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On the Dangers of Cryptocurrencies and the Uselessness of Blockchain

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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.

In our letter, we write: “By its very design, blockchain technology is poorly suited for just about every purpose currently touted as a present or potential source of public benefit. From its inception, this technology has been a solution in search of a problem and has now latched onto concepts such as financial inclusion and data transparency to justify its existence, despite far better solutions to these issues already in use. Despite more than thirteen years of development, it has severe limitations and design flaws that preclude almost all applications that deal with public customer data and regulated financial transactions and are not an improvement on existing non-blockchain solutions.”

Green responds: “‘Public blockchain’ technology enables many stupid things: today’s cryptocurrency schemes can be venal, corrupt, overpromised. But the core technology is absolutely not useless. In fact, I think there are some pretty exciting things happening in the field, even if most of them are further away from reality than their boosters would admit.” I have yet to see one. More specifically, I can’t find a blockchain application whose value has anything to do with the blockchain part, that wouldn’t be made safer, more secure, more reliable, and just plain better by removing the blockchain part. I postulate that no one has ever said “Here is a problem that I have. Oh look, blockchain is a good solution.” In every case, the order has been: “I have a blockchain. Oh look, there is a problem I can apply it to.” And in no cases does it actually help.

Someone, please show me an application where blockchain is essential. That is, a problem that could not have been solved without blockchain that can now be solved with it. (And “ransomware couldn’t exist because criminals are blocked from using the conventional financial networks, and cash payments aren’t feasible” does not count.)

For example, Green complains that “credit card merchant fees are similar, or have actually risen in the United States since the 1990s.” This is true, but has little to do with technological inefficiencies or existing trust relationships in the industry. It’s because pretty much everyone who can and is paying attention gets 1% back on their purchases: in cash, frequent flier miles, or other affinity points. Green is right about how unfair this is. It’s a regressive subsidy, “since these fees are baked into the cost of most retail goods and thus fall heavily on the working poor (who pay them even if they use cash).” But that has nothing to do with the lack of blockchain, and solving it isn’t helped by adding a blockchain. 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.

Green writes: “I have no problem with the idea of legislators (intelligently) passing laws to regulate cryptocurrency. Indeed, given the level of insanity and the number of outright scams that are happening in this area, it’s pretty obvious that our current regulatory framework is not up to the task.” But when you remove the insanity and the scams, what’s left?

EDITED TO ADD: Nicholas Weaver is also adamant about this. David Rosenthal is good, too.

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ssweeny
7 hours ago
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Pittsburgh
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6 public comments
bronzehedwick
7 days ago
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Crypto is one of the rare cases where if we burn it to the ground it will help our species survive.
Jersey City, NJ
pdp68
7 days ago
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"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."
Belgium
chrismo
7 days ago
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#tech
ReadLots
7 days ago
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If we can just move all of the fraud into the blockchain, maybe then it can have purpose - keeping the scammers busy in crypto and leaving us outside of it alone.
acdha
7 days ago
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Green's “rebuttal” was disappointingly weak — to be honest, I read it expecting the end to be that he'd picked up some lucrative consulting work from a cryptocurrency company.
Washington, DC
GaryBIshop
7 days ago
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Well said!

People are getting explosive gastroenteritis at the Grand Canyon

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The Grand Canyon viewed from the South Rim adjacent to the El Tovar Hotel on November 11, 2019, in Grand Canyon National Park, Arizona.

Enlarge / The Grand Canyon viewed from the South Rim adjacent to the El Tovar Hotel on November 11, 2019, in Grand Canyon National Park, Arizona. (credit: Getty | George Rose)

The Grand Canyon is an immense, vibrantly painted geological wonder, treasured for its awe-inspiring stratified architecture, which has been spectacularly sculpted over millions of years. Up close, it will blow your mind and take your breath away—and if you've visited recently, it may also violently flush your colon and have you projectile vomiting your granola bars.

That's right—the majestic natural wonder has been the site of a months-long outbreak of gastrointestinal illness, likely caused by norovirus. The virus was confirmed to be the cause of illnesses among at least eight rafting trips. Overall, more than 150 river rafters and backcountry campers have fallen ill since April, according to a recent update from the Grand Canyon National Park Service.

While many may have sought the outdoor grandeur in hopes of avoiding the pandemic coronavirus, it seems they were instead met with a different germ that has been savagely hollowing out innards at a pace many orders of magnitude faster than the Colorado River gutted the southwestern section of the Colorado Plateau. Amid the smoothly carved buttes and intricately chiseled chasms serenely shaped over eons, park-goers are blowing chunks from both ends in hot seconds. And instead of reaching both the North and South Rims during their visits, some are forced to remain perched on the edge of a far smaller basin.

It's unclear how exactly the illness is spreading among visitors, and clusters of illnesses have struck unconnected parts of the park. But the park service warns that the highly infectious virus can swiftly rip through river tours and campsites. It can spread from person to person directly, through contaminated food and water, or via contaminated surfaces. The park service advises visitors to wash their hands regularly and practice general cleanliness, avoid sharing food, stay home if they're feeling ill, and isolate people who develop illness during trips.

Gushing gorge

The park also cautions against drinking water from features of the canyon, including the Colorado River, waterfalls, pools, streams, and side canyons, or inadvertently getting water in your mouth while recreating in such waters. If visitors need to use canyon water sources during backcountry visits, the water should be filtered and then either chemically disinfected or brought to a roiling boil.

While horrifying to experience, norovirus is not typically life-threatening. But the park service warns that an acute case of gastroenteritis in an extremely hot, physically demanding environment can easily become dangerous. On Tuesday, the park posted another high heat warning, stating that the inner canyon is expected to reach 110°F (43°C). There have also been several reports of rescues, including sickened people being lifted out of the canyon by helicopter.

But even for those capable of getting out on their own, the escape will likely be a traumatic trek. The park reminds visitors that they are not allowed to leave behind whatever toxic sludge they spew while in the canyon. As the park service notes, "If a restroom is not available, all human body waste solids should be contained and carried out using a portable toilet or a specifically engineered bag waste containment system (capable of being sealed securely and containing enzymes and polymers to treat human solid waste). Vomit should also be contained in a sealable container and carried out of the canyon."

One tidbit of good news is that since the park has begun posting advisories about the illnesses, case reports have slowed to a trickle. The bulk of the cases occurred in May, suggesting the outbreak may be bottoming out.

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ssweeny
3 days ago
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Sharing for the vivid imagery alone.
Pittsburgh
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Little Shop of Horrors: Tiny Desk (Home) Concert

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Composer Alan Menken joins the cast of the off-Broadway production of Little Shop of Horrors to celebrate the show's 40th anniversary.

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ssweeny
56 days ago
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I was obsessed with the (80s) movie when I was a kid. The music is so good
Pittsburgh
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Hot Banana

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I heard that bananas are radioactive. If they are radioactive, then they radiate energy. How many bananas would you need to power a house?

Kang JI

Bananas are radioactive. But don't worry, it's fine.

Bananas are radioactive because they contain potassium, some of which is the radioactive isotope potassium-40. The factoid about banana radioactivity was popularized by nuclear engineers trying to reassure people[1] that small doses of radiation are normal and not necessarily dangerous. Of course, this kind of thing can backfire.

Thanks to their use as a radiation dose comparison, bananas now have a reputation as an especially radioactive food, but they're really not. The CRC Handbook of Radiation Measurement and Protection, the source of the original data behind the banana factoid, lists lots of other foods with more potassium-40 than bananas, including coconuts, peanuts, and sweet potatoes. A large cheese pizza might be three times more radioactive than a banana,[2] and your own body emits a lot more radiation than either.

Potassium-40 decays slowly, with individual atoms sitting around for millions or billions of years before quantum randomness finally triggers their decay. Imagine you're an atom of potassium; every second you roll 21 dice. If they all come up 6s, you decay.

There are gazillions[3] of atoms of potassium-40 in a banana. In any given second, 10 or 15 of them make that all-sixes roll, spit out a high-energy particle, and become stable calcium or argon.

That high-energy particle released by the expiring potassium atom[4] will promptly bonk[5] into other atoms, leaving everything vibrating with extra heat energy. In theory, you could use this heat energy to do work—that's how the Mars rovers Curiosity and Opportunity are powered.

The Mars rovers use plutonium, which decays millions of times per second, releasing a lot of power. By comparison, the 15 decays per second from one banana work out to a couple of picowatts of power, roughly the power consumption of a single human cell. Even if you captured that decay energy with perfect efficiency, powering a house would require about 300 quadrillion[6] bananas, which would form a heap large enough to bury most of the skyscrapers in the NYC metro area.[7]

The potassium-40 in bananas is a terrible source of energy. But that's okay, because you know what's a great energy source? The banana itself! A banana contains about 100 calories of food energy, and if you incinerate whole bananas as fuel, it would only take about 10 bunches per day to keep your house running.

Unfortunately for New York City, which we buried in bananas a moment ago while trying to make the radiation idea work (sorry!), radioactivity vs chemical energy isn't an either/or thing. If you piled up a lot of bananas, they would start to release that chemical energy, one way or another. The sun-baked banana pile would start to rot. The heat from the bananas decomposing in the atmosphere would immediately swamp the heat from radioactivity. The sun-dried bananas would dry, crack, and eventually burn.

Decomposition by anaerobic bacteria deep in the pile would produce various gases, including highly flammable methane. As they bubbled up to the surface of the burning banana swamp, they could ignite; gas buildup from food waste is a major industrial explosion hazard.

So don't worry about the radioactivity in bananas. It's the rest of the banana that's the real threat. But if you're willing to risk the danger, you could power a lot more than just your house. With just a modest weekly supply of bananas—enough to cover Liberty Island in NYC...

...you could power the entire city.

[1] After nuclear engineering, this is the main pastime of nuclear engineers.

[2] Google has a handy tool for looking up the amount of potassium in foods, which even lets you select specific pizza brands. But for some reason, if you select Pizza Hut Pepperoni Pizza, your only serving size options are either "1 slice" or "40 pizzas." Nothing in between.

[3] There are about 800,000,000,000,000,000 of them, which is probably quadrillions or quintillions or something, but life is too short to sit around counting zeros and then looking up the Latin prefixes for big numbers.

[4] RIP

[5] The technical term is THUNK.

[6] Fine, I looked it up this time.

[7] It's 300 quadrillion bananas, Michael—what can it cost, 3 quintillion dollars?

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ssweeny
56 days ago
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Pittsburgh
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2 public comments
jlvanderzwan
57 days ago
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Meertn/Levitz can probably confirm or deny this, but allegedly there once was a physics professor at the University of Groningen who during an excursion with his students to a nuclear power plant triggered the alarms at a checkpoint where they made sure you didn't steal any radioactive materials. The thing was, not only was he not carrying anything, it was on *the way in*.
belehaa
57 days ago
I don’t know about a story involving the University of Groningen, but I do know about Stanley Watras and radon in Pennsylvania https://radon-ohio.com/the-stanley-watras-story/ (I’ve read some old newspaper stories about him, but this was what came up near the top of a quick search)
Levitz
53 days ago
I'm familiar with the story, was it not the man himself de Waard?
jlvanderzwan
53 days ago
That rings a bell... (Hendrik de Waard, for the people still reading along). @belehaa: ah, tha explains the radon-joke in that one Eddie Murphy movie I once saw! Never heard of radon testing in the Netherlands
rosskarchner
57 days ago
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I missed this
DC-ish
MartinHT
57 days ago
Yeah, me too!