A Critic of Cryptocurrencies Says Bitcoin Needs To Be Burnt With Fire

Tracy Alloway (0:10)

Hello and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:15)

And I'm Joe Weisenthal.

Tracy Alloway (0:17)

So Joe, I think at this point, we've had a number of people either involved in the cryptocurrency boom or massive fans of it on the podcast, correct?

Joe Weisenthal (0:28)

Yeah, we have now, haven't we? I hadn't really like thought about that, but in the last several months, it does feel like even with the sort of boom having waned quite a bit over the last year, we have talked to a number of hardcore true believers.

Tracy Alloway (0:44)

Yes, and we've discussed this before, but our timing on this has been absolutely terrible because we basically waited until the bubble had burst for us to get a bunch of Bitcoin people on.

Joe Weisenthal (0:54)

But at least we didn't contribute to the bubble because I don't think we did a single crypto episode in all of 2017, as far as I know. And so at least when everyone was losing their heads or going crazy, at least we didn't amplify the hype.

Tracy Alloway (1:11)

This is very true. But I think in the interest of fairness at this point, we need to get a sort of anti-crypto person on.

And in my search for this ultimate anti-crypto person, I think I came upon the most sort of vociferous argument against cryptocurrencies and also the underlying blockchain technology that I have ever seen.

Joe Weisenthal (1:37)

Wait, are we talking to Jamie Dimon today?

Tracy Alloway (1:40)

No, it's not Jamie. Jamie Dimon was not that convincing because he came to that conference, said Bitcoin was a fraud. But we know that JP Morgan, at the same time that it says Bitcoin is a fraud, claims to be experimenting with blockchain technology. So no.

Joe Weisenthal (1:54)

No, I mean, there's a really good point here.

And it's something that I've always found frustrating in the debate, which is that there's no shortage of Bitcoin skeptics and Bitcoin critics and people call it a fraud and a Ponzi scheme and a bubble. What there is a shortage of, however, are people who are, who call Bitcoin a fraud or they're skeptical of it, who have actually done the research and have the technical chops to understand it and understand what they're talking about. So you get all these people on stage and they say Bitcoin is a scam. It's like, okay. But what they usually don't have is anything interesting to say after that. And so that is what I'm hoping that maybe we can accomplish today.

Tracy Alloway (2:35)

Absolutely. And what you often hear from the crypto proponents is, oh, well, you don't understand the technology or you don't understand the technology's potential and so it's not worth talking to you.

Okay, so I'm very pleased to say that we have found not only a tech expert, but someone who is sort of the ultimate anti-crypto person who gave a presentation at the Enigma Usenix Conference in California just about a month ago.

The title of this conference was Cryptocurrencies and Blockchain, Burn It with Fire.

You can't get stronger than that, can you? So I'm very excited to say that our guest for this episode is Nick Weaver. He is a researcher at the International Computer Science Institute and a lecturer at UC Berkeley. Nick, thanks so much for coming on.

Nicholas Weaver (3:20)

Thanks for hosting me.

Tracy Alloway (3:22)

So Nick, I gotta say, cryptocurrencies burn it with fire.

You know, you're clearly not mincing your words here. You have strong feelings about the crypto sphere.

Nicholas Weaver (3:34)

Yes, and that's because I've actually been able to watch it for three quarters of a decade now. So what happened when the cryptocurrencies first came out in 2010 and 2011 is most people who looked at it with technical understanding went, oh, this is bovine excrement and walked away.

But I have a monetization model. I can watch the cryptocurrency space and turn it into both academic papers and non-academic papers. And so I've been able to basically mine comedy gold from the field for several years now. And that means I've been aware from the beginning from sagas such as 10% of all Bitcoin being invested in a Ponzi scheme run by a guy called Pirate at 40

Joe Weisenthal (4:33)

So in your presentation and in your talks and tweeting, you're critical of both sort of public blockchains, which is what we call cryptocurrency, and also corporate blockchains. I'm a little less interested in the corporate side because I feel like there are very few defenders of them anymore.

And so you'll find a lot of agreement even among cryptocurrency enthusiasts. When you look at cryptocurrencies, however, and this idea of like Bitcoin as this sort of permissionless kind of anonymous payment system, decentralized, what is in your view, the sort of fatal flaw that makes it not live up to the, the hype of its advocates?