This interview has been edited and condensed.

Aside from occasional blisteringly anti-crypto commentary from the likes of Warren Buffett and Bill Gates, one of the crypto industry’s most consistent and vocal naysayers is IT industry analyst Jason Bloomberg.

Bloomberg is a published author, Forbes contributor and president of the firm Intellyx, which helps enterprises integrate new technological developments and trends into their business models.

Bloomberg also devotes a significant amount of his time to attending crypto and blockchain-related conferences and events, speaking and debating with industry leaders. His public stance, however, can be characterized as anti-crypto, but more accurately it is anti-decentralized, permissionless crypto — against the original dream of truly decentralized, peer-to-peer interactions laid out in the Bitcoin (BTC) white paper that captured the imaginations of early adopters.

Last month at BlockShow Americas in Las Vegas, Cointelegraph had a chance to speak with Bloomberg about why he wants to “shut down” decentralized crypto, what he sees as the threat of crypto-related crime and why he comes to blockchain industry events like BlockShow.

What’s wrong with permissionless blockchains

Olivia Capozzalo: So, you have a reputation for saying some pretty bold things about cryptocurrency. This spring you wrote an article in which there was a sentence stating something like “We need to make cryptocurrency as we know it illegal.”

Jason Bloomberg: Right. The challenge that most cryptocurrencies have is that they run on a permissionless blockchain infrastructure. By permissionless, we mean that there’s nobody in charge, right?

In a proof-of-work system, every transaction processor has to process the transactions. Because it’s permissionless, anybody can sign up as a miner, including criminals.

Now, not all miners are criminals, obviously, but criminals are welcome to be miners. There’s nothing stopping them from being miners. As a result, many criminal enterprises, including organized crime syndicates, have gotten into the mining business.

There’s really no way to stop this, aside from moving away from permissionless blockchain-based approaches.

So, when I say, “Shut all the cryptocurrencies down,” what I’m really saying is “shut down the permissionless ones.” If cryptocurrency is going to survive, we’ll have to move to a permissioned infrastructure.

OC: Just hypothetically, if people start taking you up on this call to action, what would that look like? Do you have a vision of how that would start to affect what we know today as the crypto industry?

JB: Well, in practical terms, it would be very difficult to shut down, say, Bitcoin, because it doesn’t exist in any one country. So each country would have to decide what laws it wanted to create in order to make transactions illegal, or whatever it would be.

What I would expect to happen is, over time, as various organizations and governments, as well as banks and Wall Street trading firms realize that permissionless cryptocurrency has these issues, then gradually the trend would be to encourage permissioned systems versus permissionless — and that would drive down the value of Bitcoin and other cryptocurrencies that run on permissionless systems.

So if you drive down the value sufficiently, then it is no longer cost-effective to mine the cryptocurrency. And at certain point, then, essentially it will fall apart.

Nobody will be running transactions because there will be no money made in conducting transactions, and fewer and fewer countries will allow cryptocurrency. And hopefully, other cryptocurrencies that are based on permissioned systems will essentially take the line and investment is going to move to them.

But I would say that the permissionless ones will essentially fade over time. There will be less interest in them, they’ll be less valuable, and fewer and fewer people will want to mine them.

Watch the full interview with Jason Bloomberg here:

Against a trustless system

OC: For many, if not most people in the crypto industry, the fact that anyone can send money from one person to another directly — without intermediaries, without an enterprise, without a bank — is a core value.

What do you say to the people who really care about the decentralized aspect of cryptocurrency when you are talking about shifting the entire value system?

JB: You’re quite right, and this is a very astute point — the whole perspective on decentralized cryptocurrency blockchain versus the centralized permissioned approach. And for many people in this community, it’s all about decentralization, and some of them don’t even see permissioned blockchain as being blockchain at all.

In terms of decentralization, I still don’t see that there’s a way to implement decentralization without opening the doors to criminal enterprise.

And so, all of these people with these libertarian priorities, libertarian visions for a decentralized world with no government intervention — the problem there is that, if you don’t have sufficient regulation, if you don’t have sufficient permissioning of the transaction processors, then essentially, it becomes just a playground for criminal enterprise.

OC: What about the fact that not all cryptocurrencies are proof-of-work, you don’t need to mine all of them. You can have permissionless and proof-of-stake blockchains, right?

JB: Well, this is an important trend away from these permissionless systems to the more permissioned approach. And there could be a lot of different variations, whether it’s proof-of-stake...you know, Ripple is an example of a centralized, permissioned approach — and I would say that is really where the focus will be.

But whether or not there’s a way to solve the crime problem and still be decentralized, I just don’t see that because I think the whole point is that we need to have, essentially, a centralized entity that people put their trust in, who is now extending their trust to the participants in the infrastructure to the miners.

And without that, we are just allowing criminals in. And this has happened over the years with various approaches, right? This is nothing new.

Crypto and crime

OC: In the research that you’ve done, you see that the criminal involvement is increasing?

JB: The criminal involvement in cryptocurrency was one of the original reasons why cryptocurrency took off, so it’s one of the reasons why Bitcoin became as popular as it did in the earlier days.

And now, it’s only continuing to expand. I mentioned in my panel this morning that in 2017, the most active form of hacking of big business was ransomware. Ransomware is only practical when you can pay the ransoms in some sort of cryptocurrency. Before cryptocurrency, there was no ransomware, it just wasn’t feasible. So, cryptocurrency now gave the criminals a way to conduct ransomware.

That was 2017. Ransomware is no longer the most popular. In 2018, the most popular is cryptojacking — or illicit crypto mining — where the hacker puts crypto mining software either in a browser, but increasingly on servers, both in enterprise centers and cloud environments that essentially sucks up electricity and pays the criminal in some sort of cryptocurrency.

This is now the most popular, the most predominant way of hacking a big company.

So essentially, what cryptocurrency has become is not only a way for criminals to get into the mining, but it’s a way to conduct criminal transactions, it’s a way to conduct hacking.

If you look at the dark web, the whole economic context for the dark web is cryptocurrency. The dark web wasn’t really practical — because there was no good way of exchanging funds — until cryptocurrency came along.

OC: But one of the arguments that people make is that crime-related transactions are not the majority of the transactions happening with cryptocurrency.

There’s always going to be crime, so why would you fight the medium of exchange — cash, crypto, whatever it is — rather than looking for other ways to prevent or prosecute crime?

JB: Well, criminals have been using cash since the invention of cash, obviously. But that’s actually a false comparison. You’re saying, “Well, because criminals can use cash, we shouldn’t worry about criminals using cryptocurrency.”

It’s like saying, “Well, if I get stopped for speeding, my argument to the cop should be that other people are speeding,” or, “Other people were going faster than I was.” No cop is going to let you off of a ticket because you said that somebody else has committed a crime. That is not a justification for a crime.

OC: But here’s the comparison. Why can the car go faster than the speed limit? Why don’t they just make cars that can’t go faster than a certain speed?

If you start controlling the means, it restricts people’s freedom. And I think that is a really important thing for people in crypto — it’s like, I want the freedom to be able to send you, transact with you on a peer-to-peer basis. I feel like It’s sort of crushing the dream of a decentralized world.

JB: Well, I don’t think it’s a question of crushing the dream, it’s that the technology that people have come up with does not support the dream. The dream of being able to conduct a transaction as easily as giving you a dollar bill, but be able to do it internationally, electronically — okay, well that makes sense on the superficial level, so why come up with this huge technology infrastructure that is hugely valuable to the criminals and becomes a central element of organized crime, globally speaking.

And this has happened over the years. In fact, I’ve just read some research that came in a newsletter this morning, about how this notion of decentralized network communication — we’ve never come up with a way of doing it without it just ending up being a means for criminal activity.

Back in the 80s, hardcore pornography was hard to come by. The web wasn’t around. You’d go to your local store, you could get Playboy — but that wasn’t hardcore — so this was it. And it was mostly illegal until the Clinton administration relaxed the obscenity rules in the 1990s. Once the Clinton administration did that, mainstream pornography moved to the web, and it’s been there ever since.

Now along comes BitTorrent. We’re now using the internet, internet speeds are going faster, we’re now able to download videos. So, what do we do? We come up with a peer-to-peer, decentralized protocol that allows anybody to exchange big files with anybody else. So, what do you use that for? Well, pirated software, pirated videos and illegal pornography. Because that was the primary use. This is just human nature: If you have a way of exchanging information or files that is hidden from view, then it is going to be primarily used by criminals to conduct criminal activity.

The problem with BitTorrent was that BitTorrent itself was not particularly anonymous — you had to identify your IP address — so it wasn’t very good for organized crime. It became, sort of, a disorganized crime protocol. It also didn’t provide a payment mechanism. It was more about sharing that illegal porn with your buddies than building a business.

What do we need? We needed a way of greater anonymity in the payments and a payment infrastructure. And along came Bitcoin. That’s why Bitcoin exploded, it was because BitTorrent did not have those things.

Now, you add Bitcoin to BitTorrent and now you can build a global, professional black market for illegal contraband and that’s the dark web.

This is the history of distributed technologies — it’s been one of facilitating criminal enterprise. Bitcoin played right into that, and now we have the dark web and now we have hackers who are leveraging the technologies as well.

This is the story. This is the story of cryptocurrency.

And people are pretending or fooling themselves that it’s about some sort of a libertarian ideal, where people are going to behave. No, people will not behave. Criminals are going to come in, and they are going to take over, and it’s going to be the whole reason why we have this stuff.

The cryptojacking threat

OC: You have this arguably pessimistic vision of how this all will turn out. Let’s get back into the nitty-gritty of cryptojacking, that particular type of hacking. What’s the exact harm being done there?

JB: So, with illicit crypto mining or cryptojacking, the early days were all about the browsers — you have some sort of compromised website that would give you some Javascript you would run on your browser. And so, your own computer would spin for a while, and it steals a little bit of electricity and a little bit of processor power from you.

That software has gotten better and now, even when you close your browser, it will still run on your computer. So, it’s sucking up your processor on your laptop. That is relatively minor compared to crypto mining software on a server. You put it on a server, it’s getting more sophisticated, it’s now consuming electricity and processor power on the server. If it’s in the cloud, it’s running up the cloud bill.

So, companies are paying money for their cloud services, including any crypto mining that is running on there. If it’s on premises, it’s still consuming electricity and processor power, and will continue to do so until the miners proliferate and take the entire network down. It’s not just one hacker doing this. If a company is vulnerable, then multiple different bad guys are going to figure this out and put mining software, which is forming itself into botnets.

So, many different computers mining software, consuming electricity and processor power, unbeknownst to the other crypto mining software on the same servers.

Essentially, at certain point, it just uses up all the processing power, the server stops working and this could happen across the entire network. It could take down the entire company’s data center.

But because it is running behind the scenes, the way that criminals make their money is simply processing transactions and they get money from the Bitcoin or Monero infrastructure directly. The money isn’t going directly from the victim to the perpetrators. It’s indirect.

But as a result, it’s catching a lot of the CSOs, the chief security officers, unaware until such time that it takes down their entire network. So, this is already the biggest problem on corporate networks today, but it’s not going to take as much attention as perhaps it should because it doesn’t have the command-and-control link and, in the early days, it doesn’t have much impact.

OC: Okay, I see. And you think the solution, just to clarify, is not to deal with preventing that kind of an attack or mitigating it in some way, but actually shut down cryptocurrency because cryptocurrency is the problem here.

JB: Well, I don’t think this is really a practical solution. It would be great if I could say, “Well, we’ll just shut down cryptocurrency, that’s going to stop crypto mining.” And yes, it would, but I don’t think it’s practical for the reasons I listed: There’s no one country, it’s no one country’s laws.

So, it’s going to take a lot of time. And it’s going to be, really, the economic forces, right? It has to be less valuable to own certain cryptocurrencies over others. And once we shift the economy to the safer cryptocurrencies, then that is going to be a long-term, gradual solution.

In the short term, yes, it’s essentially traditional cyber security methods: malware detection and threat prevention. And this is where a lot of big companies are spending their cybersecurity dollars today.

Why we’re here

OC: Let me ask you a question that’s a little bit pointed, but what are you hoping to do by coming to BlockShow or any other crypto/blockchain-related events? Like, why are you here exactly?

JB: Why am I poking my stick into all these people? Well, I write for Forbes. I am a Forbes contributor, so I write five articles a month for Forbes. I’m always looking for good stories, and that’s a part of the story.

But I’m also, essentially, looking for the gems in the rough. I’m looking for those enterprise blockchain companies that have real solutions, at least in the works — obviously, it’s still early days, so it’s usually proofs-of-concept — but real solutions in the sense that they are solving business problems for companies who aren’t just other companies in the blockchain echo chamber.

Those are the stories that I think are the most important to tell. But yes, I can tell the stories about the flaws of cryptocurrencies or the problems with the libertarian perspective on things, but that only gets you so far.

Really, it’s more important to focus on the positive stories, right? The real business cases for real companies, who are solving real customer problems. And that’s really what I am looking for.

OC: Great, thank you so much.