From:
https://www.schneier.com/blog/archives/2022/06/ on-the-dangers-of-cryptocurrencies-and-the-uselessness-of-blockchain.html

On the Dangers of Cryptocurrencies and the Uselessness of Blockchain

Earlier this month, I and others wrote a letter to Congress [1],
basically saying that cryptocurrencies are an complete and total
disaster, and urging them to regulate the space. Nothing in that
letter is out of the ordinary, and is in line with what I wrote about blockchain in 2019 [2]. In response, Matthew Green has written
[3]--not really a rebuttal--but a "a general response to some of the
more common spurious objections... people make to public blockchain
systems." In it, he makes several broad points:

1. Yes, current proof-of-work blockchains like bitcoin are terrible
for the environment. But there are other modes like
proof-of-stake that are not.
2. Yes, a blockchain is an immutable ledger making it impossible to
undo specific transactions. But that doesn't mean there can't be
some governance system on top of the blockchain that enables
reversals.
3. Yes, bitcoin doesn't scale and the fees are too high. But that's
nothing inherent in blockchain technology--that's just a bunch of
bad design choices bitcoin made.
4. Blockchain systems can have a little or a lot of privacy,
depending on how they are designed and implemented.

There's nothing on that list that I disagree with. (We can argue
about whether proof-of-stake is actually an improvement. I am
skeptical of systems that enshrine a "they who have the gold make the
rules" system of governance. And to the extent any of those scaling
solutions work, they undo the decentralization blockchain claims to
have.) But I also think that these defenses largely miss the point.
To me, the problem isn't that blockchain systems can be made slightly
less awful than they are today. The problem is that they don't do
anything their proponents claim they do. In some very important
ways, they're not secure. They doesn't replace trust with code; in
fact, in many ways they are far less trustworthy than non-blockchain
systems. They're not decentralized [4], and their inevitable
centralization is harmful because it's largely emergent and
ill-defined. They still have trusted intermediaries, often with more
power and less oversight than non-blockchain systems. They still
require governance. They still require regulation. (These things
are what I wrote about here. [2]) The problem with blockchain is that
it's not an improvement to any system--and often makes things worse.

In our letter, we write: "By its very design, blockchain technology is
poorly suited for just about every purpose currently touted as a present
or potential source of public benefit. From its inception, this
technology has been a solution in search of a problem and has now
latched onto concepts such as financial inclusion and data transparency
to justify its existence, despite far better solutions to these issues
already in use. Despite more than thirteen years of development, it has
severe limitations and design flaws that preclude almost all
applications that deal with public customer data and regulated financial transactions and are not an improvement on existing non-blockchain
solutions."

Green responds: "`Public blockchain' technology enables many stupid
things: today's cryptocurrency schemes can be venal, corrupt,
overpromised. But the core technology is absolutely not useless. In
fact, I think there are some pretty exciting things happening in the
field, even if most of them are further away from reality than their
boosters would admit." I have yet to see one. More specifically, I
can't find a blockchain application whose value has anything to do
with the blockchain part, that wouldn't be made safer, more secure,
more reliable, and just plain better by removing the blockchain part.
I postulate that no one has ever said "Here is a problem that I
have. Oh look, blockchain is a good solution." In every case, the
order has been: "I have a blockchain. Oh look, there is a problem I
can apply it to." And in no cases does it actually help.

Someone, please show me an application where blockchain is essential.
That is, a problem that could not have been solved without blockchain
that can now be solved with it. (And "ransomware couldn't exist because criminals are blocked from using the conventional financial networks,
and cash payments aren't feasible" does not count.)

For example, Green complains that "credit card merchant fees are
similar, or have actually risen in the United States since the 1990s."
This is true [5], but has little to do with technological
inefficiencies or existing trust relationships in the industry. It's
because pretty much everyone who can and is paying attention gets 1%
back on their purchases: in cash, frequent flier miles, or other
affinity points. Green is right about how unfair this is. It's a
regressive subsidy, "since these fees are baked into the cost of most
retail goods and thus fall heavily on the working poor (who pay them
even if they use cash)." But that has nothing to do with the lack of blockchain, and solving it isn't helped by adding a blockchain. It's
a regulatory problem; with a few exceptions, credit card companies
have successfully pressured merchants into charging the same prices,
whether someone pays in cash or with a credit card. Peer-to-peer
payment systems like PayPal, Venmo, MPesa, and AliPay all get around
those high transaction fees, and none of them use blockchain.

This is my basic argument: blockchain does nothing to solve any existing problem with financial (or other) systems. Those problems are inherently economic and political, and have nothing to do with technology. And,
more importantly, technology can't solve economic and political
problems. Which is good, because adding blockchain causes a whole slew
of new problems and makes all of these systems much, much worse.

Green writes: "I have no problem with the idea of legislators
(intelligently) passing laws to regulate cryptocurrency. Indeed, given
the level of [6] insanity [7] and the [8] number of [9] outright
scams [10] that are happening in this area, it's pretty obvious that
our current regulatory framework is not up to the task." But when
you remove the insanity and the scams, what's left?

EDITED TO ADD: Nicholas Weaver is also [11] adamant [12] about this.
David Rosenthal is good [13], too.

[1]
https://concerned.tech/

[2]
https://www.schneier.com/blog/archives/2019/02/blockchain_and_.html

[3]
https://blog.cryptographyengineering.com /2022/06/09/in-defense-of-cryptocurrency/

[4]
https://assets-global.website-files.com/5fd11235b3950c2c1a3b6df4/ 62af6c641a672b3329b9a480_Unintended_Centralities_in_Distributed_Ledgers.pdf

[5]
https://is.gd/aIHZj6

[6]
https://www.cnbc.com/2022/05/29/ who-got-rich-before-terra-stablecoin-collapsed.html

[7]
https://www.cnbc.com/2022/05/19/ tether-claims-usdt-stablecoin-is-backed-by-non-us-bonds.html

[8]
https://is.gd/2flRn2

[9]
https://is.gd/cghNI7

[10]
https://cointelegraph.com/news/ yikes-elon-musk-warns-users-against-latest-deepfake-crypto-scam

[11]
https://www.currentaffairs.org/2022/05/ why-this-computer-scientist-says-all-cryptocurrency-should-die-in-a-fire

[12]
https://www.youtube.com/watch?v=J9nv0Ol-R5Q

[13]
https://blog.dshr.org/2022/02/ee380-talk.html

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Ben Collver <bencollver@tilde.pink> writes:

From:
https://www.schneier.com/blog/archives/2022/06/ on-the-dangers-of-cryptocurrencies-and-the-uselessness-of-blockchain.html

<snip>

There's nothing on that list that I disagree with. (We can argue
about whether proof-of-stake is actually an improvement. I am
skeptical of systems that enshrine a "they who have the gold make the
rules" system of governance. And to the extent any of those scaling solutions work, they undo the decentralization blockchain claims to
have.) But I also think that these defenses largely miss the point.
To me, the problem isn't that blockchain systems can be made slightly
less awful than they are today. The problem is that they don't do
anything their proponents claim they do. In some very important
ways, they're not secure. They doesn't replace trust with code; in
fact, in many ways they are far less trustworthy than non-blockchain
systems. They're not decentralized [4], and their inevitable
centralization is harmful because it's largely emergent and
ill-defined. They still have trusted intermediaries, often with more
power and less oversight than non-blockchain systems. They still
require governance. They still require regulation. (These things
are what I wrote about here. [2]) The problem with blockchain is that
it's not an improvement to any system--and often makes things worse.

In our letter, we write: "By its very design, blockchain technology is
poorly suited for just about every purpose currently touted as a present
or potential source of public benefit. From its inception, this
technology has been a solution in search of a problem and has now
latched onto concepts such as financial inclusion and data transparency
to justify its existence, despite far better solutions to these issues already in use. Despite more than thirteen years of development, it has severe limitations and design flaws that preclude almost all
applications that deal with public customer data and regulated financial transactions and are not an improvement on existing non-blockchain solutions."

<snip>

This is my basic argument: blockchain does nothing to solve any existing problem with financial (or other) systems. Those problems are inherently economic and political, and have nothing to do with technology. And,
more importantly, technology can't solve economic and political
problems. Which is good, because adding blockchain causes a whole slew
of new problems and makes all of these systems much, much worse.

<snip>

<references>

Damn, these are pretty bold and incendiary claims. As much as I respect Schneider, I can't help but wonder why there's such a pure, unadulterated vitriol on blockchains coming from him. It seems to me
that he's choosing the anti-blockchain hill to be the place to die on.

--

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ldpshddtti <uudbdjctko@qnqwvbhkwi.invalid> writes:

Ben Collver <bencollver@tilde.pink> writes:

From:
https://www.schneier.com/blog/archives/2022/06/
on-the-dangers-of-cryptocurrencies-and-the-uselessness-of-blockchain.html

Damn, these are pretty bold and incendiary claims.

They are pretty common views.

As much as I respect Schneider, I can't help but wonder why there's
such a pure, unadulterated vitriol on blockchains coming from him. It
seems to me that he's choosing the anti-blockchain hill to be the
place to die on.

Because it’s all fraud dressed up with technology, one way or another.

--
https://www.greenend.org.uk/rjk/

--- SoupGate-Win32 v1.05
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Richard Kettlewell <invalid@invalid.invalid> writes:

ldpshddtti <uudbdjctko@qnqwvbhkwi.invalid> writes:

Ben Collver <bencollver@tilde.pink> writes:

From:
https://www.schneier.com/blog/archives/2022/06/
on-the-dangers-of-cryptocurrencies-and-the-uselessness-of-blockchain.html >>

Damn, these are pretty bold and incendiary claims.

They are pretty common views.

As much as I respect Schneider, I can't help but wonder why there's
such a pure, unadulterated vitriol on blockchains coming from him. It
seems to me that he's choosing the anti-blockchain hill to be the
place to die on.

Because it’s all fraud dressed up with technology, one way or another.

How come? I get that condensing thought into single sentences can convenient. But I would like to know where you're coming from with that
claim.

Either way, just to expand on this discussion more, in the article Schneier writes:

The problem is that they don't do anything their proponents claim they
do. In some very important ways, they're not secure. They doesn't replace trust with code; in fact, in many ways they are far less trustworthy than non-blockchain systems. They're not decentralized
[4], and their inevitable centralization is harmful because it's largely emergent and ill-defined. They still have trusted intermediaries, often with more power and less oversight than non-blockchain systems. They still require governance. They still require regulation. (These things are what I wrote about here. [2])
The problem with blockchain is that it's not an improvement to any system--and often makes things worse.

It seems that, in general, these are his issues with "blockchains". I
don't agree with about one of it and the rest are either "non-issues" or
an opinion to me. I'll just brush aside the "they're not secure" claim
since I don't even know what he means by that in that context.

They doesn't replace trust with code; [...]

I don't get this obsession with "replacing trust with code". I've read
his previous article on this and he makes this claim as well. Is this an
actual claim that cryptocurrencies make? I haven't encountered one that
does this. Maybe those are the scammy ones. But you can never replace
trust with code, and that's not just limited to cryptocurrencies. For anything tech related, you cannot replace trust with code. Some brilliant man already wrote a paper about this back in 1984.

They're not decentralized [4], and their inevitable centralization is harmful because it's largely emergent and ill-defined.

The problem with sweeping generalizations like this is that refuting it
will require me to constrain what I'm talking about to certain applications. With Bitcoin, it is decentralized by design. Taking it
from that, it's "unintended centralization" point is with the development of ASICs. But that's just the market doing its thing to fill
a demand. If we're talking about projects that actively make an effort
to promote decentralization, look at Monero.

Also, the latter half of that sentence is an opinion.

They still have trusted intermediaries, often with more power and less oversight than non-blockchain systems.

Again, another sweeping generalization. I think he's talking about Ethereum here which is not exactly the bastion of cryptocurrency development. If we're talking about Ethereum and the countless Ethereum-dervied coins, then yes, that claim is true. But that is by
design on Ethereum's part.

They still require governance. They still require regulation. (These
things are what I wrote about here. [2]) The problem with blockchain
is that it's not an improvement to any system--and often makes things
worse.

Opinion.

Also, I find this claim odd:

From its inception, this technology has been a solution in search of a problem [...]

When in the very first sentence of the Bitcoin abstract, Nakamoto writes
this:

A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.

So it's either he's woefully misinformed on that or that he's purposefully omitting it. The blockchain was Nakamoto's solution on this problem that he's trying to solve. Maybe he can argue that a blockchain
is *not* the best solution for a P2P digital cash without any intermediary financial institution and I can understand that point. I
might ask him what he thinks is a good solution in solving that problem,
but saying that it's "a solution in search of a problem" is very misleading.

So yeah, I stand by my earlier point that this article is a thinly
veiled incendiary piece aimed at turning people's heads.

But hey, I'm not a prestiged cryptographer so what do I know. I still respect the dude though.

--
Pointless meanderings in a bleak and lonely world.

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On Wednesday, 31 August 2022 at 10:54:07 UTC+2, ldpshddtti wrote:

Ben Collver <benco...@tilde.pink> writes:

From:
https://www.schneier.com/blog/archives/2022/06/ on-the-dangers-of-cryptocurrencies-and-the-uselessness-of-blockchain.html

<snip>

Damn, these are pretty bold and incendiary claims.

Incendiary and one more false/wrong than the other. He
is just repeating the mainstream FUD and brainwashing
ad nauseam that, adamantly of course to any actual
facts and reasons, has been going on for few years now
on all official channels: i.e. since when the powers that
be have started realizing what's the real potential there.

Anyway, we, the present day human incivilization, are
in such a one-way pathological shithole that we'll most
probably manage to get ourselves mass-extinguished
way before any of that gets to actually matter...

Julio

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5GyYap52yQ1UGMWD <ehj46PkBWfBAng9C@VW28LtWn6wknpUMV.invalid> writes:

Richard Kettlewell <invalid@invalid.invalid> writes:

ldpshddtti <uudbdjctko@qnqwvbhkwi.invalid> writes:

Ben Collver <bencollver@tilde.pink> writes:

From:
https://www.schneier.com/blog/archives/2022/06/
on-the-dangers-of-cryptocurrencies-and-the-uselessness-of-blockchain.html >>>

Damn, these are pretty bold and incendiary claims.

They are pretty common views.

As much as I respect Schneider, I can't help but wonder why there's
such a pure, unadulterated vitriol on blockchains coming from him. It
seems to me that he's choosing the anti-blockchain hill to be the
place to die on.

Because it’s all fraud dressed up with technology, one way or another.

How come? I get that condensing thought into single sentences can
convenient. But I would like to know where you're coming from with
that claim.

At this point if you’re not aware of the endless list of blatant frauds
then you’re not paying attention.

--
https://www.greenend.org.uk/rjk/

--- SoupGate-Win32 v1.05
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Richard Kettlewell <invalid@invalid.invalid> writes:

5GyYap52yQ1UGMWD <ehj46PkBWfBAng9C@VW28LtWn6wknpUMV.invalid> writes:

How come? I get that condensing thought into single sentences can
convenient. But I would like to know where you're coming from with
that claim.

At this point if you’re not aware of the endless list of blatant frauds then you’re not paying attention.

Alright. I guess there's no discussion to be had with you.

Cheers,

--
Pointless meanderings in a bleak and lonely world.

--- SoupGate-Win32 v1.05
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Richard Kettlewell <invalid@invalid.invalid> wrote:

At this point if you’re not aware of the endless list of blatant
frauds then you’re not paying attention.

As one writer noted, it's a bit unfair to call all crypto a ponzi scheme.
There are also rugpulls, slow burns, pump & dump, money laundering...

https://www.techtarget.com/whatis/feature/Common-cryptocurrency-scams
--
/* * * Otto J. Makela <om@iki.fi> * * * * * * * * * */
/* Phone: +358 40 765 5772, ICBM: N 60 10' E 24 55' */
/* Mail: Mechelininkatu 26 B 27, FI-00100 Helsinki */
/* * * Computers Rule 01001111 01001011 * * * * * * */

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On Thursday, 1 September 2022 at 00:20:57 UTC+2, Julio Di Egidio wrote:

On Wednesday, 31 August 2022 at 10:54:07 UTC+2, ldpshddtti wrote:

Ben Collver <benco...@tilde.pink> writes:

From:
https://www.schneier.com/blog/archives/2022/06/ on-the-dangers-of-cryptocurrencies-and-the-uselessness-of-blockchain.html

<snip>

Damn, these are pretty bold and incendiary claims.

Incendiary and one more false/wrong than the other. He
is just repeating the mainstream FUD and brainwashing
ad nauseam that, adamantly of course to any actual
facts and reasons, has been going on for few years now
on all official channels: i.e. since when the powers that
be have started realizing what's the real potential there.

Anyway, we, the present day human incivilization, are
in such a one-way pathological shithole that we'll most
probably manage to get ourselves mass-extinguished
way before any of that gets to actually matter...

Up. Fuckers...

Julio

--- SoupGate-Win32 v1.05
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