censorship, I'm not sure what you mean. A government would find it difficult to obscure an on-chain contract but that's also not really an issue. I don't want to guess what you mean.
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Yeah, there's this whole concept of "Oracles", which were supposed to be trustable sources for facts, but they can mainly deal well with things like stock prices or weather data.
It would also have been possible for these Oracles to employ people to fact-check things in case of a dispute. So, user30000004 might claim that the pizza has been delivered and wants their money for it, while user9000005 says nothing got delivered, so then you have someone physically drive out to user9000005 and see if there's pizza there or not.
But yeah, you still have the problem that a pizza isn't hard to hide/eat, so you'd need to do some expensive detective work to try to figure out the truth. And that just isn't worth the cost...
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AI is the new crypto, crypto still here but its largely used by shady people and conservatives love to invest in a scam, because they play it like its stock, but its easier to understand and less convoluted than a stock, buys, puts,,whatever. the threat of CRYPTO has largely faded into background.
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With the recent payment provider shenanigans I wonder if crypto could somehow have its revival among normal people.
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It's still out there and going amazing!!! Despite the lack of mainstream media coverage, blockchain and smart contacts couldn't be doing better.
On an unrelated topic, does anyone want to buy some NFTs? I can give you a really good deal. No take-backs, though.
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Expensive and useless. Decentralization was an illusion and they don't solve any real problems
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Tell that to itch.io and Steam - the latest victims of centralized payments systems.
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To my knowlege, unless we completely abandon traditional currency, we still have the same problem. You still need 3rd party payment processors and/or currency exchanges, which have the ability to act as gatekeepers - esspecially since the libertarian markets promoted by crypto tend to end up monopolised eventually.
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To call it useless is just untrue. There are many possibilities, Crypto is just a black hole eating the hype and funding that would otherwise go into valuable tech
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- It's actively transforming global agriculture. While the USA failed to innovate Canada has integrated blockchain into it's agricultural sector to facilitate unparalleled traceability.
- Blockchain transactions are painfully slow compared to other payment processers. BTC is only 7 transactions a second. VISA handles 65,000 transactions per second. That's one of the major reasons we're not seeing more widespread adoption.
- Crypto currency isn't backed by a nation's GDP; which is effectively the mechanism that gives money value. However USA just passed laws recategorizing crypto issuers as financial institutions; that must comply with regulations such as having a % of their liabilities(crypto) as collateral (Cash). So we shall see where things go.
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Crypto currency isn’t backed by a nation’s GDP
Stablecoins? USDT is the most traded crypto globally since 2019.
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Well the value of the USD is based on the bond market which is essentially based on USA's GDP.
I'm not saying stable coins don't exist. I'm explaining the fundamental valuation difference between crypto and national currencies.
Also traded /= transacted. In the context of OPs question, the existence of stable coins has not pushed the needle on crypto from a trading asset to liquid transactable colloquial currency.
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Canada didn't integrate blockchain into agriculture on a whole. The article you linked was a pilot study.
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VISA handles 65,000 transactions per second. That's one of the major reasons we're not seeing more widespread adoption.
I thought they were gonna fix that by running a bunch of bar tabs
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It's actively transforming global agriculture. While the USA failed to innovate Canada has integrated blockchain into it's agricultural sector to facilitate unparalleled traceability.
This example is a nice summary of the issue with block chain. Sure it can be done with block chain.
However, is it really doing it better than SAP or whatever large corporate program used to do it? Is there an ecosystem of thousands of specialised consultant that will tailor a solution for your need? Most managers tends to be conservative with tech, they want a brand they know (Microsoft, SAP) wich can provide a support contract and be sued, and with sales-person wearing a tie. The cryptobros and theirs block chain based startup do not match.
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Also, NFTs. Wasn't there a supposed use case for contract authenticity or something?
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Oh that? It was bullshit just like AI.
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Out of those I only know blockchain being used in spain as a way to ensure legality of accounting books, and that business are not commiting fraud by deleting invoices. Not in a public ledger or anything, just a hashed chain that they need to send to irs equivalent.
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The vast majority of it was driven by speculation and outright scams. The few who were genuinely trying to make a currency couldn't make something competitve with existing systems, as they all ended up with the same problems and then some. Usually, blockchain based systems are very slow, expensive, centralized (in who has control over it), hard to regulate, and insecure. The only real advantage they have, is being harder to modify records for, meaning they're less private and more traceable, if that can even be considered a plus for currency.
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Things are still happening, it's just slow to adopt.
E.g.
https://www.ledgerinsights.com/nasdaqs-calypso-now-supports-blockchain-based-collateral-workflows/
There's a lot of work being done around tokenizing stocks. The 3 day settlement period would become instant for example. But that's no small feat to implement. That could be a decades long endeavor between all exchanges for example.
Also until recently, the SEC was hostile towards it all in the USA, with some pivotal multi year long court cases only being resolved in the past year or so where the SEC lost. (E.g is Ethereum a security or not? Well, now it is not. Now we also have the ETFs)
Ethereum only recently had some pretty big upgrades as well, which are going to be key to unlocking growth potential as well. A couple months ago they had a peak of 800 transactions per second, and the road map of these upgrades going to >100k (note these are including the level 2 networks that use the L1 ethereum for their security, like Arbitrum. Level 1 is somewhere between 15-20 right now. As L1 grows, L2s also grow)
I don't know when the killer app that brings everyone into daily use will happen, but more and more behind the scenes things will slowly adopt it and you won't even realize it. Like maybe when you do a bank to bank transfer, it'll be that Visa VTAP thing I linked above, and it won't take 1 to 3 business days.
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It's in the same place as those NFTs that sold for hundreds of thousands of dollars.
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Idk, they’re currently in use at financial companies and adoption is increasing. There’s still a lot of regulatory uncertainty though.
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It's being used for what it's very good at. That means very little applications (although there are some), on a different scale, and certainly nothing that can promise a quick buck for free. Basically, empty promises just farted out.
Most of the real world usage were bogus, either because they did not actually work as advertised, or because they had lots of negative properties for businesses (imagine a system that would try to prevent fraud if done well… nobody wants that). There's also the issue that a lot of "funky, interesting stuff", once you filtered out the bad and the ugly, were just… less efficient, less useful versions of what we already used to do.
There are still people clinging to it (and the recent fuckery in the US might revive that… although for all the bad reasons), but the press moved forward to the next thing.
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As always EU silently doing it right with EBSI, that aims to benefit the public sector (and ultimately the public), and hopefully the digital Euro to come.
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It doesn't have the backing of a powerful government unlike fiat does, so its effectively worthless in the eyes of the average person.
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Unfortunately distributed ledger software never seemed to get used for what it should given the crypto craze.
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And what exactly should it have been used for?
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really anything with a centralized database, especially multiple databases. The name itself. Distributed ledger. Says what it does. shipping in regards to supply chain management where all parties can trace without everyone have to have it all on their own databases and thing like customers can know details without having to access the companies databases. same with verification of information like health records or content. Its like having a record of authenticity
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Its in the cloud
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Money got involved and fucked everything up.
As usual.
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I personally think what they do for general audience is way too niche and it all starts to make sense when you massively decentralize and switch to crypto for everything regarding money. Now do we see a massive surge in big P2P decentralized systems for end-users? I don't see it. There are few alternatives for some chat apps here and there and that's it. So maybe it's just too early. Prime time of this tech is yet to come. If someone builds a huge P2P cryptopowered platform level of Steam or YouTube that's when you should expect to hear about all this stuff solving real problems.
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I don’t know. But apparently “fintech” is still a thing - or at least there are ghost job descriptions for it.
73 comments
Blockchain is just a ledger. Most systems don't need a ledger, they need a database. It was a solution looking for a problem in most cases and the marketing/business types don't listen to the engineers if the engineers are even in the room.
it does still hold value, but the value is super niche and generally shouldn’t be exposed to the user… it’s an implementation detail
If I understood it correctly, the main problem it can solve is lack of trust. If the involved parties can't find a single authority to trust, they can use a blockchain instead.
Finding cases like that is a bit tricky. For example, you trust your ISP, your bank, maybe even your government... to some extent.... They're not your best friend, nor do they have to be. You can still trust them enough to take care of certain jobs. You pay your ISP via bank transfer, and they provide the service you signed up for. As long as there's just enough trust, the system still works and there's no need to use a blockchain.
Same goes for banks. Most people trust that the bank isn't going to run away with your money. As long as that trust exists, there's no need to use a blockchain.