I recently got challenged to defend my anti-cryptocurrency stance. So I took the opportunity to write a blog post to outline why I believe cryptocurrencies are bad.
Before we start, I’d like to be transparent about a few things:
First, I admit that I am (still) fascinated by the technical aspects of blockchain technologies, especially consensus (Bitcoin and Cryptocurrency Technologies was a fascinating read).
I’ve financially profited from NFTs (I was lucky that my purely academic curiosity about blockchain technology led me to obtain an NFT that recently became worth orders of magnitude of its initial cost).
I’m a nuanced person with nuanced opinions about things. Blockchains and cryptocurrency seem to be an exception (I’m abnormally strongly opinionated about it). I’m not sure why this is the case (I suspect it’s the intersection of understanding the technology and observing what harmful things people are doing with it).
With that out of the way, here are the reasons I think blockchains (and everything it enables, especially cryptocurrencies) are bad:
1. Blockchain technology is a solution in search of a problem that doesn’t exist (yet)
My basic position on blockchains (and specifically cryptocurrencies) is the following:
The argument rests on the following (somewhat abstract) assumptions:
Resources for survival are limited.
Historically, we’ve experimented with various models to distribute the limited resources.
We’ve evolved to leverage deep social structures for survival as a species. For this reason, the most effective models for distributing limited resources tend to rely on collaboration and trust (for example, a modern democracy depends on collective trust in things like constitutions, government institutions, and fiscal policies).
Working together as a species, which requires collective trust, makes life better for most people. Not all. Most.
The fundamental value proposition of blockchain technologies is removing the need for collective trust.
And this is the gist of my stance: why would we want to remove the thing that’s making life better for most people?
That being said, I’m a futurist: I can imagine that trustless systems would be the norm in post-scarcity societies, but until then, I’ll remain grounded.
2. Blockchain technology enables bad actors to exploit vulnerable people disproportionately more than it enables good actors to do good
I don’t have much direct evidence for this, but the data points from sources I trust make me conclude this is right.
Consider, for example, the litany of disasters chronicled on web3isgoinggreat.com. If you trust the source (and I do), it’s not hard to see what damage this is causing to society. Content warning: This is the first Google result I get when searching for “luna suicide”.
From my own experience in hanging out in “web3 communities”, people in those communities are seemingly young, uneducated, and lacking critical thinking skills. The gold rush ethos espoused by the web3 project lures this kind of person in like a moth to a flame. Unfortunately, these are precisely the people who are most vulnerable.
Do another small experiment: go browse the dark web (reminder: this is where people selling child pornography and hired assassins do their business, so be mindful of good security practices) and notice what’s enabling these marketplaces to operate.
To try and argue the opposite, you’d have to come up with a list of counter-examples, cases where cryptocurrency improved people's lives (and here, I don’t mean the guy who took out a second mortgage, got lucky, and retired early). If you can, I might be convinced to change my position. Otherwise, I’ll stick with the evidence.
3. Cryptocurrency is bad for the environment
Just the Bitcoin network alone consumes more energy per year than the entire country of The Netherlands. And what do we get from it in return? Of course, I’m already hearing pro-crypto people shouting “but Proof of Stake!” in my face, but that hardly changes my main argument.
4. Cryptocurrency is not really decentralised yet
Because the infrastructure that it depends on is not decentralised. The popular blog post by Signal founder Moxie explores this idea further.
There exists the hope that blockchain technology can enable a world “where unstoppable censorship resistant web apps exist in opposition to authoritarian regimes.“““I also hope for that world, but I don’t think blockchain technology is the answer there per se (or at least, it can’t be the only answer). When Ukraine asked for help, Starlink was the solution, not Skynet.
A chain is only as decentralised as its weakest link.
5. People that I trust as reliable sources of information tend to be anti-cryptocurrency
See, for example, @molly0xFFF, @smdiehl, @ncweaver and @random_walker. I judge these people as trustworthy because of my judgement of their agendas, intellectual honesty, professional backgrounds and track records. For an especially riveting watch, check out this lecture by @ncweaver (most of the points made in the lecture are very technical, so I’ve omitted them here, even though I agree with them all).
I don’t know anyone I trust as a reliable source of information that’s also pro-cryptocurrency (maybe they exist, and I haven’t found them yet).
Of course, there might be some bias at work here, but the correlation carries weight.
6. Blockchain-related topics are polarising and often lead to unproductive conversations
I will be the first to admit that, when it comes to this topic, I often engage in conversations in a manner that is unproductive and often downright childish. The Twitter thread that inspired this blog post is an example of that. Twitter is awash with conversations with similar overtones (just consider the hate @molly0xFFF is receiving — despite it being high in entertainment value, it’s not productive).
We need more thoughtful dialogue and less throwing stones (and I want to start by taking responsibility for my behaviour — this post is the first step). After all, this is my entire premise against blockchains: humans need to be able to trust each other, and for that, we need to have open and thoughtful dialogues.
Thanks for reading! Think I missed something? Think I’m wrong? Please share your thoughts.