Hey Nerds: Blockchain
- Thread starter zeke
- Start date
Wayward DP
Well-known member
someone tried to do a 10 minute intro of blockchain in the office... it is more complex than can be explained in that amount of time.
MindzEye
Wayward Ditch Pig
The basics of it are simple though.
The easiest way to think about blockchain is that it's "just" a transaction ledger. The most famous application of blockchain to date is as the transaction ledger for bitcoin. Think of it as a spreadsheet that everyone who is part of the network (bitcoin, whatever) has a copy of on their computer. Those individual computers add information (of transactions) to their copy of the spreadsheet. Every 10 minutes though, all of the copies of the spreadsheet talk to each other and share their new information with every other spreadsheet on the network. Now every spreadsheet has a chronological record of every transaction that was entered into every other spreadsheet in the network.
It's power comes from being decentralized (shut a couple of those computers off and nothing happens to the rest of the network, it functions as if nothing has changed, regardless of whose computers they are), and from being incredibly difficult to manipulate (if one of the spreadsheets is generating false information, the network rejects it using a set of established rules that each node/spreadsheet has to comply with...for example you just can't create additional value out of thin air and inject it into the blockchain, the network notices that the data that is being added by that spreadsheet doesn't comply with the networks rules). Once the blockchain has been reconciled, every copy of it is identical to every other copy, with a record of every transaction (with buyer and sell information baked in) that has ever occurred on the network (with bitcoin being the most famous network, for example).
MindzEye
Wayward Ditch Pig
Oh, and to clarify one thing about attempting to put malicious ledger information into the blockchain, the way the network decides what information is valid is by comparing the amount of computational power that was used to create it vs the computational power used to create the information it's disagreeing with.
So it's entirely possible in theory to inject false information into the blockchain, you just need to use more computational power to do it than the rest of the network has combined (basically have to win a nerd arm wrestling match against every other computer on the network combined). You would need to be able to overpower the network (no fancy tricks are available here, pure computational power is the only thing that would matter) to inject your bad data (selling the same bitcoin multiple times, etc)
So it's entirely possible in theory to inject false information into the blockchain, you just need to use more computational power to do it than the rest of the network has combined (basically have to win a nerd arm wrestling match against every other computer on the network combined). You would need to be able to overpower the network (no fancy tricks are available here, pure computational power is the only thing that would matter) to inject your bad data (selling the same bitcoin multiple times, etc)
LeafOfFaith
Well-known member
I still don’t fully understand what the hell bitcoin is, and ether seems to be beyond my comprehension.
MindzEye
Wayward Ditch Pig
Incredibly legit.
Blockchain is a superior method for managing contracts (especially financial contracts) than existing methods. Think about a smart contract using the technology I described above that automatically manages simple functions (pay outs, etc) without human intervention.
You can use blockchain to help manage elections, supply chains, etc. Tons of very real applications.
MindzEye
Wayward Ditch Pig
Okay, full disclosure. I run a rig mining ether but I don't fully understand the additional complexities of ether's usage of the blockchain and bitcoins (which is just a big, beautiful, unhackable ledger).
So the first thing to understand here is that ether is just the coin (similar to bitcoin) given by the ethereum network for solving computational problems. The ethereum network though functions quite a bit different than the bitcoin network. Bitcoin is just a cash system, and that's all it was designed as. Ethereum is designed as a platform for blockchain based app development (like the smart contract I mentioned in the post above). So all of those fancy uses for blockchain technology (finance, law, elections, etc) requires a blockchain to be built from scratch (rules, etc) for them. Ethereum apparently makes that process way, way easier.
UWHabs
Well-known member
From what I know, blockchains are legit, but we still don't have a great use for them overall. Bitcoin still basically has no uses, so it definitely still feels like the question is when, not if, it will crash. Ether/ethereum from what I see seems to be a little more useful overall as a general purpose, but it's still a long ways from being any sort of true digital currency. I've love to invest in something, but I don't know enough to choose one of the many out there to try my luck in getting rich from.
MindzEye
Wayward Ditch Pig
Then mine. I have zero dollars invested in crypto, but I do have a ~2000 dollar crypto rig running 24 hrs a day mining ether. I mine about 1 ether a month, so at today's prices I've paid off the rig in a couple of months.
As for bitcoin having no uses, I disagree. It's a fantastic platform for exchanging value. Basically a frictionless payment system. It could very easily be a competitor to V & MU as a payment service.
As for current price being sustainable. I don't know and I don't think anyone really "knows". The one thing that holds me back from agreeing with people expecting a crash (by which I assume is meant to say that the bubble pops and it goes back into the triple digits in value) is that gold...that pretty, absolutely useless metal has a market cap of 7.8 Trillion dollars. It's main utilities are that you can make jewelry out of it, and that you can own it as a (poor) hedge against dollar instability and inflation. Bitcoin has a market cap of about 200 billion. So if we can believe in the value of a borderline useless metal, I don't see why we can't believe in the value of a electronic currency with a robust technological backbone.
As for bitcoin having no uses, I disagree. It's a fantastic platform for exchanging value. Basically a frictionless payment system. It could very easily be a competitor to V & MU as a payment service.
As for current price being sustainable. I don't know and I don't think anyone really "knows". The one thing that holds me back from agreeing with people expecting a crash (by which I assume is meant to say that the bubble pops and it goes back into the triple digits in value) is that gold...that pretty, absolutely useless metal has a market cap of 7.8 Trillion dollars. It's main utilities are that you can make jewelry out of it, and that you can own it as a (poor) hedge against dollar instability and inflation. Bitcoin has a market cap of about 200 billion. So if we can believe in the value of a borderline useless metal, I don't see why we can't believe in the value of a electronic currency with a robust technological backbone.
zeke
Well-known member
ok that was what my impression was. trying to be cautious though..
but to be clear - are you suggesting that much (most?) of the work governments and banks do can be run by (all of us on) blockchain? and does this jeopardize all the niche apps/businesses built on facilitating industry-specific payments/purchases (like uber, etc)?
what are the downsides here?
UWHabs
Well-known member
I don't have the patience to look into a "mining rig". Would rather just buy some sort of "blockchain etf" or if I had a better notion of which will emerge on top, to just flat out buy them on a market.
And don't get my pessimism about bitcoin to be about blockchain. I do think at some point the world will "turn over" to some sort of digital currency as essentially our modern day equivalent to the gold standard. I just don't know if that's bitcoin, ether, dogecoin, or something else.
MindzEye
Wayward Ditch Pig
Yeah, the main limitation from my understanding is that size of the chain. As your blockchain adds transactions it grows in size, which is awesome from an auditing standpoint, but demands more memory from machines writing to it over time.
I'm not even remotely an expert on blockchain, but my understanding is that just about anything that uses any form of shared database or would benefit from a shared database would be significantly improved by utilizing blockchain.
It depends...If a business is acting as an intermediary for financial exchange (western union as the simplest example) between parties, then absolutely. But that's more that entity competing with a specific usage of blockchain technology (in this case, bitcoin). I don't see why blockchain use would endanger a ride sharing service like Uber though.
There are definitely certain functions of the blockchain (smart contracts, audits) that will diminish the need for a certain amount of billable hours from Law and Accounting professionals. There are some government support functions that can be automated out more efficiently than they are today (government benefits fraud prevention, etc)
Blockchain:
- 51% of any network can, at any time, alter information stored on that network's chain and the size of the chain. Basically, if you can control 51% of the computational power of the network, you ostensibly control 100% of the network whenever you want.
Blockchain based electronic currency:
To authenticate a transaction locally (which is not a requirement, but as an extra layer of security can be done locally instead of utilizing an exchange/online wallet) requires you to download the entire chain (bitcoin's is over 100GB). The process can take up to a couple of days. For faster transactions, it requires you to trust in an online server which is then a location that can be attacked by hackers and your BTC can be stolen from those servers.
Transaction speed/Scaling....BTC can only handle 7 transactions per second. Ethereum can do 15. This is not their final form if being used as an international payment system is the goal. Visa, for comparison can handle about 50,000 with an average load of 2,000 per second.
MindzEye
Wayward Ditch Pig
The only way to do that right now is to invest in Nvidia or a semiconductor ETF. I think I read something the other day about the Nasdaq setting up bitcoin futures trading next year.
Betting on the individual coins can obviously be lucrative, but it's going to continue being extremely volatile. I'd definitely look at some "pick and shovel" type plays like Nvidia if I was looking for exposure without the crazy downside.
It will be whoever figures out scaling. The develops of all of these networks are killing themselves to try to figure out how to scale up to handle the amount of transactions necessary, while still maintaining the security of an immutable blockchain.
MindzEye
Wayward Ditch Pig
Cool, I'll do my best to answer. My disclaimer though is to not take my word as the gospel, I'm very much a neophyte myself. I learned about as much as I had to for me to get into building and running a mining rig. There are good reddit communities that would obviously be a much, much better source of knowledge than I am.
