The Promise of Blockchain Is a World Without Middlemen (hbr.org)

dryriver writes: The Harvard Business Review has an interesting article about how Blockchain technology may bring down the cost of business transactions and enable new ways of doing things: "Consider the problem that small manufacturers have dealing with giants like Wal-Mart. To keep transaction costs and the costs of carrying each product line down, large companies generally only buy from companies that can service a substantial percentage of their customers. But if the cost of carrying a new product was tiny, a much larger number of small manufacturers might be included in the value network. Amazon carries this approach a long way, with enormous numbers of small vendors selling through the same platform, but the idea carried to its limit is eBay and Craigslist, which bring business right down to the individual level. While it's hard to imagine a Wal-Mart with the diversity of products offered by Amazon or even eBay, that is the kind of future we are moving into." "Decentralization" is the idea that a database works like a network "that's shared with everybody in the world, where anyone and anything can connect to it," writes Vinay Gupta for Harvard Business Review. "Decentralization offers the promise of nearly friction-free cooperation between members of complex networks that can add value to each other by enabling collaboration without central authorities and middle men." The proposition ultimately makes things "more efficient in unexpected ways." For example, "a 1% transaction fee may not seem like much, but down a 15-step supply chain, it adds up. [...] The decentralization that blockchain provides would change that, which could have huge possible impacts for economies in the developing world," writes Gupta.

Comments

I call bullshit

[Anonymous Coward]

"Decentralization" is the idea that a database works like a network "that's shared with everybody in the world, where anyone and anything can connect to it," writes Vinay Gupta for Harvard Business Review. "Decentralization offers the promise of nearly friction-free cooperation between members of complex networks that can add value to each other by enabling collaboration without central authorities and middle men."

And this wonderful decentralization, where anyone and anything can connect to "the database," is why Bitcoin transactions take hours to confirm, the network is only capable of supporting a handful of transactions per second, etc. Don't even get me started on the laughs involved if "everybody in the world, anyone and anything" is keeping local copies of "the database," or enough of it to verify transactional integrity to a level necessary for shit like inventory management at Wal-Mart scale.

Re:I call bullshit

[Anonymous Coward]

or to artificially register extra copies to extend the transaction cost (time) for a competitor.

Re:I call bullshit

[madumas]

Yup that's the biggest hurdle right now but multiple ideas are being explored. The one that I personally find the most promising is "sharding", an idea developed to allow the Ethereum blockchain to scale massively. In a nutshell, they will split the blockchain in multiple shards and allow transactions between them.

More details here: https://github.com/ethereum/wi...

Re:I call bullshit

[MrL0G1C]

Blockchain size:
https://blockchain.info/charts...

Bitcoin isn't popular yet and the blockchain size has already exponentially mushroomed to over 100GB.

Fanboys like to point out that not everyone needs to have a copy of the block-chain, but that completely negates the 'decentralised' part. IE back to square one with banks running it.

Have you got a few peta-bytes of storage handy for when Bitcoin becomes popular?

Re:I call bullshit

[TheRaven64]

Fanboys like to point out that not everyone needs to have a copy of the block-chain, but that completely negates the 'decentralised' part.

You don't need an entire copy of the blockchain unless you want to audit the entire history. To validate the most recent entry, you need to scan the block chain once, but that's a matter of streaming that 100GB, not having to store it. Still more than you'd like to do on a mobile device, but quite plausible. You can also have well-known entities publicly attest to the state at specific intervals, so that you only need to validate the last few records. Unlike a centralised banking system, anyone can attest to this state and anyone can verify that attestation.

Re:I call bullshit

[MrL0G1C]

And that doesn't negate what I said at all. And no, "anyone can attest" is not true when the blockchain has increased to tens of terabytes or more, which will happen.

Most of all, I'm an environmentalist and bitcoin sucks bad from an energy use point of view. More mining has to be done for every transaction.

Re: I call bullshit

[Anonymous Coward]

I'm sure middle man in practise suck up more energy so I completely call bullshit on this.

That said blockchain is not a immutable decentralised database in a general sense. It only behaves like one under a whole host of conditions, but lots of people including freaking 50% of blockchain start ups and Fintech Founders stake their careers and future on one hype train they couldn't understand.

Re:I call bullshit

[Anonymous Coward]

"Decentralization" is the idea that a database works like a network "that's shared with everybody in the world, where anyone and anything can connect to it," writes Vinay Gupta for Harvard Business Review. "Decentralization offers the promise of nearly friction-free cooperation between members of complex networks that can add value to each other by enabling collaboration without central authorities and middle men."

And this wonderful decentralization, where anyone and anything can connect to "the database," is why Bitcoin transactions take hours to confirm, the network is only capable of supporting a handful of transactions per second, etc. Don't even get me started on the laughs involved if "everybody in the world, anyone and anything" is keeping local copies of "the database," or enough of it to verify transactional integrity to a level necessary for shit like inventory management at Wal-Mart scale.

Better get Stonebraker on the horn.

Re:I call bullshit

[Shoten]

"Decentralization" is the idea that a database works like a network "that's shared with everybody in the world, where anyone and anything can connect to it," writes Vinay Gupta for Harvard Business Review. "Decentralization offers the promise of nearly friction-free cooperation between members of complex networks that can add value to each other by enabling collaboration without central authorities and middle men."

And this wonderful decentralization, where anyone and anything can connect to "the database," is why Bitcoin transactions take hours to confirm, the network is only capable of supporting a handful of transactions per second, etc. Don't even get me started on the laughs involved if "everybody in the world, anyone and anything" is keeping local copies of "the database," or enough of it to verify transactional integrity to a level necessary for shit like inventory management at Wal-Mart scale.

I can see it...it's happened before, on a smaller level and with the removal of a different choke point that required centralization of a different kind.

Anyone here remember "The Sharper Image"? They were stores...and a catalog...of incredibly cool stuff. This was before there was public access to the Internet or such a thing as a .com TLD; back then, you had to go to stores or catalogs to find things. As a result, for lack of a better way to put it, it was "harder to find stuff."

Today, if I wanted to buy...gird your loins...a "Slave Leia outfit in purple, size X-large," I would have to do research just to find out what kind of a store might carry something like that, and then find one such store within my physical reach. If I was really stretching, I could make a phone call to some other place and perhaps get them to ship it to me...sight unseen. (And hopefully, something like a Slave Leia outfit in size X-large would forever remain sight unseen, but I digress.)

Now, I simply go to Google, or some other search engine, and...gah! But yeah, I found it, in less time than it would have taken me to go grab my copy of the Yellow Pages.

As a result, The Sharper Image found themselves as a solution for which the problem no longer existed. Their shelves drew customers because it was the best way to get introduced to clever, interesting, or quirky high-end items that solved interesting problems or had unique appeal for some other reason. Before you could got into a Target and buy a Dyson vacuum cleaner (and before you could buy one online), they carried them, for example. They had the capital, business model and logistics to do this. But then, websites popped up (like ThinkGeek) which did what they did, but at an even more targeted scale...which was made possible because you no longer needed physical stores or a catalog to be accessible to your customers. The mass which made them successful was now a pair of cement shoes as they sank in the ocean of options.

So what exists now, as far as centralization? Amazon comes to mind. But note that Amazon is about logistics as much as anything else; hell, they don't even make sure that half of their "Apple" products actually came from Apple. And the hardest part of that logistics value proposition is payment handling. A lot of their products aren't shipped or handled by them, they just do the payment processing for the vendor. Anyone can go to a FedEx or UPS to ship something; heck, if you have a return to Amazon, that's what you end up doing. The main thing that Amazon, as a vendor, provides is the payment processing.

And yes, AWS is a real thing...I get that. But it's separate, and can exist outside of this concept of where the value proposition lies today vs. where it would lie in a blockchain-based economy. Indeed, it is the infrastructure that supports their payment processing, their shipping, their logistics, inventory, etc. But you could open up a blockchain-based vendor that competes with them...and run it on AWS, too. Amazon's main nemesis in the video content streaming space, for example, runs on AWS. It's called Netflix. :)

Re:I call bullshit

[CastrTroy]

But even streaming it becomes a problem when the blockchain gets big enough. Bitcoin is vanishingly small compared to something like a visa, master card, paypal, or even m-pesa. If you needed to stream terabytes of transactions just to begin verifying transactions, it's a complete non-starter for most of the world's population. If only a few key players have the resources to verify the block chain, then it is open to collusion between those parties.

A middle man always comes back into the picture

[Anonymous Coward]

"Decentralization offers the promise of nearly friction-free cooperation between members of complex networks that can add value to each other by enabling collaboration without central authorities and middle men."

Let's look at the numerous examples of decentralized systems that are already out there, like git, BitTorrent, and even Bitcoin.

What do we notice about them? Despite all of the hype about how decentralization is important, a large degree of centralization ends up happening again just to make those systems practical. With git it's GitHub. With BitTorrent it's the major tracker sites. With Bitcoin it's the major exchanges.

Of course, doing this ends up eliminating the benefits of decentralization. Like when GitHub goes down, and now all of these git users are shit out of luck (they'll always point out they could push to or pull from each others repos, yet this is a real pain in the ass in practice and they never actually do it). Or like when a tracker is taken offline and finding content to download becomes difficult. Or like when a Bitcoin exchange gets hacked and all of the bitcoins get stolen.

Anyone who isn't trapped in an ivory tower can see that decentralization is a fantasy at best. In the real world, decentralized systems end up centralizing again in order to become useful.

Re:A middle man always comes back into the picture

[known_coward_69]

yeah, they used to trade stocks on the grass in downtown manhattan in the 1700's and 1800's until things grew and they needed a central exchange. same with banks before clearance houses

Re:A middle man always comes back into the picture

[Immerman]

>Or like when a Bitcoin exchange gets hacked and all of the bitcoins get stolen.

That would seem to me an example of exactly why centralization is *bad*. After all, bitcoin exchanges are pretty much entirely superfluous to the functionality - they pretty much exist only to provide money laundering and bilk their (presumably criminal) clients out of their money whenever they "get hacked"

Re:A middle man always comes back into the picture

[madumas]

Actually, it is quite the opposite. Blockchain platforms, like Ethereum, are being built to address the re-centralization problems that you describe.

Ethereum aims to build a centralized "world-computer" with 3 main components:
- ethereum blockchain: decentralized turing-complete VM, with built-in ability to create cryptocurrencies
- swarm: decentralized storage, similar to IPFS
- whisper: decentralized messaging

The project is still in its infancy, but it's already usable. Still not 100% decentralized as it still relies on HTTP and DNS, and scaling is on the roadmap. Just to give you an idea of what this platforms makes possible, here are examples of projects already launched or in alpha:
- OasisDEX: A decentralized cryptoasset exchange
- ENS: Decentralized Naming Service, to replace DNS
- uPort: self-sovereign identity
- Everex: remittance for migrant workers

Re:A middle man always comes back into the picture

[Anonymous Coward]

No.. they exist to provide liquidity. They exist because of demand for liquidity.

Re:A middle man always comes back into the picture

[mbkennel]

- ethereum blockchain: decentralized turing-complete VM

Aaah, no, no no no no no no! What Could Possibly Go Wrong?

Just to give you an idea of what this platforms makes possible:
- Permanently self-mutating, globally replicating, unkillable viruses and parasites

Re:A middle man always comes back into the picture

[madumas]

It's a VM, but it's not free. You need to pay the cost of CPU processing, so to be able to be 'unkillable', a virus will need to be able to generate revenues on its own, to be able to support its "life-style".

But yeah, being turing-complete is a major challenge. Ethereum sustained a major DOS attack a few months ago because some opcodes were mispriced. An attacker was able to bog down the network with a relatively small investment.

Re:A middle man always comes back into the picture

[Anonymous Coward]

>Or like when a Bitcoin exchange gets hacked and all of the bitcoins get stolen.

That would seem to me an example of exactly why centralization is *bad*

No shit Sherlock! That was the entire fucking point of that paragraph! Did you skip right over the first sentence? It's the one which said:

Of course, doing this ends up eliminating the benefits of decentralization.

Or in other words, recentralizing eliminates the benefits of decentralizing, by virtue of, y'know, no longer being decentralized.

Re:A middle man always comes back into the picture

[roman_mir]

In case of BitCoin the reason for centralization is not technical but cultural. For such a long time people used to have their money kept in a bank or a fund of some sort it is difficult for them to realise that with BitCoin there is no reason to do that.

Also there are some ideas for ETFs floating around in BitCoin space and this is truly stupid. With something like gold ETF it makes sense to have a traded fund because gold delivery actually *costs money*, but with BitCoin the cost of delivery is negligible, so there is no reason to have someone else store your BitCoins. In case of gold you can pay somebody to store a *physical amount* of gold for you, that's why you are paying a fee - somebody else has to store physical bars or coins and keep it all secure. But in case of BitCoin the entire concept is ridiculous, in fact ETFs will *introduce a storage cost where there is no need for one currently*.

I think with a source code repository the reason for some centralization is much greater than with something like BitCoin, where the reasons are cultural and some of it is just lack of understanding, so it is misinformation and illiteracy on the subject.

Re:A middle man always comes back into the picture

[Anonymous Coward]

Aaah, no, no no no no no no! What Could Possibly Go Wrong?

It has gone wrong.

Re:A middle man always comes back into the picture

[Anonymous Coward]

> (they'll always point out they could push to or pull from each others repos, yet this is a real pain in the ass in practice and they never actually do it)

You know why this is rarely done?

Because Github is up and running.

If Github closes its doors, git users can either
* Push their local copy of what was sitting in Github to another git provider
or
* Instruct their collaborators to use one of their local copies as the canonical repo

Everyone else updates a remote and bing, bang, boom, it's like nothing ever changed.

Unlike SVN, git users have an option when a git service provider goes down. Compare what happens when Github vanishes to the story about an SVN service provider that vanishes. If you haven't been religiously making and keeping backups of your SVN repos, when an SVN service provider vanishes the history from that repo is gone _forever_.

A big benefit of git's decentralization is elimination of an SPOF, not somehow making it more convenient to self-host a git repo than to let Github do it. _That's_ what people mean when they say "It's a good thing that git lets you push and pull from each other's local repos.".

Re:A middle man always comes back into the picture

[l20502]

Don't complain because people get spoiled by easier/faster ways to do things.

You've never used github if you haven't seen people pushing repos taken down to other git hosts.
Bittorrent was only designed to be fast, and that's why it overtaken p2p clients that tried to actually tackle those other problems.
Both the users not using local wallets and incompetent owners attracted by free internet moneys are to blame.

Re:A middle man always comes back into the picture

[slew]

yeah, they used to trade stocks on the grass in downtown manhattan in the 1700's and 1800's until things grew and they needed a central exchange. same with banks before clearance houses

However, end users still by stocks through brokers (often the same ones from the 1800's), and end users still clear checks through banks (ditto).
The advanced technology is often simply to allow the middlemen to be disrupted by smaller nimbler middle men (e.g., discount stock brokers like e-trade and savings and loan banks, remember them?), but generally do not democratize the field down to the end user... In a way these types of new technology simply allows us to meet our new masters, often same as the old masters...

Re:A middle man always comes back into the picture

[Immerman]

No reason that function couldn't be handled just like any other currency exchange - you're not normally expected to actually store your money with those, you just go in with the currency you have, and use it to buy the currency you want.

Re:A middle man always comes back into the picture

[Anonymous Coward]

Exactly. Ask an economist how to get rid of middlemen and she will tell you not to. Middlemen create markets and validate them.
Of course, search engines and honest reviews might be able to replace the middlemen one day, but you'd still have hoards of people gaming the system. (SEO, astroturfing, etc.) Middlemen also act as referees. They do an important job and they earn that 5% - 10% extra you have to pay.

Harvard

[Hognoxious]

Weren't they good once?

Re:Harvard

[Anonymous Coward]

Weren't they good once?

Harvard used to be good, but now they've become decentralized, so it's crap.

Re:Harvard

[Anonymous Coward]

They probably were as superficial earlier, we all were younger and were taken in by the bullshitting more easily ...

Previously in the news

[fiannaFailMan]

The Economist also wrote about this in 2015.

Missing technical details

[Vairon]

Most of these blockchain articles fail to mention the important technical details about how a blockchain would be used. The questions I'd like to see answered are:
What is the "proof of work" used by the blockchain to decide which node gets to commit to the permanent blockchain record?
How will the blockchain handle if a pool of nodes consisting of > 50% of the computing power for proof of work decides to "double spend" or alter a blockchain record?
How decentralized will access to the blockchain be?
Will it only be companies or individuals with access?
Who decides who gets access?
What is the minimum amount of time you will need to wait for a blockchain record to be permanent and unable to be altered?
How big will blockchain be on disk?
Will each node need a full copy of the blockchain?

Re:Missing technical details

[Anonymous Coward]

all these question can easily be answered by a centralized exchange for managing ... o wait

Re:Missing technical details

[bws111]

Blockchain is not bitcoin or other cryptocurrency. There is no 'proof of work'. These things are called permissioned blockchains, who gets to see and update what is controlled by cryptography.

If you are actually interested in those questions, look up open ledger and hyperledger. There is loads of information and places where you can see how it works and try it for yourself.

Re:Missing technical details

[Immerman]

Actually, that could be the beginnings of a good idea - a central *oversight* committee in charge of managing the various potential problems before they manifest can be in everyone's best interest. And since they don't have to actually participate in any of the transactions, there's very minimal overhead involved.

Re:Missing technical details

[madumas]

Woah that's a lot of questions. Let me try to answer the first two:

What is the "proof of work" used by the blockchain to decide which node gets to commit to the permanent blockchain record?
A complex mathematical question that takes a long time to answer. Complexity of the question is adjusted dynamically to aim for a regular block "commit" like you say. There are alternatives to PoW, like Proof Of Stake (PoS) where you "stake" an amount of money that you will lose if you cheat.

How will the blockchain handle if a pool of nodes consisting of > 50% of the computing power for proof of work decides to "double spend" or alter a blockchain record?
It happened on smaller, less popular blockchains, where the investment to hire the necessary computer power was relatively small. That's why bigger, more popular blockchains are considered more "secure". For bitcoin, that would cost hundreds of millions and you might gain at most thousands of dollars. Double-spending will be discovered a few blocks later, that don't leave you a lot of time to cash out the bitcoins.

Re:Missing technical details

[Anonymous Coward]

"The Promise of Distributed Ledger Is a World Without Middlemen". Hmm not quite the same ring to it,

Re:Missing technical details

[StormReaver]

Most of these blockchain articles fail to mention the important technical details about how a blockchain would be used.

For every reason you mentioned, and an additional infinite reasons, using Blockchain to eliminate middlemen is a pipe dream even in a make believe world. It will do exactly the opposite. There will be a few (at most, and eventually merging into one) extremely large middlemen guarding all the doors and holding all the keys. It is not even a remotely viable replacement for our current economic system.

Re:Missing technical details

[Vairon]

Sorry if I was not clear. I understand what a proof of work is. I was just wondering what the specific proof of work was going to be for the blockchain alluded to in the article. If it's a distributed network ledger based on a Byzantine fault tolerant consensus algorithm then it seems like it would be susceptible to attack if > 1/3 of the nodes on the network were traitors to the purpose of the network. What prevents a large numbers of traitorous nodes from joining the network to serve the purpose of a single party? It seems like Bitcoin's system of requiring a computationally expensive proof of work (SHA-256 to find a nounce) makes it harder for a large number of traitorous miners to exceed the 1/2 network threshold required to make a double-spend stick.

Re:Missing technical details

[madumas]

Sorry for misreading your questions. The article talks about blockchains in general, it does not refer to one in particular, so it is not possible to give specific answers to your questions.

When people talk about "general purpose" blockchains, usually they have in mind Ethereum (which uses cpu-resistant POW, to make sure ASICs are not economical. Planning to transition to POS) and Hyperledger which uses PBFT. My understanding of Hyperledger is that is assumes that most nodes are acting in good faith, but I might be wrong.

Re:Missing technical details

[r0kk3rz]

Most of these blockchain articles fail to mention the important technical details about how a blockchain would be used.

For every reason you mentioned, and an additional infinite reasons, using Blockchain to eliminate middlemen is a pipe dream even in a make believe world. It will do exactly the opposite. There will be a few (at most, and eventually merging into one) extremely large middlemen guarding all the doors and holding all the keys. It is not even a remotely viable replacement for our current economic system.

A centralised 'blockchain' is just a database, and we have those already so why bother? The whole value proposition of a blockchain is cooperation between entities that don't really trust each other but the greater value is in working together, so like a multi-player prisoners dilemma.

Reverse retail decline

[Anonymous Coward]

Reverse retail decline by minuscule transaction costs. Now work on the last mile.

Yea sure

[Anonymous Coward]

That's the reason all banks are trying to get in the blockchain game. Te be eliminated from game of intermediaries (if I'm permitted the joke).

"Disintermediation": Remember that 90s buzzword?

[Anonymous Coward]

Anyone here remember during the original dot com boom in the 90s how the Internet would cut out the middle man and we'd live in a paradise of direct connections to businesses and people? The word they used back then was "disintermediation." Why are they still not using that word? Because it carries the stench of failure.

Re: A middle man always comes back into the pictur

[Anonymous Coward]

> ... useful again.

And fair/regulated.

The best thing about such a development...

[Anonymous Coward]

... is how butthurt everyone will be when it eliminates some huge number of jobs.

Interestingly enough

[Anonymous Coward]

Bitcoin has created a massive middlemen market when buying from regular currency. I know this is not quite what this article is about but in all the articles on bitcoin I have never seen this phenomena mentioned.

Re:"Disintermediation": Remember that 90s buzzword

[Immerman]

Yep, It's terrible the way eBay, Craigslist, Etsy, Airbnb, etc. have all failed to cut out many layers of middle men so that ordinary people can more easily do business with each other, yet people keep using them anyway. /sarcasm

Re:"Disintermediation": Remember that 90s buzzword

[Motherfucking Shit]

eBay, Craigslist, Etsy, Airbnb, etc. are the middlemen, they all extract their pound of flesh from people who are "doing business with each other."

Re:"Disintermediation": Remember that 90s buzzword

[mbkennel]

What happened was not the elimination of middlemen, but the consolidation by network effects & capital into a single middleLord. More akin to feudal times where the Lord taxed all commerce going in and out.

War Stories

[Anonymous Coward]

About 50% of the human race is middlemen and they don't take kindly to being eliminated.

I don't think we're going to like our new

[rsilvergun]

super efficient world. Waste employees a _lot_ of people. And as those folks lose more and more jobs to efficiency they'll be more and more competition for the few jobs left. We'll work harder and harder to please the owner class that calls the shots and makes the rules.

And somehow I don't see us transitioning to Star Trek utopia. That means taking money from that owner class and giving it to everybody else. People call that stealing, and while I could write a book about how that's hokey and hogwash it wouldn't make anyone feel better about it. I've yet to hear a good, one sentence answer to the question: "You just gonna steal my money and give it to the poor?"

Re:I don't think we're going to like our new

[Neuronwelder]

rsilvergun I fear you are right. Most people with huge sums of money are not empathetic towards the lesser. One exceptional example is Elon Musk. But this world doesn't have an abundant amount of rich people with heart, and humanitarianism like Elon Musk. Just think of the thought of freeing up society to make great things greater, improving things to even a higher degree, make new things that were never ever seen before for people to enjoy, create wonderful breathtaking artwork, improving man and planet to a whole new level, etc.

Re:I don't think we're going to like our new

[Anonymous Coward]

"You just gonna steal my money and give it to the poor?"

Yes, guillotines are also super efficient.

Re:I don't think we're going to like our new

[RonTheHurler]

>> I've yet to hear a good, one sentence answer to the question: "You just gonna steal my money and give it to the poor?"

How about "How much is the safety and well being of you and you family worth? (Did you skip ALL the history classes?)"
Or maybe "You don't quite understand how money works. (Here's let me explain...)"
Or "That's right, because you and people like you are what made them poor in the first place."

People who benefit the most from a great education and the structure of a well orchestrated society *SHOULD* be paying the most for its maintenance and stability. If not, they will drown and die (or their children will) in a deteriorating society throttled by the corruption, greed and selfishness of the few elites who cannot shoulder the innovation, the construction, maintenance and smooth operation of the greater society they directly benefit from. Look around, the world is full of these little places. Infrastrutures will crumble, innovation will halt, societies will fail.

People are not poor because they want to be. Sure, some small percentage of them will choose to be lazy and suck off the system. But by far most people are poor only because of a lack of good education or lack of opportunity. Which world would you rather live in-- look out your window and see a thriving metropolis with verdant parks and happy populace, or a shanty town? How's that for a one sentence answer? If the system is broken, stop trying to defend it and find a way to rebalance it so it doesn't topple.

Also, "poor" is a relative term. We are all insanely wealthy compared to our recent ancestors, with our indoor plumbing, electricity, mega grocery stores, automobiles, televisions, clean mattresses, air conditioning and such. Part of feeling "poor" is the comparison we make to the culture we see, on TV, advertising, the flaunting of the well-to-do, etc. But try and get the advertising community to play it down and watch the profits drop as people stop trying to catch up to being better off than they are. How are they going to buy all that stuff you're selling if they're too poor to go to the store? Are you beginning to understand how money actually works? Money is nothing but a symbolic representation of value. Did the rich *really* create all that value? Or did they exploit people and steal it from those who actually did create the value?

If you are a wealthy person who does not give back a substantial portion to the welfare and well being of the greater society, then YOU are the bloodsucking parasite, a veritable cancer on society and have no business criticizing the poor. Don't get me wrong, there's nothing wrong with being moderately wealthy. There is great value in organizing all those creative people. But don't kid yourself that you did all the work or that no one else deserves it but you. We're all in this game together.

Re:I don't think we're going to like our new

[RonTheHurler]

Sorry, I got carried away there. I see I missed your point about efficiency and automation taking away all the jobs. It's been said before -- automation and machinery took away about 90% of the jobs we had 100 years ago, but today we're all better off for it. We'll invent new jobs and new industries. People can solve complex scientific problems through distributed gamification of them (like the protein folding game, for example). Imagine being a professional video game player, but one that makes a real contribution to the sphere of human knowledge. And people can organize and curate information and other systems, re-test all those medical studies that haven't been retested or verified, etc, etc, etc... And the world will be a better place. But it won't happen unless we EDUCATE the children and the masses and SUPPORT the efforts to make the world a better place for everyone. The top 1% could easily fund the entire education system of our country by themselves. That money could get us better quality of teachers (anyone here have kids? Isn't it alarming to you how many of the teachers can't really do their jobs?) ...

Actually, I could write a book on this. Maybe I should go do that. Maybe some of you should too. Or better yet, go start a movement. Here's a brief instructional video -- https://www.ted.com/talks/dere...
Don't be afraid to be the lone nut. Just turn off the TV, do something useful and make a difference for crying out loud.

I predict success akin to microtransactions

[Anonymous Coward]

We all know they were a huge hit, weren't they?

Re:"Disintermediation": Remember that 90s buzzword

[Anonymous Coward]

not a singular lord. Each of those middlemen for their respective markets get fees, but so do the payment processors, which again there is a handful of, and each of those pay fees to the banks, and each of those owe their soul to lucifer. So still plenty of middle-people.

Shallow article

[nikkipolya]

Yet another shallow article on HBR. I can safely skip these HBR articles. These are more baits for unsuspecting businesses than anything else.

Blockchain is a Solution in Search of Problems

[Anonymous Coward]

That really sums up almost all of the blockchain nonsense floating around out there. The digital crypto currency problem was a very specialized set of requirements, practically unique to a currency. Nothing else the block chain does right now couldn't be much better, cheaper, faster and more reliably by a centralized database system and public key cryptography, neither of which depend upon blockchain. The people cheerleading for blockchain are either ignorant, hobbyists dabbling with the tech for their own entertainment, or startup carnival people trying to scam gullible investors out of their (real) money.

Article contradicts its own premise

[mvdwege]

So, just reading the excerpt in the summary is enough to make me facepalm: Blockchain technology encourages disintermediation, and as examples they put up some of the biggest intermediates on the web.

Mart

"No Banks" probably means "We are the new Banks"

[eirikma]

Get serious. The total number of card-payed consumer purchases has peak hours of approx 500 transactions per second in my country alone. Nobody is going to have their mobile phone mine blocks at that rate all day long. It is going to be offloaded to a provider that will sort out all the transactions and keep track of your assets. If that isn't a bank, then what is?

Money?

[jandersen]

I had a quick look at what wikipedia says - so blockchain is a kind of database that is highly resistant to modification, it seems, which makes sense if we are talking about currency, but it isn't enough on its own. Money is basically a kind of IOU, backed by a powerful institution, that guarantees the "value" (whatever that means) of it; in principle, at least, you can go to that instution and exchange each unit of currency for a certain quantity of "value". In pratice this doesn't happen, but as a kind of substitute, you have a right to buy goods from any shop, if you have the required amount of legal tender; also, you can bring your disputes over money to court - just imagine what the judge would say if you went to court over a debt in Monopoly money. IOW, the legal system takes money serious.

I'm not convinced that electronic currencies are there yet, and I think the guarantor part is likely to be missing always, if the system is not backed by a centralised authority in some form.

Re:Money?

[jandersen]

- oops, shouldn't reply to myself, but one more thing: I'm not saying that blockchain or anonymous, electronic money isn't possible, or that it isn't possible to avoid middlemen, only that I think some sort of centralised backer is necessary, in my view.

Re:"No Banks" probably means "We are the new Banks

[MrL0G1C]

That and the blockchain size would quickly become astronomical in size.

Fiction, but probably accurate

[Paul Carver]

WASH
(sotto voce)
Could've made more.

MAL
That wasn't a bad idea, Wash, but
eliminating the middle man is never
simple as it sounds.

WASH
(surprised)
You heard about...?

MAL
About fifty percent of the human race
is middle men and they don't take kindly
to being eliminated. This quadrant,
we play nice. We got enemies enough
as it is.

From: http://firefly.shriftweb.org/s...

45f946c3-a8a5-4f3d-94ae-f8d065edff21

[Bomazi]

How is a blockchain going to reduce inventory management costs ? The reason low-cost retailers have a small product line has nothing to do with transaction costs, which are negligible by comparison.

Never Let The Facts Get In The Way Of A Good Story

[ytene]

Don't want to sound completely negative, but this piece by Vinay Gupta is living in denial of reality.

For example, as an illustration of how blockchain could "revolutionize" people's lives, he suggests that in the future it would enable an AirBnB renter could select a property with one transaction, but then furnish it with short-term-let furniture sourced via a second transaction...

Gupta concentrates solely on the idea that somehow Blockchain is going to solve the thorny problems of micro-transactions and ultra-short-term insurance and that equally mysteriously, these solutions will make this fictional future a reality. He fails to consider

1. Where the original home-owner's furniture will be stored during the short-term let [oh, wait, is that another micro-transaction enabled by Blockchain?]

2. How the cost of shipping furniture to a home - for a few days, a few weeks at the most - might somehow be absorbed by the furniture renter at a profit, or by the purchaser of the service. This is not an inconsiderable cost, certainly to the extent that it would take the viability out of the proposal.

In my view it is a shame that the article chose to focus on the areas that it did; I do believe that blockchain has the potential to simplify a range of activities, just that the pitch expressed here may not be the best examples. In fact, I will go further:

To bring actual, useful benefit to our broader societies, blockchain must not only streamline existing activities that we rely upon on a daily basis, but it must be able to do so in a way that is sufficiently disruptive to break away from the incumbent holders/owners of the process - in such a way that the benefit reaches the end user/consumer.

For example, we could easily imagine a scenario for currency conversion in which a federated sharing model would enable private citizens to "swap currencies" with peers in other nations, whilst cutting out the excessive fees charged by banks and credit card companies. However, there is an elephant-sized problem, which is how you would go about executing the trade in the real world. Do you want me to physically meet my peer and actually exchange paper currency? If you want me to accept the currency electronically, how am I going to store it? Via some trusted digital exchange medium, like, say, a credit or debit card? If so, I am going to need a bank to act in an escrow capacity to underpin the transaction.

I think the author fails to see what enabling technology would be required, or how hard it would be to displace incumbent providers. What is *much* more likely is that major players in sectors that can leverage blockchain - like big banks - will be able to use it in a way that further enhances their profits, without allowing any of the benefits to flow through to consumers. Or perhaps the author does see that, and the article is just part of a misinformation process?

Hi, I am the author of this article.

[vkg]

There's a few other things which are worth taking a look at on the topic at http://internetofagreements.co... - the HBR piece is short, and this is not a topic that is particularly easy to compress.

There are two things in particular that didn't come across well. Firstly, we expect this to be a five to ten year process. We're well aware how much there is to do, and how far this all has to come. We don't dream you can just digitize a body of law through natural language processing and then have an AI make legal rulings any time soon. But narrow areas - product labeling comes to mind - might be high value and tractable quite soon. And Internet of Agreements blockchain. Blockchain is a *how*, but IoA is a *why*.

Second thing is that IoA's intention is to get people with various pieces of this picture into direct contact with each other, with a rough sense of the goal state in a decade or so, to start building the bits that are currently financially possible to do real engineering on. As time passes, more and more of the vision should become manageable, and things will pick up speed and come together.

Hope that helps.

"world without middlemen"

[Chas]

Bullshit.

Good middlemen can learn how to middleman ANYTHING.

Re:"world without middlemen"

[Anonymous Coward]

Good middlemen make sure that the producer makes more than he would without the middleman, and that the consumer gets more at a better price than he would without the middleman, enough so that the middleman can get his cut. The good middleman never tries to cut off non-middleman transactions, because he doesn't need to.

Re:"world without middlemen"

[slew]

Good middlemen make sure that the producer makes more than he would without the middleman, and that the consumer gets more at a better price than he would without the middleman, enough so that the middleman can get his cut. The good middleman never tries to cut off non-middleman transactions, because he doesn't need to.

Middlemen might generate benefit for producers and consumers, but calling the successful ones "good" is often a bit of a stretch.

By working to intimidate/cripple/locking-out/buying-off/killing-off other middlemen, a less scrupulous middleman can assure that a producer has little choice but to use the remaining middleman to distribute their goods because the consumer will have difficulty to purchase the products from anyone else and obtain these benefits. After this all happens, the non-middleman transactions are a vanishingly small part of the business so they don't need to do anything about it. I wouldn't generally call any of these middlemen behaviors "good", as the typical competitive behavior between middlemen is sometimes a bit bordering the legal boundary (or sometimes blowing way past it), yet it often achieves a similar by appearance locally stable point, but generally slightly sub-optimal for both producers and consumers...

A few examples, LiveNation, Apple iTunes, Amazon, Uber, Drug-gangs, Mafia, etc ...

Laughable

[Anonymous Coward]

Take any product. Any product at all. Let's choose ice cream.
There was never a reason why anyone with two brain cells would need to pay anyone to make ice cream. That was true when ice cream was first "invented" and it is even more true today. Even if I don't want to milk a cow, make sugar, raise vanilla and harvest ice, I can get those ingredients from someone who does make or grow them. That has always been the case. Ice cream is super simple to make and with the advent of electric freezers and electric powered ice cream makers there is less than zero reason that you do not have a bowl of ice cream in front of you 24/7.
Here's the thing: people are lazy. They really, really don't want to do anything. Given just that one fact I predict that, in any market where the buyer will need to make an effort, a middleman will emerge to make that effort for them.
Bet on it. Or better yet, give me the money and, for a small fee, I will bet on it for you.

in loco reparentis

[epine]

Like when GitHub goes down, and now all of these git users are shit out of luck (they'll always point out they could push to or pull from each others repos, yet this is a real pain in the ass in practice and they never actually do it).

Hey, let's pull the curtains off the rest of the matrix.

With git you really are barely three square meals away from anarchy, and GitHub knows this.

Hence the outages tend to be brief, by all the earthly powers of mice and men and backup diesel generators.

Re:"Disintermediation": Remember that 90s buzzword

[alexandru_preoteasa]

Those who can't remember history are definitely going to relive it.
The only good thing, IMO, is that the "ages" will become shorter and shorter due to communication speed and exchange of ideas.