Why This Computer Scientist Says All Cryptocurrency Should "Die in a Fire"

[Nevilledog]

Link to tweet

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

Despite being hyped in expensive Super Bowl ads, cryptocurrency is now having a difficult moment. As the New York Times reports, “the crypto world went into a full meltdown this week in a sell-off that graphically illustrated the risks of the experimental and unregulated digital currencies.” One of cryptocurrency’s most vocal skeptics is Nicholas Weaver, senior staff researcher at the International Computer Science Institute and lecturer in the computer science department at UC Berkeley. Weaver has studied cryptocurrencies for years. Speaking with Current Affairs editor-in-chief Nathan J. Robinson, Prof. Weaver explains why he views the much-hyped technology with such antipathy. He argues that cryptocurrency is useless and destructive, and should “die in a fire.”

The interview transcript has been lightly edited for grammar and clarity.

NATHAN J. ROBINSON:

Here’s a quote by you from 2018:

Cryptocurrencies, although a seemingly interesting idea, are simply not fit for purpose. They do not work as currencies, they are grossly inefficient, and they are not meaningfully distributed in terms of trust. Risks involving cryptocurrencies occur in four major areas: technical risks to participants, economic risks to participants, systemic risks to the cryptocurrency ecosystem, and societal risks.

In a 2022 lecture about cryptocurrency on YouTube, you are even more blunt and harsh:

This is a virus. Its harms are substantial. It has enabled billion dollar criminal enterprises. It has enabled venture capitalists to do securities fraud as their business. It has sucked people in. So either avoid it or help me make it die in a fire.

*snip*

[XanaDUer2]

1. I don't understand it

Want nothing to do with it

[Wounded Bear]

2. Always seemed like the ultimate Ponzi scheme to me...

I've always avoided them and will continue to do so.

[Phoenix61]

17. Yep, it's the 21st Century, hi-tech version Ponzi scheme. nt

[smirkymonkey]

20. Saw this on Twitter...

"Crypto is Mary Kay for Tech Bros"

[hlthe2b]

30. Me too.

[roamer65]

3. Just one Carrington event away from oblivion with cryptocurrencies.

Federal Reserve has billions printed in reserve for just such an emergency.

[empedocles]

7. Wish you would provide more context

[roamer65]

10. ..

https://en.wikipedia.org/wiki/Carrington_Event

[empedocles]

11. I did look that up. The Federal Reserve fund?

[roamer65]

16. I remember reading in the past they store printed currency for any national emergency.

Just the FRB of NY stores about $100B itself in the cash warehouse.

Other FRB’s store it as well.

[Silent3]

25. A bad Carrington event will fuck up everything

Crypto currencies more than traditional currency, yes, but we could be so badly screwed for so many years and in so many ways that crypto dying would be a mere footnote in the history following such an event.

[roamer65]

26. Yes. If it was in the same magnitude as 1859 we would be royally fucked.

We missed one in 2012 just by a day or so.

[stopdiggin]

4. well, can't call this guy a fence sitter!

any commentary or opinion of my own would be considerably half-baked - but I'd recommend the read as worthwhile. I expect that 'coin' will rebound (to some extent, and with perhaps winners and losers?) - but that in no way addresses any of the issues involved.

[dalton99a]

5. "Obviously he doesn't understand the algorithm"

"He's just jealous because he missed out"

"This is the future. Why does he want to live in the past?"

etc.



Weaver knows his stuff. A must read.

[48656c6c6f20]

6. This idea is way better.

In 1971, President Richard Nixon took the U.S. off the gold standard, saying that the U.S. would no longer convert dollars to gold at a fixed value. That move effectively delinked the dollar's value to the price of a tangible good and allowed it to float freely.

Floating freely is way better.

[roamer65]

13. Most people don't get that gold was simply made a floating rate currency by that move.

Gold and silver are easily converted into any other floating rate fiat.

[hunter]

19. There's that word "fiat" again.

I don't think it means what defenders of cryptocurrency think it means.

[ProfessorGAC]

21. Spot On!

They also ignore that the "full faith" statement is supported by a functioning tangible economy, which is further supported by assets of nearly $270 trillion.
Fiat doesn't just mean "trust us".

[Wounded Bear]

22. "Fiat" currency are at least backed by the country that presents it...

Crypto is backed by...what?

Yeah, I'll continue to avoid it.

[sarcasmo]

8. Reddit crypto was crazy yesterday.

[Iwasthere]

9. IT IS NOT GOING AWAY

How did your stocks do last week? Eventually BTC will seperate from tech stocks and be a safe haven far greater than gold and silver can dream of. How has gokd done in the last couple decades as a safe haven?

[Nevilledog]

12. You sound agitated. Got lots of crypto?

[empedocles]

14. 'BTC' ?

[Celerity]

32. BTC is Bitcoin. Like USD is US Dollar. SEK is Swedish Krona, etc etc.

[patphil]

18. There are at least 2 major differences between bitcoin, paper currency, and gold or silver.

1) Gold and silver have intrinsic value as precious metals. They are real, tangible elements that may fluctuate in value, but are essentially timeless.
Bitcoin has no real substance. If a CME knocked out the world-wide electrical grid, and the internet went down, it would cease to exist.
Paper money and element based coins could still circulate, along with precious metals.

But bitcoin would be dead, as would be credit cards.
But at least credit cards have traditional currency behind them and are not actually currency in themselves; just a measure of actual currency.

2) Bitcoin will never achieve the level of trust of a nationally backed currency unless nations decided to make bitcoin their national currency. That would preclude the need to waste all that energy generating bitcoin. The government would just declare the currency to exist, the same way it does today. We already have electronic currency, without all the expense and risk of bitcoin.
Essentially bitcoin is a risky alternative form of existing electronic currency, which is at least somewhat backed by paper, and gold.

I don't see any good argument for using bitcoin except as a niche currency for people and businesses that don't want anyone tracking their transactions.
It's never going to be mainstream without the blessing of governments, and if governments bless it, they'll co-opt it into their existing financial structures and it will cease to exist as independently generated pseudo-wealth.
Governments don't like a currency they can't control.

[JCMach1]

15. Crypto-luddite... Like all revolutionary tech, blockchain isn't going anywhere

But will there be tech haters..., Yep

Like all tech, is it all good... Nope

Have tech investments across the board cratered in recent weeks... Yep

Should you invest only in crypto and tech? If now is learning the answer is NOPE you should have never invested to begin with.

Are most of you using tech powered by crypto and/or Blockchain already...? Yep, close to 100% whether you know it or not.

End of my 30sec. tED talk (with a little t)

[ProfessorGAC]

24. Nothing Luddite About It

Your rant does nothing to alter the root flaws pointed out in the linked article.
You want to gamble&0 & call it investing, fine.
Denigrating others who see it differently is childish.

[JCMach1]

33. Dead wrong sorry

Frankly glad to drop you on ignore. Bye bye now

[Silent3]

27. Block chain itself as a distributed ledger has some utility...

...but using it as a basis for virtual currency is the problem, for all the reasons outlined in the article, which have nothing to do with block chain itself.

[hunter]

31. I like this quote from the article:

Most of these "decentralized" organizations are not actually decentralized. They are identifiable entities. So when you have regulations that apply to identified entities, like say money transmission laws, apply them to the named entities. Cryptocurrency is pseudonymous, not anonymous. So actually enforce requirements on transfers to make sure that money that’s been contaminated by bad stuff is not allowed. That would disrupt a whole bunch of bad activity.

To put it bluntly, the SEC needs to grow a pair. Because this space is provably negative sum. It can only harm investors. Everything in this space, for the most part, ticks boxes for stuff that the SEC is allowed to regulate, which it should regulate.

If the SEC does "grow a pair" I'm sure all the cryptocurrency enthusiasts will claim it's some great government conspiracy to protect their own "fiat" currency, "Just like China!" or some other nonsense, but that doesn't change the underlying reality.

A more timid SEC is probably waiting for this thing to flame out on it's own, which is a bad thing for the people who continue to believe and all those harmed by the other "bad stuff" of the cryptocurrency trade.

[Earth-shine]

23. You know why they invented NFTs (nun-fungible tokens)?

To give people with crypto something to spend it on.

Intrinsically valueless currency to purchase intrinsically valueless digital files.

[empedocles]

29. .

[Hortensis]

34. :) Something to that I imagine. A market created by the appeal of

virtual purchasable by virtual, offered special to those who engage.

And of course where demand would be expected to develop (just human nature), supply would find it remarkably free and easy to oblige.

[LiberalFighter]

28. Totally agree. It is nothing but a scam.

[Hortensis]

35. Thanks for the article, Nevilledog. Worth reading.

Link to tweet

[honest.abe]

36. "And the reason I've gotten so sour on the cryptocurrency space is the ransomware"

From the article..

And the reason I’ve gotten so sour on the cryptocurrency space is the ransomware. It’s doing tens to hundreds of billions of dollars worth of damage to the global economy. And it only exists because people can pay in Bitcoin.

So the way it works is that some bad guys in Russia break into, say, Colonial Pipeline. They encrypt all the data and say “Hey, Colonial Pipeline, pay me 5 million bucks or your data’s gone forever.” And Colonial Pipeline pays the 5 million bucks and is offline for a while anyway, and there are gas disruptions on the East Coast.

That exists only because there’s the ransomware payment method of cryptocurrency. Because the alternatives are cash or bank transfers. The banks will not allow payments of 5 million bucks to known criminals in Russia. (Gee, I wonder why.) And if the known criminals in Russia want to pick up a $5 million block of cash, well, that’s a 50 kilogram suitcase that they’re going to have to pick up, and when they go to pick it up they might just get a .308 caliber gift courtesy of the U.S. Marines. And so Bitcoin is the only game in town for them.

This is a major reason to hate cryptocurrency.

[Hortensis]

37. Another reason: Environmental. Carbon emissions.

Frankly, I've read about that several times over the past few years and promptly blew it off and forgot, but apparently it's expanded exponentially with these types of cryptocurrencies and is horribly real. It caught my attention recently, though, that the World Wildlife Fund tried to develop a series of NFTs regarding endangered animals that was less environmentally damaging than others (Melania's eyes?) and failed. Virtual products, real, big emissions.

[honest.abe]

38. The only thing cryptocurrencies are good for is crime..

drug dealing. money laundering , criminal to criminal payments, hiring hitmen, etc.

This is taken from Weaver's presentation on Youtube.

Its very good if you want to understand the nitty gritty about cryptocurrencies.