Ask HN: Blockchains

8 pointssfrechtling10y ago6 comments

More and more noise seems to be appearing about blockchains. I see the small benefit of use in transactions between organisations, but am struggling for the case for private blockchains and some points of cryptocurrency in general. I don’t know if this is the best place to ask, but everything online is full of jargon and is inaccessible to me.

I have a few questions:

- What are the benefits of using a private blockchain (should I be thinking of it as a replacement to a General Ledger?)? Is this just another name for a ledger with auditable history?

- Can a blockchain exist without mining or without a currency/coin? Will all private blockchains need a “coin”? (eg the Goldman Sachs coin or ABC plumbing coin?)

And another couple of broader questions

- What keeps people interested in a blockchain (and currency) once all of the easy mining is done eg, for people joining later?

- I see that transaction costs for bitcoin keep rising, is that related to the size of the blockchain?

- I thought bitcoin was supposed to be decentralised – doesn’t a group of centralised developers have the ability to change everything about the currency?

6 comments

olalonde10y ago

Disclaimer: I work full time on blockchain tech. My answers in order:

I've never heard the term private blockchain and therefore not sure what you are referring to. If you mean a blockchain that is exclusively mined and used by a single entity, I don't see the point. Perhaps people are piggy backing on the "blockchain" buzzword while creating something that is quite different?

A blockchain cannot exist without a currency/coin. Blockchains need a reward mechanism for miners who "protect" it and a cost for submitting transactions to prevent spam.

What keeps miners interested after all mining is done is an open question. As long as there is a reward for mining, there will be miners but if that reward drops too low, we could see the network's hash rate drop substantially (miners quitting their job) and the blockchain would become more vulnerable to double spending attacks (a single miner intentionally "undoing" a large number of blocks).

There is no fixed transaction cost, each miner is free to decide how much they "charge" to mine transactions. I wasn't aware that transaction costs had kept rising. Keep in mind that as the BTC/USD price fluctuates constantly, the average transaction cost in USD might change often while remaining the same in BTC.

In theory, the Satoshi client (original bitcoin) developers could release a new Bitcoin software which changes the Bitcoin consensus rules and anyone downloading this new release would be participating in a new "altcoin" which would be separate from the original Bitcoin. They could send or receive Bitcoins to people using the old software. For the Bitcoin protocol to change in a significant way, a large number of people would have to agree on the new rules.

sfrechtlingOP10y ago

Hi, thank you very much for your answers.

Part of my questions were piqued by this blog post (https://blog.ethereum.org/2015/08/07/on-public-and-private-b...) which defined a private blockchain as a "blockchain where write permissions are kept centralized to one organization". I think that it might be the case of people piggy backing on the buzzword and that people are using blockchain as a sort of computerized ledger.

So, generally speaking, a coin with a larger number of loyal miners will be more resilient than another with less loyal miners?

I think I made a mistake with the rising transaction costs - in USD they have risen with the price of BTC but have been rebased a few times.

faithfone10y ago

I'll try and answer your last three questions in order. I'm not an expert though, only a casual observer.

- What keeps people interested in a blockchain (and currency) once all of the easy mining is done eg, for people joining later?

What keeps me and many others interested is the utopian vision of traditional banks and currencies being disrupted, and bitcoin becoming the de facto global currency of choice.

- I see that transaction costs for bitcoin keep rising, is that related to the size of the blockchain?

Raising the transaction fee gives miners incentive to verify your transaction before others. It's not directly related to the size of the blockchain.

- I thought bitcoin was supposed to be decentralised – doesn’t a group of centralised developers have the ability to change everything about the currency?

It is decentralized. There is a group of developers overseeing the Bitcoin protocol, but for any change to be made, there must be consensus.

sfrechtlingOP10y ago

Oh that first answer is very interesting - my thoughts at the moment is when/if is this technology going to be included by governments alongside their currencies. Eg each currency being "digitised" alongside standard paper currency. Doing some background reading, this reads as the opposite of the goal of bitcoin/blockchains.

I feel as if a more achievable goal would be not to have a blockchain as a currency or reserve currency, but rather a settlement mechanism shared between banks and individuals (who don't have direct access to ACH etc). That means the coin would be the vehicle of transmission and record. Is this a common viewpoint?

faithfone10y ago

The blockchain offers many possible uses. What you describe is one. As for bitcoin, it's meant to replace fiat. It's not controlled or manipulated by any authority. What you describe sounds more like Ripple.

The blockchain is one part of the Bitcoin (with a capital B) protocol. The digital currency part (bitcoin with a small b) is what makes the blockchain run. The two are inseparable. That's my understanding.

EDIT: Ripple is an extremely revolutionary project in its own right. If anything, it's too far ahead of its time. Or maybe not.

jabgrabdthrow10y ago

> Is this just another name for a ledger with auditable history?

Yes.

> Can a blockchain exist without mining or without a currency/coin?

Yes, but the interesting ones use currency/coins because you can use incentives other than the legal system to secure the database.

> What keeps people interested in a blockchain (and currency) once all of the easy mining is done eg, for people joining later?

Securing databases without using the legal system in order to outmaneuver some issues intrinsic to legal systems.

> - I see that transaction costs for bitcoin keep rising, is that related to the size of the blockchain?

It is related to many things. In bitcoin's case, the primary cost is the consensus algorithm, ie the network has to "outpay" any potential attacker.

> I thought bitcoin was supposed to be decentralised – doesn’t a group of centralised developers have the ability to change everything about the currency?

This is a nuanced topic, we could go in depth about "what does 'decentralized really mean", or even worse, "what does 'bitcoin' really mean" but I find this too hard to think about.

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