As the Speeding Crypto Train Crashes, Scientific and Engineering Experts Tell Congress that Both Crypto and Blockchain Were a Sham from the Beginning

 

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As the Speeding Crypto Train Crashes, Scientific and Engineering Experts Tell Congress that Both Crypto and Blockchain Were a Sham from the Beginning

By Pam Martens and Russ Martens: June 17, 2022 ~

Actor Matt Damon Hawking Crypto in Commercial

Crypto pushers hired themselves Trump’s outgoing SEC Chairman, Jay Clayton; a boatload of celebrities like Matt Damon (see his commercial below), LeBron James, Spike Lee, Tom Brady, Alec Baldwin, among numerous others; and high-priced lobbyists to sway Congress and state legislatures to back off any regulatory push. Crypto even slapped its name on sports stadiums and arenas – similar to Enron and Citigroup just before they blew up from specious business models.

Like any other pump and dump scheme, crypto mania worked for a while. Insiders grabbed their windfall profits early and left the unsophisticated with the losses.

Now crypto concerns are hiring themselves the likes of Big Law firm Akin Gump to explain why investors can’t get access to $11 billion in frozen accounts at Celsius Network.

The warnings have been out there for years now from experts in the legal and scientific communities, that when it comes to crypto, there’s no “there” there.

As reports spill out in mainstream media of average folks losing their entire retirement savings or the money they had squirreled away for their first home in the latest crypto bust, a group of 26 scientists, software engineers, and technologists have released a letter they sent to key members of Congress, including Senator Sherrod Brown, Chair of the Senate Banking Committee; Senator Ron Wyden, Chair of the Senate Finance Committee; and Maxine Waters, Chair of the House Financial Services Committee.

The signatories to the letter include Kelsey Hightower, a principal engineer at Google Cloud; and Bruce Schneier, a Lecturer in Public Policy at the Harvard Kennedy School, a board member of the Electronic Frontier Foundation, special advisor to IBM Security and author of 14 books — including the New York Times bestseller, Data and Goliath: The Hidden Battles to Collect Your Data and Control Your World.

The letter is particularly noteworthy in that it pulls no punches about either crypto or blockchain – the latter being an area that has been heralded by many on Wall Street and in Congress. The letter states:

“Today, we write to you urging the Committee to take a critical, skeptical approach toward industry claims that crypto-assets (sometimes called cryptocurrencies, crypto tokens, or web3) are an innovative technology that is unreservedly good. We urge you to resist pressure from digital asset industry financiers, lobbyists, and boosters to create a regulatory safe haven for these risky, flawed, and unproven digital financial instruments and to instead take an approach that protects the public interest and ensures technology is deployed in genuine service to the needs of ordinary citizens.

“We strongly disagree with the narrative—peddled by those with a financial stake in the crypto-asset industry—that these technologies represent a positive financial innovation and are in any way suited to solving the financial problems facing ordinary Americans…

“As software engineers and technologists with deep expertise in our fields, we dispute the claims made in recent years about the novelty and potential of blockchain technology. Blockchain technology cannot, and will not, have transaction reversal mechanisms because they are antithetical to its base design. Similarly, most public blockchain-based financial products are a disaster for financial privacy; the exceptions are a handful of emerging privacy-focused blockchain finance alternatives, and these are a gift to money-launderers. Financial technologies that serve the public must always have mechanisms for fraud mitigation and allow a human-in-the-loop to reverse transactions; blockchain permits neither.

“By its very design, blockchain technology, specifically so-called ‘public blockchains’, are poorly suited for just about every purpose currently touted as a present or potential source of public benefit. From its inception, this technology has been a solution in search of a problem and has now latched onto concepts such as financial inclusion and data transparency to justify its existence, despite far better solutions already in use. After more than thirteen years of development, it has severe limitations and design flaws that preclude almost all applications that deal with public customer data and regulated financial transactions and are not an improvement on existing non-blockchain solutions.”

You can read the full letter here.

But this latest missive is far from the only siren call that has been sounded by experts. As far back as three years ago we reported this statement from NYU Professor and economist Nouriel Roubini:

“Crypto currencies are not even currencies. They’re a joke…The price of Bitcoin has fallen in a week by how much – 30 percent. It goes up 20 percent one day, collapses the next. It is not a means of payment, nobody, not even this blockchain conference, accepts Bitcoin for paying for conference fees cause you can do only five transactions per second with Bitcoin. With the Visa system you can do 25,000 transactions per second…Crypto’s nonsense. It’s a failure. Nobody’s using it for any transactions. It’s trading one sh*tcoin for another sh*tcoin. That’s the entire trading or currency in the space where’s there’s price manipulation, spoofing, wash trading, pump and dumping, frontrunning. It’s just a big criminal scam and nothing else.”

Now, the crypto crashes are occuring at an ever-accelerating pace. Bitcoin, the most popular cryptocurrency, peaked at $69,000 on November 9. As of 8:30 a.m. (CT) this morning, Bitcoin’s front month futures were trading at $20,595 – a decline of 70 percent in seven months. Other crypto “assets,” like Ethereum and Dogecoin have fared even worse. A so-called “stable” coin, TerraUSD, that was supposed to trade at $1 parity with the U.S. dollar, collapsed completely in May, costing many individual investors the bulk of their life savings. Crypto mining stocks that trade publicly have also been decimated, losing anywhere from 60 to 85 percent of their value. As we mentioned above, the latest blowup is Celsius Network, which can’t find the money to pay its customers and has halted all withdrawals, but can afford those hefty billable hours at Akin Gump.

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