Despite being hyped in expensive Super Bowl ads, cryptocurrency is now having a difficult moment. As the New York Times reports, “the crypto world went into a full meltdown this week in a sell-off that graphically illustrated the risks of the experimental and unregulated digital currencies.” One of cryptocurrency’s most vocal skeptics is Nicholas Weaver, senior staff researcher at the International Computer Science Institute and lecturer in the computer science department at UC Berkeley. Weaver has studied cryptocurrencies for years. Speaking with Current Affairs editor-in-chief Nathan J. Robinson, Prof. Weaver explains why he views the much-hyped technology with such antipathy. He argues that cryptocurrency is useless and destructive, and should “die in a fire.” 

The interview transcript has been lightly edited for grammar and clarity. 

NATHAN J. ROBINSON:

Here’s a quote by you from 2018: 

Cryptocurrencies, although a seemingly interesting idea, are simply not fit for purpose. They do not work as currencies, they are grossly inefficient, and they are not meaningfully distributed in terms of trust. Risks involving cryptocurrencies occur in four major areas: technical risks to participants, economic risks to participants, systemic risks to the cryptocurrency ecosystem, and societal risks.

In a 2022 lecture about cryptocurrency on YouTube, you are even more blunt and harsh: 

This is a virus. Its harms are substantial. It has enabled billion dollar criminal enterprises. It has enabled venture capitalists to do securities fraud as their business. It has sucked people in. So either avoid it or help me make it die in a fire.

But perhaps before we get to your justifications for these verdicts, you could start by telling us what you think is the best way for the average person to begin to think about what a cryptocurrency is.

NICHOLAS WEAVER:

Well, I’d start with what it’s supposed to be in theory. So in theory, it’s supposed to be a way of doing payments with no intermediary. So the idea is that if Alice wants to pay Bob a bet for 200 quatloos… 

ROBINSON: 

Hang on, you’ve dropped a word that isn’t a real word. Quatloos is a fictional currency?

WEAVER: 

It’s actually specifically a Star Trek reference. So if you want to gamble with your imaginary currency, there should be no intermediary that is responsible for executing the transfer. It’s just direct peer to peer electronic cash. Or at least that’s the idea. 

Now the problem is: how do you know who has what balance? Electronic cash is actually something we’ve had for decades now. If I want to transfer you money, I use PayPal or M-Pesa or Visa or a wire transfer or this or that. Those all have a central intermediary. And there’s a disadvantage of central intermediaries: They don’t like drug dealers. So as a money transmitter, you are under legal obligations to block a lot of known bad activity. 

With cryptocurrencies, the idea is, let’s eliminate the notion of the intermediary by making our balances public, but pseudonymous. So you’re no longer you, you are just some long sequence of random-looking numbers. And let’s create a ledger in the town square so that everybody’s bank balance is public in the town square, but only …….

Source: https://www.currentaffairs.org/2022/05/why-this-computer-scientist-says-all-cryptocurrency-should-die-in-a-fire

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