[Cryptography] Ynt: Bitcoin is a disaster.

[Osman Kuzucu]

Gönderen: Ray Dillinger <bear at sonic.net> adına cryptography <cryptography-bounces+bizbucaliyiz=hotmail.com at metzdowd.com>
Gönderildi: 29 Aralık 2020 Salı 04:07
Kime: cryptography <cryptography at metzdowd.com>
Konu: [Cryptography] Bitcoin is a disaster.


The pseudonymity of coins being owned by the bearer of some
cryptographic key is a failure;  People have been eavesdropping and
aggressively analyzing the block chain from day 1.  And the block chain
will always be there, it will always be public, and it will always be
subject to further analysis.  And we are learning that analysis of that
record is sufficient to destroy any pretense of anonymity or
pseudonymity.
I don't know if Satoshi thought about this aspect of the Bitcoin when it was published. I started to think that he just came up with a product that he hoped would be used worldwide, but he couldn't predict all the outcomes and problems we are facing right now. The anonymity on Bitcoin blockchain is non-existent right now if one has enough money and time to analyze an address(es).

The scarcity of block chain space has led people to re-invent every
last feature of the banks they thought they were going to be escaping.
Including debt brokering (lightning network) and fractional-reserve
banking, starting with the case of Mt.Gox and continuing to ventures
today by "responsible" businesspeople who just don't get, or don't
care, or both, that the entire reason the system existed, as far as the
early adopters were concerned, was to get away from exactly that.  They
have made Bitcoin into a debt-based system like any other; as long as
the "exchange" holds your keys for you, there is no obligation for them
to maintain assets equal to the deposits.  You can't prove that they
are, or aren't, maintaining sufficient assets until after those assets
are spent and the evidence appears in the block chain.
The problems mentioned here are the results of people's understanding of money, their user experience and their expectations. I am now trying to run an airdrop program for an ERC-20 token (call it a shit token if you like), even though we are recommending everyone to create their own wallet and tell them "own your private keys!", many are too lazy to do so and would like to use an exchange wallet instead. Some even complains that they don't trust wallets like MyEtherWallet for private key generation and prefer to trust the exchange company.

I believe the reason here is legally registered entities have to obey the law and if not, they might face penalties and the owners might even go to jail. And if something goes wrong with their wallet or funds, they will find someone behind, someone accountable from their accounts'/funds' security. On the other hand, if you create your own wallet and your private keys gets lost or stolen, you lose all your funds and there is no insurance or a way to claim those coins/tokens back.

That's why currently we are criticizing the cryptocurrencies. Yes, they bring the decentralization and "own your assets" into finance ecosystem but they are getting rid of the insurance and recovery. I believe no one would want to hold an asset that might be lost or stolen and it is irrecoverable. While the idea of decentralization is good, it is against the user experience, and it doesn't match with the user needs. Hence, we have the central solutions for Bitcoin.

Mining is f***ng broken, and ASICs make it actively work against a
significant number of its design goals.
Again this is the matter of "how can I make a decentralized network for financial transactions". Trusting to cryptography might have seemed good at the time but now it's not decentralized and I doubt any network out there that requires an investment to be part of will be centralized to some aspect. Simply because more money you have the more miners you can afford, rich would own the network. We can't trust on staking too because again, rich could run multiple nodes to control the network. Authorized node approach is directly centralized too, so what we are left with? I don't know.

So, Bitcoin was a good effort, it deployed some new ideas and
technology, and showed that at some scale the "block chain" idea
worked, but ultimately, although a successful proof of concept, failed
to deliver.  It doesn't scale, except by becoming the very thing it was
supposed to replace.

The more scalable the network becomes, the more centralized it becomes,
until ultimately a "scalable" cryptocurrency would be doing things
exactly the same way as a credit card processor.

Perhaps in the future someone will develop a blockchain where one human being can only contribute once and with limited power, say it finger print scanning, or retina scanning, or even DNA submitting (or whatever it could be, I'm just making up stuff). Even in that case, I am 100% sure that a rich person could distribute some amount of money to get the authentication keys/methods/data from those individuals and make the network somehow centralized. If people keep acting like a sheep, there'll be a shepherd guiding them and milking them all the time.

So, the question is, could we develop a truly decentralized network? Perhaps.
But should we do it? I think not.

As humans are prone to error, at least there has to be some level of insurance/support has to be involved. Especially to deal with refunds and all. At the end, this is what made human race "the smartest animal" because unlike most animals, we collaborate, we help each other, and we advance together. Those are my thoughts tho, what is best for humans and the society is yet to be determined, and be taught at schools in history classes 🙂

- Osman
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