Oh God. Who let Dr. Doom write an article? Oh, the Guardian.
Right, well, here we go. Put on your diapers, chug some laxatives, and let the shitstorm commence.
With the value of bitcoin having fallen by about 70% since its peak late last year, the mother of all bubbles has now gone bust…. Faced with the public spectacle of a market bloodbath, boosters have fled to the last refuge of the crypto scoundrel: a defence of ‘blockchain,’ the distributed-ledger software underpinning all cryptocurrencies. Blockchain has been heralded as a potential panacea for everything from poverty and famine to cancer. In fact, it is the most overhyped – and least useful – technology in human history.
Having correctly acknowledged that crypto prices have dropped, Nouriel Roubini turns his ire to the underlying technology itself, which he brands “the last refuge of the crypto scoundrel.” It’s a shallow attack. Those who defend the underlying technology agree with him that crypto makes for a poor store of value.
The way he puts it, the industrial-scale rush to make use of the underlying blockchain technology—whose frontrunners include the World Bank, IBM, and the New York Stock Exchange—is just a last-ditch effort at self-redemption by a bunch of disgruntled crypto bros who lost $40 in the February bitcoin crash. But really, it’s the difference between screaming Bitconnect egg Carlos Matos and Vitalik Buterin. There are real engineers working on this thing, bro. You should check them out.
A similar pattern has emerged in cryptocurrency trading. Fully 99% of all transactions occur on centralized exchanges that are hacked on a regular basis. And, unlike with real money, once your crypto wealth is hacked, it is gone forever.
You know how that crypto wealth gets hacked, Roubini? Through exchanges, which unlike the virgin bitcoin network, are vulnerable because they are—you guessed it—centralized. Uch, if only there were a way to remove the hack-prone middlemen from the equation.
Moreover, the centralization of crypto development – for example, fundamentalists have named Ethereum creator Vitalik Buterin a “benevolent dictator for life” – already has given lie to the claim that “code is law,” as if the software underpinning blockchain applications is immutable. The truth is that the developers have absolute power to act as judge and jury. When something goes wrong in one of their buggy “smart” pseudo-contracts and massive hacking occurs, they simply change the code and “fork” a failing coin into another one by arbitrary fiat, revealing the entire “trustless” enterprise to have been untrustworthy from the start.
In earlier paragraphs, Roubini contemplates the unappetizing prospect of a global finance system “subject to anarchist or libertarian decentralization.” Middlemen are good, he reasons. But here he’s dribbling on networks’ over-centralization. Make up your mind, Roubini.
He comes back to this point, more forcefully, later:
Moreover, in cases where distributed-ledger technologies – so-called enterprise DLT – are actually being used, they have nothing to do with blockchain. They are private, centralized and recorded on just a few controlled ledgers. They require permission for access, which is granted to qualified individuals. And, perhaps most important, they are based on trusted authorities that have established their credibility over time. All of which is to say, these are ‘blockchains’ in name only.
Roubini’s shifting the goalposts here. In his mind, the term “blockchain” can only refer to the decentralized, permissionless ledgers that he so despises. Those that he takes no issues with, i.e. those deployed widely in FinTech, he cruelly dismisses as “distributed ledger technology,” forgetting that very term is a euphemism for, er, blockchain.
The point is that Wall Street-grade blockchain technologies, as far removed from bitcoin as they seem, have their roots in the exact same cryptographic, Satoshi-approved principles. If anything, they’re “distributed ledger technology in name only.” Because they’re blockchains. Checkmate.
Finally, some frothing vitriol for you to enjoy.
No serious institution would ever allow its transactions to be verified by an anonymous cartel operating from the shadows of the world’s authoritarian kleptocracies.
More often than not, Roubini, cryptocurrencies empower those living in such “kleptocracies.”
Meanwhile, from Twitter:
Ideology of crypto is right wing white supremacist "black helicopters" paranoia & conspiracy about centralized evil governments, central banks, banks, jews, corporations, trusted institutions that need to be destroyed & replaced by libertarian decentralization. Fascist at core!
Because if there’s one thing the KKK loves more than Donald Trump, it’s financial freedom for the unbanked.
Dr. Doom, you’ve outdone yourself.