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nikol


Total Posts: 423
Joined: Jun 2005
 
Posted: 2017-09-11 15:22
Some interesting aspect of concentration of mining. The infamous 51% concentration got me puzzled. The answer came from probabilistic nature of settlement. There is lame discussion defending those Miner Funds, who has potential to run above 50% at once, but they dont do it because "they are not stupid to destroy the game". BS.

But it seems that the competition landscape gets richer as the new big dinosaurs (owing entire Power Stations) are entering the miners club.
https://www.cnbc.com/2017/08/01/bitcoin-mining-goes-from-enthusiasts-to-giant-enterprises.html

https://cointelegraph.com/news/russian-government-plans-to-subsidize-bitcoin-mining-electrical-cost --- this becomes the way to sell excess capacity and hedge overcapacity costs. No need to shut down Termo or Hydro PowerStations. New nice dynamics to speculators.

rowdyroddypiper
NP Wrestling Champion

Total Posts: 1179
Joined: Apr 2004
 
Posted: 2017-09-12 14:34
Hi, just wondering a few things to clarify your starting position to maybe steer this in a more useful direction:

1) What do you think is a social clip in BTC/USD?
2) What %age of Bitcoin trading do you think happens OTC vs. Exchange?
3) Do you know the ways in which Monero and ZCoin differ in implementation and effectiveness? Monero is fully open source and very open to skepticism. If you can produce attacks which break the anonymity in Monero transactions you definitely would be helping by doing so.
4) What constraints do you assume are required for blockchain analysis to be effective? Just FYI the Chainalysis CEO was a co-founder of Kraken has a PhD in Quantum Mechanics and ran a site for CERN and is not really an SV bro.
5) Do you know how law enforcement investigations work and investigative timelines in general? For example: Hansa was compromised before Alphabay was taken down, yet allowed to operate post takedown. This is called flush and catch; blow up one spot and watch the criminals go to the other one, which you also control and collect better intel and evidence. I'm not surprised that there aren't doors being kicked down immediately on a lot of these things. No reason for it at this point tbh.

I don't disagree with the idea that there is the ability to for unregulated exchanges, prices, etc to be manipulated. I also agree that there are a lot of early hodlers that have a low basis and could act in ways you might not expect. But I don't think there's a clear play book of do X -> Y -> Z and distort the market and win. I think you'd find it hard to continue to trade with the OTC guys taking the other side of your winning trades as the number of counterparties that can take size are relatively small.

As for doxxing DNM operators, blackmailing criminals is still blackmail which is still illegal so hard pass for me.



Revolution to the mean

rowdyroddypiper
NP Wrestling Champion

Total Posts: 1179
Joined: Apr 2004
 
Posted: 2017-09-12 15:54
I do not presume to speak for the community at large, so I will only pass my observations:

1) people that were early adopters and long term holders but staying in are just going with what works. People told them to sell BTC at $50 because it was 500x their basis, then told them to sell at $500 because it was 5000x their basis. There's a belief you'll be able to buy your house with 1 Bitcoin at some point in the future so why miss out. There are also guys that sold early, then re-bought and don't want to make the mistake again. Despite some downs, it's been mostly up, so this behaviour is just reinforced.

2) Ethereum is for people that weren't in on bitcoin early and think it's an opportunity to gain ground on those that were. Same mentality applies. Except a lot of (m)ethheads have this cultish view that it will change the way the world operates and in addition to the sick gainz there is a tribal affinity for it. I just think it's a printing press for scams and so the value is dependent on the scam economy being long term viable. No company (not any of the venerated members of the Ethereum Enterprise Alliance even!) are going to run things on public ethereum blockchain. They may do some private but there are better solutions coming and it's just a cheap option to get information on what's happening in general. JPMorgan will not have to buy your precious ether to allow its dinosaur customers to check bank balances.

3) ICOs - this is where the mania happens. People with no, tech, team or fair terms for investors are raising tens or hundreds of millions to fund half-baked dreams and utter bullshit. This is all enabled by the fact that a token (ERC20 compliant of course) can be ginned up in 15 minutes and purport to add some value. The real difference between this and let's say the dotcom bubble (ignoring relative scale) is that there is precious little engineering or design talent flowing in to create anything of value. Even the "best" ideas are incredibly naive and poorly implemented (c.f. Lightning Network) and the core members of most projects run off to do some other scam before delivering on their previous offering. ICOs generally just look like micro-cap fraud with some fairly basic MLM techniques brought in to attract the herd and facilitate money laundering.

My 2 satoshis / wei would love to hear more.

Revolution to the mean

AndyM


Total Posts: 2321
Joined: Mar 2004
 
Posted: 2017-09-12 16:19
As hard as I look, I can't see any there there. Elegance does not an asset make.

Upthread, I compared bitcoin to the trading sardine joke. For those who don't know it:

There is the old story about the market craze in sardine trading when the sardines disappeared from their traditional waters in Monterey, California. The commodity traders bid them up and the price of a can of sardines soared. One day a buyer decided to treat himself to an expensive meal and actually opened a can and started eating. He immediately became ill and told the seller the sardines were no good. The seller said, “You don’t understand. These are not eating sardines, they are trading sardines.”

So we're punting trading sardines. Except, in this case, there isn't even a can of sardines. The underlying is (a formulaicly limited number of) non-existent cans of sardines. I think sometimes people get lost in the technicalities, and take their eye off the big picture.

I used to be disgusted; now I try to be amused...

rowdyroddypiper
NP Wrestling Champion

Total Posts: 1179
Joined: Apr 2004
 
Posted: 2017-09-12 16:41
Interestingly, one of the first and only guys to get pinched by the Federales for using bitcoin to money launder (he pleaded to running an unauthorized MSB) got very jealous upon hearing Bernie Madoff getting kudos for cornering the market in Swiss Miss. So he related a story of using packets of mackerel as currency in prison and tried to relate it to his blockchain experience. I told him the trading sardines story and he didn't get it. Which was not surprising, because he is in fact, very stupid.

https://fee.org/articles/mackerel-is-money-in-a-prison-economy-npr-story-on-charlie-shrem/

The more I deal with this space the more I'm convinced we are living in some wonky simulation.

Revolution to the mean

svisstack


Total Posts: 303
Joined: Feb 2014
 
Posted: 2017-09-12 18:19
Great discussion about topic, I would love to see continuation of this, trying to participate but I'm very short on time resource.

@AndyM: sardine’s joke is clear, but let’s talk more specific as winning this like that will not render much value for us on how future will unfolds and this should be the goal of this discussion. Clearly physical sardines inventory value deprecating in time and buyer was scammed, took unaccounted risks or product/trade was not well defined enough and missed expectation of the buyer in terms of expiration date. Don’t see relation to Bitcoin any other than as a reminder that we can trade something that is not well defined, which I think it’s not true there as we have clearly defined value which we can liquidate with multiple counterparties.

I honestly don’t see much major differences between Gold and Bitcoin apart from: (1) Bitcoin is not yet hold with any government regulated entity on balance sheet, consequence of that value of BTC have no relationship to value of living anywhere geographically (2) Intrinsic value of Bitcoin is future possibility of making transfer/transfers on specific blockchain network. Gold as material to consume.

I’m trying look it from big picture perspective as I agree with @AndyM that too much people was fooled with technicalities on this.


Time well wasted.

jslade


Total Posts: 1095
Joined: Feb 2007
 
Posted: 2017-09-12 22:58
There are reasonable ways of valuing these things. In principle, the economic utility of a given "coin" is in the size and velocity of the transactions on the blockchain network it's denoted in. And a speculative guess as to the size of these transactions in the future.

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2842557https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2842557

It's obvious that speculators in these things expect the transaction volume on blockchains to be huge in the future. It's also obvious most of these speculators haven't examined the technical difficulties in doing so. Though in some cases, the price and the network value are reasonably well matched.

Valuing them as commodities is also legit, but most people who attempt to value commodities note some kind of economic utility in their use (sardines, tin, whatever). The economic utility of a Bitcoin is in the turn over on Bitcoin networks.
Of course, you could also just trade the trend; some large number of any commodity trades is done by people who don't care to know anything about the underlying utility of whatever they're trading.

"Learning, n. The kind of ignorance distinguishing the studious."

EspressoLover


Total Posts: 245
Joined: Jan 2015
 
Posted: 2017-09-13 01:50
@rowdy

Assuming this is directed at me... so I'll give my $0.02. Caveat emptor, I'm no expert in cryptocurrencies, never claimed to be and likely will never become one. I have an armchair interest, and sometimes like to speculatively apply generalized principles from other areas where I do have some experience.

1&2) I think I get the gist, but I'm embarrassed to admit not being exactly sure what "social clip" means... hopefully this gets to your question:

I quickly sampled the consolidated order book of the major exchanges at data.bitcoinity.org. Right now there's about 1650 BTC of resting liquidity within 1% of the mid-price/last-trade. At $4500 a coin, that's $7.4 million in capital to spike/crash the price across all the major exchanges. I have no idea the size of the OTC market, but I doubt it's larger than the size of the exchange liquidity. So, $15 million would be a good amount of notional capital to really move the market, at least for a short period.

To move the book -1%, let's say your VWAP basis is -0.65% below the original mid-price. Let's also assume you're terrible at liquidating post-settlement, and you cover your short exactly back at the mid-price. Add another 0.1% in exchange fees, and generously 0.05% in various other costs, risk compensation, etc. You end up taking a 0.8% loss on the spot side of the scheme.

Let's also be generous again and say you need 2X the capital, because you're banging ETH/BTC instead of BTC/USD, the market's thicker at settlement, settlement samples a time range, etc. That's an expected loss of $240 thousand to manipulate the settlement value 1%

On the futures side, let's say Bitcoin contracts are only as liquid as the least liquid FX major at the CME. I think if BTC futures take off, it's safe to say there will be at least the same amount of speculative mania as there is in the New Zealand Dollar. That trades $2.3 billion in notional a day. I think it's reasonable, on settlement day, to slowly build a position at 5% of ADV at a net t-cost of 0.2%. That's a $117 million notional position, with an incurred $235 thousand in t-costs.

Manipulating spot gives you a 1% expected return on the futures settlement. Altogether you net $695 thousand for taking a little bit of intraday BTC risk. Assuming 2.5:1 margin on spot and 6:1 margin on futures, that's a 2.7% one day return. If you use OTM options at the futures exchange, you could probably do 4%+. And this is all making very conservative assumptions about the liquidity in the futures market.

This works because exchange-listed crypto derivatives are inevitably going to be much more liquid than spot crypto markets. Very few institutional funds are going to have the legal ability to directly trade crypto, let alone the technical acumen to do so without major security risks (imagine hacking the private key to CALPER's wallet). So if bitcoin does become an "Asset Class", all that money will go through exchange-listed derivatives.

2a) "I think you'd find it hard to continue to trade with the OTC guys taking the other side of your winning trades as the number of counterparties that can take size are relatively small."

Actually on the spot side of the trade, your counter-parties would be making significant profit. The patsies when banging the close are in the derivatives markets. For example in the above example, the spot market counter parties net out $195k in profit. It works out that way because the manipulator has to close out his spot market position, almost always at a worse price than his cost basis.

3) Don't really know much details about Monero vs ZCash, or have a strong opinion about one vs the other. From a 12,000 foot perspective, I'm aware Monero is based on obfuscation whereas ZCash is based on ZKP. So, ZCash is provably secure, whereas Monero is not. OTOH with ZCash you have to trust that the original private key was actually destroyed. (BTW there's a Radiolab episode about the creation of the public key, that's very entertaining). Otherwise a malicious actor could keep counterfeiting new coins and there'd be no trace. Depends on your personal preferences, YMMV.

4) Any mixer is cryptographically deniable assuming:

-A: The operation itself is trusted and doesn't keep logs
-B: The client's coins make up <50% of the tumbled coins
-C: A malicious attacker doesn't make up >50% of the tumbled coins
-D: Tumbled coins are paid out in random transactions with random fees
-E: Tumbled coins are returned with random timing

It's trivial easy to show that this results in untraceable transactions. Suffice to say these are sufficient conditions, but not necessary. Some of the constraints can be tightened or even eliminated using fancier schemes.

Unless Helix is the world's stealthiest honeypot, and/or the government is willing funding half the revenue of the world's largest money laundering operation, all of these criteria apply to the most widely used commercial bitcoin mixer.

5) Is it possible? Certainly so. And like I said, I will come back and eat crow if we do see major arrests from deanonymizing blockchain analysis. Doubly so if it's Chainalaysis that delivers it.

But I was debating the assertion that publicly available blockchain analysis can easily defeat commercial grade tumbling. *If* that was the case it wouldn't just be law enforcement. The doxxing hypothetical wasn't just for trolling. If currently published blockchain analysis produced practical results, every two-bit hacker in the world would be blackmailing every DNM operator, ransomware distributor and any party who previously hacked an exchange.

The flush and catch scenario is only possible if LE has access to commercial-grade blockchain analysis that the public doesn't. They're sitting on it, silently collecting a massive pile of evidence, and are patient enough to wait years without any arrests. (Hansa was only a honeypot for a few months). And also no one in the operation is leaking the software or commandeering it for himself to doxx DNMs on the side. Possible? Yes. Plausible? Ehh... Anyway, this is just saying that blockchain analysis is easy enough for the NSA to figure out, but no one else. That's quite different than the original assertion that practical blockchain analysis only requires graph theory 101.


Hope that all makes sense. Doubly hope that I didn't make an embarassing error somewhere that completely ruins all my arguments... I'm open to changing my mind given sufficient evidence or well-reasoned logic, just not argument authority. Some or all of this could be glaringly wrong. But if that's so, could you please do me the courtesy of explaining *why* it's wrong.

EspressoLover


Total Posts: 245
Joined: Jan 2015
 
Posted: 2017-09-13 07:38
Btw,

Another way to launder USD into a BTC wallet without traceability. Doesn't even require mixing or any wallet shell games: Buy some AntMiners.

Just make sure to connect to a pool with a Tor hidden service. Even if you're losing negative 15% ROI on your mining operation, that's much less than the typical cost criminals pay for fiat money laundering. Point being, even if blockchain analysis was flawless against tumblers, there'd still be a very reliable (albeit more expensive and inconvenient) way to acquire anonymous coins.

Bitcoin will always be an attractive playground for those looking to hide and shuffle dirty money.

nikol


Total Posts: 423
Joined: Jun 2005
 
Posted: 2017-09-13 10:29
J.Dimon
https://blogs.wsj.com/moneybeat/2017/09/12/jamie-dimon-says-bitcoin-is-a-fraud-that-will-blow-up/
.
It will blow up, but not now since his daughter is in. Now we have to buy and drive it to 100,000.

rowdyroddypiper
NP Wrestling Champion

Total Posts: 1179
Joined: Apr 2004
 
Posted: 2017-09-13 12:20
@espresso - sorry, yes, I forgot to @ you the first time as I'm quite rusty posting here.

1&2) No need for embarrassment, I apologize for the jargon. You have the right idea, basically what's a trade size that doesn't move the market price. It's been quite low on bitcoin exchanges historically (less than $1mm) which is why anecdotally 70-80% of the market is OTC. Back of the envelope the total estimated volume (no BIS survey to fill out yet) is roughly the same as USD / PLN so yeah.

2a) Yes, I did not make my point here in-line so thank you for reorganizing ;) I am not an expert in "banging the close" or other types of strategies so I can learn something here. If I am to understand it correctly: I understood the mechanism to be that one would distort the price of the future to impact the value of an OTC position, but it seems what you are describing is to manipulate the spot to impact the futures price? Btw, 2.7% one day returns in crypto are considered somewhat meh. I know guys that make that and more just straight up lending. But if you can expand on what I am missing that would be helpful.

3) Okay, I just got from your comment that you thought Monero / Zcash somehow didn't provide any incremental anonymity or privacy relative to BTC. I don't know what you mean by "provably secure" in this context. Monero uses ring signatures and has yet to be compromised by an adversary doing transactional analysis. ZCash is centralized and requires the condition that the "signing ceremony" was done honestly to be true before it can begin to be effective. The fact that the lead dev for ZCash said that they could make it traceable and ZCash allows for transparent transactions by defualt is ummm kind of a red flag. I reckon that since you dropped the zSnark/ZKP as proof that it's more secure than Monero you're maybe stretching a bit. I'm happy to have a much more detailed discussion of ZCash vs. Monero but they're not really close.

Tweet where Zooko says "we" can make it traceable: https://twitter.com/zooko/status/863202798883577856

4) So your condition for blockchain analysis to ineffective is that there's a "cryptographically deniable" mixer available that satisfies properties A-E as you describe? Would it require every transaction to undergo mixing to render blockchain analysis ineffective? There's very little (I know of) out there that even satisfies A under the most generous interpretation.

You're pointing to Helix as the largest, but there's a few big problems. In the first place you need an account. This introduces another point of centralized record keeping. In the second place they claim (themselves) over 10,000 coins cleaned. This is not anything approaching a reasonably useful volume. They also say we can't tell you how to do it, but trust us it's secure. This is a red flag. Big, waving, bright red flag. You can't evaluate their claims.

5) Can you classify what you mean by "Major" and is there a more reasonable time frame you're willing to accept this unmasking over instead of weeks as prior?

You've missed the argument inre: LE. The blockchain is just a ledger. But it's one that's easily accessible and deemed to be reliable as well as permanent. In the analysis of this data, in a vacuum, there are not many advantages that LE has. Where LE has a distinct advantage is in the contextual information that correlates those ledger transactions to the real world. They can also black bag operators and get further contextual analysis via voluntary or involuntary access to their systems. What the chain analysis does is provide a good idea of what lines to run in an investigation and leverages the value of information off the chain. I'm not sure how you think this isn't useful fore investigations or doesn't represent a risk to users that may be targets for investigation. And remember the Alphabays admin recycled his email from a public persona so it's not like we are dealing with criminal masterminds by and large. Also I'm not sure why you are arguing your point on flush and catch, it happened, flush AlphaBays -> flushed a lot of people to Hansa where they were subsequently caught.


P.S. here is a link to a recent and very nice paper on blockchain analysis and the evolving techniques. Enjoy if you haven't read it.

https://arxiv.org/pdf/1709.02489.pdf






Revolution to the mean

chiral3
Founding Member

Total Posts: 5022
Joined: Mar 2004
 
Posted: 2017-09-13 18:50
Jamie stole the conference. My boss was speaking there and Jamie's comment was really all anyone talked about.

Nonius is Satoshi Nakamoto. 物の哀れ

rowdyroddypiper
NP Wrestling Champion

Total Posts: 1179
Joined: Apr 2004
 
Posted: 2017-09-14 03:25
Wait till they get Nonius to speak there.

Taro Tsujimoto is going to be the pseudonym I use for the next great cryptocurrency.

Revolution to the mean

svisstack


Total Posts: 303
Joined: Feb 2014
 
Posted: 2017-09-14 10:53
>> Wait till they get Nonius to speak there.

We spoke in 2015/Q3 in Berlin about the cryptocurrencies/Bitcoin and I remember he interested me, bcs he was first person I met from finance which didn’t hate bitcoin, just opposite... but maybe things changed since then.

Time well wasted.

gax


Total Posts: 14
Joined: Apr 2011
 
Posted: 2017-09-14 17:19
*** double post *** deleted

gax


Total Posts: 14
Joined: Apr 2011
 
Posted: 2017-09-14 17:19
Cyrpto currencies aside, is there any new/interesting technology the blockchain gives you that isn't already available via a standard database. I know this whole idea of a decentralized ledger is meant to be the main selling point, but are there many use cases out there where this makes sense? (as opposed to having one company own and update the database?)

chiral3
Founding Member

Total Posts: 5022
Joined: Mar 2004
 
Posted: 2017-09-14 17:36
Smart contracts.

Nonius is Satoshi Nakamoto. 物の哀れ

Maggette


Total Posts: 968
Joined: Jun 2007
 
Posted: 2017-09-14 17:38
Could somebody give a more specific example of a smart contract in b2b or especially finance that really adds value? I just do not see it.
Thx

Ich kam hierher und sah dich und deine Leute lächeln, und sagte mir: Maggette, scheiss auf den small talk, lass lieber deine Fäuste sprechen...

chiral3
Founding Member

Total Posts: 5022
Joined: Mar 2004
 
Posted: 2017-09-14 17:50
I could regurgitate the Wikipedia page, but that will not help.

It reminds me of ISDAs versus long form in some ways. There was a time when, to print a trade, we had to have a gaggle of lawyers lawyering. By standardizing the contract and making certain parts pre-defined or for perpetuity, a bunch of time and expense was saved, and business worked better. Self-enforcing and reduction in fraud via cryptographic protocols makes sense to me. Putting a fcukton of lawyers out of work also makes sense to me.

Not sure it mine was the best answer to gax's question, but it could utilize a blockchain-like technology.

Nonius is Satoshi Nakamoto. 物の哀れ

rod


Total Posts: 375
Joined: Nov 2006
 
Posted: 2017-09-14 18:36
Nick Szabo started writing about smart contracts in the mid 1990s. Unfortunately, his old webpage is no longer online. However, some of his old essays are available online elsewhere, e.g.,

□ Nick Szabo, A formal language for analyzing contracts, 2002.

Fortunately, his blog is still up. A couple of his posts from the pre-BTC days:

□ Nick Szabo, Smart contracts watch, 2007.

□ Nick Szabo, Smart contracts reduce mental transaction costs, 2006.

Maggette


Total Posts: 968
Joined: Jun 2007
 
Posted: 2017-09-14 19:03
Thanks to both of you.
" Putting a fcukton of lawyers out of work also makes sense to me."
Agreed :).

Ahhh... I need more time (or must become smarter)...there ist too much interesting stuff out there :(

Ich kam hierher und sah dich und deine Leute lächeln, und sagte mir: Maggette, scheiss auf den small talk, lass lieber deine Fäuste sprechen...

Osiris2


Total Posts: 7
Joined: Sep 2017
 
Posted: 2017-09-14 20:39
You can't have "smart" contracts unless all/most counterparties have agreed to use a standard form contract.
Once that agreement is in place, whether the contract gets executed directly between counterparties, through some clearinghouse or exchange, or over a distributed ledger blockchain ... do we really care?

Patrik
Founding Member

Total Posts: 1338
Joined: Mar 2004
 
Posted: 2017-09-14 22:05
@rowdyroddypiper
with regards to your point 2:
think about it this way - is it easier for shell (or bp, or total, etc etc) to buy up all cargoes of the north sea brent loading program or corner the brent futures market? The same tends to apply for almost all markets where there's a liquid derivatives market. In my oil example the whole BFOE loading program is some 28-30mm bbls for a given month. One BFOE cargo is 600k bbls, so we're talking about less than 50 cargoes to arrange. If you focus on just forties (which tend to be the worst grade eligible to be included in the window, hence the most important), then it's even less. The brent futures market is obviously many many times bigger. So when the big guys go to town trying to make a play in oil or other commod markets the game is always to lose money in the spot market to make many times that back in the derivatives market where your position can be many multiples bigger. In the oil example you'd have people ship oil out of one region to another at a small loss in order to make a big gain on your derivatives position from the excess/surplus created as a result. @espresso is describing the same mechanism in an assumed liquid btc futures market, liquid relative to it's underlying btc spot (exchange) market that serves as the price fix to cash settle the futures from. If you would move to physical delivery instead a lot of these games become smaller problems to deal with.

Capital Structure Demolition LLC Radiation

Patrik
Founding Member

Total Posts: 1338
Joined: Mar 2004
 
Posted: 2017-09-14 22:06
[double post]

Capital Structure Demolition LLC Radiation

jslade


Total Posts: 1095
Joined: Feb 2007
 
Posted: 2017-09-14 23:15
Smart contract example: Etherdelta is an exchange for ERC20 tokens on Ethereum.

https://etherdelta.com/#MTH-ETH
https://etherscan.io/address/0x8d12a197cb00d4747a1fe03395095ce2a5cc6819#code

It's not very effective, but it's a good example of the type of thing people are trying to do using software contract enforcement instead of legal terms of service. BTW, unless they have an upgrade path explicitly in their contract, stuff like etherdelta is immutable and will be around as long as ethereum is around.

FWIIW ERC20 tokens (and the ICOs they're sold in) are also a form of smart contract.

The classic example of a smart contract is the DAO, which was an attempt at putting a joint stock company based on smart contracts together. It didn't work because ethereum still hasn't discovered formal code proofs, and the SEC has recently declared attempts to do so illegal if you sell shares in it.

Another example is Slock.it, which uses ethereum to unlock physical locks (I suppose this could be used for a vending machine or something).
Yet another example is automated exchange of electricity futures on a microgrid.
https://www.newscientist.com/article/2079334-blockchain-based-microgrid-gives-power-to-consumers-in-new-york/

In principle you can do any value exchange operation using a smart contract (assuming the value exchange is tied to a blockchain; meaning no dollars). In practice there are problems getting real world data into and out of a smart contract in a provably secure way. There are a number of attempts to set up betting systems (Auger, Gnosis, etc) in Ethereum and other smart contract equipped blockchains. The biggest problem is setting up oracles to ajudicate bets. The solutions I have seen so far are things like forcing oracles to put up ether or tokens which are worth more than the bet; aligning economic incentives is helpful, but this isn't real satisfying.

Other use cases; get paid to use your hardrive to store someone else's files, get paid to rent your spare CPU cycles to people who do raytracing.

Of course, when you want to turn your value exchanged into something in the corporeal world, like dollars or cocaine, you need an exchange to do this. Exchanges which exchange for dollars, as I am getting tired of saying, have KYC up the ying yang, making hypothetical attacks on Bitcoin/Dollar futures impossible.

"Learning, n. The kind of ignorance distinguishing the studious."
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