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Why blockchain is BS - calling out the crypto-mania!

George Lawton Profile picture for user George Lawton July 12, 2023
Summary:
It's time to take a stand - blockchain needs to be seen for it is.

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Blockchain is 99.998305% bullshit. You may be wondering how I arrived at that strangely precise number. I divided the blockchain tools’ annual market size in 2021 by the cryptocurrency market cap and subtracted this from 100. Not a fair metric, you may argue, since market caps and annual revenues reported by suspicious third-tier market analysis firms are entirely different things. 

But it’s probably more accurate than most of the other assessments out there. The fundamental issue is that the casino mentality driving the cryptocurrency mania completely overshadows any real value of blockchain tech innovations. Casinos can be a lot of fun as long as you remember to leave your credit cards at home and before drinking the free beer. But I have an axe to grind, having watched a predecessor to this current mania destroy a perfectly lovely San Francisco community nearly two decades ago. 

Almost every day, my news feed gets bombarded by new predictions that Bitcoin will hit $100,000 this year. As soon as I hit unsubscribe, two other new sources seem to rear their ugly heads, like a Greek Hydra growing two new heads for everyone that gets cut off. It boggles my mind how an entire meme predicated on facilitating money laundering, ransomware, tax evasion, and massive energy consumption could ever be expected to grow.  

And then this whole tokenization concept around repackaging boring computations and contrived art into sexy new computationally secure Non-Fungible Tokens. It sounds pretty cool until you consider how suspiciously familiar it is to the collateralized debt obligations that sparked the 2008 financial crises. It’s easy to question the foundations after reading stories of what Internet pioneers like Vint Cerf had to say to a conference of blockchain enthusiasts. 

False hope

Now don’t get me wrong. I have watched with fascination and expected hopes as many predecessors to this current mania come along and kind of fizzle. First, there was LimeWire, then BitTorrent, and eventually, the InterPlanetary File System (IPFS), which is still sort of sputtering along since it hitched a ride on the blockchain bandwagon. And BitTorrent is still kicking as a resilient file-sharing community but never found a role in enterprise technology strategy. 

And let’s not forget Van Jacobson, one of the pioneers of the TCP protocol. He went on to develop the decentralized Named Domain Networking and Content-Centric Networking protocols in 2006, which promised most of the same things that modern blockchain tech offers – minus a link to a massive pyramid scheme, which is probably why it is not a household name today. 

Despite the crypto-mania, I honestly believe this technology has a role in the enterprise for no other reason than facilitating better conversations about trust across enterprise boundaries - as long as there are sufficient rollback measures when things go wrong. 

There also seems to be tremendous potential in concepts like verified credentials for decentrally sharing certifications like college transcripts, driver’s licenses, and authentication tokens across untrusted parties. Sir Tim Berners Lee has gone on to build an ecosystem of trusted, privately controlled data pods on the core of this technology called Solid for sharing personal data in a controlled manner. 

And the foundations of Berner Lee’s Web 3.0 concept now silently lie at the heart of semantic web infrastructure and knowledge graphs underlying Google’s recent search upgrade. You can see examples of this every time you ask about a movie, and Google helpfully pulls up the cast, duration, and local cinema times using knowledge graphs. Berners-Lee once stressed to me that this is not to be confused with the Web3 meme that got mixed into the current crypto-mania. 

My take

As I alluded to earlier, my beef with blockchain is personal. I feel the hairs on the back of my neck rise every time an enthusiastic PR person or blockchain enthusiast mentions most of the keywords that get linked to this idea, including tokenization, blockchain, smart contracts, metaverse, Web3, and particularly “fiat currency.” 

I first came across the term fiat currency while attending regular monthly potlucks and retreats with the South Bay Living Foods community on the peninsula south of San Francisco in the early 2000s. We would get together and eat fancy raw food delicacies that, in theory, would help us live forever and sometimes tasted good. I made a habit of smelling new items before eating. However, the people were lovely, the discussions enlivening, and the community had a kindred feel to it all.

Then one day, a young couple came in and gave us a presentation on the nature of fiat currency that was driving the modern banking system. They all encouraged us to read The Creature from Jekyll Island, an island off the coast of South Carolina. It was where the US Federal Reserve held a meeting about transitioning from the gold standard to one based on US Federal Debt. It also suggested one of the protagonists of the 1886 novel of a similar name. 

A few months later, a US fellow from Mexico drove up 600 miles in a large Oldsmobile without license plates. He explained how the government kept us in check through taxation. If we just wrote our given names in lowercase and declared ourselves Sovereign Corporations, we could all be free from the evils of fiat currencies. Some of the more enthusiastic community members went on to organize a large fundraising effort whereby we would all send thousands of dollars to this magical other sovereign entity. Then it would gift massive profits back. Only they weren’t called profits because that would have been a business thing. 

The punchline was that a few months later, the money apparently vanished, having been “stolen” by the US Internal Revenue Service on the way to the Bahamas, but in more likelihood, one of the organizers. Sadly, the whole community fell apart after that. Then the fellow that started the whole community in the first place tried fasting on pure water for 30 days like Jesus to purify himself. Tragically he went blind in one eye as a result. 

Today, we call the modern variant of this hustle cryptocurrency. But it breaks my heart whenever I watch a friend lose a packet or their good composure to these innovations. I completely forgot that whole story, which came crashing back to me after watching the HBO series The Anarchists, about a community of Crypto Anarchists occupying Acapulco for a few years fueled by the promise of a decentralized world. To keep a long story short, it did not go well for most of the participants. They read the same damn book we did.

The challenge is trying to make sense of these new concepts from a feeling sense as much as a thinking process. It was only recently recounting my experience that I remembered the gut feeling that always makes me want to scream when an editor asks me to cover the topic. 

In March of 2019, one respected enterprise tech vendor paraded out Bumble Bee Tuna for me as a source for a story on enterprise blockchain adoption. It did not make sense since it was one company using the tech with a bunch of independent suppliers. Why not just use a database like everyone else since none of the suppliers were exchanging data with each other? Somehow, I wasn’t surprised when I learned that Bumble Bee filed for bankruptcy six months later after management was embroiled in a price-fixing scandal.  

Even though the technology industry seems to rely on an analytical thinking process, there is a role for feeling our way through these things. The new buzzword always has a shiny feel and packaging to it, but quite often, we can feel an echo of something we have felt before. 

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