Blockchain/Crypto technologies do not fix the "trust" problem.

Blockchain/Crypto technologies are not fixing the "trust" problem. They are enabling the tying of contracts to enforcement via currency without the cost of lawyers, bankers, and sheriffs. The problem in not achieving trust always comes down to getting the external world to merge with the blockchain contracts. In other words, there is "trust" only inside the cyber system, not in the real world. Take the example of a crypto-currency. It is a specific and special type of contract that is between the blockchain and its users, whereas all the other contracts may not involve a fixed rule that is married to the blockchain protocol. The non-currency contracts are just interested in using the blockchain "protocols"/language to execute contracts. Even when setting aside the problems of 51% attacks, inherent errors, lazy core developers, and rollbacks by core developers with or without consent of the community, we can't trust the value of bitcoin over time due to there being no external connection except users perception of its value on exchanges. Even across space the value is not stable because a "dollar" is not worth the same in all places (purchasing power parity, McDonald's hamburger standard, etc). This is not a problem the blockchain can solve without resorting to an M of N system that resorts to trusted oracles such as a basket of commodities as measured and reported by large exchanges, which is only a higher degree of trust rather than absolute, but still subject to political, technological, hacking, or financial influence affecting the oracles or the exchanges they are looking at in London, New York, Chicago, and Hong Kong.

The trust issue can be solved if the cost of verifying transactions can be hard-coded into the blockchain protocol as a fixed percent of the value of the transactions. The Fed thinks 2% annual inflation is a good thing, and actually since debt erasure has always been the solution to broken economies, 2% inflation as a slow debt erasure may not be a bad idea. Jews used "Jubilee" to do this every 50 years. New Kings usually came to power as a result of economic crises and immediately erased all debts to get rid of old power structures (like BANKS and existing GOVERNMENT, aka "lords"). It worked well for everyone at the end of WW2 and not doing it at the end of WW1 is what caused WW2.

OK, so 2% annual value of the total amount of transactions on the blockchain could be the "tax" imposed by the blockchain to support it's computational and security costs. Not taken out of transactions, but new money created. Transactions are free, but wealthy coin holders are taxed if they are just hoarding and not participating in the economy, as it should be. Bitcoin idealism is a dream of the wealthy and a nightmare for the poor and indebted. "Tax" is the right word because the ultimate goal is for the blockchain to replace government, banks, and enforcement personnel with a much smaller group of computer technologists, as is occurring in all other sources of employment because brains are the last remaining foot-hold humans have as useful entities in the free market.

2% inflation is actually a fixed value for the money if the transaction weighted volume increases 2% per year, as the economy improves, or adoption of the currency increases to a larger marketplace. This assumes hoarding as a result of speculation in an big increase in future transaction volume is not occurring (as in bitcoin's history so far). This increase use of the currency by the marketplace has been the key to U.S. success since WW2, and its impending nightmare if all those dollars come home in a sovereign debt crisis due to our abuse of that power (ability to "enslave" other countries at a lower cost, thereby losing our real-world useful employment and switching to non-productive employment such as services, banking, military, and government).

Server node operating payments could be more or less than 2%, fixed to the expansion of the weighted transaction volume, so the technologists win or lose if the "economy as measured by transactions" wins or loses, and there would be no inflation or deflation. This keeps contracts valid in terms of value for all future time, but this rigid enforcement of the "debt" of past blockchain contracts does not have any good historical precedents as I explained above. To solve the problem of having to choose between inflation and lords, the measurement of the transaction action volume would need to be multiplied by happiness per median person, so that if happiness goes down, the wealthy lose. So they should spend their money on investments that increase the happiness of all. The measurement of happiness would be another M of N system of contracts and oracles, that somehow strongly guards against political (money) influence. In the real world we use a separate currency called 1 vote per person to try to make this happen. The only way I see to make this happen is for a biometric security device to lock each person's DNA to the awareness of the blockchain system of voting if not a wider range of contracts. Voting would merely be saying if your happiness or unhappiness increased or decreased since the last vote, or by joining a separate DAO (local, regional, or state government). In the nested hierarchy of competing governments, those improving their citizen's happiness the most could be copied, or expand in citizens directly.

Trust will be achieved if the median happiness per citizen of the DOA on the blockchain is increasing. Not if the wealthy are made more powerful as in the bitcoin and gold systems. Not if there is inflation such that wage and price contracts are invalidated over time (or space as in other countries). Not if stable value is achieved at the expense of monopolies and externalities (like pollution) or an increasing wealthy class.


  • aatkinaatkin Member Posts: 75 ✭✭
    I did a presentation on Trust in ethereum highlighting the TrustDavis protocol as one possible solution. Yes, essentially we are swapping one "Trust Stack" of entities we trust for another. Given what I've seen in life, I prefer trusting myself, the client source code, the network/miners and reputation over myself, the lawyers/banker/centralized intermediaries and the legal system/gov't. But that's just me.
  • zawyzawy Member Posts: 26
    edited July 2014
    The legal system and government have a place. Their place is to help us work together following rules that allow all of our "transactions" in society to be mutually-beneficial. The alternative is anarchy where we ultimately depend on guns, storing food, gold, and bitcoin in order to feel secure from the rest of society. But I am not familiar with the early 1990's anarchist philosophies that got all excited about cryptocurrencies which resulted in bitcoin, and how they expect people to work together peacefully and honestly while being completely anonymous. The first rule in attacking others is to not let them know you are there. Try playing a sniper game where there are no tracers...they pretty much stopped making that type of game. You are paralyzed and can't go anywhere and do anything from fear of getting shot without the ability to hold the anonymous person responsible. Working together requires knowing who your partners are and knowing many things about them. Everyone else by default becomes a food source from which you wish to eat, or an enemy who wants to have you on his dinner plate. A libertarian believes the free market can work things out by reputation without government, which is a very naïve position regarding externalities and monopolies. But even these libertarian capitalistic reputations require a reduction in anonymity for at least the seller. Google, Amazon, and Apple depend on a reduction in the anonymity of the buyer.

    The current hatred of banks, finance, insurance, and the wealthy tax deductions is well-placed. The hatred of government is misplaced: the guilty party is complacent voters who refuse to vote 3rd party on the practical grounds that they will not win...but if most people think that way then of course they will not, so it is immoral to vote on practical rather than moral grounds. Morality is defined as "behaving in a way such that if everyone behaved that way, everyone would be better off." It is the solution to the prisoner's dilemma. Force by law and superstition by religion are ways to enforce the benefits of morality without depending on it. Technology can enable this love, but anonymity is not love. Declare yourself and your love or remain silent and alone.

    Yes, cryptocurrencies are trading one trust system for another. But I trust Bank of America with my money more than Mt. Gox, BTC-e, or BitStamp. (I distrust BofA in other ways, such as political influence over merchant fees and interest rates.) The problem is the conversion from the cyber world to the real world. Bitcoin is only a step in the right direction. Ethereum has the potential to merge the law of the real world with the money of the cyber world via M of N contracts.
  • cigcig Member Posts: 7
    aatkin said:

    Given what I've seen in life, I prefer trusting myself, the client source code, the network/miners and reputation over myself, the lawyers/banker/centralized intermediaries and the legal system/gov't.

    We've only seen the cryptocurrency scene in the 'pioneer' stage though. Maybe the "network/miners" crowd is people you like more than the general population/government crowd at the moment, but if cryptocurrencies become successful it seems highly likely that the politics of the "network/miners" crowd will look pretty much like that of any other large polity.
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