“Cryptocurrency and Blockchain: Explaining the Fraud in Four Slides” – Twitter | $7,041.83

Cryptocurrencies are provably inferior when you don’t require censorship resistance.

• Any volatile cryptocurrency transaction for real-world payments requires two currency conversion steps
• Any stable cryptocurrency requires any entity to convert dollars to tokens and vice versa at par

Blockchain “security” guarantees are horribly inefficient and overrated

• A “private blockchain” is trivial to implement append-only log: just cryptographically sign a hash claim
• “Publick blockchains” protected by proof-of-whatever promise a “no central authorities”  & “fully distributed trust” append-only data structure. This is a lie.
• Any lottery-based reward creates mining pools
• The code developers also can do act as central authorities
• And protection is limited to the amount of money wasted

Limited capacity fee death spirals: Fun for the whole family…

• If the number of transaction < capacity, the transactions may be cheap, including cheap for spammers who want to occupy space forever
• If the number of transaction > capacity, fee auction death spiral starts, where the price/transaction goes from $0-$30+.
• Either option is exploitable by a moderately-funded adversary

Eulogy made by Nicholas Weaver

Source

Disclaimer

Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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