Mmegi Online :: The big blockchain lie


NEW YORK: With the value of Bitcoin declined by about 70% from its peak at the end of last year, the mother of all bubbles has now failed. More generally, cryptocurrencies have entered a not so cryptic apocalypse. The value of the major currencies such as Ether, EOS, Litecoin and XRP decreased by more than 80%, thousands of other digital currencies fell by 90-99%, and the rest was exposed as true fraud. No one should be surprised by this: four out of five initial coin offerings (ICOs) were scams to begin with.

Faced with the public spectacle of a bloodbath in the market, the calls have fled to the last refuge of the cryptic villain: a defense of "blockchain", the registry software distributed at the base of all cryptocurrencies. Blockchain has been heralded as a potential panacea for everything from poverty to famine to cancer. In fact, it is the most overwritten and least useful technology in human history.

In practice, blockchain is nothing but a glorified spreadsheet. But it has also become synonymous with a libertarian ideology that treats all governments, central banks, traditional financial institutions, and real-world currencies like evil concentrations of power that must be destroyed. The idealist world of Blockchain fundamentalists is one in which all economic activities and human interactions are subject to anarchist or libertarian decentralization. They would like the entire social and political life to end up in the supposedly "unlicensed" public records (accessible to all) and "without trust" (not dependent on a credible intermediary such as a bank).

However, far from having introduced a utopia, the blockchain has given rise to a familiar form of economic hell. Some self-serving white men (there are very few women or minorities in the blockchain universe) who pretend to be messiai for the impoverished, marginalized and homeless masses of the world, claim to have created billions of dollars of wealth out of thin air.

But it is enough to consider the massive centralization of power between "miners", coffers, developers and possessors of wealth of cryptocurrency to see that the blockchain is not about decentralization and democracy; it is about greed. For example, a small group of companies – mostly located in such democratic bastions such as Russia, Georgia and China – control between two-thirds and three-quarters of all cryptocurrency activities, and all regularly increase the costs of transaction to increase their fat profit margins. Apparently, blockchain fanatics would let us trust our faith in an anonymous cartel to no rule of law, rather than trusting central banks and regulated financial intermediaries.

A similar model emerged in the cryptocurrency trading. Fully 99% of all transactions take place on centralized exchanges that are regularly compromised. And, unlike real money, once your crypto wealth is violated, it's over forever.

Moreover, the centralization of the development of the crypt – for example, the fundamentalists have appointed the creator of Ethereum Vitalik Buterin as a "benevolent dictator for life" – has already given lies to the claim that

"The code is law", as if the software behind the blockchain applications were immutable. The truth is that the developers have the absolute power to act as a judge and jury. When something goes wrong in one of their "smart" pseudo-contract buggy and huge hacking occurs, they simply change the code and "fit" one failed currency into another with an arbitrary card, revealing that the & # 39; entire business "without trust" has been unreliable from the beginning.

Finally, the wealth in the crypto universe is even more concentrated than it is in North Korea. Considering that a Gini coefficient of 1.0 means that a single person controls 100% of a country's income / wealth, North Korea scores 0.86, US scores rather unequal 0.41, and Bitcoin gets a surprising 0.88.

As should be clear, the statement of "decentralization" is a myth propagated by the pseudo-billionaires who control this pseudo-industry. Now that retail investors who have been sucked into the crypto-market have all lost their shirts, snake oil sellers who remain are sitting on piles of fake riches that will disappear immediately if they try to liquidate their "assets".

As far as the blockchain itself is concerned, there is no institution under the sun – bank, company, non-governmental organization, or government agency – that puts its balance sheet or register of transactions, transactions and interactions with customers and suppliers on the public decentralized ledger books without permission. There is no good reason why such proprietary and valuable information should be publicly recorded.

Moreover, in cases where distributed diffusion technologies are actually used, the so-called corporate DLT, have nothing to do with the blockchain. They are private, centralized and registered on a few controlled registers. They require authorization for access, which is granted to qualified persons. And, perhaps most importantly, they are based on trusted authorities that have established their credibility over time. All this is to say, these are "blockchains" only in the name. He is saying that all "decentralized" blockchains end up being centralized, the authorized databases when they are actually put into use.

As such, blockchain has not even improved the standard spreadsheet, which was invented in 1979.

No serious institution would ever allow its transactions to be verified by an anonymous cartel that operated in the shadow of the authoritarian kleptocracies of the world. So it comes as no surprise that every time that "blockchain" was piloted in a traditional environment, it was thrown into the trash bin or turned into an authorized private database that is nothing more than an Excel spreadsheet or a database with a misleading name. (Project Syndicate)

* Nouriel Roubini, a professor at the Stern School of Business at NYU and CEO of Roubini Macro Associates, was a Senior Economist for International Affairs at the Council of White House Economic Advisors during the Clinton administration. He worked for the International Monetary Fund, the US Federal Reserve and the World Bank

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