Big fan of Matt Stoller but obviously he doesn't have neither the computer science and engineering education nor financial industry and monetary theory knowledge to be able to comment on crypto in an educated fashion. Yes, every new industry in the world went through boom and bust cycles and yes each of those new industries was complemented by a caravan of con artists who see that people want to spend money on new technology and get in between the money and the technology to make a fortune. This is a process that can't be controlled. Money is social - if people want to buy/invest in something, other people will show up and offer it to them - whether with real or fraudulent claims. However, Bitcoin has been around for 13 years - to dismiss it is as a 2-year tulip or real estate mania is very silly at this point. Bitcoin has gone through 4 bull and bear markets and has gotten more expensive over time. Matt constantly rails about people losing trust with institutions and banks in particular and yet he can't comprehend a payment system technically designed to goes around the banks. Fiat itself isn't backed by anything but trust in the state's institutions. But people don't have trust in the state and the state's banks anymore. Thus they choose a different payment system where the state is not involved. How hard is this to understand? Bitcoin is real and even the current SEC chair (who taught a class on crypto at MIT for crying out loud) and has sterling educational and professional pedigrees has said this on multiple occasions. Continuing to treat Bitcoin as a scam in 2021 is frankly multiple levels below Stoller's level of intelligence.
Every time someone tells me what I can do with blockchain, it's never something I would actually want to do. I read quite a bit of the open thread and it was a tremendous effort not to let my eyes glaze over as people tried to explain Ethereum use cases and whatnot. And that may be laziness on my part—not willing to spend time learning about new technology as the world changes—but damn, it's already pretty complicated just staying afloat under the financial system I've been living under for the past 30 years. Based on what I've seen so far, I have very little faith that cryptocurrencies, or blockchain technology in general, are going to result in less inequality or more power to the people.
I get the sense that most people using crypto are just speculating with it, hoping to get ahead of everyone else for a time. My friends who are into cypto talk a lot about how it's the future of money and that people should "get in now," which is not a phrase I personally associate with legitimate ventures.
Again, you can argue this is laziness or that I'm protecting the status quo or whatever, but I find myself more on what Matt deems the Warren side of things—thinking that we should use our efforts to fix what's broken via the power of the state and its institutions. I'm currently reading Langdon Winner's The Whale and the Reactor, and his chapter on Mythinformation ("the almost religious conviction that a widespread adoption of computers and communication systems along with easy access to electronic information will automatically produce a better world for human living") strikes me as having a lot of parallels with blockchain technology.
Perhaps I'm wrong and I'll end up feeling like a big dummy years from now, but I just have not seen any convincing arguments about how this will actually make life better for anyone.
The ignorance displayed in this piece is stunning. So much so that it causes me to lose most of the respect I've had for your ability to launch cogent argument via logic, Matt. In fact, this piece reminds me very much of a Barrons article written by Alan Abelson in the early 1990's about CDMA and cellphones in which Abelson could not fathom how a technology could possibly break cell signals into bits at the source and then reassemble them at destination, not to mention that Mr. Abelson wondered aloud about what could possibly be so important that more than a handful of folks would ever walk around with cellphones in hand... Needless to say, the Abelson piece survives as a monument to the man's Luddite ignorance even well after his death, as I predict this piece will haunt you down the blockchain road of our future, Mr. Stoller.
> Cryptocurrencies are a social movement based on the belief that markings in a ledger on the internet have intrinsic value.
You know what? This is a more concise metaphor of what cryptocurrencies are, so I'm stealing this for future use. Similarly, proof-of-work “mining” shouldn't be called that, or anything that implies that the computers on a blockchain are doing any useful work. They're guessing. They're guessing billions of numbers a second in parallel to make sure that their number looks like another number after you've mangled the first number up. All the wrong numbers are thrown to the trash. That's what “mining” is.
There are two big examples of government fixing the problem. First in the mid 1700s, the British Parliament got serious about busting bubbles, and their regulations lasted for a long time. Then in 1933, FDR did a full System Reset. He closed the banks, sent out auditors to restore the decent banks, and harshly regulated the stock market and derivatives. His solution worked for 40 years until Nixon started to tear it down. It still halfway worked until the '90s when Clinton finished the job.
So it's not impossible for a STRONG government to force the system to serve normal businesses and normal people. The question is how FDR got the power to bust through all the Deepstate bureaucracies. I don't know the answer except pure raw GUTS. He was a rich insider to begin with, so he knew how to operate the blackmail knobs. After gutting his way through polio, he wasn't afraid of bureaucratic backbiting.
"a social movement based on a dangerous get-rich-quick scam"
Wow. I'm astonished Matt that you could have such a naïve understanding for someone trying to do something about wealth inequality and the civil behavior of big business.
Drop everything and read: The Bitcoin Standard: The Decentralized Alternative to Central Banking by Saifedean Ammous. You have no standing to discuss cryptocurrencies until then.
Thank you - for an excellent article. Reading it I remembered an alarming detail several years ago:
A news item that Deep State has penetrated and monitor transactions in block-chain systems -- that already resulted in arrests, etc.
I never again read about it but if true all this independency and anonymity claims in block-chain transactions are an illusion. We live in a CONTINUUM.
FBI and Edgar Hoover’s crimes and surveillance === CIA-FBI and St. Obama, Clapper, Brennan, Hayden === SAME despicable dangerous bastards.
As someone who is fiercely anti-monopoly and generally skeptical of cryptocurrencies (though cautiously optimistic), there is much in this piece that is sensible. But also a couple of head-scratchers.
> [Cryptocurrency] has value in the moment it is traded, but only because there’s a collective belief that it has some intrinsic worth.
How is this different than any other asset, financial instrument, or even fiat currency? Stocks only have value because there is an expectation a company will produce more value. You could argue that public companies have to comply with securities law, but that's only as relevant as an enforcement arm actually exists to apply laws fairly. Fiat is even worse (or any state-based, debt-based issuance)! It's based entirely on the (increasingly false and empty) faith that the state can deliver on the credit it issues to the people. What happens when enough people no longer believe in the full faith and credit of the US Treasury?
> And anyone who doesn’t buy into this idea is inherently defending a set of collusive bailout-friendly institutions that we sometimes call liberal democracy.
I mean this is true. One can make the argument that defending "liberal democracy" is better than defending the blockchain. But if so, you are conclusively saying the one decrepit, geriatric, corrupt set of institutions is better than the other volatile, speculative one. Both are unaccountable.
> If crypto boosters sought aggressive reform of the existing financial order, democratizing the Fed, clamping down on big banks, and so forth, and said that until that happens, they will pursue alternative currencies, that would be one thing.
Don't always listen to the most extreme or "bullish" voices (meme: Bitcoin fixes this). I am someone who completely falls into the description you make here. I don't know how common I am, but I bet a lot I'm not uncommon.
> In other words, my view is that crypto is a movement based on the theory that the existing nation-state is a system is rigged by billionaires, and the right response is to create a different and more corrupt order rigged by different billionaires, money launderers, and dictators.
Yes, this is accurate. One view (yours and mine to a degree) is that the state should enforce a good playing field of competition so that citizens in the state can operate fairly. The prevailing view of leading crypto intellectuals is that this is not the state's job. Instead, different states should complete for citizens, and the one that facilitates the least centralization will end up collecting the right people. Which also means some people will choose to opt-in to dictatorship, and that's totally fine.
> In D.C., those who opposed the bailouts and sought to break up the banks - the reformers - are the most skeptical of cryptocurrencies. Meanwhile, the pro-crypto lobby includes...
This is the most interesting point in the piece, largely true, and makes a lot of sense. Many normal people who are attracted to crypto are those who have been locked out of any institutional influence whatsoever. However, it's pretty funny how that is certainly not the case for e.g., Marc Andreeson, Balaji Srinivasan, Brian Armstrong, etc. They genuinely believe they are doing something good by trying to undermine traditional financial institutions.
Anyway, I do think it's hilarious how the vast majority of crypto nodes still use infrastructure within monopoly companies (*ahem* AWS *ahem*) to do mining, create blocks, etc. Huge irony there.
The last point is that I don't even think trading is the best or even coolest application of on-chain technology. There is so much that I believe blockchain will be useful for outside of the culture war memeification of it. For example, a de-centralized ledgers for tracking inflation or commodities markets with an extensible/open-source API that any person can construct their own dashboard with. Crowdfunding for (that's less embarrassing than Constitution DAO) and distribution independent filmmaking and music.
I just can’t get past the fact that you “buy” cryptocurrencies with the very same money that they want to replace...huh? Plus, if you forget your passcode or lose your “wallet” it’s all gone. No recourse.
To start off, I have to say that though I subscribe to several Substack authors - you are essentially the only one who actually seems to give a damn, and respond to, what your subscribers think and have to say - and that, IMO, is sooo rare these days! I suspect that I will not be renewing my subscriptions to the others - I may well read them out of curiosity - but, in this pay to play world, I don't think they are worth paying for - yours is, and although I have punched in "unsubscribe", it is ONLY because I don't like to "automatically renew" anything other than some causes I deeply care about, like MSF (Doctors without Borders) - so when the time comes, I suspect I will indeed renew, voluntarily, by choice --
Which, I think segues in to what I think is one of the primary "discussions" around crypto and so much else these days - the concept of choice and the "freedom" to refuse to do what we don't want to do. I get the distinct impression that at the bottom of the crypto advocacy is the desire to avoid paying - Taxes - and high tech ways of avoiding them. For the folks with lots of money - they can do it by "paying" for pols that write the "rules" (aka loopholes) that allow them to do so. So crypto may be conceived of as a way for the "little guy" to do the same.
Some of the other comments here suggest that, gee, if one doesn't have "computer science and engineering education" or "financial industry and monetary knowledge", one cannot comment on crypto in an "educated fashion" - that seems to me another example of the "shoot the messenger" phenomenon - if someone disagrees with me, they must be "unintelligent" or "uneducated" When that sort of "argument" pops up - it is often because one cannot. or will not, answer another's objections or arguments - but although they are dismissed as "fairy tales for children", The Emperor's New Clothes, Toto pulling aside the curtain in the Wizard of Oz, e.g., (and for all you "educated" folks out there who aren't familiar with these motifs, I suggest you check them out), are tales of how belief "in the great and powerful", whether it is individuals, institutions, or, in this case, technology, to take us down the "yellow brick road" - too often takes us instead, behind a Pied Piper, down the road to the sea and over the cliff ...
I am quite sure the above metaphor will be ridiculed or dismissed as just "silly" written buy a self acknowledged tech idiot, who, if (s)he would only "get educated" would see the error of his/her ways and acknowledge the wonderful new world of bit coin, just as we should of genetic engineering or nuclear power - and, not to worry, we can keep this new found freedom "safe" from being abused or degraded ---- Oh dear, now who believes in fairy tales ...
Although the implementations of cryptocurrencies have been a wash thus far, I wouldn't argue they are complete "Bullshit" because of their potential applications for controlling disbursement of money. For example, there are many government funds which invest in particular sectors, but one of the main issues anti-government folks cite is a lack of transparency and mismanaged funds. I think this is an excellent problem space of implementing cryptocurrency-like technology, which has a decentralized and distributed ledger. Moreover, their could be a partitioning of crypto address types which only allow for specific types of transactions. Here's how this would all work for lead abatement in a manner which would help prevent a crisis like Flint's leaded water problems due to an increase of transparency.
Here's how it would work: the federal government could pass a bill for $100 million in spending towards lead abatement in water supplies such that the funds could only be spent on the chemicals needed to reduce acidity in water preventing erosion of lead pipes. This money would be issued as a token, call it LeadToken, and each municipality controlling a water supply would receive these tokens instead of money. Now, the chemical suppliers would be required to accept these tokens instead of fiat currency, and part of the transaction would be the amount of chemicals purchased and the price paid. The associated ledger would have an entry saying municipality purchased chemical A from supplier B.
Building this kind of semi-private crypto whose ledger is still publicly accessible would give regulators and investigators more tools for fighting corruption with lead abatement from drinking water.
So why decentralized?
Well, having multiple nodes not controlled by a single entity helps prevent against hacking, providing more robust information infrastructure. Moreover, say someone in power wanted to coverup and hide their transactions, or lack of, well, they couldn't because of the decentralized nature of the token.
But wait, how are currency addresses handled?
These could be handed out by the federal government where a single issuer address has all of the initial funds. Then, the initial issuer could assign new addresses, such as addresses for accepting currency, by registered companies, and addresses for city governments, who could only disperse the tokens to the addresses handled by chemical companies.
Isn't there still room for fraud?
Well, of course. For example, if a company is lying about their chemicals, well, that would probably be a crime in of itself, in addition to fraud. Other ways fraud could happen is by registering fake chemical companies and having the money received in exchange for the tokens be dispersed to the fake company. This kind of fraud could be fought with more controls to prevent such issues. This is not limited to, requiring suppliers to prove they have existed for more than some time span (say 3 years) and have had real income/transactions selling the chemicals, requiring the registration of some U.S. citizen who owns the company to be legally responsible for the chemicals being dispersed, or any other accountability/transparency tool used to make the ledger as easy to study as possible.
Most of the proponents of crypto in the open forum did not even attempt to confront the facts brought out by the opponents. They just went on and on about why blockchain was a good idea -- which, even though I agree, it's changing the subject, and avoiding the issue entirely. I doubt they even read entirely through your latest email, because there is no valid argument against what you have said.
In general, I think that crypto is a solution in search of a problem. I’ve written some ethereum contract code and read up on cryptocurrencies in general, so I can’t claim to be an expert in the area. That said, there seem to be some serious issues with the technology even if you’re a die hard believer that blockchain in its current form can have serious value/benefit to humanity.
Any cryptocurrency has a fundamental vulnerability in the form of a coordinated attack made by a malicious actor with a huge amount of computing power, or other way to overpower the cryptography underlying it.
As I understand it, harnessing >50% of the total computing power behind a cryptocurrency can compromise it. There are various ways that software layers can hypothetically be used to restrict access to the blockchain and prevent these sorts of attacks, but those additional software layers compromise the very essence of the blockchain. The price of gas for ethereum transactions is a good indicator of how expensive a secure cryptocurrency or blockchain product can be. Overall, using crypto in its current form seems very expensive on a fundamental level. Even if computing power gets cheaper – the amount of processing power required to secure against an attack is always related to the total volume of processing power available for an attack. (nevermind that we may be nearing the end of Moore’s law)
Additionally, it appears that quantum computers are well-suited towards breaking cryptocurrency security. I can’t claim to be an expert quantum computing, but my understanding is that the fundamentals behind their operation make them perfect for “cracking” hash functions. In essence, the conditions required to solve the hash function are fed to the quantum computer, then the quantum computer’s processor transforms qbits into a readable state that comprises the solution to the cryptographic function. I don’t know exactly how many qbits are required to crack any cryptocurrencies, but my understanding is that the order of magnitude of where we’re at v. what is needed to threaten crypto is similar.
So basically, crypto needs to use a large percentage of the world’s computing power to be secure, and that quantum computing could ruin its security anyway. Yeah, I can’t see why it’s useful to begin with, but these two issues nag me enough that I don’t care about learning about its usefulness.
Big fan of Matt Stoller but obviously he doesn't have neither the computer science and engineering education nor financial industry and monetary theory knowledge to be able to comment on crypto in an educated fashion. Yes, every new industry in the world went through boom and bust cycles and yes each of those new industries was complemented by a caravan of con artists who see that people want to spend money on new technology and get in between the money and the technology to make a fortune. This is a process that can't be controlled. Money is social - if people want to buy/invest in something, other people will show up and offer it to them - whether with real or fraudulent claims. However, Bitcoin has been around for 13 years - to dismiss it is as a 2-year tulip or real estate mania is very silly at this point. Bitcoin has gone through 4 bull and bear markets and has gotten more expensive over time. Matt constantly rails about people losing trust with institutions and banks in particular and yet he can't comprehend a payment system technically designed to goes around the banks. Fiat itself isn't backed by anything but trust in the state's institutions. But people don't have trust in the state and the state's banks anymore. Thus they choose a different payment system where the state is not involved. How hard is this to understand? Bitcoin is real and even the current SEC chair (who taught a class on crypto at MIT for crying out loud) and has sterling educational and professional pedigrees has said this on multiple occasions. Continuing to treat Bitcoin as a scam in 2021 is frankly multiple levels below Stoller's level of intelligence.
Every time someone tells me what I can do with blockchain, it's never something I would actually want to do. I read quite a bit of the open thread and it was a tremendous effort not to let my eyes glaze over as people tried to explain Ethereum use cases and whatnot. And that may be laziness on my part—not willing to spend time learning about new technology as the world changes—but damn, it's already pretty complicated just staying afloat under the financial system I've been living under for the past 30 years. Based on what I've seen so far, I have very little faith that cryptocurrencies, or blockchain technology in general, are going to result in less inequality or more power to the people.
I get the sense that most people using crypto are just speculating with it, hoping to get ahead of everyone else for a time. My friends who are into cypto talk a lot about how it's the future of money and that people should "get in now," which is not a phrase I personally associate with legitimate ventures.
Again, you can argue this is laziness or that I'm protecting the status quo or whatever, but I find myself more on what Matt deems the Warren side of things—thinking that we should use our efforts to fix what's broken via the power of the state and its institutions. I'm currently reading Langdon Winner's The Whale and the Reactor, and his chapter on Mythinformation ("the almost religious conviction that a widespread adoption of computers and communication systems along with easy access to electronic information will automatically produce a better world for human living") strikes me as having a lot of parallels with blockchain technology.
Perhaps I'm wrong and I'll end up feeling like a big dummy years from now, but I just have not seen any convincing arguments about how this will actually make life better for anyone.
The ignorance displayed in this piece is stunning. So much so that it causes me to lose most of the respect I've had for your ability to launch cogent argument via logic, Matt. In fact, this piece reminds me very much of a Barrons article written by Alan Abelson in the early 1990's about CDMA and cellphones in which Abelson could not fathom how a technology could possibly break cell signals into bits at the source and then reassemble them at destination, not to mention that Mr. Abelson wondered aloud about what could possibly be so important that more than a handful of folks would ever walk around with cellphones in hand... Needless to say, the Abelson piece survives as a monument to the man's Luddite ignorance even well after his death, as I predict this piece will haunt you down the blockchain road of our future, Mr. Stoller.
But what is today’s value of an acre of Florida land bought in 1920?
It’s not the first time that Matt is losing me on elementary logic. Sorry, I feel I wasted my time reading that post.
> Cryptocurrencies are a social movement based on the belief that markings in a ledger on the internet have intrinsic value.
You know what? This is a more concise metaphor of what cryptocurrencies are, so I'm stealing this for future use. Similarly, proof-of-work “mining” shouldn't be called that, or anything that implies that the computers on a blockchain are doing any useful work. They're guessing. They're guessing billions of numbers a second in parallel to make sure that their number looks like another number after you've mangled the first number up. All the wrong numbers are thrown to the trash. That's what “mining” is.
There are two big examples of government fixing the problem. First in the mid 1700s, the British Parliament got serious about busting bubbles, and their regulations lasted for a long time. Then in 1933, FDR did a full System Reset. He closed the banks, sent out auditors to restore the decent banks, and harshly regulated the stock market and derivatives. His solution worked for 40 years until Nixon started to tear it down. It still halfway worked until the '90s when Clinton finished the job.
So it's not impossible for a STRONG government to force the system to serve normal businesses and normal people. The question is how FDR got the power to bust through all the Deepstate bureaucracies. I don't know the answer except pure raw GUTS. He was a rich insider to begin with, so he knew how to operate the blackmail knobs. After gutting his way through polio, he wasn't afraid of bureaucratic backbiting.
Do we have any politicians with equivalent GUTS?
"a social movement based on a dangerous get-rich-quick scam"
Wow. I'm astonished Matt that you could have such a naïve understanding for someone trying to do something about wealth inequality and the civil behavior of big business.
Drop everything and read: The Bitcoin Standard: The Decentralized Alternative to Central Banking by Saifedean Ammous. You have no standing to discuss cryptocurrencies until then.
web3 isn't crypto and crypto isn't web3. You needlessly conflate these two in your article.
Thank you - for an excellent article. Reading it I remembered an alarming detail several years ago:
A news item that Deep State has penetrated and monitor transactions in block-chain systems -- that already resulted in arrests, etc.
I never again read about it but if true all this independency and anonymity claims in block-chain transactions are an illusion. We live in a CONTINUUM.
FBI and Edgar Hoover’s crimes and surveillance === CIA-FBI and St. Obama, Clapper, Brennan, Hayden === SAME despicable dangerous bastards.
As someone who is fiercely anti-monopoly and generally skeptical of cryptocurrencies (though cautiously optimistic), there is much in this piece that is sensible. But also a couple of head-scratchers.
> [Cryptocurrency] has value in the moment it is traded, but only because there’s a collective belief that it has some intrinsic worth.
How is this different than any other asset, financial instrument, or even fiat currency? Stocks only have value because there is an expectation a company will produce more value. You could argue that public companies have to comply with securities law, but that's only as relevant as an enforcement arm actually exists to apply laws fairly. Fiat is even worse (or any state-based, debt-based issuance)! It's based entirely on the (increasingly false and empty) faith that the state can deliver on the credit it issues to the people. What happens when enough people no longer believe in the full faith and credit of the US Treasury?
> And anyone who doesn’t buy into this idea is inherently defending a set of collusive bailout-friendly institutions that we sometimes call liberal democracy.
I mean this is true. One can make the argument that defending "liberal democracy" is better than defending the blockchain. But if so, you are conclusively saying the one decrepit, geriatric, corrupt set of institutions is better than the other volatile, speculative one. Both are unaccountable.
> If crypto boosters sought aggressive reform of the existing financial order, democratizing the Fed, clamping down on big banks, and so forth, and said that until that happens, they will pursue alternative currencies, that would be one thing.
Don't always listen to the most extreme or "bullish" voices (meme: Bitcoin fixes this). I am someone who completely falls into the description you make here. I don't know how common I am, but I bet a lot I'm not uncommon.
> In other words, my view is that crypto is a movement based on the theory that the existing nation-state is a system is rigged by billionaires, and the right response is to create a different and more corrupt order rigged by different billionaires, money launderers, and dictators.
Yes, this is accurate. One view (yours and mine to a degree) is that the state should enforce a good playing field of competition so that citizens in the state can operate fairly. The prevailing view of leading crypto intellectuals is that this is not the state's job. Instead, different states should complete for citizens, and the one that facilitates the least centralization will end up collecting the right people. Which also means some people will choose to opt-in to dictatorship, and that's totally fine.
> In D.C., those who opposed the bailouts and sought to break up the banks - the reformers - are the most skeptical of cryptocurrencies. Meanwhile, the pro-crypto lobby includes...
This is the most interesting point in the piece, largely true, and makes a lot of sense. Many normal people who are attracted to crypto are those who have been locked out of any institutional influence whatsoever. However, it's pretty funny how that is certainly not the case for e.g., Marc Andreeson, Balaji Srinivasan, Brian Armstrong, etc. They genuinely believe they are doing something good by trying to undermine traditional financial institutions.
Anyway, I do think it's hilarious how the vast majority of crypto nodes still use infrastructure within monopoly companies (*ahem* AWS *ahem*) to do mining, create blocks, etc. Huge irony there.
The last point is that I don't even think trading is the best or even coolest application of on-chain technology. There is so much that I believe blockchain will be useful for outside of the culture war memeification of it. For example, a de-centralized ledgers for tracking inflation or commodities markets with an extensible/open-source API that any person can construct their own dashboard with. Crowdfunding for (that's less embarrassing than Constitution DAO) and distribution independent filmmaking and music.
I just can’t get past the fact that you “buy” cryptocurrencies with the very same money that they want to replace...huh? Plus, if you forget your passcode or lose your “wallet” it’s all gone. No recourse.
Thank you, Matt!
To start off, I have to say that though I subscribe to several Substack authors - you are essentially the only one who actually seems to give a damn, and respond to, what your subscribers think and have to say - and that, IMO, is sooo rare these days! I suspect that I will not be renewing my subscriptions to the others - I may well read them out of curiosity - but, in this pay to play world, I don't think they are worth paying for - yours is, and although I have punched in "unsubscribe", it is ONLY because I don't like to "automatically renew" anything other than some causes I deeply care about, like MSF (Doctors without Borders) - so when the time comes, I suspect I will indeed renew, voluntarily, by choice --
Which, I think segues in to what I think is one of the primary "discussions" around crypto and so much else these days - the concept of choice and the "freedom" to refuse to do what we don't want to do. I get the distinct impression that at the bottom of the crypto advocacy is the desire to avoid paying - Taxes - and high tech ways of avoiding them. For the folks with lots of money - they can do it by "paying" for pols that write the "rules" (aka loopholes) that allow them to do so. So crypto may be conceived of as a way for the "little guy" to do the same.
Some of the other comments here suggest that, gee, if one doesn't have "computer science and engineering education" or "financial industry and monetary knowledge", one cannot comment on crypto in an "educated fashion" - that seems to me another example of the "shoot the messenger" phenomenon - if someone disagrees with me, they must be "unintelligent" or "uneducated" When that sort of "argument" pops up - it is often because one cannot. or will not, answer another's objections or arguments - but although they are dismissed as "fairy tales for children", The Emperor's New Clothes, Toto pulling aside the curtain in the Wizard of Oz, e.g., (and for all you "educated" folks out there who aren't familiar with these motifs, I suggest you check them out), are tales of how belief "in the great and powerful", whether it is individuals, institutions, or, in this case, technology, to take us down the "yellow brick road" - too often takes us instead, behind a Pied Piper, down the road to the sea and over the cliff ...
I am quite sure the above metaphor will be ridiculed or dismissed as just "silly" written buy a self acknowledged tech idiot, who, if (s)he would only "get educated" would see the error of his/her ways and acknowledge the wonderful new world of bit coin, just as we should of genetic engineering or nuclear power - and, not to worry, we can keep this new found freedom "safe" from being abused or degraded ---- Oh dear, now who believes in fairy tales ...
Although the implementations of cryptocurrencies have been a wash thus far, I wouldn't argue they are complete "Bullshit" because of their potential applications for controlling disbursement of money. For example, there are many government funds which invest in particular sectors, but one of the main issues anti-government folks cite is a lack of transparency and mismanaged funds. I think this is an excellent problem space of implementing cryptocurrency-like technology, which has a decentralized and distributed ledger. Moreover, their could be a partitioning of crypto address types which only allow for specific types of transactions. Here's how this would all work for lead abatement in a manner which would help prevent a crisis like Flint's leaded water problems due to an increase of transparency.
Here's how it would work: the federal government could pass a bill for $100 million in spending towards lead abatement in water supplies such that the funds could only be spent on the chemicals needed to reduce acidity in water preventing erosion of lead pipes. This money would be issued as a token, call it LeadToken, and each municipality controlling a water supply would receive these tokens instead of money. Now, the chemical suppliers would be required to accept these tokens instead of fiat currency, and part of the transaction would be the amount of chemicals purchased and the price paid. The associated ledger would have an entry saying municipality purchased chemical A from supplier B.
Building this kind of semi-private crypto whose ledger is still publicly accessible would give regulators and investigators more tools for fighting corruption with lead abatement from drinking water.
So why decentralized?
Well, having multiple nodes not controlled by a single entity helps prevent against hacking, providing more robust information infrastructure. Moreover, say someone in power wanted to coverup and hide their transactions, or lack of, well, they couldn't because of the decentralized nature of the token.
But wait, how are currency addresses handled?
These could be handed out by the federal government where a single issuer address has all of the initial funds. Then, the initial issuer could assign new addresses, such as addresses for accepting currency, by registered companies, and addresses for city governments, who could only disperse the tokens to the addresses handled by chemical companies.
Isn't there still room for fraud?
Well, of course. For example, if a company is lying about their chemicals, well, that would probably be a crime in of itself, in addition to fraud. Other ways fraud could happen is by registering fake chemical companies and having the money received in exchange for the tokens be dispersed to the fake company. This kind of fraud could be fought with more controls to prevent such issues. This is not limited to, requiring suppliers to prove they have existed for more than some time span (say 3 years) and have had real income/transactions selling the chemicals, requiring the registration of some U.S. citizen who owns the company to be legally responsible for the chemicals being dispersed, or any other accountability/transparency tool used to make the ledger as easy to study as possible.
Most of the proponents of crypto in the open forum did not even attempt to confront the facts brought out by the opponents. They just went on and on about why blockchain was a good idea -- which, even though I agree, it's changing the subject, and avoiding the issue entirely. I doubt they even read entirely through your latest email, because there is no valid argument against what you have said.
In general, I think that crypto is a solution in search of a problem. I’ve written some ethereum contract code and read up on cryptocurrencies in general, so I can’t claim to be an expert in the area. That said, there seem to be some serious issues with the technology even if you’re a die hard believer that blockchain in its current form can have serious value/benefit to humanity.
Any cryptocurrency has a fundamental vulnerability in the form of a coordinated attack made by a malicious actor with a huge amount of computing power, or other way to overpower the cryptography underlying it.
As I understand it, harnessing >50% of the total computing power behind a cryptocurrency can compromise it. There are various ways that software layers can hypothetically be used to restrict access to the blockchain and prevent these sorts of attacks, but those additional software layers compromise the very essence of the blockchain. The price of gas for ethereum transactions is a good indicator of how expensive a secure cryptocurrency or blockchain product can be. Overall, using crypto in its current form seems very expensive on a fundamental level. Even if computing power gets cheaper – the amount of processing power required to secure against an attack is always related to the total volume of processing power available for an attack. (nevermind that we may be nearing the end of Moore’s law)
Additionally, it appears that quantum computers are well-suited towards breaking cryptocurrency security. I can’t claim to be an expert quantum computing, but my understanding is that the fundamentals behind their operation make them perfect for “cracking” hash functions. In essence, the conditions required to solve the hash function are fed to the quantum computer, then the quantum computer’s processor transforms qbits into a readable state that comprises the solution to the cryptographic function. I don’t know exactly how many qbits are required to crack any cryptocurrencies, but my understanding is that the order of magnitude of where we’re at v. what is needed to threaten crypto is similar.
So basically, crypto needs to use a large percentage of the world’s computing power to be secure, and that quantum computing could ruin its security anyway. Yeah, I can’t see why it’s useful to begin with, but these two issues nag me enough that I don’t care about learning about its usefulness.
Cryptocurrencies aren’t currencies at all — they’re electronic gambling tokens.
As for Bitcoin’s “value” get back to me when it’s no longer expressed in $USD …