no_free_lunch Posted January 3, 2018 Share Posted January 3, 2018 @joe i do not have a handle on blockchain tech. i think i have an emerging handle on the potential uses of blockchain as something that can disintermediate or reduce transaction cost and increase efficiency. Honest question about efficiency and transaction costs: Given what I've read about the transaction costs for bitcoin and the amount of computing power needed to validate transactions, it seems like these two points are potential problems, not solutions. Seems like infrequent, high-priority transactions might be well served, but small and frequent transactions would get killed by the transaction costs. Is that a bitcoin-specific issue or a more general block-chain challenge? I have been thinking about this too. They just can't write it all to the chain, it takes too long and incurs significant costs. Unless they are using something other than bitcoin. I wonder if they are running their own private chain / database that they periodically tokenize (basically just encode everything to say a single 256 byte string) and then they write that token to the block-chain. So you can then look at their chain and verify that at each step it was linked to the true block-chain which provides your proof of legitimacy and timing. Just a theory. Link to comment Share on other sites More sharing options...
rkbabang Posted January 3, 2018 Author Share Posted January 3, 2018 In case anyone is interested a high quality paper on the economic state and future of the whole crypto space. Very well written and researched: https://s3.eu-west-2.amazonaws.com/john-pfeffer/An+Investor%27s+Take+on+Cryptoassets+v6.pdf Thanks for posting this Add another +1. Thank you. I'm heavily invested in Ethereum and yet I am having a hard time seeing where he is wrong. Link to comment Share on other sites More sharing options...
Guest cherzeca Posted January 3, 2018 Share Posted January 3, 2018 @joe i do not have a handle on blockchain tech. i think i have an emerging handle on the potential uses of blockchain as something that can disintermediate or reduce transaction cost and increase efficiency. Honest question about efficiency and transaction costs: Given what I've read about the transaction costs for bitcoin and the amount of computing power needed to validate transactions, it seems like these two points are potential problems, not solutions. Seems like infrequent, high-priority transactions might be well served, but small and frequent transactions would get killed by the transaction costs. Is that a bitcoin-specific issue or a more general block-chain challenge? I have been thinking about this too. They just can't write it all to the chain, it takes too long and incurs significant costs. Unless they are using something other than bitcoin. I wonder if they are running their own private chain / database that they periodically tokenize (basically just encode everything to say a single 256 byte string) and then they write that token to the block-chain. So you can then look at their chain and verify that at each step it was linked to the true block-chain which provides your proof of legitimacy and timing. Just a theory. i have read some about improving current blockchain tech to handle huge volume more efficiently, such as you would need to try to blockchainify wall st. as a tech noncognescenti, i cant tell if this might work or how hard it would be. Link to comment Share on other sites More sharing options...
sjh Posted January 3, 2018 Share Posted January 3, 2018 In case anyone is interested a high quality paper on the economic state and future of the whole crypto space. Very well written and researched: https://s3.eu-west-2.amazonaws.com/john-pfeffer/An+Investor%27s+Take+on+Cryptoassets+v6.pdf Thanks for posting this Add another +1. Thank you. I'm heavily invested in Ethereum and yet I am having a hard time seeing where he is wrong. Sold my ETH and NEO for BTC today after reading it. Link to comment Share on other sites More sharing options...
no_free_lunch Posted January 4, 2018 Share Posted January 4, 2018 the only company that i have found that seems to be aggressively moving to commercialize blockchain in interesting use cases is OSTK...first, in seeking to cut out prime brokerage from finding locates for short selling, which is a very opaque and therefore lucrative business for prime brokers (especially for hard to find names, which are the 80% in this 80/20 market). of course prime brokers could implement their own blockchain platform, but they wont do it in a way that cannibalizes their own profit center...it has to come from outside would welcome other use case examples/companies Ripple has another use case. It is a private block-chain that is used for quick money transfers. Apparently transfers are just a few seconds to complete vs 10 minutes for bitcoin. Since it is private it has a mammoth advantage with energy efficiency / transaction capacity but you lose out on the robustness of a decentralized currency. Link to comment Share on other sites More sharing options...
Liberty Posted January 4, 2018 Share Posted January 4, 2018 the only company that i have found that seems to be aggressively moving to commercialize blockchain in interesting use cases is OSTK...first, in seeking to cut out prime brokerage from finding locates for short selling, which is a very opaque and therefore lucrative business for prime brokers (especially for hard to find names, which are the 80% in this 80/20 market). of course prime brokers could implement their own blockchain platform, but they wont do it in a way that cannibalizes their own profit center...it has to come from outside would welcome other use case examples/companies Ripple sells a private block-chain that is used for very quick money transfers. Apparently transfers are just a few seconds to complete vs 10 minutes for bitcoin. Since it is private it has a mammoth advantage with energy efficiency / transaction capacity but you lose out on the robustness of a decentralized currency. If the ledger is centrally controlled, what's the benefit over a conventional database ledger? These are already fast and secure. Link to comment Share on other sites More sharing options...
no_free_lunch Posted January 4, 2018 Share Posted January 4, 2018 It is not really centrally controlled. My understanding, and I am no expert, it is more an exclusive club of consensus generating nodes that work to stitch together the transactions and create each new block. However, there isn't the wasteful mining happening, there is instead more trust involved here. It is a different approach and it has some advantages. Link to comment Share on other sites More sharing options...
Liberty Posted January 4, 2018 Share Posted January 4, 2018 If it's privately owned, how is it not centrally controlled by the owner? What are those advantages was my question. Link to comment Share on other sites More sharing options...
wachtwoord Posted January 4, 2018 Share Posted January 4, 2018 the only company that i have found that seems to be aggressively moving to commercialize blockchain in interesting use cases is OSTK...first, in seeking to cut out prime brokerage from finding locates for short selling, which is a very opaque and therefore lucrative business for prime brokers (especially for hard to find names, which are the 80% in this 80/20 market). of course prime brokers could implement their own blockchain platform, but they wont do it in a way that cannibalizes their own profit center...it has to come from outside would welcome other use case examples/companies Ripple sells a private block-chain that is used for very quick money transfers. Apparently transfers are just a few seconds to complete vs 10 minutes for bitcoin. Since it is private it has a mammoth advantage with energy efficiency / transaction capacity but you lose out on the robustness of a decentralized currency. If the ledger is centrally controlled, what's the benefit over a conventional database ledger? These are already fast and secure. There is no benefit except to Ripple labs who have managed to make a significant amount of people believe Ripple (XRP) hold any value whatsoever while being in control of over 95% of the float (and the ability to make more). Ripple is not even a crypto but like a government issued currency, only by a company. Link to comment Share on other sites More sharing options...
Liberty Posted January 4, 2018 Share Posted January 4, 2018 https://www.coindesk.com/ripples-xrp-giving-third-largest-cryptocurrency-second-look/ https://twitter.com/prestonjbyrne/status/948636938088611841 Link to comment Share on other sites More sharing options...
wachtwoord Posted January 4, 2018 Share Posted January 4, 2018 https://www.coindesk.com/ripples-xrp-giving-third-largest-cryptocurrency-second-look/ https://twitter.com/prestonjbyrne/status/948636938088611841 The whole trust network thing? They killed that before even launching Ripple. And it's all possible with lightning on the Bitcoin network. Link to comment Share on other sites More sharing options...
Spekulatius Posted January 4, 2018 Share Posted January 4, 2018 Some questions: 1) Aren’t all those crypto currencies inflationary? Creating these tokens creates no real value in the physical world, but they have a real value for now. right noe, the total value of crytocurrencies is just a few hundred billion $, but if this becomes larger in the trillion $ range, we are talking about a huge and non-government controlled extra money supply. 2) I understand that the network are safe because information is distributed, but what would happen, if most of the processing Power were concentrated in one spot, even if temporarily so? Could China hijack the Bitcoin simply by flooding the network with mining servers, then temporarily or even permanetly damage it with fake transactions amongst each other, which makes it hard or even impossible to restore. A distributed network sort of lives in the moment, If I can gain control or quasi control over it for just a while, one could change its history ? Link to comment Share on other sites More sharing options...
Liberty Posted January 4, 2018 Share Posted January 4, 2018 2) I understand that the network are safe because information is distributed, but what would happen, if most of the processing Power were concentrated in one spot, even if temporarily so? Could China hijack the Bitcoin simply by flooding the network with mining servers, then temporarily or even permanetly damage it with fake transactions amongst each other, which makes it hard or even impossible to restore. A distributed network sort of lives in the moment, If I can gain control or quasi control over it for just a while, one could change its history ? https://en.bitcoin.it/wiki/Majority_attack Link to comment Share on other sites More sharing options...
wachtwoord Posted January 4, 2018 Share Posted January 4, 2018 Regarding inflation: there is a pre determined max for Bitcoin (not all of them) so there is no inflation in total supply. There is some inflation in what portion is free floating already (the release of new tokens exponentially decreases to zero). Link to comment Share on other sites More sharing options...
SharperDingaan Posted January 4, 2018 Share Posted January 4, 2018 In case anyone is interested a high quality paper on the economic state and future of the whole crypto space. Very well written and researched: https://s3.eu-west-2.amazonaws.com/john-pfeffer/An+Investor%27s+Take+on+Cryptoassets+v6.pdf This is a very good paper. One of the key takeaways is that it is token users who benefit, and not token owners (Bitcoin excepted). This is the same result that occurs when tokens ran on a database versus a distributed ledger. In both cases the 'user' is the organization employing the technology, you or I buying that organizations products or services - are only secondary beneficiaries. Bitcoin itself is exceptionally clever, but its core natural market is also its greatest liability; for many the restraint on widespread adoption is not the technology - it is the possibility of RICO charges by association. Bitcoin 1.1 is very likely to be a central bank version, running on a database, that essentially does all the same things - but runs in the light. Bitcoin 1.1 being used for global trade settlements, versus Bitcoin itself. The 'investable' opportunities are the shares of the application providers, and their clients, versus the token themselves. Consistent with our view that it's primary an investment in 3) and 4) that improves productivity, profitability, and cash flow. Nice to see a confirmation from an independent 3rd party source. Thanks for posting. SD Link to comment Share on other sites More sharing options...
no_free_lunch Posted January 4, 2018 Share Posted January 4, 2018 If it's privately owned, how is it not centrally controlled by the owner? What are those advantages was my question. The advantage is it is much, much faster as you don't need to do mining. They do appear to have a custom set of validators, so you are trusting ripple to be honest about which validators they use. Which UNL should I select? Since anybody can run a validator, the burden is on the network participants to choose a reliable set. Currently, Ripple (further mentions of Ripple in this document that are italicized represent the company) provides a default and recommended list which we expand based on watching the history of validators operated by Ripple and third parties. Eventually, Ripple intends to remove itself from this process entirely by having network participants select their own lists based on publicly available data about validator quality I get that there are some issues here. This thing should not be worth $360B. Yes it does not have the robustness of bitcoin. However, for actually getting things done it does have some advantages. I was just replying to the "other use cases" question, which I think this pertains to. Link to comment Share on other sites More sharing options...
berkshire101 Posted January 4, 2018 Share Posted January 4, 2018 Ripple co-founder is now richer than the Google founders on paper https://www.cnbc.com/2018/01/04/ripple-co-founder-is-now-richer-than-the-google-founders-on-paper.html Pretty crazy given that there is hardly any use for the product/service. Link to comment Share on other sites More sharing options...
Spekulatius Posted January 4, 2018 Share Posted January 4, 2018 Regarding inflation: there is a pre determined max for Bitcoin (not all of them) so there is no inflation in total supply. There is some inflation in what portion is free floating already (the release of new tokens exponentially decreases to zero). I understand that the #of bitcoins is fixed, but this does not answer my question. Creating these cryptotokens is like creating money, as long as those tokens have a value and there is no economic benefit created (at least for the time being) with these tokens. This makes it inflationary in the real world. Link to comment Share on other sites More sharing options...
no_free_lunch Posted January 4, 2018 Share Posted January 4, 2018 You are absolutely right, they are inflationary to the fiat currencies but too small currently to have a big impact. Link to comment Share on other sites More sharing options...
rkbabang Posted January 4, 2018 Author Share Posted January 4, 2018 Regarding inflation: there is a pre determined max for Bitcoin (not all of them) so there is no inflation in total supply. There is some inflation in what portion is free floating already (the release of new tokens exponentially decreases to zero). I understand that the #of bitcoins is fixed, but this does not answer my question. Creating these cryptotokens is like creating money, as long as those tokens have a value and there is no economic benefit created (at least for the time being) with these tokens. This makes it inflationary in the real world. So the addition of these new currencies/stores of value on top of all of the currencies/stores of value already existing in the world is inflationary. I agree. I think any value these new currencies capture long term will come at the expense of something else, I would expect a decrease in value of fiat and precious metals. I think gold will be reduced in value somewhat, but gold will still have value because it has a feature Bitcoin doesn't (i.e. you still have it when the electricity goes out or the internet goes down), it is the best non-digital store of value. I would expect other metals like silver and copper to lose all value over the value they have as a commodity for industrial/commercial uses. I think the majority of value loss will come from fiat currencies as they will be used only for transactional purposes and lose all store-of-value uses almost completely and probably lose much of their transactional value to one or more altcoins as well. Link to comment Share on other sites More sharing options...
Guest cherzeca Posted January 4, 2018 Share Posted January 4, 2018 Regarding inflation: there is a pre determined max for Bitcoin (not all of them) so there is no inflation in total supply. There is some inflation in what portion is free floating already (the release of new tokens exponentially decreases to zero). I understand that the #of bitcoins is fixed, but this does not answer my question. Creating these cryptotokens is like creating money, as long as those tokens have a value and there is no economic benefit created (at least for the time being) with these tokens. This makes it inflationary in the real world. my thought is that at some point the fed/treasury will react. how i dont know. but here's a question: if some bitcoin billionaire cashes out, how does IRS know and get its share? does IRS have to audit the ledger? this might get treasury's attention in a not good way. Link to comment Share on other sites More sharing options...
alxcii Posted January 4, 2018 Share Posted January 4, 2018 In case anyone is interested a high quality paper on the economic state and future of the whole crypto space. Very well written and researched: https://s3.eu-west-2.amazonaws.com/john-pfeffer/An+Investor%27s+Take+on+Cryptoassets+v6.pdf Thanks for posting this Add another +1. Thank you. I'm heavily invested in Ethereum and yet I am having a hard time seeing where he is wrong. Sold my ETH and NEO for BTC today after reading it. First post. It seems to me he is using the equation of exchange incorrectly - P*Q should be total transaction volume on chain, not the value of computation behind it. It would be like valuing a fiat currency by the value of the government/police/gold/infrastructure/etc backing it, not the aggregate value of transactions. Link to comment Share on other sites More sharing options...
rkbabang Posted January 4, 2018 Author Share Posted January 4, 2018 In case anyone is interested a high quality paper on the economic state and future of the whole crypto space. Very well written and researched: https://s3.eu-west-2.amazonaws.com/john-pfeffer/An+Investor%27s+Take+on+Cryptoassets+v6.pdf Thanks for posting this Add another +1. Thank you. I'm heavily invested in Ethereum and yet I am having a hard time seeing where he is wrong. Sold my ETH and NEO for BTC today after reading it. First post. It seems to me he is using the equation of exchange incorrectly - P*Q should be total transaction volume on chain, not the value of computation behind it. It would be like valuing a fiat currency by the value of the government/police/gold/infrastructure/etc backing it, not the aggregate value of transactions. Welcome to the board. Still his main points are still valid even if the target valuation is some higher number. There is nothing stopping applications from moving from one turing complete app chain to another. If the value is located in the applications themselves, then what does it matter what chain any app is on as long as there is sufficient computing resources to run it. So there will be little stopping movement from one chain to another, or even from an app running on multiple chains at once and to switch between them (eventually even on the fly). And as long as there is more than one app-chain competing the prices will fall to some minimum level to provide the computing resources it needs to keep the chain operational (with maybe some small level of profit margin). And there will most likely be 10s or even hundreds of app-chains to choose from. There may be good investments in specific apps as they grow (just like stock in companies can be good investments), but the app chains themselves won't be the place the excess value will reside. I don't know, I'm still thinking through this myself. Link to comment Share on other sites More sharing options...
wachtwoord Posted January 4, 2018 Share Posted January 4, 2018 Ripple co-founder is now richer than the Google founders on paper https://www.cnbc.com/2018/01/04/ripple-co-founder-is-now-richer-than-the-google-founders-on-paper.html Pretty crazy given that there is hardly any use for the product/service. Emphasis on paper as he holds a huge percentage of the float. Link to comment Share on other sites More sharing options...
sjh Posted January 4, 2018 Share Posted January 4, 2018 In case anyone is interested a high quality paper on the economic state and future of the whole crypto space. Very well written and researched: https://s3.eu-west-2.amazonaws.com/john-pfeffer/An+Investor%27s+Take+on+Cryptoassets+v6.pdf Thanks for posting this Add another +1. Thank you. I'm heavily invested in Ethereum and yet I am having a hard time seeing where he is wrong. Sold my ETH and NEO for BTC today after reading it. First post. It seems to me he is using the equation of exchange incorrectly - P*Q should be total transaction volume on chain, not the value of computation behind it. It would be like valuing a fiat currency by the value of the government/police/gold/infrastructure/etc backing it, not the aggregate value of transactions. Welcome to the board. Still his main points are still valid even if the target valuation is some higher number. There is nothing stopping applications from moving from one turing complete app chain to another. If the value is located in the applications themselves, then what does it matter what chain any app is on as long as there is sufficient computing resources to run it. So there will be little stopping movement from one chain to another, or even from an app running on multiple chains at once and to switch between them (eventually even on the fly). And as long as there is more than one app-chain competing the prices will fall to some minimum level to provide the computing resources it needs to keep the chain operational (with maybe some small level of profit margin). And there will most likely be 10s or even hundreds of app-chains to choose from. There may be good investments in specific apps as they grow (just like stock in companies can be good investments), but the app chains themselves won't be the place the excess value will reside. I don't know, I'm still thinking through this myself. I think he basically means that utility blockchains (like ETH) are like a commodity business. There is no moat. The price for a token can only rise to the value of computing power you get for it (plus a small margin for the miners). If the price for tokens rises above that point people will start using a blockchain that offers cheaper tokens (and provide similar utility). Therefore the market cap (price of all tokens) equals computing power of the network (or slightly above, but never much higher). The only type of network where this does not apply is a store of value network (like bitcoin), because high token prices are a positive for users here. Link to comment Share on other sites More sharing options...
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