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:
- 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.
- 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.
- 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.
- 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.