Does blockchain make any sense?

612 words

Context: Butarin on non-financial applications of blockchain, 15 tweets. I’ll assume you have read it.

I am deeply convinced that blockchains have no use cases. Trust is provided in the real world by the option to sue people. Trust in most blockchains is misplaced because miner pools are too big and the group of dictators of any coin is small, not accountable and wrongly incentivised. Timestamping data works just as well without using a distributed blockchain. Immutability is provided by standard crypto. The oracle problem is a real fuckin’ serious problem that is only ever resolved through the force of law.

Every function of distributed blockchains can be provided by combining digital signatures, cryptographic commitment schemes, public key cryptography, hashing all data and either periodic or on-demand polling.

So every time Tyler Cowen of Marginal Revolution posts a link to Buterin’s Twitter feed, my confidence in other people’s assertions dies a little bit more.

I’ll take the tweets linked up top in order.

2-5. I think he means “Cryptography allows you to encrypt data, prove data was signed by someone, etc etc… blockchains OTOH allow you to prove that a piece of data was *not* published [according to protocol]”, because the original is obviously false (my daily newspaper published things but is not on any blockchain). The adapted statement is also false, because SSL is based on the very notion that certificates can be rejected and that you can check that a certificate hasn’t been rejected.

6. Not just SSL, GNuPG does this very same thing as well.

7-8.  Blockchains aren’t credibly neutral, every miner on a blockchain has money in it, skewing their incentives in certain directions. Trust only goes as far as you can pay. Cryptographic hashes and signatures can make every database trusted if you can sue its proprietor.

9-11. This might be true, but it is pretty much impossible that performance will ever reach the one of standard crypto, and Buterin conveniently manages to forget the additional cost in programmer-hours. Technological cost is human cost, of the kind which is in most limited supply.

12. This tweet illuminates a lot. Buterin lives in countries without proper online banking and moreover hates privacy of any kind.

13-14. What does this even mean. Anything can and will get hacked. Your hard drive will stop working one day, and your backup won’t work.

15. Smaller stakes \implies smaller mining rewards \implies less miners \implies easier to attack. Also applications breaking incurs a huge social cost; some people are still distrustful of others from when Google Reader (RIP) was cancelled.

I know a lot of computer scientists at my institute, including people who do research into applications of blockchains. Nobody I know believes blockchains are useful apart from black markets, tax evasion, as a novel pyramid scheme, or as a hype for getting grant money.

I get why Cowen falls for Buterin’s sweet talk, he is an economist with no knowledge of cryptography. I don’t get why not more people who know anything about cryptography are speaking out about the insanity of blockchain. My best guess is that everyone who knows stuff about it is using it to either make money themselves, pretending to be enthusiastic to further the pyramid scheme, or profiling themselves as “blockchain expert” and charging high consultancy fees.

Section of doubt

I hope I’m completely wrong and I just misunderstood every statement every blockchain fanatic has ever made. My constant rejection of all their statements does make me question myself, because it seems strange that so many people can be so consistently wrong about a thing. I’d love to show epistemic humility here, but I don’t consider it to be justified.

Post-scripts

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