Submitted by berlinparisexpress t3_yvy33d in Futurology
Heap_Good_Firewater t1_iwiszto wrote
Reply to comment by paradox-snail in Will working for a DAO be better than a corporate job? by berlinparisexpress
>Daos are not getting "hacked" exactly as that would require the underlying blockchain to be compromised.
Fair enough. The incident I am referring to was actually the result of an exchange being hacked. The hacker then leveraged his control of the majority of tokens to vote himself out of trouble in a DAO that was associated with the exchange. I can't find that one (heard about it on a podcast), but I have linked an example of a DAO being hacked via smart contract and another where price manipulation was used (almost legally, it would seem).
https://decrypt.co/112627/hacker-300k-olympus-dao
https://thedefiant.io/mango-caves-to-hacker
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>I'm a bit skeptical of the 90% number still, but with the number of institutional investors these days it makes sense. In fiat currency I suspect the number is worse.
It's obviously hard to compare exactly, but crypto is less equally distributed than fiat (at least when it comes to the largest currencies and tokens).
Countries aren't a perfect analog for currencies, but they can give you a rough idea of what I am talking about.
The Gini coefficient of the US is 0.49, and one of the most unequal countries is South Africa, at .63.
The Gini coefficient of Bitcoin is .88 and Ethereum is .92.
Sources:
https://blog.dshr.org/2018/10/gini-coefficients-of-cryptocurrencies.html
https://data.worldbank.org/indicator/SI.POV.GINI
>Its true blockchains don't communicate well with each other yet, but its possible to move value around between them.
Transfers between blockchains are choke points where security vulnerabilities and centralization can creep into the system (malicious smart contracts, etc). Even if these can be ironed out, you have to ask why so many people feel the need to create their own blockchain rather than leveraging the work of others.
It seems like part of the problem is that blockchains don't scale well. You usually have to build a layer on top of a blockchain to get decent transaction capacity, and these layers often introduce security holes and centralization.
The bigger problem seems to be the aforementioned inequality when it comes to tokens. If a token has already run up in value, it becomes prohibitively expensive for new entrants. Why wouldn't you want to own a huge chunk of a new token that might moon versus a fraction of an established coin that the whales already own?
These smaller/newer blockchains are more vulnerable to 50% attacks, which are not possible against the likes of Ethereum or Bitcoin.
The main problem with incentivizing new blockchain/token creation rather than building on a dominant chain is the lack of network effects. Instagram, Twitter, and TikTok are popular because almost everyone you know or care about is on them. If there were 200 social media sites, and your friends and family were distributed across them at random, the user experience wouldn't be very compelling.
Some Web 3.0 proponents claim that blockchains are ideal for social media (metaverse or traditional). I can imagine some major advantages to a blockchain-based social media platform:
- No central ownership.
- Potential to reliably validate identity (if desired).
- Possibility for users to monetize their own data, rather than a company doing so
- Requiring buy-in (even a small amount), might make users feel more responsible and invested, and discourage bots and alt accounts.
I can also see some major downsides:
- No paid social-media platform aside from dating sites has ever succeeded at scale. Even a nominal fee might discourage the average user. A free site would presumably have to be funded by the same sketchy practices Web 3.0 is trying to avoid.
- It might be more difficult to remove content from an immutable blockchain (accidental nudes, drunken rants, hate speech, etc.)
- No existing blockchain can handle anywhere near the volume of traffic that a major social media site generates without an external layer (again, security and centralization risk).
paradox-snail t1_iwjljus wrote
That makes sense, an exchange would be more vulnerable. I could even see a DAO getting tricked with a bad smart contract. Its not really possible to be "hacked" though as you have an opportunity to read the code before accepting a contract. Transactions can't happen without consent. Most of the time somebody gets hold of the keys to dao member wallets through "social engineering".
Transfers between chains are a point of vulnerability for sure. Something I think DAOs can eventually solve.
I would maybe disagree that token price dynamics are problematic. Ultimately a currency is meant to be an ubiquitous unit of value, enabling people to trade with each other in ways direct bartering doesn't.
Its actually advantageous to be able to create new currencies when there are issues with the existing one. In a perfect system the currency rarely pools for long in one place, instead circulating to facilitate the maximum number of transactions.
When one currency becomes too expensive, or its control too centralized, then we can just create a new currency and begin doing business in it instead. Your new network can grow to become more valuable than the old one, giving you first holder advantage.
Ultimately its all about decentralization. The entire movement is a reaction to the percived corruption and unfairness in the current system. The dollar and stock market are very centralized, and even the data they report comes from "trusted" central authorities. Theres ample evidence of fraud at the highest levels. Not to mention the Fed's ability to print more currency at their own discretion.
Blockchains (except privacy chains like Monero) make financial transactions fair and transparent. The rules are written in code (essentially pure logic)for everybody to see. Most chains cannot be changed without a vote.
The music industry is a good analog for what's happening in finance. Music was dominated by record companies, who used their size to force new artists into disadvantageous contracts, and forced people to pay an increasingly exorbitant price for something that had almost no cost to produce.
Some bold coders created programs that allowed people to share music directly with each other, cutting out the middleman.
The music industry attacked every way they could, but each company they sank caused an even more decentralized system to take its place, until irritated coders created programs that don't make them any money at all, rendering music a public service for anybody with enough knowhow.
I would argue peer to peer networks have an ability to spread without the aid of the "network effect". Word of mouth is sufficient. People are motivated to foster community online and share information.
There are even free online tools now that allow you to create your own social media platforms, with custom rules, backed by your choice of blockchain for security.
We might end up with a lot of small custom platforms full of people who share some ideal or interest. Many with opportunities for members to earn currency of some sort.
Heap_Good_Firewater t1_iwld8mc wrote
>When one currency becomes too expensive, or its control too centralized, then we can just create a new currency and begin doing business in it instead.
This is a wild claim. Such a system would never scale to a global, or even national level. If a major currency was replaced without years of planning, the ensuing chaos would result in a global depression.
It's OK for crypto to be volatile, and for older tokens to be pushed aside, because it's early days, but much more stability will be required if a cryptocurrency is ever going to be used for anything but limited/illicit transactions.
>The rules are written in code (essentially pure logic)for everybody to see.
Ah yes. "Code is law". This cuts both ways. Say someone embedded a smart contract in a jpeg and gets it in your wallet somehow (social engineering often works on the average person). If you click on it, it drains your funds. Fuck you, code is law. Your tokens belong to the hacker now.
Also, if your currency is especially useful for money laundering, human trafficking, ransom and terrorism, that's not exactly benefitting society.
​
>Its not really possible to be "hacked" though as you have an opportunity to read the code before accepting a contract.
Then why have so many hacks happened using this exact vector? I'm a software engineer and I miss things on code reviews sometimes (and this code isn't trying to hide things from me).
I imagine my mom would miss even more, if she even bothered to check the code. If only software experts can use a product safely, that doesn't bode well for mass adoption.
​
>Ultimately its all about decentralization. The entire movement is a reaction to the percived corruption and unfairness in the current system.
Is Coinbase decentralized? How about Binance? Crypto is so hard for non-technical people to use that centralization will always be required.
Blockchains are orders of magnitude too slow for mainstream adoption as currencies (see article below). Therefore they require layers (Lightning, Layer2, etc.) to increase transaction throughput. These layers introduce centralization and negate many of the undeniable security benefits of the blockchain.
Replacing an unfair system with a system that is already far more unequal and can only be safely used by software engineers seems like trading one set of problems for another.
>The music industry is a good analog for what's happening in finance.
The music industry analogy breaks down pretty quickly. Music is a product, not a currency. It doesn't underpin the entire economy. The nature and use cases of music didn't change, just the distribution method and which entities had centralized control.
Centralized record companies were largely replaced by centralized streaming companies. There are still a couple dozen acts that hoover up 90% of the revenue. The one big benefit is that artists can build a following by touring and posting on YouTube and SoundCloud (and others) and avoid being enslaved by a record company early on.
SOURCES:
Blockchains and Cryptocurrencies: Burn It With Fire (Nicholas Weaver)
The best takedown of crypto by a Berkeley CS professor.
Line Goes Up – The Problem With NFTs
A less technical, but equally interesting takedown, focused mostly on NFTs
paradox-snail t1_iwo8s0o wrote
Interesting conversation, but it looks like you missed my point on that last one, given your response.
I can certainly understand your perspective, given the info and ideas you've mentioned. Only time will tell whose correct
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