Thread by @enn_nafnlaus

@GidMK I've been ranting against cryptocurrency for quite a while, and I fully agree with every word he says.

@GidMK TL/DR: blockchain is a database that can store any data. Nothing more. But it's distributed between many parties, who you can't trust. So unlike a normal database, you have to go to extreme lengths to try to prove that they're not lying to / cheating on you.

@GidMK With cryptocurrencies, they're using it like a database of VISA transactions of digital coins, and also generating a small number with each transaction processed. You could of course do this with any database, but distributed you must assume everyone might be lying.

@GidMK Unlike a centralized database, where the central authority can fix problems as needed, everything written to the blockchain is permanent. If it's money, there's no reverting a transaction. If it's software, there's no fixing a bug. Etc.

@GidMK Cryptocurrency advocates argue that this is an advantage. Permanence is good. Central authorities are evil. But rarely are real-world databases designed to be immutable, because that's rarely a characteristic that's *actually desirable*.

@GidMK Another aspect is that all data stored in a blockchain is publicly accessible. You can insert some second inner layer to hide it (most cryptocurrencies don't), but the default is "everyone can see everything", while central servers default to "everything is private".

@GidMK (But of course there are nice cheap laundering services called "mixers" that randomly shuffle up coins between different addresses so criminals can separate their expenditures from the sources of their illicit funds)

@GidMK It's possible to design cryptocurrencies which follow anti-laundering/anti-terrorism/etc and know-your-customer regulations. But the anti-authority attitude of most crypto-advocates are generally staunchly against this.

@GidMK (Of the relatively small portion of crypto advocates who actually make non-speculative financial transactions, it's amazing the percentage who will openly admit to you that they do so to avoid taxes, buy illegal things, etc)

@GidMK In order to avoid the central authority, again, you have to implement proofs of having committed a certain amount of things that cost money to run, which all add together each time a transaction is processed, proving that making the chain took great resources.

@GidMK Usually these resources are processor power and electricity (ASICs). Sometimes it's that plus memory (GPUs). Occasionally it's disk storage (but with a lot of CPU/GPU overhead). In all of them, you're proving you wasted a ton of power, hardware, and made e-waste.

@GidMK Central authorities don't have to do any of this, of course; they have "proof of authority". So their footprint is *many* orders of magnitude smaller per transaction.

@GidMK The theoretical exception for blockchain is "proof of stake", where coins holders are randomly selected as validators, with their coins at stake for validation that others disagree with. Security risks are less well quantified vs. Proof of Work.

@GidMK Even under proof of stake resource consumption per transaction is still vastly higher than a normal database with a central authority. Just not "numerous orders of magnitude more".

@GidMK TL/DR: Blockchain is a massively inefficient immutable publicly-visible database for people who hate central authorities with a passion, and would rather work with peers they can't trust.

@GidMK Governments, for their part, can make blockchain databases they control, too. And entities seeking to evade governments can also used central databases not under said governments' control. Central vs. distributed does not define the ability to evade censorship/control.