Security quotes of the week
Security quotes of the week
Posted Mar 1, 2019 11:31 UTC (Fri) by anselm (subscriber, #2796)In reply to: Security quotes of the week by mina86
Parent article: Security quotes of the week
he is an expert in security, therefore his opinion about finances is valid. What?
You don't need to be an expert in finance to figure out that Bitcoin-style cryptocurrencies are at best useless in practice (certainly as “currencies”) and at worst a criminal scam perpetrated on naive idealists with too much money. Common sense will do that for you, and I don't think anyone would claim Bruce Schneier has insufficient common sense.
Posted Mar 1, 2019 21:27 UTC (Fri)
by hummassa (subscriber, #307)
[Link] (3 responses)
I don't have a firm opinion, for lack of "not just the common sense" good arguments, on the subject. Bitcoin is very expensive to mine. Other cryptocurrencies, not so much.
In one thing Schneier is absolutely right: blockchain is the answer only if the question is: "how do I keep a public, perfectly replicated, inviolable (at least in-principle), log of transactions of some kind?" and its only security application is (ta-daaah) to keep auditable but decentralized logs.
Posted Mar 1, 2019 22:49 UTC (Fri)
by anselm (subscriber, #2796)
[Link] (2 responses)
My suggestion would be to read Attack of the 50 Foot Blockchain by David Gerard. That should solve that problem for you.
The main argument against cryptocurrencies, at least against cryptocurrencies like the ones people are touting now such as Bitcoin,
is that they aren't actually currencies, they are a type of unregulated security that has basically no value. According to Martin Walker, you can think of them as “perpetual zero-coupon bonds”, i.e., a form of bond that doesn't pay interest and never matures. (Actual currencies get their value from the fact that you can use them to pay taxes.) The calculable value of such bonds is zero, so they can only be sold to suckers, and the only way of making money with a cryptocurrency is basically to find someone who is a greater sucker than you and is willing to take it off you at a price that is more than what you paid in the first place – where the problem is that prices are artificially inflated by hype and by sleazy techniques such as “painting the tape” that would be quite illegal in the normal (regulated) securities market. It's only a question of time until the normal regulations are extended to cover cryptocurrencies, and at that point cryptocurrencies will probably go away because the sucker-protection rules that apply to the traditional markets will make them unsustainable. (Note also that cryptocurrency exchanges are basically unlicensed banks, and, in most countries, running an unlicensed bank will get you time in jail.)
In addition, it turns out that Bitcoin is surprisingly difficult to sell in quantity for hard currency (US dollars) because, apart from money-laundering regulations that outfits which actually buy Bitcoin for dollars must adhere to, even fairly modest Bitcoin sales make the price drop considerably. If you're sitting on 1000 Bitcoins these may be “worth” some $3,000,000 or more according to the current “exchange rates” but it's not as if you could actually realise that value – and that should make one think.
Posted Mar 7, 2019 15:01 UTC (Thu)
by hummassa (subscriber, #307)
[Link] (1 responses)
Ah, yes, prices are overinflated, the rest of your argument is absolutely sound. But the value part is kind of core... :-)
Posted Mar 8, 2019 12:55 UTC (Fri)
by anselm (subscriber, #2796)
[Link]
I can use my country's currency to pay taxes, buy anything from groceries to real estate, or buy the currency of other countries. If I obey the relevant regulations there is no problem with me using Euros to buy millions of US dollars (if I had the money, anyway).
OTOH, there isn't a lot of stuff one can buy with Bitcoin (let alone pay taxes) and the sort of stuff that one can buy is typically either illegal to buy otherwise, or another cryptocurrency. Remember that even at blockchain conferences, they sell Bitcoin t-shirts only for dollars, not Bitcoin. (Also, try buying a million actual US dollars with Bitcoin and see how that works out for you.) This means that as far as Bitcoin has “value” at all, it has value mostly to people who want to buy illegal stuff, and cryptocurrency speculators. As has been explained elsewhere, it is completely useless as an everyday-type “currency” for buying groceries or bus tickets.
It is difficult to figure out what people see in Bitcoin to make them spend lots of actual money “mining” the stuff, but any value proposition there depends strictly on being able to find suckers who are willing to pay more for Bitcoins than the electricity to mine them, depreciation on the mining hardware, rent, etc. costs. And certainly according to the theory, if you have Bitcoins today you would be silly to spend them because if this thing – against all odds – does work out in the end, being deflationary by design, your Bitcoins will be “worth” more next week and even more next year. If it doesn't, you can only hope to unload them on some other sucker, hopefully for not a lot less than what you paid for them yourself.
Security quotes of the week
Security quotes of the week
I don't have a firm opinion, for lack of "not just the common sense" good arguments, on the subject.
Security quotes of the week
Security quotes of the week
It's no more "something of value" than the "I trust my country's government will not go bankrupt and default on the its bonds plus interest rates" thing that make most (all?) fiat currencies...