Ask about Crypto Dangers of Cryptocurrencies and the Uselessness of Blockchain

[upnorth]

Earlier this month, I and others wrote a letter to Congress, 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. In response, Matthew Green has written—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, 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.) The problem with blockchain is that it’s not an improvement to any system—and often makes things worse.

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.

Full source:

On the Dangers of Cryptocurrencies and the Uselessness of Blockchain - Schneier on Security

www.schneier.com

 

[[correlate]]

Full source:

On the Dangers of Cryptocurrencies and the Uselessness of Blockchain - Schneier on Security

www.schneier.com

Cryptocurrency is a space for scammers and mafiosi
It is also a reason for the spread of crime, especially digital attacks such as ransom attacks.
What will you gain from an unstable currency?
It may rise to 100 thousand dollars and may fall to 0 dollars. It's a scam
It is similar to hierarchical marketing.
The victim in the end is the last consumer.

 

[n8chavez]

Cryptocurrency is a space for scammers and mafiosi
It is also a reason for the spread of crime, especially digital attacks such as ransom attacks.
What will you gain from an unstable currency?
It may rise to 100 thousand dollars and may fall to 0 dollars. It's a scam
It is similar to hierarchical marketing.
The victim in the end is the last consumer.

Yeah...no. You're just determined to be stupid I guess. Cryptocurrency gives people an alternative to government controlled money. It allows for high liquidity, greater mobility, as well as anonymity. Cryptocurrency has no transaction fees, and i s immune to inflation. Isn't that a dig deal right now? Yes, there are some people scare of it. That's true with anything new. Yes, it is possible it could collapse. But could the same not be said for the dollar or yuan? Those can be worthless too, one day. Do you asssume the goverrnment will protect you, that they really have your best interests in mind? I don't. I don't trust them. Yes, I get paid is USD, but why not diversify?

 

[Digmor Crusher]

Yeah...no. You're just determined to be stupid I guess. Cryptocurrency gives people an alternative to government controlled money. It allows for high liquidity, greater mobility, as well as anonymity. Cryptocurrency has no transaction fees, and i s immune to inflation. Isn't that a dig deal right now? Yes, there are some people scare of it. That's true with anything new. Yes, it is possible it could collapse. But could the same not be said for the dollar or yuan? Those can be worthless too, one day. Do you asssume the goverrnment will protect you, that they really have your best interests in mind? I don't. I don't trust them. Yes, I get paid is USD, but why not diversify?

Yeah..no, I have no idea what you mean by government controlled money, is it the money every country in the world has been using for the past 100+ years? If so it seems to me that is has been working pretty well. Every dollar used by any country is backed to be secure, safe and available, can you say the same for crypto? And not sure why anyone would need anonymity unless their doing shady stuff. Here in Canada bank accounts are insured up to a certain amount by the gov't, so if a bank goes bankrupt we get our money back, but will never happen, as Canada's banks are some of the best in the world, can you say the same for crypto? Now lets think here, where should we put our money, in crypto which may be stolen or decrease in value significantly or in a bank where we know its safe? Crypto is a borderline scam and only fools would risk their money buying it.

This is my impression on how crypto works;

Bob 1 speaking to his buddy also named Bob, Bob 2.

Jan 2021

Bob 1: Hey man, I just bought 20 k of crypto.
Bob 2: Cool man.

July 2021

Bob 1: Dam , my 20k of crypto is only worth 10 k now.
Bob 2: That sucks man.

December 2021

Bob 1: Crap, my crypto account just got hacked, its worthless now.
Bob 2: Bummer, lets go smoke some weed.

 

[[correlate]]

Yeah...no. You're just determined to be stupid I guess. Cryptocurrency gives people an alternative to government controlled money. It allows for high liquidity, greater mobility, as well as anonymity. Cryptocurrency has no transaction fees, and i s immune to inflation. Isn't that a dig deal right now? Yes, there are some people scare of it. That's true with anything new. Yes, it is possible it could collapse. But could the same not be said for the dollar or yuan? Those can be worthless too, one day. Do you asssume the goverrnment will protect you, that they really have your best interests in mind? I don't. I don't trust them. Yes, I get paid is USD, but why not diversify?

Are you looking for quick profit?
But investing in those currencies is the real risk, in the beginning you need to convince someone to buy something that does not have any real value, and then that person sells that thing to someone else, it may be at a high price and your functions, but be sure that this thing is important, its price will go back to zero.
There are also risks such as theft
Hackers steal $100 million (digital coins) from HARMONY.
It only happened yesterday
Buying a gold bar and keeping it is better than buying a worthless digital currency.

 

[[correlate]]

Cryptocurrency investor

 

[n8chavez]

Yeah..no, I have no idea what you mean by government controlled money, is it the money every country in the world has been using for the past 100+ years? If so it seems to me that is has been working pretty well. Every dollar used by any country is backed to be secure, safe and available, can you say the same for crypto? And not sure why anyone would need anonymity unless their doing shady stuff. Here in Canada bank accounts are insured up to a certain amount by the gov't, so if a bank goes bankrupt we get our money back, but will never happen, as Canada's banks are some of the best in the world, can you say the same for crypto? Now lets think here, where should we put our money, in crypto which may be stolen or decrease in value significantly or in a bank where we know its safe? Crypto is a borderline scam and only fools would risk their money buying it.

This is my impression on how crypto works;

Bob 1 speaking to his buddy also named Bob, Bob 2.

Jan 2021

Bob 1: Hey man, I just bought 20 k of crypto.
Bob 2: Cool man.

July 2021

Bob 1: Dam , my 20k of crypto is only worth 10 k now.
Bob 2: That sucks man.

December 2021

Bob 1: Crap, my crypto account just got hacked, its worthless now.
Bob 2: Bummer, lets go smoke some weed.

Yeah, no. You misunderstand what I'm saying. I'm not saying that crypto will ever take the place of a bank. Where you got that idea I don't know. You know that the value of government-backed money changes value too, right? It's called inflation, and conversely deflation. The difference being that with crypto, because of the blockchain, there can only be a certain amount of that "coin." However, governments can simply print more of their currency, thus devaluing what is already in circulation. Don't believe me? Look at the value of the USD between 1970 and now. Can $1 then by the same as $1 now. No. So understand the difference; I'm not talking about if a bank were to go under. I'm talking about the value of the money a bank holds. If that were to be devalued there's nothing any government or insurance can do. This is why people diversify.

An your argument about people being suckers and losing their money if hard for me to understand? Are these people freaking out at dips and selling? That would be the only way to lose money. Never invest with money you cannot afford to lose. I bought BTC @ 2.5K usd, and made a lot of money with it. Of course, you cash out then put in in the bank or reinvest. The point being, treat crypto like the stock market; buy low, sell high, and NEVER sell unless you have to. It's not that hard.

Gone are the days where the USD was backed up by gold. That hasn't been the base for years. How do you protect against inflation? You diversify. It's just that with crypto we have another market to try.

Think of crpto not as a currency. It's not there (yet). Think of it like a tool, like the stock market. The whole point is to see your value go up and then cash out into used currency. If you never sold what would be the point?

 

[[correlate]]

Yeah, no. You misunderstand what I'm saying. I'm not saying that crypto will ever take the place of a bank. Where you got that idea I don't know. You know that the value of government-backed money changes value too, right? It's called inflation, and conversely deflation. The difference being that with crypto, because of the blockchain, there can only be a certain amount of that "coin." However, governments can simply print more of their currency, thus devaluing what is already in circulation. Don't believe me? Look at the value of the USD between 1970 and now. Can $1 then by the same as $1 now. No. So understand the difference; I'm not talking about if a bank were to go under. I'm talking about the value of the money a bank holds. If that were to be devalued there's nothing any government or insurance can do. This is why people diversify.

An your argument about people being suckers and losing their money if hard for me to understand? Are these people freaking out at dips and selling? That would be the only way to lose money. Never invest with money you cannot afford to lose. I bought BTC @ 2.5K usd, and made a lot of money with it. Of course, you cash out then put in in the bank or reinvest. The point being, treat crypto like the stock market; buy low, sell high, and NEVER sell unless you have to. It's not that hard.

Gone are the days where the USD was backed up by gold. That hasn't been the base for years. How do you protect against inflation? You diversify. It's just that with crypto we have another market to try.

Think of crpto not as a currency. It's not there (yet). Think of it like a tool, like the stock market. The whole point is to see your value go up and then cash out into used currency. If you never sold what would be the point?

Crypto money is currently a win-and-loss gambling
But the last player in the series will be a loser for sure.
As for the decline in the dollar or other currencies, it is a natural decline with calculated consequences.
But the current cryptocurrency is just a scam.
There is a large fluctuation in the price, rising the size of the Himalayas and then descending at lightning speed to below sea level Are we in wonderland of course not
Many investors sympathize with digital currencies and the purpose is to make profit and not love others.

 

[Digmor Crusher]

Yeah, no. You misunderstand what I'm saying. I'm not saying that crypto will ever take the place of a bank. Where you got that idea I don't know. You know that the value of government-backed money changes value too, right? It's called inflation, and conversely deflation. The difference being that with crypto, because of the blockchain, there can only be a certain amount of that "coin." However, governments can simply print more of their currency, thus devaluing what is already in circulation. Don't believe me? Look at the value of the USD between 1970 and now. Can $1 then by the same as $1 now. No. So understand the difference; I'm not talking about if a bank were to go under. I'm talking about the value of the money a bank holds. If that were to be devalued there's nothing any government or insurance can do. This is why people diversify.

An your argument about people being suckers and losing their money if hard for me to understand? Are these people freaking out at dips and selling? That would be the only way to lose money. Never invest with money you cannot afford to lose. I bought BTC @ 2.5K usd, and made a lot of money with it. Of course, you cash out then put in in the bank or reinvest. The point being, treat crypto like the stock market; buy low, sell high, and NEVER sell unless you have to. It's not that hard.

Gone are the days where the USD was backed up by gold. That hasn't been the base for years. How do you protect against inflation? You diversify. It's just that with crypto we have another market to try.

Think of crpto not as a currency. It's not there (yet). Think of it like a tool, like the stock market. The whole point is to see your value go up and then cash out into used currency. If you never sold what would be the point?

I just don't trust it.