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Michael's avatar

The thing I find most interesting about cryptocurrency is something Bitcoin doesn't support: zero-knowledge proofs. Cryptographers have come up with very elaborate mathematical schemes by which it's possible to prove to someone that a fact is true and that you know it, without revealing to them what that fact is.

Right now the main use of this is in cryptocurrencies where nobody knows where transactions come from or where they go, yet they can still be certain that all the transactions add up correctly. (I'm deliberately not mentioning the names of these because I'm not a cryptocurrency promoter, but you can look them up if you care.)

But from my limited knowledge, the zero-knowledge proof technology is pretty general, and when you think about mixing it with smart contracts, things could get pretty futuristic. Like imagine a loan, where neither party has any way of knowing who the other is, but the creditor still knows with certainty that they are the most senior creditor.

Of course the problem remains that all this is internal to the blockchain, and the real-world legal system might happily just reach in and screw it all up.

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Herre's avatar

You say: "Of course, there’s still the argument that Bitcoin will eventually die. I guess I see two ways that could happen. "

Isn't there a third problem? Proliferation of alternative cryptocurrencies is effectively a glut of supply in 'systemic risk hedging assets', no? A technically superior altcoin (say, one that requires less energy expenditure) could greatly dilute the value of any other coin serving the same purpose.

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