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On Blockchain — Understanding the absolute basics.

Emmanuel C. Onyema on February 13, 2022

In this post, we are going to learn about blockchain in its simplest form, my objective for this post is that by the end, you would have a better...
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codenameone profile image
Shai Almog

Counterpoint: blockchain was an interesting idea that was taken into production too soon. It has no actual utility and was taken over by crooks who've made it into a ponzi scheme.

Voting could be defeated by a government willing to put up enough computing power. The problem is that the integrity of voting would be further in doubt even if they don't.

NFTs mean nothing. They have no legal standing. We already have contracts and they work. This is a solution looking for a problem. For NFTs to be effective you need verification into the real world at which point a centralized system makes more sense in all respects.

Cloud storage?
Pay 1000000 times more than any simple cloud storage to store 3 kb?

Curbing money laundering is... Right now this is used by criminals more than any other tool. It was promoted as private. So now the selling point is that it isn't private? At least that's technically correct.
The problem is that it won't "curb" anything. People just won't use it.

Money transfer at a cost 20x that of SWIFT isn't exactly worth it.

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miketalbot profile image
Mike Talbot ⭐

Totally agree, "Proof of Stake" is open to corruption and "Proof of Work" is killing the planet.

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Thorsten Hirsch

What about Algorand's PPoS? I think they solved a lot of issues of previous PoS attempts, see: algorand.com/resources/blog/algora...

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Mike Talbot ⭐

I'm not going to claim to be an expert, but my initial reaction to this was: isn't Pure PoS only really a principle based on the fact that a majority holder of coins isn't going to "be silly" enough to devalue their own holding? Seems like it isn't a perfect argument to me and further that if the contracts on the chain are relating to physical world items, let's say a land registry for property, then the practical value of the assets is different to the coins on the chain by a huge factor making a calculation of who is the majority holder a complex and non-digital one.

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FJones • Edited

The privacy is the one thing that trips even crypto enthusiasts up, funnily enough. On the one hand, you'll hear about putting medical records on the chain, but on the other hand it's super great that every message on the chain is traceable!

It's not just a solution looking for a problem, it's a solution trying for every problem and failing every time.

(Nevermind that the actual traceability eats even more power if you actually want to verify integrity...)

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ImTheDeveloper

I think you dancing between at least 3 topics here with the same argument for each and ultimately trying to treat them as the same thing .. namely "crypto".

Blockchain has valid use cases, hence why businesses such as R3 are doing so well.

Crypto for payments, maybe.. but quickly you get wrapped into privacy and money laundering. So yea I'm on the fence with this one too.

NFTs and proof of ownership, no more or less valid than a piece of paper claiming ownership. It's down to recognition as legal tender or agreement between parties. That's not such a brutal hurdle to overcome.

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codenameone profile image
Shai Almog

It's not me whose dancing. It's crypto trying to find a valid use case.

Right now they're trying to treat it as a commodity (like gold) but it's pretty terrible at that too.

NFTs have no current valid use case. When you have a piece of paper it relates to a single government registry and legal system that enforces ownership/IP etc. The "writing something in the blockchain" is the easy part. Ensuring that it's respected and you're truly the owner, that's why we have governments and local registries.

NFTs don't prove anything other than the fact that you registered something. Just today I read an article claiming 80% of NFT deals are frauds by people who don't hold the IP to the work they're selling.

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Sergiy Yevtushenko

You forgot to mention, that traditional money are only useful as long as people believe that they have value. So, at some point there is always trust of one people to other people about meaning and value of some things. With this in mind, traditional blockchains are no different from traditional money. And there are also other blockchains (BFT-consensus-based clusters) which don't exchibit many limitations of traditional blockchains, including energy consumption, transfer fees and performance (which could scale far beyond of capabilities of traditional payment systems).

P.S. it does not worth to try to attack me as if I'm blockchain entusiast (I'm not).

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codenameone profile image
Shai Almog

I debate. I try not to take these things personally. If it feels like an attack I'm sorry and it isn't written with that intent. I feel we need to speak up against crypto as it's both a fraud and an ecological problem.

Traditional money is backed by a government. That's a huge difference. You have a central controlling body that regulates everything. This includes fraud prevention which is rampant as I mentioned.

I'm familiar with other blockchains with various levels of costs energy wise. But then you get back to the problem of fair distribution of the funds etc. as they aren't "earned" via mining. They are all "unproven" at scale, bitcoin doesn't scale but we know it sort of works...

There's a reason none of these coins gained traction in the mass market. I don't have as much of a problem with those coins as opposed to bitcoin et. al.

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siy profile image
Sergiy Yevtushenko

Great. Then let's continue debate (I really like such an approach).

If we omit dictatorships for brevity, then we may assume that government is backed by people who elected that government. So, it's still people trust behind money value.

Mining is not only way to earn. For example, in Radix network, "mining" is consequence of supporting and maintaining reliable network node and being recognized by community as a reliable node runner). In other words, this basically is no different from getting paid for providing services to community.

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codenameone profile image
Shai Almog

Yep. I'm pretty much comparing it to democracies we live in or trust.

Maintaining a node is a form of energy spend but yes. If it's a small energy overhead I don't have as much of a problem with it. There's the lack of regulation which has some advantages. But a lot of times crypto people gloss over the disadvantages. Commodity markets are highly regulated against "pump and dump" which in the case of crypto is just unavoidable as there's no tracking.

Even if a government made it illegal. Because of the nature of crypto a person could be in a different country and perform the fraud. I think a lot of people have a view of "yes it's a pyramid scheme, let's get in, make money and get out...". There's very heavy FOMO and misinformation involved. Celebrities are peddling this and very few people understand the implications. I'm not an economist, but it looks to me like a house of cards.

We see market collapses in stocks and commodities. But governments bail us out when this happens. Here, people will be left without their savings. Exchanges and wallets might disappear overnight. Yes, they were wrong to put money there... But honestly, the level of misinformation out there... I don't blame the people who do that.

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siy profile image
Sergiy Yevtushenko

Energy consumed by node is close to just running a personal computer for usual purposes. There is no mining or other meaningless energy waste.

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codenameone profile image
Shai Almog

NFT sounds like it could be useful but when you get down to it there are no use cases that justify the effort. E.g. game items is a great example. But the game is already centrally managed so why would you need the items to be a token?

The costs of minting and the trouble around it make very little sense to me. Pretty much any case where you need an ID or item tracking would work better with a central identity server.

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Alejandro López

Will you upload a second part?

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ceonyema profile image
Emmanuel C. Onyema

Sure Alejandro, What would you like to know more about?

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Alejandro López

Don't know if it's possible, but it would be an interesting topic: Dig a bit into what is a smart contract, what's the relation between a blockchain and it, uses, pros, cons. As a newbie into these concepts like blockchain, but interested in how it could be applied in programming, that topi would be awesome to read about.

Again, thank you so much, your post just clarified a lot. Keep doing great bro ;)

 
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Emmanuel C. Onyema

I would love to read when it gets published.

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Emmanuel C. Onyema

Thank you very much, Anjan

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ceonyema profile image
Emmanuel C. Onyema

Thank you very, Anjan.

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Chris Cook

May I ask what font you’ve used for your cover image?