The dark equation of harm versus good means blockchain’s had its day

Put crypto back in the crypt


Opinion In 1960, Theodore H Maiman made the first laser.

Famously described at birth as a solution in search of a problem, it delivered a Nobel prize four years later, was in barcode scanners in shops 10 years after that, and in 1979 gave birth to the compact disc.

Not content with enabling digital audio, revolutionising many sciences and much else besides, it has since become the glowing heart of the global internet. Yay lasers.

In 2009, Bitcoin was invented – another solution in search of a problem. We don't know its inventor. To date, this bastard technology has yet to solve any problem that needed solving, but boy, has it created a few. Let's put it on trial for its life.

The underlying technology of Bitcoin, the distributed ledger of the blockchain, is undeniably cool and dangerously seductive to intellectual types. A tamper-proof public database that needs no central control and is both transparent and anonymous, it entranced mathematicians and computer scientists. It seemed then and still seems now that something that clever must be useful for something.

Now we know what that is. Cybercurrency, by dint of eschewing central control, is terribly useful for transferring value outside the banking system. Early boosters said that this would reduce costs and increase flexibility so that you could and would be using it to buy things in corner shops, foreshadowing a future where it, like the laser, was a ubiquitous component of the retail experience.

That hasn't happened. Instead, it is at the heart of a $20bn a year world-wide extortion racket. Ransomware, that insanely profitable mega-heist, uses many techniques and is constantly developing, but it is utterly reliant on cryptocurrency to be worthwhile.

Cybercurrency does have a role in specialist retail too, the sort where drugs, weaponry, fake ID, hacking data stashes and dubious services are traded by the internet's demimonde: There is certainly an argument for an open trade in recreational drugs, but not like this.

Another early promise was efficiency. Freed of the need for financial edifices such as banks, regulators and financial rulebooks, cybercurrency would have an inevitable Darwinian advantage. But baby, Bitcoin don't scale. With insane market swings, glacial transaction speeds and the miners' gluttonous appetite for energy, this stuff is an environmental and practical disaster.

Sweden wants to ban it for its power consumption, not because it creates so much carbon dioxide but because it sucks so hard at the teat of renewable energy there's not enough for everyone else.

At this point in time, based on a dozen years of practical experience, no experiment in cybercurrency – or anything blockchain – is fixing real problems. Smart contracts? Not so smart [PDF]. NFTs? Ffffft.

If you want a mildly entertaining few minutes, go and search for "successful blockchain projects." You'll find lots of lists of the top 13, or 30, or 56, "most disruptive" or "most promising" or "must-watch" projects, some with big names attached. Most profitable? Most effective? Most indispensable? You must be joking.

Try running a search for "top crypto scams", though, and you'll find a much healthier market. By some estimates, the total amount of cash abstracted from marks worldwide dwarfs the ransomware haul by a factor of five to one. Even if you discount the headline figures of $100bn because crypto hype is the hypiest hype, the ratio of harm to good is off the scale.

Blockchain is bunkum. It hasn't done anyone any good, excepting boosters, crims and enablers. When the best you can say about a technology is that it has roughly the same role in crime online as stolen art does in the physical world – a useful token of value that is harder to track than bank transfers – you’re not making the world a better place.

Fortunately, we have ways to handle technologies that tend to disgrace themselves. From distillation to driving, nunchucks to nukes, society weighs reward versus risk, harm versus benefit, and sets the rules accordingly. Cryptocurrency has had its chance; it deserves to be so tightly controlled it can barely breathe.

Where cryptocurrencies touch the rest of the world and cause problems, shut those paths down. We close down cannabis farms by tracking energy usage and heat production, that'll do it for miners. We catch criminals when they make transactions they can't explain, so ramp up the reporting requirements on the exchanges. It takes the will to say this is a failed experiment: it is, and it's robbing people of many billions.

As for the non-cryptocurrency blockchain projects: the market will take care of them. You want to convert your supply chain management to blockchain? Go ahead, and see how well you do compared to your competitors just using databases. NFTs – in a well-regulated environment, they may even do some good as robust tokens of ownership. Or not, we kinda know how to do that too. Caveat emptor. Like a feared pandemic that mutates to a mild autumn cold, if the cost of closing them down is greater than the cost of leaving them alone, then let them be. But they can and should be fiercely unfashionable.

We can't kill blockchain: it's an invention, an idea, and may we never live in a society that can erase ideas. It may yet be useful, though you'd be better off betting on Freddie Mercury being beatified by the Vatican. In a world where even lasers are regulated, the need to ruthlessly police the harm blockchain can do can no longer be moderated by the what-ofs that never could be.

It's had its chance. Bust blockchain back to the lab. ®

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