David Gerard on Blockchain and Cryptocurrency: “You Can Get a Long Way on Just Buzzwords and Big Claims”

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Blogger and soon-to-be author David Gerard doesn’t take the conventional view. His recent analysis of the Spotify acquisition of blockchain firm Mediachain was typically cutting, but won widespread praise and attention for its insight that went beyond the surface details of the deal.

It’s not the first time Gerard has riled the masses. His biting commentary on his Rocknerd blog covers all kinds of issues in music and technology in a way you won’t find anywhere else. A passionate rock critic, Gerard brings that sensibility to his take-no-prisoners takes on bitcoin and blockchain.

A typical volley: “There are a number of problems with this idea, most of them being Bitcoin, which has been addressed at length on Rocknerd previously: it’s awful garbage you should stay away from if you value your bank account. (And I’m currently writing a book on how relentlessly terrible absolutely everything to do with Bitcoin and blockchains is.)”

Based in the UK, Gerard communicated with BlockTribune about his worldview and his forthcoming book.

BLOCK TRIBUNE: How would you describe yourself – Punk anarchist? Rational counterbalance to overhyped claims? Debunker of accepted wisdom? You seem to be a lone voice of reason in the forest in several areas.

DAVID GERARD: Ha! Very dull suburban dad by day, with a day job as a Unix system

administrator, and I’m a skeptic as a sort of hobby. I heard of

Bitcoin in geeky circles in around 2011 and thought it sounded

interesting, but wondered about the claims that were pretty much get

rich for free. ‘Cos there’s no free lunch and no make money fast, but

lots of scammers who make money promising there are, and they’re

material for skeptics. Bitcoin attracted scammers straight away.

They’re actually more important than the technology, I think.

I wrote the first version of the RationalWiki bitcoin article, which I

think is still a pretty good article on the subject. I think basic

skeptical thinking tools, that’ll get people a long way. You don’t

have to be a techie; you just have to spot things that are a bit too

good to be true, then work out why.

I don’t think I’m saying much that other people haven’t said, except

maybe in personal specialist areas like the music industry.

BLOCK TRIBUNE: Who are your critics? Are they vested interests?

DAVID GERARD: Critics of the critic? I mean, it’s mostly on Reddit, which is for

arguing. Advocates just get really upset when someone treads on their

personal toe. In cryptos, the advocates are usually either holders, or

more tragically, they’re someone who’s been burnt by crypto scams

repeatedly but desperately holding on to the idea, thinking it’ll

definitely work *this* time for sure. Some of the most strident

cryptocurrency pushers on /r/buttcoin are people who’ve actually been

burnt repeatedly.

I don’t get the really angry opposition from the actual companies in

bitcoin and blockchains. They’re usually fine. The bitcoin developers

are vastly more reasonable than the fans, for instance. It’s

disagreement, not shouting.

BLOCK TRIBUNE: You were critical of the Spotify/Mediachain deal and pointed

out that its problems extend to other blockchain businesses:

You wrote: “It’s not just music — across many industries, the main Blockchain promise is magic after full availability of properly cleaned-up data. The actual problem in every case is cleaning up the data at all. The proponents’ business goal is to become the organisation controlling the newly cleaned-up data, with a monopoly maintained by network effect. The barrier that such efforts founder on, over and over, is that no industry’s players want to create a new central octopus.”

Given this, is the future of any blockchain venture going to be

individual consortiums of companies with their own solutions, unless

and until they reach some sort of consensus on a single blockchain?

DAVID GERARD: I think the future of any blockchain venture is pivoting to something

that isn’t really a blockchain, ‘cos I’ve been looking hard, and I

have found literally zero use cases where a blockchain is the right

tool that aren’t cryptocurrencies. Decentralization costs a lot and

doesn’t really get you anything.

I think a lot of these are going to go to selling transaction records

in Merkle trees, and call those “blockchain.” Because those are a

really good idea – ask a programmer who saves their code in Git, which

is literally for storing transactions in Merkle trees. You can specify

a whole code tree with one world-unique hash; you can make copies and

send them around the world and tell straight away if they’re good

copies or not, and all without proof of work and using the electric

output of Ireland.

I laughed when I read R3 proudly declare that their blockchain product

doesn’t actually have a blockchain in it.

I’ve found lots of cases, across lots of industries, where people are

touting a blockchain as the solution, when the actual problem is

cleaning up the data. It really is the standard pitch. Blockchain will

clean up your data! Matt Levine from Bloomberg thinks the “blockchain”

buzzword might motivate bothering with the boring cleanup and data

standardizing. It’d be nice, but I think he’s a bit optimistic.

You want data standards that people see and want to adopt. If you have

a database, make it centralized and regulate the controlling entity.

I don’t know what Spotify is planning with Mediachain, but I’m pretty

sure it’s not any of their blockchain stuff as such. I could be wrong.

BLOCK TRIBUNE: How soon will investors realize the fault lines in blockchain

that you’ve pointed out?

DAVID GERARD: I’d have thought they would have already, given the venture capital

record on bitcoin and blockchain so far is one-and-a-half-billion

dollars in, nothing out. Power of buzzwords, I guess. Also, there’s

way too much venture capital sloshing around at the moment without

places to go to, so weird stuff’s getting a lot more play than it

deserves.

BLOCK TRIBUNE: Beyond the Spotify deal, are there any ventures in blockchain or

cryptocurrency that you thought were absurd on their face? Any that

you like or feel have a shot?

DAVID GERARD: I’ve seen nothing that’s sensible. Nowadays, I think if it’s got the

word “blockchain” or “cryptocurrency” in, it’s probably bad and the

question’s just how. Or it isn’t actually about the blockchain bit,

like I think Spotify isn’t.

Most of the silliest ones repeat the weirder claims about bitcoin and

just change the buzzword to “blockchain.” You can get a long way on

just buzzwords and big claims.

BLOCK TRIBUNE: You’ve been critical of bitcoin and ethereum. Are there any

cryptocurrencies that you feel have a chance at greater acceptance?

DAVID GERARD: Nuh. They’re all bad, for much the same reasons. The technology isn’t

very robust, but the really huge problem is they’re like catnip for

scams and scammers.

All the people who see ethereum and *immediately* started writing

automatic Ponzi schemes … it’s like the userbase self-selected for

gullibility. And The DAO! They ignored every objection and it blew up

and every objection came true. I’m frankly amazed anyone still dares

say the words “smart contract” in public after that.

The big thing for ethereum is AlphaBay’s just announced you can buy

drugs with it. The most successful bitcoin use case. Now all they need

is ethereum ransomware.

BLOCK TRIBUNE: Tell us about your forthcoming book. When will we see the full version?

DAVID GERARD: December, 2016 for sure! I’m discovering that writing a book that’s

good all the way through is *hard*. Six weeks for a first draft, and

months of editing. Particularly when you have a day job and a busy

life and stuff. The trouble with writing is that it’s literally always

easier to lie on the floor making seal noises instead.

Basically, I started this in October, 2016 chatting to my friend Phil

Sandifer, who said I should write a quick Kindle short “Why Bitcoin Is

Stupid or something.” A 15,000-word outburst before lunch sort of

thing. So, of course, I turned it into the Sistine Chapel. Hoping for

June this year. Guess I better get back to editing, eh?

Phil’s done self-published books a few times before so he’s always

good with helpful advice, like, “if you’re expecting a sense of

accomplishment when you finish, you’ll want to stop that.” Thanks,

Phil. I provoked him to write his book, “Neoreaction a Basilisk,” a

thing on the philosophy behind the alt-right, so serves me right.

BLOCK TRIBUNE: Most journalists don’t have your background in computer

science. What are some questions that should always be asked when new

companies touting blockchain and/or cryptocurrency debut?

DAVID GERARD: “Why are you using a blockchain?” is the quick, skeptical question. I

have a list of standard questions people should ask blockchain

salespeople:

* Are they confusing “might” and “is?” Never mind the *possibilities*

– do they have present-day working blockchains that do every one of

the things they’re claiming? If not, which ones are missing?

* Will they scale to the size of your data? Get solid numbers.

* How do they fix human error in their immutable blockchain or smart contracts?

* If this is for working with people you trust less than the people

you work with now, how are they keeping the chain secure – what’s

their security threat model? Get your sysadmin along to ask pointed

questions.

* If it’s for working with people you already trust as much as the

ones you work with now, why are you bothering with a blockchain?

* What does this get you that a centralized database can’t?

A lot of this is basically get your sysadmin along to ask pointed

questions, but I would say that being one.

With cryptocurrencies, the question is whether they’re idealists or

scammers. Though either way you should stay away.

BLOCK TRIBUNE: Has your rock critic background helped in your analysis of

blockchain and the music industry? Are you a musician as well? If

so, any good/bad experiences

DAVID GERARD: It helps in that I’ve been thinking about the music industry and how

it works and how it doesn’t work for a few decades now, so it was the

ideal case study. It’s an industry that’s always run on selling

subjective feelings for money, which is prime ground for delusional

rubbish sold by fast-talking con men. Consensys sold Imogen Heap on

musical blockchains, and nobody ever talks about how she actually

managed total sales of a hundred and thirty three dollars. And twenty

cents.

At the moment, the record industry’s still reeling from the Internet –

they still think the CD boom of the 1990s is the natural state of

things, not an unusual boom-time. So they’re desperate people with

money, which is prime target for scammers.

Most of the reason it really just can’t work is that blockchains scale

really badly, and nobody pushing this stuff understands just how

*huge* the data is. A billion streams a day just on Spotify. Then run

smart contracts on every single transaction. Possibly you could do it

with multiple local streams going to a bigger central stream, but this

still has the problem that it’d be obviously better just using a

database instead of a blockchain. Decentralization really doesn’t get

you anything.

The other reason is that nobody wants to tell the whole world all

their deals, and they really don’t want to tell their competitors.

I strongly recommend Jeremy Silver’s musical blockchain white paper,

“Blockchain or the Chaingang?” It’s not perfect technically, but it’s

still *the* best white paper on blockchain I’ve seen for *any*

industry. And I’ve read some bloody awful ones. He’s pretty level-

headed and cynical about it. The main problem he sees is that it can’t

possibly scale.

Probably the worst business blockchain paper I’ve seen writing this

book was the official UK government blockchain white paper. It reads

like an end-of-term assignment they wrote in a desperate overnight

caffeinated tour de’ force. I really hope it was written to be quietly

buried.