Fwd: [Cryptography] Bitcoin is a disaster.

Robert Hettinga hettinga at gmail.com
Tue Dec 29 23:28:43 PST 2020

> Begin forwarded message:
> From: Ray Dillinger <bear at sonic.net>
> Subject: [Cryptography] Bitcoin is a disaster.
> Date: December 28, 2020 at 9:07:03 PM AST
> To: cryptography <cryptography at metzdowd.com>
> Okay, this may be just my depressive side talking, or it may be the
> stress of the last year just boiling over.  But I'm inclined to think
> it's not and it isn't. 
> It is my opinion that Bitcoin is a failure.  Worse than that, it's a
> disaster.  
> The pseudonymity of coins being owned by the bearer of some
> cryptographic key is a failure;  People have been eavesdropping and
> aggressively analyzing the block chain from day 1.  And the block chain
> will always be there, it will always be public, and it will always be
> subject to further analysis.  And we are learning that analysis of that
> record is sufficient to destroy any pretense of anonymity or
> pseudonymity.  
> The scarcity of block chain space has led people to re-invent every
> last feature of the banks they thought they were going to be escaping.
> Including debt brokering (lightning network) and fractional-reserve
> banking, starting with the case of Mt.Gox and continuing to ventures
> today by "responsible" businesspeople who just don't get, or don't
> care, or both, that the entire reason the system existed, as far as the
> early adopters were concerned, was to get away from exactly that.  They
> have made Bitcoin into a debt-based system like any other; as long as
> the "exchange" holds your keys for you, there is no obligation for them
> to maintain assets equal to the deposits.  You can't prove that they
> are, or aren't, maintaining sufficient assets until after those assets
> are spent and the evidence appears in the block chain.
> And it's useless for small transactions.  Had it been deployed to a
> market the size of, say, a college campus it could bear the load and
> the bidding for block space wouldn't exceed the value of most
> transactions.  But had it been deployed to a market the size of a
> college campus, the small pool of miners available would make mining 
> bursty and unstable, and the block chain therefore not well protected
> from tampering.  Same could have happened to Bitcoin early on, which is
> why Satoshi was mining like crazy and jumping on when needed to prop up
> the block rate and back off again when the blocks were coming too fast.
> And that brings us to mining.  Bitcoin mining has encouraged corruption
> (Because it's often done using electricity which is effectively stolen
> from taxpayers with the help of government officials), wasted enormous
> resources of energy, fostered botnets, centralized mining activity in a
> country where centralization means it's effectively owned by exactly
> the kind of government most people thought they *DIDN'T* want looking
> up their butts and where the people who that government allows to "own"
> this whole business work together as a cartel.  
> There's a pretense of monitoring the network to guard against a 51%
> attack, but to me it seems pretty clear that what they're guarding
> against is merely the mistake of the cartel failing to give the latest
> warehouse full of miners a distinct network identity.  The whole idea
> of proof-of-work mining is broken the instant hardware comes out which
> is specialized for mining and useless for general computation because
> at that point the need to have compute power for other purposes is
> absolutely irrelevant in having any effect on mining, and there ceases
> to be any force that causes mining to be distributed around the world.
> It becomes a "race to the bottom" to find where people can get the
> cheapest electricity, and then mining anywhere else - anywhere the
> government tries to make sure ordinary people actually get the benefit
> from electricity bought for tax money, for example - becomes first
> pointless, then a net loss. 
> Mining is f***ng broken, and ASICs make it actively work against a
> significant number of its design goals.
> So, Bitcoin was a good effort, it deployed some new ideas and
> technology, and showed that at some scale the "block chain" idea
> worked, but ultimately, although a successful proof of concept, failed
> to deliver.  It doesn't scale, except by becoming the very thing it was
> supposed to replace.
> The more scalable the network becomes, the more centralized it becomes,
> until ultimately a "scalable" cryptocurrency would be doing things
> exactly the same way as a credit card processor.
> Bear
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