Economics

أكاذيب تقنية الكتل الرقمية للمعاملات (بلوك تشين)

Oct 15, 2018 Nouriel Roubini

نيويورك — تتعرض عملة البيتكوين (أم الفقاعات) اليوم للانهيار جراء انخفاض قيمتها بحوالي 70٪ منذ بلوغها ذروتها في أواخر العام الماضي. بشكل عام، تواجه العملات الرقمية المشفرة كارثة متوقعة. انخفضت قيمة العملات الرئيسية مثل ايثر وايوس وليتكوين و XRP بأكثر من 80 ٪، مما أدى إلى انخفاض آلاف العملات الرقمية الأخرى بنسبة 90-99 ٪، وتم اعتبار باقي العملات على أنها احتيالات صريحة. لا ينبغي لأحد أن يفاجأ بهذا الحل: لقد تم إيجاد وسيلة غير منظمة يتم من خلالها جمع الأموال لمشروع عملة رقمية جديدة، والتي تتمثل في العروض الأولية للعملة (ICOs).

وفي مواجهة المشهد العام لصراعات السوق، فر المدعمون إلى الملاذ الأخير لكل وغد متستر: مع حماية "تكنولوجيا سلسلة الكتل (بلوك تشين)"، وهي قاعدة بيانات موزعة تستند إليها جميع العملات الرقمية المشفرة. لقد تم اعتبار تقنية سلسلة الكتل بمثابة الحل المحتمل لجميع المشاكل ودواء لجميع الأمراض بدءا من الفقر والمجاعة إلى السرطان. في الواقع، إنها التقنية الأكثر مبالغة - والأقل فائدة - في تاريخ البشرية.

من الناحية العملية، فان تقنية "بلوك تشين" ليست أكثر من جدول بياناتمقدس. هذا لم يمنعها من أن تصبح شعارًا لأيديولوجية تحررية تعتبر جميع الحكومات والبنوك المركزية والمؤسسات المالية التقليدية وعملات العالم الحقيقي بمثابة تجمعات قوى شريرة يجب تدميرها. إن العالم المثالي لأصوليي "سلسلة الكتل" هو عالم تخضع فيه جميع الأنشطة الاقتصادية والتفاعلات البشرية لللاسلطوية أو اللامركزية التحررية. يرغب هؤلاء الأصوليون في إنهاء الحياة الاجتماعية والسياسية بكاملها في سجلات الحسابات العامة "التي لا تتطلب أي رخصة" (يمكن للجميع الوصول إليها) و"الغير موثوقة" (لا تعتمد على وسيط موثوق مثل البنك).

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Nouriel Roubini

Writing for PS since 2007
174 Commentaries

Nouriel Roubini, Professor Emeritus of Economics at New York University’s Stern School of Business, is Chief Economist at Atlas Capital Team, CEO of Roubini Macro Associates, Co-Founder of TheBoomBust.com, and author of MegaThreats: Ten Dangerous Trends That Imperil Our Future, and How to Survive Them (Little, Brown and Company, 2022). He is a former senior economist for international affairs in the White House’s Council of Economic Advisers during the Clinton Administration and has worked for the International Monetary Fund, the US Federal Reserve, and the World Bank. His website is NourielRoubini.com, and he is the host of NourielToday.com.

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99 Cryptos Nov 22, 2018

@NourielRoubini -Naiveté. i respectfully suggest you employ research & info sources which will not expose your incredulity.

The 90% capitulation in the Crypto industry has taken place while Mr. Jeffrey Sprecher is poised to on-ramp Trillions (yes, with a "T") into this juggernaut.

i suspect you are stacking up BTC clandestinely...
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Emm Bee Nov 12, 2018

Another thought: if fiat-money critics rail against paper money as "it isn't backed by anything", then what is a crypto backed by? It doesn't have a central bank, interest rate or curve; there's no deposit insurance; and it can't be used as collateral or as a unit of account (for the IRS, HMRC, etc.). So a crypto currency is "backed by" much less than even a paper currency. If it's backed by less -- why is it worth more?
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Emm Bee Nov 9, 2018

Cryptocoins are merely an internet protocol for transporting information in a verifiable way. They solve the trust problem on an internet where so much can be faked.
Making money out of cryptocoins is therefore about what you do with the protocol rather than the protocol itself. You can't make money out of internet protocols such as SMTP, FTP, HTTP or database protocols. Value is created out of what is built on top (e.g. Google's ad-leads model in Gmail).
In this sense, cryptos have no inherent, intrinsic value. It's what you do with them that creates value; whether it be a more efficient, trust-based real-time supply chain or custody solution; or an ecosystem of smart contracts built on top of them.
The crypto itself is valueless.
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Sarchis Dolmanian Nov 6, 2018

The way I see it, Roubini scalds a specific technology for the manner in which some 'initiates' have chosen to use it.
Not that different from blaming a gun for the murder in which it was used...
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Resurrekt - Nov 3, 2018

Why did you use a source that was four years old when talking about the wealth imbalance in bitcoin? Did you use four year old information in your presentation to the committee?
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Rich Downing Nov 2, 2018

The fact of the matter is that people who spend more time researching blockchain and genuinely working to understand Bitcoin and other cryptocurrencies, are as a rule, more likely to believe in it. It's not easy to understand. I have experience in finance (M&A) and consulting, an MBA from a top tier program, I'm a tech entrepreneur, and admittedly I was skeptical about cryptocurrency and blockchain for months before finally conceding that Bitcoin really is pretty much inevitable. It's a logical progression in the state of technology. If you're looking for an expert, talk to a technologist, NOT a finance or economics professional. That should be obvious.

The resistance we're seeing from the powers that be (if you work for one, consider your bias) is exactly what we saw with the Internet, to a comedic level, with mainstream pundits and financial analysts (who are not technologists) feeling insecure about their failure to understand the power of such a new and disruptive phenomenon. It's true that the "I'm right and you're stupid" argument is not an argument at all, but it doesn't matter. Such arguments are an unfortunate result of the people who DO understand this stuff growing tired of the talking heads. They (we) shouldn't be so dismissive, but it's very frustrating to argue with people who haven't done the same work involved in learning the technical details.

I know that I, for one, have no doubt in my mind that Bitcoin will eventually be globally adopted, leading the way as it has for many other cryptocurrencies as well. It sucks that so many smart people are taking so long with the uptake, albeit unsurprising. It takes a certain amount of humility to get on board with this stuff, which is in short supply in both financial and academic arenas. There's no need to be fearful or defensive. It's a wonderful develop that will usher in a new era of human progress, and once the detractors find a way to get over themselves - look beyond their egos - they too can participate and be rewarded as early adopters.
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george sos Oct 29, 2018

This is the point that Roubini is fed up explaining in detail and support with data his claims and goes for the "Dont you get it stupid??" technique...:)
Thats not to say i disagree with anything that he says about the subject.(coins and blockchain)
- Peter Schaeffer Oct 30, 2018
  
  I am no fan of Bitcoin (see my other comments). However, Roubini hasn't troubled himself to learn the subject. Comparing blockchain to a 'glorified spreadsheet' shows that Roubini hasn't done his homework.
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Edgar Kirsch Oct 28, 2018

Again, you are funding your arguments on Bitcoin and POW-based cryptocurrencies. Furthermore your comparison that it is nothling more than an Excel spreadsheet is cynical and shows that you fail to be open to the good site of blockchains. Human beings in India, South Africa or other countries with masses of rural population without access to a bank account are given the chance to use their smartphone as a means of storing and trading value. Of course there are hurdles to overcome, but why should we dismiss this chance to improve the life of alot of people just because in our western world you see no benefit in using blockchain? To you its just an Excel spreadsheet, to alot of other people it can be a step closer to financial freedom.
- Blockchainisjust Badsoftware Oct 29, 2018
  
  "hurdles to overcome" There is much more scalable and proven technologies in centralized bank technologies that could be implemented with essentially less hurdles. Overcoming these hurdles of central banking, and governing would also ensure that these countries progress into more stable moral regulated economies.
  Your premise is that Bitcoin would be similar to using your phone for payment, but the currency is massively different then using a credit card. For the most part no one really uses bitcoin yet to actually buy physical goods. If you ever did, the price of physical goods would need to constantly change due to the change in the coins. These prices aren't just figured out automatically, usually when you go to a store there is 1 price that is listed with a paper tag. So if you want to grab 10 items but really you have no idea what they are going to charge you, you can discuss back and forth for awhile and ensure the value of 0.00025 bitcoin for spice, or 0.00033 for milk is a good deal and then proceed. At some point you most likely will be charged ₹14600 rupees for masala ingredients because the vendor can get away with it. This isn't more convenient or stable then dealing in cash of fiat. Bitcoin allows more immoral dealings as well as ensures any decrease of corruption or an increase in equality and quality of life.
  Those countries need a stable, regulated and liable governing body. This would lead more honesty and stable and available currency and economy leading to an increase in quality of life. Pyramid schemes dont increase quality of life for many.
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Edgar Kirsch Oct 28, 2018

While this arguement is valid for a few cryptocurrencies, it does not apply to all blockchain-based cryptocurrencies. Some cryptocurrencies do not need miners (pre-mined).
- Blockchainisjust Badsoftware Oct 29, 2018
  
  "Crypto-currencies" that do not use computationally complex mathematics ie. "mining" do not solve the double spend problem. Ie. The incentive to attack is not guaranteed to be less then the incentive to create. Thus these are essentially not Crypto-currencies they come more closely to an asset such as Pokemon and utilize peoples hype and ignorance as thier "value". This is completely and mathematically 100% true.
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Peter Schaeffer Oct 25, 2018

For the record, I am no fan of Bitcoin or any other cryptocurrencies. For a long list of reasons, I have no sympathy for these 'innovations'. However, much of this article is a mindless rant.

"A few self-serving white men (there are hardly any women or minorities in the blockchain universe)"

Using 'white' and 'men' as four-letter words may be PC. However, it will (rightfully) alienate billions of people who (rather strangely) don't like being discriminated against. Racism and bigotry are bad, even if they are directed against the universal 'villains' of the SJW/cultural Marxist left.

Of course, China accounts for 60-75% of global Bitcoin mining. So much for dominance by 'self-serving white men'. Apparently, the truth and Roubini don't play nice.
- Sambit Datta Oct 27, 2018
  
  Blockchain is an elegant piece of technology that does something very complicated very well. It therefore offers the potential to reduce the necessity and power of centralised intermediaries and platforms. Roubini takes issue with the distributed ledger technology and propounds a contrarian view of the technology based on the wild fluctuations on crypto valuations. Well, money as a store of value has been continually evolving from direct barter to indirect stores of value. There was no paper money before the seventeenth century, credit cards are only 70 years old, mobile payments less than 10. They is no reason not to think that this process of evolution will not continue. In fact, decentralisation could be the Goliath slayer that most platform intermediaries like banks in finance, social networks in information exchange and utilities in the energy sector fear. Yes cryptos are volatile and their value is down, but so what? The fact they exist is a threat to the status quo.
  - Claudio Migliore Oct 29, 2018
    
    And the fact it is a threat to the status quo may be a clue as to why so many vociferous rants surface from generally well educated individuals who seem to be ignorant and mischaracterise the phoenomenon.
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- Claudio Migliore Oct 26, 2018
  
  @Peter,
  Missed the China vs white men thing. Nice catch!
  - Peter Schaeffer Oct 27, 2018
    
    CM, "Missed the China vs white men thing. Nice catch!". Thank you. The "self-serving white men" line is both wrong and irrelevant to Roubini's comments. However, it does show the degree to which bigotry and racism have been mainstreamed by the PC/SJW/Cultural Marxist left.
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Steve M. Oct 23, 2018

There are some misleading facts in the article as pointed out in many comments. My mind is sceptical in general concerning digitalisation of our lives, admitting also life gets easier in many aspects, but also more risky of our data, exposed in any form (blockchain, server or any other way to store and securely transact data).
Blockchain technology could be used for good uses. I work partially in value chains and Governments certifying things, so was thinking blockchain could certify the cow, the slaughterhouse and basically run throughout the value chain until the consumer. Blockchain can secure that the consumer has meat on the table which satisfies legal requirements, bio, ethical or whatever the programmers then put into it. Think also about any security in value-chain management, and much more. But blockchain is just one of the many options out there to secure our digital life, nothing less, nothing more.
Cryptocurrencies is another story, should be put on separate track. It is indeed an illusion money, but same time with more and more real world applications (pay taxes for instances!), it became already real. As said i was sceptical, but looking objectively at cryptocurrencies (the good ones, not the scam), I couldn't find anymore differences to money administered by central banks, as their money as well is now disconnected from gold parity (so no more value, except some paper with numbers on it). The value of USD and EUR for instance is just pegged to a an assumed, but fictious real market value which could collapse as fast as any cryptocurrency (see the financial crisis 2008/2009). So "real value" made more damage than crypto yet. With money, what needs to be addressed is speculation, meaning the gambling with money from others ... banks, insurances, asset managers as crypto managers and many more ... that's the plague ...
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Yves Spalé Oct 23, 2018

Si au moins les mineurs étaient plusieurs (au moins 8) à valider une transaction, pour éviter (tuer) la spéculation ...
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Claudio Migliore Oct 22, 2018

When the Scholar is Angry

I just read, a week after publishing, The Big Blockchain Lie, by Nouriel Roubini on the often thought-provoking if sometimes bland and sometimes self-congratulating Project Syndicate.

I was surprised by the angry and poorly supported rant from a thinker who, generally, I find cooler and more balanced that like-minded opiners such as Joseph Stiglitz or Yanis Varoufakis. If he wanted to create controversy, though, it was a good play, with seventy-nine comments so far, six of them while I write this piece.

Rather than going after each unsubstantiated jab, which I may do separately in my blog, let me stick to the panoramic view of this article.

The doomsday view.

Is there a bloodbath? You might say so judging by the standards of traditional assets with clear established prices that are the promise to deliver a static and clearly stated underlying good. However, if one thinks cryptoassets are in the process of price discovery, oscillations might not be such a surprise. Think of the present as the first few minutes of the Big Bang and consider how behavior deviates from standard physics in this environment. Some “retail” investor likely lost some money, sure, but this is far from rational evidence of a scam.

Blockchain vs Bitcoin

I deride blockchain lovers in Coffe Talk(https://claudiomigliore.wordpress.com/2015/03/16/coffee-talk/), but I have a hard time believing Mr. Roubini buys his own claim that a blockchain is just a spreadsheet. By that measure, penicillin is just random mold and the internal combustion engine just arson inside some iron ore block. The concept of blockchain, though far from the final, winning representative of crypto-value structures, is a genial construct that offers opportunities to coordinate and therefore enhance human activity in ways we cannot completely imagine yet. Claiming the contrary is disingenuous and, from an accomplished academic, suspect.

Economic Hell

The spectre of monopoly, centralization and manipulation is real. I pointed out in Another take on what makes a good cryptocurrency (https://claudiomigliore.wordpress.com/2017/11/20/another-take-on-what-makes-a-good-cryptocurrency/) some problems with bitcoin as Satoshi Nakamoto laid out in his seminal paper. Bitcoin has a scaling problem that goes beyond the petty dispute about megabytes. A truly global crypto platform must scale by distributing and not concentrating and it must be able to forget as much as it is able to remember.

Nevertheless, Mr. Roubini’s arrogant underestimation of the buying decisions of free economic actors is insulting. He assumes mathematicians, financiers and data scientists are regularly duped by very bad hombres in undisclosed unsavory locations. In reality, most crypto holders are highly educated individuals who buy the concept of crypto and use the currencies for their advantage.

Monopoly and manipulation are unpleasant and not necessarily persistent phenomena and roadkill, though unfortunate, should be viewed in a Shumpeter-like fashion, as part of the creative destruction intertwined with progress.

No institution under the sun.

Well, no institution under the sun would have trusted email contracts, digital signatures, telephone conversations for that matter just a few years or decades ago. ‘Nough said.

Appeal to discrimination.

I have no time now to reread and find where in the rant the writer regrets the absence of minorities in crypto (he shouldn’t really, if this is such a scam). But this cheap shot is just in line with attributing it all to “greed” a concept that hardly fits with economic science.

Finally,

My father used to ask “cui prodest”, perhaps assuming someone who pushes something often does it out of self interest of, as Mr. Roubini would put it, greed. In this case, I wish I knew.

I might add that it would be appreciated if Project Syndicate would find a more knowledgeable voice to ponder on crypto. There is no dearth of that around.

https://claudiomigliore.wordpress.com/
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Vader Vader Oct 22, 2018

most banks "only" have 100k government insurance for a bank acount . so if you own 1million $ bitcoin is more safe as a bank. if you know how to keep your private key private. which is not difficult use a paper and pen.
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ZIEMOWIT LASKI Oct 22, 2018

At its core, a blockchain is an encrypted and immutable linked list, meaning that it is very difficult to insert or delete blocks from it. This difficulty rises as the linked list gets longer. So, blockchain creates an audit trail, but it is not a database and certainly not a spreadsheet. Nor does it need to be distributed (though it can be).
- Pathdoc Pathdoc Oct 26, 2018
  
  Hi Ziemowit, thanks for your comment. It challenged me to put some effort into thinking about this carefully. I agree with you up to the point where you say "... but it is not a database and certainly not a spreadsheet." I also agree that, in the presence of a trustworthy host, it does not need to be distributed.
  
  In the following paragraph, I construct an example where a blockchain is represented as a spreadsheet. I would welcome any corrections that you have. If you accept my example, then I think the correct statement is that a blockchain or DL is not just an arbitrary spreadsheet/database, it is potentially much more valuable than that.
  
  To simplify, let's consider an undistributed blockchain, so that there is only one trusted host for the data. Suppose we have a consensus mechanism for agreeing which transaction to record. Moreover, suppose we record an initial transaction on a (spread)sheet that the trusted host then signs, locks and, after encrypting it, places it on a publicly available webpage. It seems reasonable to call this sheet, the initial block. Now, when the next transaction is agreed upon, we send the updated sheet to the host who links it to the initial one in such a way that the new record on the new sheet is entered as an injective function on the set of initial values that could have been entered on the initial sheet. (As you may well know, this means that, whenever the initial record is altered, the function's value will also change.) Moreover, suppose that the host ensures that an alarm will go off (a public announcement) whenever the value of the new record is incompatible with the record of the initial transaction that appears on the new sheet. Once again, the host then signs, locks and, after encrypting it, places this sheet alongside the initial sheet on the same publicly available webpage. Am I wrong in thinking that this is now a second block and that we have nontrivial blockchain? That is, it appears that I have constructed an encrypted audit trail of transactions that are suitably linked and, moreover, one that is immutable (given that it was locked by trusted host).
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ZIEMOWIT LASKI Oct 22, 2018

I see a fallacy here. A speculative bubble and snake oil surrounding a given asset does not invalidate the asset's intrinsic value and utility. Bubbles can occur wrt new technology due to gaping information asymmetries. And, in such situations, outsize returns will accrue to those who first develop or deploy the technology, which would explain the high Gini ratio.
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John Kornblum Oct 22, 2018

If Roubini opposes it, there must be someting good about blockchain .
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Rich Downing Oct 22, 2018

I find it ironic that Project Syndicate advises commenters to be "please be civil and avoid name-calling and ad hominem remarks", not because this is a redundant statement, but because this is how Roubini operates - emotional appeals that are absent of logical arguments or any genuinely rigorous intellectual inspection of what is objectively and mathematically a ground-breaking and world-changing technological innovation.

You people are all reinforcing each other's biases, which won't make the blockchain phenomenon any less successful in achieving mass adoption, which is already global and very encouraging indeed. Technology doesn't care what you decide to tell yourselves. As long as there have been banks, there has been corruption and exploitation, and it's as bad now as it's ever been. Of course Roubini doesn't mention this. Central banks are not creating "real" value. Today's so-called "real money" is nothing more than an outdated mechanism to support the manipulative syphoning of value from the true contributors - entrepreneurs, creatives, and laborers. There's nothing "free market" about today's status quo.

I won't attempt to explain the cryptocurrency phenomenon, because I get the sense that nobody who consumes stories such as this would be interested in objective truth. Bitcoin alone will have (and is having) as significant of impact on the world as the telephone did in its early stages, and which derives its (very real, despite tantrums) value from a similar mechanism, that is, the network effect. Wikipedia can help understand this very basic idea.

Rather I'll defer to an academic who puts all PS contributors, especially Roubini, to shame. His name is George Gilder, and his most recent book, titled "Life After Google" explains the blockchain phenomemon quite well.

Here's a video interview with Gilder about his new book:
https://youtu.be/cidZRD3NzHg

Best of luck to all of you. Long live self awareness, truth and justice. Down with egomaniacal tyrants. Down with inefficiency and fear mongering.
- Blockchainisjust Badsoftware Oct 22, 2018
  
  I find it very ironic that you say "Long live self awareness, truth" but you claim things like corruption is as "bad now as it's ever been". Which is completely untrue. There isn't a person in any right mind that would say that just 100 years ago it was less corrupt. What you have said is a lie. Other things your argument twists and swindles actual truth out of saying how "Roubini operates - emotional appeals that are absent of logical" however just because Roubini has a different opinion then you does not make it an emotional and non-logical. Roubini did present logical issues with the current blockchain space, which many even proponents of blockchain systems will acknowledge. Hmm another Lie, from you.
  Other claims that you make such as "Central banks are not creating "real" value" Central banks are securing, insuring and are liable for the safe keeping of peoples earnings.
  In blockchain space you may have a seemingly more complex and thus "valuable" form of currency, however you lose the insurance, and liability. As well as possibly gain nothing in terms of less corruption or increase in civil equality.
  I would say that this is a much more accurate, true and self aware description of a blockchain system.
  Also "down with inefficiency" Blockchain is an extremely in-efficient computational process, it will always be more inefficient then a centralized system could be. Which unfortunately is required to create that "value" that mentioned.
  Long live actual truth, and thorough and self critical self awareness. Not just "truth" in the form of whatever hyped system happens to get alot of spammy press. If you actually cared about self awareness you would realize the spread of the blockchain systems through the news is essentially just to make $$.
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davidleobonner Oct 22, 2018

Hi, I just see one mistake. The author suggests that the idea of blockchain as a game-changing technology came about as a trick to distract attention from the bad fundamentals of cryptocurrencies. That's chronologically wrong, and also inverts the cause cause and effect. The fascination with blockchain decorrelated from cryptocurrency, initiated in 2015 and was full tilt already in 2016, it preceded and accompanied the rise of crypto.
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Donald Humphreys Oct 22, 2018

I loved this note.

I just read the New Yorker piece on blockchain "technology" and was as just as baffled about the hype as before. I didn't understand it (and according to the New Yorker piece many of the blockchain enthusiasts don't understand it) and don't understand it as a realistic contracts option for typical transactions---how in hell can it replace a multi-million dollar multi-party loan agreement? I can't fathom why it has any traction.

It appears to be the modern too-too-smart-for-their-own-britches uber-techie tulip scam.

Don
- Donald Humphreys Oct 22, 2018
  
  After my posting my comment yesterday I regretted the judgemental snarky conclusion (which was directed more narrowly at cryptocurrencey.) Since I confess not understanding blockchain I am not in position to pass judgement on it. Moreover, since my post I recalled reading a couple of pieces in the UC Berkeley Haas School alum magazine noting that serious academics are looking into various potential blockchain applications. Maybe there is something to it?
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- Rich Downing Oct 22, 2018
  
  We always love to have our biases against inconvenient truths reenforced. That doesn't make them accurate. It doesn't make us any less biased. Indeed, it makes us more biased. How much do you know about psychology - namely cognitive bias?
  
  You are aware that the new/young talent from both silicon valley and wall street is leaving in droves for well-funded blockchain projects, yes?
  
  This might be a good starting point for you:
  https://www.ted.com/talks/kathryn_schulz_on_being_wrong?language=en&utm_campaign=tedspread&utm_medium=referral&utm_source=tedcomshare
  
  Best of luck to you!
  - Rich Downing Oct 23, 2018
    
    I'm sorry that you're unable to fathom it, Don. That's a bummer. It's really not that complicated. Anything that can be mocked up on a spreadsheet, can be automated. Try harder!.
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Pathdoc Pathdoc Oct 22, 2018

I have a lot of respect of Roubini, but this is a low level debate he is hosting here. He doesn't even define blockchain before criticising it. Is it the encryption aspect of blockchain that he doesn't like? For, if my hard disk is encrypted and my encryption key is safe, I could indeed "leave it out" for everyone to try and hack and the probability of being hacked would be roughly the same as if it were hidden behind a Pentagon firewall. But perhaps my hard disk is less safe than a Pentagon server: no serious institution would ever allow it's motherboards to be hardware hacked would they? Yet Business Week has evidence that over thirty have. I think it is reasonable to ask whether Blockchain/DLT can help maintain trust (by users) in markets where hardware could be hacked.
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Enrique Woll Battistini Oct 21, 2018

Global Environmentally Friendly Comprehensive Socioeconomic Development must be based on real people, real economics, real currencies, and honest hard work, fueled by enlightened investment, pristine profit and savings, in the context of private-sector led partnerships for development with multilateral and governmental cooperation. Not on fantasy. Some relevant ideas:

https://www.academia.edu/15092472/Living_in_Peru_-_Peru_in_Copenhagen_Thoughts_on_The_Right_to_Pollute_-_Does_it_Exist_-_2010102701

https://www.academia.edu/23094646/OFA_At_the_Brink_of_Recovery_or_Conflagration_The_World_at_a_Tipping_Point_2011111506

https://www.academia.edu/24596360/TRUTHOUT_-_The_solid_wall_between_the_1_and_the_working_poor_in_the_USA_The_perverse_and_persisting_conundrum_of_the_minimum_wage_-_2016041801

https://www.academia.edu/24438374/Notiagro_Decisiones_consensuadas_decisiones_aletargadas_2010010601

https://www.academia.edu/21950018/Facebook_-_Staving_off_the_impending_effects_of_unemployment_through_increased_consumption_-_2013031902

https://www.academia.edu/18040396/Living_in_Peru_-_Uses_and_Limitations_of_Michael_Greene_s_Social_Progress_Index_SPI_for_Development_-_2015102202

https://www.academia.edu/15077925/The_Formulation_of_Ad_Hoc_Green_Development_Strategies_-_2009082801

https://www.academia.edu/14174471/The_definition_of_a_nation_in_the_wider_global_context_-_2011110604

https://www.academia.edu/14174442/La_falencia_de_los_paradigmas_de_gobernanza_post_II_guerra_mundial_The_failure_of_post_World_War_II_governance_paradigms_-_2011100703

https://www.academia.edu/13947987/La_elaboraci%C3%B3n_de_propuestas_para_el_mundo_de_hoy_-_Junio_24_2005_-_2013010902

https://www.academia.edu/13062837/La_Reforma_Tributaria_del_Siglo_XXI_The_XXI_Century_Tax_Reform_-_2011100411

https://www.academia.edu/13062623/Informal_Proof_of_Thomas_Pikettys_Thesis-2014060802

https://www.academia.edu/12631728/Research_Questions_The_Role_of_Investment_Promotion_Organizations_in_Third_World_Development_-_2008020102

https://www.academia.edu/14177013/The_new_New_World_Order_-_2009040505

https://www.academia.edu/12823875/An_idea_set_forth_in_1992_and_written_up_in_1993_A_Partnership_for_Development_with_the_United_States_of_America_-_1993101201

https://www.academia.edu/12823884/Some_attempts_at_promoting_A_Partnership_for_Development_with_the_United_States_of_America_-_1997031002

https://www.academia.edu/12823841/Mathematical_Model_and_Simulation_for_A_Partnership_for_Development_with_the_United_States_of_America_-_December_1999
- Rich Downing Oct 22, 2018
  
  Bitcoin is more real than any fiat currency that can be printed easily on a whim of the powerful/disconnected, who have proven that they absolutely do not care about the wellbeing of the masses.
  
  Wake up. Do the work involved in understanding blockchain and cryptocurrency. You clearly do not understand it.
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- Eric Swanson Oct 21, 2018
  
  It doesn't take much to have the Gold Bugs emerge. Why do those who claim to have a democratic agenda attack institutions under democratic control. It's the paradox of Andrew Jackson.
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Andrew (Andy) Crow Oct 21, 2018

"Apparently, blockchain fanatics would have us put our faith in an anonymous cartel subject to no rule of law, rather than trust central banks and regulated financial intermediaries.

...who make their own laws and regulations. They do !

If the erstwhile respectable financial industry either behaved itself decently or was effectively regulated there wouldn't be a niche for blockchain.

This is a shameful apologia for the conservative establishment's financial services.

Shame on you, NOURIEL ROUBINI.
- Rich Downing Oct 22, 2018
  
  Great comment. Hear hear! Well done.
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Douglas Leyendecker Oct 21, 2018

The more likely alternative to fiat currency will be a return to currencies backed by hard assets. If the fiat currency system unraveled there would be no Internet and with no Internet there's no crypto anything. Yes, fiat currencies have created an unsustainable economic system built on faith (an economic religion?) but the ultimate unraveling will benefit those countries with natural resources...where ALL economy begins.
- Andrew (Andy) Crow Oct 21, 2018
  
  There is no problem whatsoever with Fiat currency except that political and financial authorities won't use it properly except for their own enrichment and the furthering of their own agendas.
  
  Hard asset backing is barking at a moon of nostalgia. Not only was it never effective, but also it never will be. It doesn't work. It can't work. Though I take your point about economics being about real resource management, if indeed that is what you are saying. I'm not entirely confident that you are.
  
  Modern Monetary Theory explains why and how to run a fiat currency system, and the sooner 'ordinary' people get their heads round that (and it isn't complicated in principle) the sooner Central Bankers and Finance ministers will have to stop lying to us and doing as they please to the detriment of the rest of us.
  - Derryl Hermanutz Oct 22, 2018
    
    Exactly! I became aware that commercial banks, not governments, issue the money supply of nations, about 35 years ago; and have been advocating monetary system reform (government issuance of debt-free, interest-free money) ever since. When I first read Warren Mosler’s Soft Currency Economics I thought, here is a guy who understands money! But after becoming associated with MMTers I became aware that they claim the US government spends money into existence by “marking up accounts”; and the government only issues interest-bearing Treasury debts to provide private sector investors with interest-earning assets. In reality, only banks have administrative authority to “mark up” (credit) bank account balances; which only happens when banks create new bank deposits to fund their bank loans and bond purchases; and happens within the bank-operated payments system when banks debit payer account balances and credit payee account balances. We already have a globally-integrated digital money and payments system: bank deposits and the bank-operated electronic payments system. May cryptocurrency fans believe crypto is an alternative to government-issued “fiat money”. Most of our money supply is actually commercial bank-issued credit-debt money that is payable - by debtor-banks to creditor-deposit account customers - in central bank-issued fiat currency (banknotes). Monetary system reformers dream of a world in which we use debt-free government-issued fiat money instead of debt-based commercial bank credit as our main form of money.
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Robert Goldschmidt Oct 21, 2018

The critics of cryptocurrency and blockchain continue to fall back on national currencies as the be all and end all. They need to consider some of the potential international uses.

Protection of cash assets when national currency valuation is under attack

In the age of climate change refugees, the ability to transfer liquid assets out of a country without possibility of government intervention.

The payment of a global minimum wage directly into the wallets of workers according to their labor contribution when a retail sale is made.

Only one or two high volume exchanges have ever been hacked. Anyone taking the time to investigate can find reputable exchanges that are secure. In addition, when dealing with substantial sums, they would protect themselves by quickly transferring any converted cryptocurrency out of their exchange into a properly designed private wallet.
- Blockchainisjust Badsoftware Oct 22, 2018
  
  Apart from the "uber-rich" tax evasion purpose. International currency could be accomplished in more efficient and flexible ways. This would require these separate governments, which inherently will exist, to work together in a reliable and stable manner. This is a progressive step to not only form a economically and efficient international fiat currency, but to also create a more stable and equal quality of life globally. This most likely will happen at some point if citizens and governments progressively work to achieve it (vs. just trying to scheme each other for $).
  A blockchain system introduces a system that is quick, non bureaucratic, and will allow "uber-rich" tax evasion across borders, as well as a very in-efficient and volatile market, that also introduces even more issues with regulation and corruption.
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- Andrew (Andy) Crow Oct 21, 2018
  
  You hit upon what will make the difference between life and death of crypto currency.
  
  If it will enable the uber-wealthy to move their financial assets across international borders un-taxed and unhindered you can be assured that it WILL work.
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Alan Barbier Oct 21, 2018

Mr Roubini"s article reminds me of the kind of argument that a sled manufacturer would have used against the invention of the wheel.
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Nathan W Oct 21, 2018

The author's perspective is missing an important piece of information.

Blockchain in finance and trading companies is not supposed to have benefit through *publicly*-distributed ledgers. It's supposed to be (potentially, for example) for an internal clearing process to automate certain transaction processes until completion of all required steps, or otherwise a satisfactory completion of the trade (e.g., including delivery, partial payment at stages, or final approval/clearing of the transaction).
- Andrew (Andy) Crow Oct 21, 2018
  
  The author's perspective is to bleat on behalf of the financial markets about the threat to their privileged position of being able to be (very highly) paid for offering no useful service to society.
  
  We need financial services, but the ones we have, have become highly destructive. Their entire raison d'etre now is to extract wealth from public to private ownership.
  
  Somehow it has to be stopped, and if Blockchains can do it or contribute to the process, well and good.
  - Rich Downing Oct 22, 2018
    
    Ha! I love these comments of yours. I'd like to connect on LinkedIn if that's OK and see if we can work together.
    
    This is how doers (makers, innovators) operate, people. Observe!
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oleksowk Oct 20, 2018

So if my real money is hacked, I get all of it back from someone or something? You're money is gone no matter what. It got hacked. Its gone. Real or no real does not matter. Hacked is hacked. Gone is gone.
- Edgar Kirsch Oct 28, 2018
  
  Some exchanges are hacked, but not all are hacked on a regular basis. In a sphere as new as this, it is unfair to demand 100% security in all cases (Case = exchange). You should consider that VC money started to flow in in late 2016, and exchanges are currently developing into bigger and better businesses. Further, banks get hacked quite regular too.
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#Instigateur #Instigateur Oct 18, 2018

The jig is up. While the remainder of the argument is as patently absurd as it is self contradictory this is true. DLT as most banks and other know it has indeed "nothing to do with blockchain" - having fatally undermined their own implementations by taking control back so they can do what they want.
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Ronen Sartena Oct 17, 2018

What about using blockchain in emerging economies where citizens don't trust their government? Couldn't that be a good use case and actually eliminate corruption where it is most probably relevant?
- Rich Downing Oct 22, 2018
  
  Very good point, Ronen. This is one of many positive aspects of the blockchain phenomenon that isn't being fairly covered by bias media such as PS.
  
  And for the record, I actually appreciate most of what Project Syndicate publishes. They just need to open their eyes on this particular subject. First step is to get rid of Roubini and other "reality TV" (populous) writers. These articles are like the like selfies of academia.
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- Blockchainisjust Badsoftware Oct 17, 2018
  
  As blockchain allows a significant decrease in both liability and authority in economic markets. There is very little reason why it would ever be able to achieve any decrease in corruption at all. A blockchain system has no systems to deter corruption. Essentially everything comes down to computation and complete anonymity.
  - Rich Downing Oct 22, 2018
    
    LOL it's new software. All new software is buggy and requries testing and development. Thing is, Bitcoin is the most basic kind of software imagineable. It's just a transacting program (person A gives X BTC to person B) and a single spreadsheet (list of historic transactions) for a database. Can't really screw that up.
    
    But anyway Bitcoin is a follow-on cryptocurrency variant to an earlier version, which was called BitGold. Bitcoin is the improved version. It's not going anywhere, despite the resistance from established defenders of outdated monetary mechanisms. This is an expected and common phenomenon in any disruptive innovation's path to mass adoption, as loathsome a phenomenon as it is. Standard and basic, albeit highly annoying obstacles.
    - Blockchainisjust Badsoftware Oct 22, 2018
      
      "Bitcoin is the most basic kind of software imagineable" its not basic. It requires encryption, it requires distribution, it requires signed access. It requires large, and ever growing, amounts of electricity. It also now needs to function more then "a transaction" but as a complete bank, which introduce PC access issues, exchange issues, network issues, operating system issues. Following issues even grow, hardware issues, social issues, volatile issues, scam issues, also yes bugs, malware, spyware, trojans. All of this also the blockchain system is also just running atop Windows 10 with its own huge list of issues :/ not a great balance...
      "any disruptive innovation's" Im sure there are examples of ridiculous "disruptive" systems such as scientology, radium, DOS etc. Bitcoins advantage to these is that it does achieve a single mathematic achievement, singularly solving the "double spending problem". This is the only thing new however once bundled together there is troves of claims without the critical thought of actual mathematics and valid solutions becomes disruptive. Everyone wants a piece of the new thing, but they don't want to actually use math which they dont understand, these are called scammers. Even Satoshi himself claimed he never intented Bitcoin to be used as a standard. It was not built for the masses, but the masses certainly do like superficial drama.
      - Rich Downing Nov 2, 2018
        
        Lol OK... I still call that basic. You don't even need a computer to trasact it. I can write down my private key and wallet address with a pen and paper, and simply hand it to someone - anyone, anywhere in the world. HOW anyone fails to see the power in that, I will never understand.
        
        Are you in technology? You seem like maybe a banker or maybe some sort of political lobbyist... what do you do for a living? That might be the source of your fear/bias.
        
        Anyway, of course it was made for the masses, and it says so right there in Satoshi Nakamoto's white paper, which is public. "Drama"? Haha not really, dude. What are you smoking? I want some! This is fun though.
        
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  - Andrew (Andy) Crow Oct 21, 2018
    
    I guess if there was away to stop corruption in the affairs of human society we'd have come up with it in the 150,000 years we've been here.
    
    The nearest we've probably ever got is various attempts at 'religion' to supply a moral, ethical code. But even they don't last a generation at a time before they are hijacked.
    - Blockchainisjust Badsoftware Oct 21, 2018
      
      Religion is not the closest that we have to a moral and uncorrupt society. Regulated democratic government is substantially more free of corruption then anything humans have every accomplished in 150k years. That is at least when people and the public try to work together and not lie to each other or form unrealistic fears of un-existent government corruption.
      As far as moral human affairs and ideologies of incorruption, the public behaviors are far more dishonest and irresponsible then most governments. Peoples delusional and just untrue beliefs that government is impossible are being proved over-exaggerated and just wrong as governments work hard to progress equality for as many as possible in a regulated and steady manner. Acting as if government doesn't have very effective systems that offer communication, equality and enrichment is delusional and untrue.
      I know its super cool to be "like the government is like totally not hip with it dude its like I just want like free money and stuff geez, wheres my yacht" but thats because the public is the most greedy, ignorant and destructive and un-responsible source of corruption that exists.
      - Andrew (Andy) Crow Oct 21, 2018
        
        Yes, on reflection, I agree that functional democracy was probably better than religion in it's effectiveness and the morality of organising society around fictitious beliefs in supernatural beings is not something I approve of. It was a pretty good wheeze in the Bronze Age but we should have grown out of it by now.
        
        Functional democracy didn't last long here in the UK. To work there has to be an a engaged and appropriately educated population; the very last thing that the ruling class, be they hereditary, elected or self-appointed, want.
        
        It is really rather depressing. And the blame accrues to us all.
        
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Edward Hickman Oct 17, 2018

The entire article starts off with a misleading line.

The price of BTC on Jan 1st 2017 was roughly 900 dollars... the average price throughout the year comes in at roughly 4,130 USD.

The price is now over 6,500 USD...

If you are cherry picking extremes to serve a narrative then you should at least be more careful.

...also btw digital assets have been the top performing asset of every year they've existed. So good luck scaring the old, normies away from the market but we are here to stay.
- Andrew (Andy) Crow Oct 21, 2018
  
  Yep. You reinforce my feeling that is a pure propaganda piece, masquerading as academic pontification. Shameful.
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Lennart Scharmann Oct 17, 2018

Blockchains are no databases by definition and aren't centralized. See e.g. Everledger and TradeLens.
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Lennart Scharmann Oct 17, 2018

They can be private and are never centralized, as that is called a "database". See Everledger for an example of a decentralized blockchain "actually being used".
- Blockchainisjust Badsoftware Oct 17, 2018
  
  There are many different examples of different attempts at a "Blockchain" system. Some essentially do become centralized, which essentially does fail at being an actual Blockchain. Others who attempt actual decentralization for the most part fail at being useful, or even functional as well as just bad solutions to insignificant problems. The actual best decentralized platform has been around for a long time, it is available to anyone through a computer. It is the intelligence to understand how to use TCPIP and other internet protocols, and possibly public key encryption, to practically do any computer task you need. It works now, and nothing needs to change. Blockchain reverts that openness to instead allow large computational sources more "value" and power then your single source of available computation and intelligence. Once people actually attempt "decentralization" with a blockchain system, they will slowly realize that its just a over complicated, problematic option that does not improve these open protocols that are already completely free and available.
  - Andrew (Andy) Crow Oct 21, 2018
    
    It may well be that the useful aspects of blockchain, in the long term, have nothing whatsoever to do with currency. We don't actually need to alter the way we handle currency, we just need to use the system we've got properly.
    
    There are many things in our world, which need to be accounted for, that are considerably more important than money. Real resources for example, and energy.
    
    I know little about the mechanics of how blockchain works, but everytime I hear it criticised the critic gives away the vested interest he is trying to protect against the system being changed.
    
    I don't need to understand the detail to see the picture.
    - Blockchainisjust Badsoftware Oct 22, 2018
      
      "There are many things in our world ... that are considerably more important than money ... resources for example, and energy."
      "I know little about the mechanics of how blockchain works"
      To clarify that my viewpoint is not simply to "protect the system being changed". I aim to provide the reasons why a blockchain is worse, then other options. If your arugment "resources are more important then money" is your belief, then the blockchains constant need and use of physical resources from possibly unregulated sources, ie. Coal, etc. to create money that it would be considered a failure as a money creating process. Ie. The use of resources is significant as well as destructive and un-trackable just to print your own money.
      
      "everytime I hear it criticised the critic gives away the vested interest he is trying to protect against the system being changed." I am opposed to changing the system to a worse system. There is alot of software systems out there, some good, some bad. We think that the technological industry in some way is different then the Car industry and that all the products are going to be the same and thier pretty front end interfaces are surely useful if its that pretty. We don't believe that with a car, why should I with software. The software industry is often trying to sell us a lemon, why try when people no nothing but the front end interface do as little work as possible just all marketing (works for microsoft :-( ). Also seems earily similar to how blockchain is being proposed as "good" when its nothing that you really need. Its inhernetly more difficult to tell if software is a lemon then a car, its takes a bit more thought, but often there are companies that repeatingly deliver useful and thorough software with great security options and at least a seemingly thorough effort. Googles approach to society, progressive development and intelligent technology design, which works to make it available and useful to as many as possible, is something that I would, as a software engineer that wants good change, throw my money at, as very little other technology companies have tried to, or achieved the intelligently useful software that Google has. I think there are projects that Google, and others competitively (although Google is usually smarter), is working on that would be more beneficial to a civil and equal society then the blockchain is aiming to achieve. Google is writing the software the way that its always been possible to do, ie. the thoroughly well coded way perhaps without all of the significant and overwhelming amount of inflated manipulative marketing (and possible very little actual design).
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Lennart Scharmann Oct 17, 2018

Blockchains are not neccessarrily permissionless. Goes to show once more the authors lack of knowledge about this topic.
- Blockchainisjust Badsoftware Oct 17, 2018
  
  You stated above "They ... are never centralized". A permissioned blockchain allows only a selected group of users to validate transactions. Thus a CENTRAL group. You directly contradict yourself. Your a flat out and FACTUALLY wrong. The level of intellect that is involved in your decisions of value a blockchain are rampant evidence of the lack of reality, and completely irrational beliefs that blockchain proponents believe and spread.
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Lennart Scharmann Oct 17, 2018

Using the Gini coefficient is misleading and wrong in this case. Bitcoin owners also own other assets in USD, EUR, etc.
- András Novoszáth Oct 23, 2018
  
  In this case, the metric is purely based on bitcoin ownership:
  
  "Best estimates are that there are about one million holders of Bitcoin; 47 individuals hold about 30 percent, another 900 hold a further 20 percent, the next 10,000 about 25% and another million about 20%, with 5% being lost. So 1/10th of one percent represents about half the holdings of Bitcoin and 1 percent close to 80 percent (http://www.businessinsider.com/927-people-own-half-of-the-bitcoins-2013-12). "
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Lennart Scharmann Oct 17, 2018

This is outright wrong. A fork is not done by a few programmers but by all participants and can also be rejected by the community. Nobody has the absolute power. That is the most fundamental point about Blockchains.
- Blockchainisjust Badsoftware Oct 17, 2018
  
  "A fork is not done by a few programmers" unless its actually not a blockchain. Its permissioned. Or the computation is imbalanced unequally. Or large chunks of the chain disappear (which has happened). Or there are new and everending bugs.
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my_name_is_not_important Oct 15, 2018

Yes, I would like the entirety of social and political life to end up on a permissionless and trustless ledger, accessible to everyone. A world where no person has power over another.
I understand how that sounds threatening to some people.

I've grown up on the internet, unlike your generation. We exist without identity, skin color, without nationality, without religious bias. You may be a well-respected person, but in the world I'm part of, words are assessed by their merits, and yours have few. I'm not sure if you were misinformed, or simply failed to do the research you should before writing a opinion piece.

A bank is not a credible intermediary, and never has been. How can someone that promises to keep your money safe and then lends it to someone else, unaccountably and unbeknownst to most of the population, ever be credible?
No one wants to trust banks. We use them because we need to, and that isn't much longer.

Yes, once your crypto wealth is hacked, it is gone forever. Unlike your fiat money, which is gone without ever being hacked.
Just ask the people whose salaries are growing below inflation, feeding the pockets of the shareholders.
Just ask Assange, or Dotcom, or anyone the U.S. government seems to have a problem with, no matter what nationality they are, or which countries they live in.
It's funny that you accuse China and Russia of being kleptocracies, when they at least limit their theft to their own territories, as opposed to robbing others countries' central banks after unilaterally breaking treaties, or routinely freezing assets of international organizations that happen to say inconvenient truths.

How ironic that you accuse men like Buterin or Bitcoin developers of greed, when they've formed non-profits, warned people against speculation since the start and donated their unpaid time to the betterment of society and of something they believe in.
Meanwhile, other people are being paid by the IMF, Federal Reserve, banks. Launching for-profit limited liability consulting firms. How surprising.

Unlike bankers', miner's profits are consistently going down.
Here, I'll help with the reference the article doesn't contain: https://www.forbes.com/sites/investor/2018/07/02/cryptocurrency-mining-profits-are-way-down
This is as you would expect a perfect competition system to work, one that is based not on the rule of (paid for) law, but on the rule of mathematics.

Yes, there's greed in the blockchain ecosystem.
Greed by clueless people that came in hoping to make a quick buck.
Greed in the permissioned blockchains that you've correctly identified as pointless, driven by old companies desperately trying to stay relevant in an area they can't compete in.
But mostly, greed by institutional investors, who don't understand or care about the technology or its long-term implications, and lost a fair sum of money in favor of people like myself, who were there since the technology was created.
This article has a lot of misplaced anger. How coincidental.

Any interested high school student can tell you the difference between blockchain and a spreadsheet. It's quite easy, but they can spend their time answering more interesting questions, so I'm glad that they won't bother.
- Blockchainisjust Badsoftware Oct 17, 2018
  
  "We exist without identity, skin color ... nationality ... religious bias" OMG LOL This is so not true and completely not how the current internet landscape operates. If anything it is more toxic then practically any physical community that exists.
  "words are assessed by their merits, and yours have few" No the words are usually "assessed" by whoever spams or upvotes more regardless of truth, that is much more accurate and true description. Which also leaves a troubling end to what is value on the internet when bots spend a significant and unending amount of energy creating fake news and fake technologies to manipulate the actual equality that exists in the world outside the internet.
  
  "A bank is not a credible intermediary, and never has been" Hmm It has been working very well for a very long time and only getting better along with the increase of balanced civil liberties and intelligence. Regardless of what the delusional people who spend all their time discussing conspiracies on the internet believe.
  "We use (banks) because we need to" Good luck fending off the bank robbers, when they point a gun to your head for your crypto password.
  
  "once your crypto wealth is hacked, it is gone forever" It is also not really usable anywhere without trading into fiat, so essentially its value is reliant on the infrastructure of another stable system. Ie. crypto's value itself has yet to stand on its own feet to prove its value "here" or "gone". When its the standard then inflation becomes the problem.
  "fiat money, which is gone without ever being hacked" This is for the most part not true, but, there is at least liabilities and regulations in place for support of theft. Blockchain has no such support system that succeeds in a decentralized way.
  
  "Unlike bankers', miner's profits are consistently going down" Perhaps along with the value of the currency as well.
  "This is as you would expect a perfect competition system to work ... on the rule of mathematics" Not just mathematics, but social manipulation, extortion, likely some violence, fear, as well as large, and ever growing, amount of physical fuel, clean or dirty, to keep this "competition" working. Yes computers use physical resources (fuel,coal,gas,etc.), in case you weren't aware.
  
  "there's greed in the blockchain ecosystem" Yes it comes from a large mob of unregulated, un-liable group of the public. Banker, brokers, investors also came from the public. Blockchain is a space that allows a significant decrease in any sort of liable and responsible regulation. Essentially any issue that we have with our current monetary ecosystem is only easier and less liable in a blockchain system.
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- Blockchainisjust Badsoftware Oct 17, 2018
  
  This isn't how a "permissionless and trustless ledger" works. Everything is computation. There is no deduction of power, the power and value is just created via computation. Which is not equallly accessible or liable to create any equality or morality of any sort. Your "desires" are just as applicable to fiat system. But people are delusional. Blockchain is significantly worse then a bank and there will be significantt destruction caused by the ignorant who push it and their irrational fear of the effective and progressive Banks. Blockchain is just the vicious and toxic dark web.
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Viet Q Oct 15, 2018

It is short-sighted of Mr. Roubini to dismiss the underlying blockchain technology. The digital era is one becoming dominated by platforms that provide value in the exchanges between chains of suppliers and buyers. As Amazon, Uber, Airbnb and countless other examples demonstrate - the value of a firm is becoming disentangled from the assets it owns versus its ability to bring customers together with sellers. That is the power of the platform.

In order to navigate these increasingly complex supply and demand-side networks, increasing real-time co-ordination is critical. No one single organization can hope to manage and control all of the information that flows through its operations. The demands of the crowd are such that you need the power of the machine to manage it or else you will eventually become crippled by the ubiquity of data.

That's where blockchain comes in.

Through encryption, blockchain encodes trust at each touch point of these sensitive networks. At the same time, blockchain allows for greater real-time transparency to occur. When increasingly sophisticated requirements are being put on the value chain (ie., customer privacy, environmental reqs, public safety reqs), organizations that have the ability to protect data while measuring it across company/nation boundaries will outcompete those which cannot.

For instance, financial institutions may be facing strict requirements for customer privacy under Europe's GDPR. How do you ensure every single financial transaction is protecting consumer privacy? Or if a customer wants to know whether any of their mutual fund investments are in companies that violate child slave labor laws - how would a single financial institution be able to manage that? Or how would a shareholder easily find out if their company is using environmentally-sustainable suppliers?

These kinds of issues create real economic risk for all stakeholders, from shareholders, employees, and customers. The specificity and scale of these problems cannot easily be solved without an underlying digital technology. Blockchain is that technology.
- Blockchainisjust Badsoftware Oct 17, 2018
  
  "The demands of the crowd are such that you need the power of the machine to manage it or else you will eventually become crippled by the ubiquity of data"
  This is being proved wrong by everyone that is actively using amazon as it works perfectly, and only supplies more useful and well designed value every year.
  "power of the machine" Yes amazon is run on a computer... A computer can run hundreds of thousands more computable processes then "the crowd" is capable of. The computer wins. See how simple that is, and really it is just that simple.
  
  "That's where blockchain comes in" Blockchain only slows that process down by a significant amount as it is much more amounts of encrypted, distributed and replicated (often completley uneccssarily) data. Blockchain is also run on a computer, and someone has to program the functions and software so the limits really just dont change.
  
  "How do you ensure every single financial transaction is protecting consumer privacy?" Write good software. Tokenized Credit Card Numbers. Two factor auth.
  "Or if a customer wants to know whether any of their mutual fund investments are in companies that violate child slave labor laws" Write good software. Database of companies. Look it up.
  "how would a shareholder easily find out if their company is using environmentally-sustainable suppliers?" Database of companies. As well as ensuring they don't use the excessive amount of computation that the blockchain requires, as that is essentially a un-sustainable environment violation as well. Yes Computers affect the environment too. And a solution built to stave off our delusional fear of banks, and (bad) solution to phony problems, that need significant energy increase is environmentally irresponsible.
  
  "how would a single financial institution be able to manage that?" Basic Encryption? A Database? Hmm Both of those "problems" are actually very easy to solve. Its called being organized. Its also already being mostly achieved and works quite well.
  
  "These kinds of issues create real economic risk for all stakeholders, from shareholders, employees" No these problems do not create the significant problems. The problems come from extortion and quick pressure to utilize unnecessarily complicated and in-efficnet technologies to thrawt insignificant problems, because people have irrational fear, delusion and urge to be arrogantly revoultionary, against whatever is currently working that takes patience and some slight work to maintain.
  
  If these are our problems. Our problems are fake, insignifcant, delusional, and ridiculous. We should just all donate to SpaceX and Elon Musk will get us all to Mars in practically no time. #fakeproblems #fakesoftware
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Asim Karaomerlioglu Oct 15, 2018

Bitcoin's value is still around 6500 dollars despite people like Mr. Roubini claims that this is the mother of all bubbles etc. Given his belief that bitcoin and others have no intrinsic value, such a value is still incredibly high. I think his claims and reality, at least as of now, are still in deep contradiction...
- Paul Müller Oct 19, 2018
  
  The price of Bitcoin is around 6500$. Nobody knows what the value is. Currencies don't usually have an intrinsic value. Usually the value is determined by the stuff you can buy with it. Since FIAT currencies are pretty much enforced in a region, all the products produced in that region make up the value of that currency (it is not exactly said, but good enough for a first approximation)... With non governmental currencies it is much more difficult, because people can start or stop accepting it at any time... Thus its value is unpredictable. The moment people lose faith, the price in "real FIAT currency" ;) will drop pretty fast... Now of course it is almost like a cult, so I fear the "leaders" will start selling, while they still preach to their followers to buy...
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Aruna Koya Oct 15, 2018

In my opinion, and note the word, "opinion":

The blockchain technology using the DLT does have a lot of value, and yes, I agree, with the author, that in the majority of cases, the value lies in the permissioned, private format, as far as most enterprises are concerned.

This does not limit the technology, but does rather take away, from the whole "philosophy" of decentralisation, and morally incorruptible high ground that some of these companies are lauding. (I sense, and agree with the author's frustration with this, moral high-ground that these companies/people are taking, is a huge con-job!)
These companies, and individuals are wrong. It will help to "clean up" industries where there are trust issues, BUT cannot be the only governance tool/technology to do so.

It will work in conjunction with other existing tools. The DLT will be a "source" of truth, and cannot be the only truth (not at least, in the public, permission less format).

And no company in their right mind will want to replace all their databases, with the blockchain database architecture. Even new systems, will not be designed with Blockchain, it simply is not viable, or practical.
The DLT will augment the existing technologies, and this is why the key challenge/focus area, with Blockchain technology, is "integration".

This is where the advantages, yields are going to arise, in my humble opinion.

The crypto-currencies and ICOs used to mine the blockchain, are a huge minefield of rip-off merchants, I agree, as the author states, and I would add, investors (In the crypto-currencies), beware!

That should not undermine(pardon the pun!) the technology as a whole, which does have huge value.
The technology, I do see as a good investment, where appropriate use-cases have been identified.

Overall, I do agree with his take, but it is not a very informative, fact based article, more of an "opinion" formed with non-substantiated understanding of the current state of the "industry" .

In the comments, there was a view that the technology will take 2yrs to filter through, and I think that this, is on mark.
There are already some significant use cases, that are coming into the public sphere, and I would add, that, these come from technical integrations, and don't depend on questionable ICOs/crypto-currencies.
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Paul Friesen Oct 15, 2018

Tulip bulbs, tech stocks, derivatives, Bitcoin. If you don't understand exactly why people value something that is being hyped so much, stay away from it.
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M M Oct 15, 2018

What is the author talking about, could it be the consequential effect of the over usage of the 1979 spreadsheets?
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Mike Robinson Oct 15, 2018

In my [professional ...] opinion, "block-chain" technology bears one very-important promise that it has not yet been able bring to pragmatic, market-ready fruition: the creation of tokens that can be verified without the need for real-time polling of a central source-of-truth (with the vulnerabilities of "race conditions" and so-forth). This would give digital trading tokens the same features that Dollar Bills have: you can verify that they are authentic without calling the US Treasury in real time. That's huge. When we can do this pragmatically, efficiently, and quickly, it will be revolutionary.

The thing that's holding us back now is computational infeasibility: the tokens are too hard to compute; they are "mined."

(The reckless gambling and Ponzi-scheming is also holding us back, but as you said, that's dying-off now.)

One day, someone's breakthrough will make block-chain be just as revolutionary as, say, "public key encryption." Perhaps more so. Well, it took many iterations and alternative strategies to perfect public-key crypto, but we finally did it, and today it protects nearly everything (including the "https" that protects this very web site – see that "padlock" on the address-bar of your browser?).

The promise of block-chain technology is so compelling, and obviously so valuable, that we know a similar breakthrough will one day occur in this space. It will not be a "coin." It will revolutionize financial transaction security in mundane ways that presently cannot be achieved. But, alas, not yet.
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Janes Weiß Oct 15, 2018

Despite huge respect for Roubini because of his pre-2008 crash predictions, this is just a load of rubbish. If this bitcoin experiment is "broken" as he says, how the hell is the existing "classical" system better? It crashes every 20-30 years and causes massive devastation to real economy and beyond! The system, ie. mainly the banks, blew every nanometer of trust with 2008 crisis when public money had to bail them out and yet everything is the same and judging from the opinions here we can expect the next crisis in 2020. If this is not the ultimate proof of invalidity of current system then what the hell are we talking about? Its not as if the current system is working for anybody except the richest 10% and their lackeys. Bailouts, workers income stagnation, rocket profits for the richest few, unimaginable accumulation of money in the hands of upper most 10%, unregulated free market - until the AIG comes along - all speak of how the current system is utterly broken for 90% of population of this planet.

... and speaking of "blockchain is nothing more than a glorified spreadsheet", what the hell is securitization else then plain old insurance we know from Roman times? Nothing! Its the same, and yet it was greeted as the holy grail of finances from the 1990ties onward and made insane profits for "traditional financial institutions" Mr. Roubini defends here as sound, working and trustworthy.

In short, I thought there was more to Roubini then this pointless Bitcoin bashing. BTC will survive this onslaught and become a viable system, so will the major crypto currencies.
- D G Oct 16, 2018
  
  Your comment is 100% accurate. Roubini fails to comment on fiat currency used by everyone which has no intrinsic value. When a central bank decides to print money, they do it without blinking. At least block chain gives a level of fairness not controlled by the very few.
  - Paul Müller Oct 19, 2018
    
    "Roubini fails to comment on fiat currency used by everyone which has no intrinsic value."
    It doesn't and it shouldn't have intrinsic value... It is a meant to exchange goods and services. It should not be an investment!!! Buy gold or cryptos, if you want to have something "solid", but don't touch everyones currency.
    With one currency in a region, determining its value is pretty straight forward... Value currency = value of stuff you can buy = value of stuff that is produced in that region
    
    Of course it is more complicated in international capitalism... But nothing comparable to having multiple currencies compete in the same region. Now nobody can predict the value of the currency anymore.
    
    "When a central bank decides to print money, they do it without blinking."
    citation needed... Most central bankers are rather conservative with the money supply... Yeah there are countries with large inflation (Zimbabwe, Venezuela, Argentina? ...), but they are pretty much the minority, and don't follow the established guidlines (e.g. independant central bank). So you are trying to solve a problem, that already has a solution...
    
    "At least block chain gives a level of fairness not controlled by the very few." Sure, that is why the distribution of bicoins and other cryptos is more unequal than that of North Korea... But seriously... The whole dream of dezentralization goes out the window, if you leave it to the market... China controls much of the crypto markt today...
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ericvancewalton Oct 15, 2018

This article paints a picture of the crypto/blockchain space that is very misleading and flat out incorrect in many aspects. Time will tell how well cryptocurriencies and distributed technologies fare the fact that many in the traditional financial world trash talk the technology but yet invest so heavily in it is proof enough to me of its potential. Watch actions, don’t just listen to words. Especially words like this article.
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terry.price16 Oct 15, 2018

Blockchain is a single source of truth.

For example if you insure a flight for being late, if it's late, then the insurance company pays out because it can check data if the plane was late from the airline via Blockchain. This will cut payment time from weeks to days or even hours.

This kind of automation has the potential to vastly reduce staff levels and increase productivity and profit.

Ultimately, Blockchain will be seen as a trusted audit of transaction and data, it's just going to take 2 years from now to feed though.
- Lampuki W Oct 16, 2018
  
  And it is impossible to do now because technology doesn't exist? There is no reason for that not to happen now. And because mainly issue is the process and not data - once a blockchain is used they might as well keep taking their sweet time with refunds or anything else.
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- rhodon416 Oct 15, 2018
  
  What you said doesn't make any sense. The insurance company can just subscribe airline's reports about late flights. Even I can get such info from Google instantly. Using blockchain to publish such data doesn't provide any additional value.
  - nowayhose Oct 16, 2018
    
    When you buy insurance against a flight, it could be issued as a smart contract. This would instantly and automatically pay out if the flight is delayed. No human involved
    - Blockchainisjust Badsoftware Oct 17, 2018
      
      Unless whoever rights the smart contract, creats a bug. Or malware to transfer the money elsewhere. Taking the money from both the airline, and the customer. As "no human involved" and complete anonymity is the perfect place to create malware, smart contracts are not something that I would like to use or expect any company to trust and use at all. As a customer I would prefer a human, and multiple layers of liability, regardless of the slight inconvenience. I also am very computer savvy, and a professional software engineer, so my doubt with the actual safe implementation of software is well founded.
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Paul King Oct 15, 2018

"He has worked for the International Monetary Fund, the US Federal Reserve, and the World Bank." Pipers and tunes. Pipers and tunes.
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Paul King Oct 15, 2018

This is also misleading with regards to Bitcoin. Roubini is counting mining pools as miners. The miners are free to leave any mining pool at any time, and take their hash power elsewhere. Mining pools are just a voluntary collaboration.

Also, centralized compared to what ? How many people actually set the Federal Reserve interest rates, or decide how much QE to do ?
- Lampuki W Oct 16, 2018
  
  Centralized as in actual mining farms that mine most of the coins located in areas where electricity is cheap and run by pretty much businesses. Those random individuals building their own rigs are pretty much a drop in an ocean
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