Dan Goodin: Fire (and Lots of It): Berkeley Researcher on the Only Way to Fix Cryptocurrency: "Nicholas Weaver says bitcoin and other digital coins recapitulate 500 years of failure... characterized bitcoin and its many follow-on digital currencies as energy-sucking leeches with no redeeming qualities. Their chief, if not only, function, he said, is to fund ransomware campaigns, online drug bazaars, and other criminal enterprises...
...Private and permissioned blockchains are an old idea—a good idea—just with a new buzzword on it. The public blockchains are grossly inefficient. The cryptocurrencies don't work to provide anything against drugs and ransoms and stuff like that. Smart contracts are an unmitigated disaster unless you like comedy gold. And the field is just recapitulating 500 years of failures. So in the end, the only winning move is not to play—unless you like playing with flamethrowers....
Cryptocurrencies make a poor substitute for the use of payment cards, checks, and old-fashioned cash.... Cryptocurrencies are deflationary.... Cryptocurrencies are hard to hold. Ask just about anyone who has stored large amounts of cryptocurrency in a 'hot walle't" that is, an Internet-connected computer. They will almost inevitably say their wallet has been stolen.... In theory, there are no central authorities that control cryptocurrencies. In practice, quasi-central authorities abound. Consider the 2016 bailout of The DAO, a crowdsourced investment fund, after hackers swindled it out of $0 million worth of Ethereum. The hack exploited a loophole in a "smart contract" that was intended to use computer code, rather than a court of law, to enforce a legal agreement. Ultimately, some members of the Ethereum community voted to void the contract in a move that was at polar opposites to the "code is law" ethos of smart contracts....
Bitcoin and most other cryptocurrencies rely on a permissionless chain of hashes to verify a public ledger of all previous transactions.... The problem, Weaver said, is that these chains have existed for decades in the form of hash chains and have already been used for just about anything that could benefit from it. "For all of those who say 'blockchain will solve X,'" Weaver said, "the only thing it solves is you now know the person knows nothing about X." What's worse, Weaver said, is that public blockchains are woefully wasteful and inefficient. Contrary to what blockchain proponents say, the requirement that many computers participate in resource-intensive "proof-of-work" computations has nothing to do with securing consensus. Instead, it's required to prevent so-called Sybil attacks that subvert a peer-to-peer system by creating a large number of fake nodes. The result is that bitcoin and other cryptocurrencies waste what Weaver said is an "obscene amount of resources." A central authority that designated 10 trustworthy entities could generate the same blockchain with "10 Raspberry Pis using less power than an incandescent light bulb."...
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