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Attack of the 50 Foot Blockchain. Yes, it’s a bubble

Cryptocurrencies are a bubble, just like dot com stocks were, and like tulip mania was too. Yes, really, they are. They will not transform the world, are not inherently secure, and provide little or no actual added value in the real world. Mostly, they are bought by speculators who hope the price will go up so they can cash out and go live on their right-wing libertarian islands somewhere. You did know cyrptocurrencies had their birth in, and still are, highly influenced by hard right, libertarian ideologies, right?

There are so many technical issues and problems. Blockchains are inherently clumsy, are getting ponderously unwieldy and huge, and they can’t scale. Bitcoin can process a maximum 7 transactions a second. That’s not seven transactions a second for your transactions, that’s for the entire bitcoin system. By contrast, Visa does 65,000 transactions a second. And Visa doesn’t need a blockchain, plus it has way better security.

Merchants who try cryptocurrencies invariably find the number of transactions is minuscule, and that it just isn’t worth the hassle. Plus, cryptos are a pain to use. They are generally stored in online wallets, which can and are hacked, as are the cryptocurrency exchanges themselves. A key point is that it is hard to get money out of cryptocurrencies. Also the miners are a consortium, and do collude with each other. If a big player decides to liquidate holdings, the volume is so low that a big sell order will tank the price. This makes penny stock trading look positively stable and ethical.

Making things worse, the code is often clumsily written and easy to hack. ICOs (Initial Coin Offerings) have had millions stolen within minutes of opening. Oopsie, we’re sorry. And there’s nothing you can do because it isn’t regulated. Isn’t libertarianism and no damn gummint in your face just a wonderful thing?

The author dissects this greed fest with humor, wit, and knowledge. Yes, you may make money from cryptocurrencies. But you probably won’t.

The book concludes with:

Everything to do with cryptocurrencies and blockchains is the domain of fast-talking conmen. If anyone tries to sell you on either, kick them in the nuts and run.