Blockchain Is Not Only Crappy NSA Technology...,

medium |  Blockchain is not only crappy technology but a bad vision for the future. Its failure to achieve adoption to date is because systems built on trust, norms, and institutions inherently function better than the type of no-need-for-trusted-parties systems blockchain envisions. That’s permanent: no matter how much blockchain improves it is still headed in the wrong direction.

This December I wrote a widely-circulated article on the inapplicability of blockchain to any actual problem. People objected mostly not to the technology argument, but rather hoped that decentralization could produce integrity.

Let’s start with this: Venmo is a free service to transfer dollars, and bitcoin transfers are not free. Yet after I wrote an article last December saying bitcoin had no use, someone responded that Venmo and Paypal are raking in consumers’ money and people should switch to bitcoin.

What a surreal contrast between blockchain’s non-usefulness/non-adoption and the conviction of its believers! It’s so entirely evident that this person didn’t become a bitcoin enthusiast because they were looking for a convenient, free way to transfer money from one person to another and discovered bitcoin. In fact, I would assert that there is no single person in existence who had a problem they wanted to solve, discovered that an available blockchain solution was the best way to solve it, and therefore became a blockchain enthusiast.

There is no single person in existence who had a problem they wanted to solve, discovered that an available blockchain solution was the best way to solve it, and therefore became a blockchain enthusiast.

The number of retailers accepting cryptocurrency as a form of payment is declining, and its biggest corporate boosters like IBM, NASDAQ, Fidelity, Swift and Walmart have gone long on press but short on actual rollout. Even the most prominent blockchain company, Ripple, doesn’t use blockchain in its product. You read that right: the company Ripple decided the best way to move money across international borders was to not use Ripples.

A blockchain is a literal technology, not a metaphor

Why all the enthusiasm for something so useless in practice?

People have made a number of implausible claims about the future of blockchain—like that you should use it for AI in place of the type of behavior-tracking that google and facebook do, for example. This is based on a misunderstanding of what a blockchain is. A blockchain isn’t an ethereal thing out there in the universe that you can “put” things into, it’s a specific data structure: a linear transaction log, typically replicated by computers whose owners (called miners) are rewarded for logging new transactions.

themaven |  I completely agree with much of what you wrote here. I’d like to point out a couple things:

First, in regards to “There is no single person in existence who had a problem they wanted to solve, discovered that an available blockchain solution was the best way to solve it, and therefore became a blockchain enthusiast.” There is in fact at least one such person: me. In 2010 I was looking for a payment system which did not have any possibility for chargebacks. It turns out that bitcoin is GREAT for that, and I became a blockchain enthusiast as a result.

The ugly truth about blockchain is that it is immensely useful, but only when you are in some way trying to circumvent an authority of some sort. In my case, I wanted to take payments for digital goods without losing any to chargebacks. It’s also great for sending money to Venezuela (circumventing the authority of the government of Venezuela, which would really rather you not). It’s great for raising money for projects (ICOs are really about circumventing various regulatory authorities who make that difficult). It’s great for buying drugs, taking payment for ransomware, and any number of terrible illegal things related to human trafficking, money laundering, etc.

Frankly, the day that significant trading of derivatives (gold futures, oil futures, options, etc) starts happening on blockchain, I expect a bubble that will make previous crypto bubbles look tiny in comparison. This is not because blockchain is an easier way to trade these contracts! It is because some percentage of rich traders would like to do anonymous trading and avoid pesky laws about paying taxes on trading profits and not doing insider trading.

I sum it up like this: are you trying to do something with money that requires avoiding an authority somewhere? If not, there is a better technical solution than blockchain. That does NOT mean that what you are doing is illegal for you (it’s perfectly legal for me to send money to Venezuela). It just means that some authority somewhere doesn’t like what you are doing.

Blockchain is inherently in opposition to governmental control of the world of finance. The only reason governments aren’t more antagonistic towards blockchain is that they don’t truly understand how dangerous it is. I wrote at length about this back in 2013 in an article called “Bitcoin’s Dystopian Future”: