Writing for Wired, Harvard professor author and cryptographer, Bruce Schneier has strongly attacked “trust automation” value claims by blockchain advocates in a piece called “There’s No Good Reason to Trust Blockchain Technology.”
The article’s central argument is that trust is not eliminated in blockchain systems, but displaced from institutions and social conventions on to technology. He alleges that techno-maximalism overlooks both the residual trust in tech systems whose governance remains clearly human, as well as the frequent, and often murky, imperfection of the technology itself.
Schneier thinks that trust cannot be left to robots, nor sidelined by appealing catch phrases like “in code we trust”, saying that trust is essential to society.
“As a species, humans are wired to trust one another,” he writes. “Society can’t function without trust, and the fact that we mostly don’t even think about it is a measure of how well trust works”.
“Much has been written about blockchains and how they displace, reshape, or eliminate trust,” he says. “But when you analyze both blockchain and trust, you quickly realize that there is much more hype than value. Blockchain solutions are often much worse than what they replace.”
Is Our Trust Misplaced?
People in the crypto world generally do prefer to put trust into mathematics, or machines. But what happens when that trust is misplaced?
“There is no recourse. If your bitcoin exchange gets hacked, you lose all of your money. If your bitcoin wallet gets hacked, you lose all of your money. If you forget your login credentials, you lose all of your money. If there’s a bug in the code of your smart contract, you lose all of your money. If someone successfully hacks the blockchain security, you lose all of your money”.
He says that until we all “speak code”, losses in the virtual world force victims to seek recourse in traditional rule-enforcing structures.
“Would you rather trust a human legal system or the details of some computer code you don’t have the expertise to audit?”
He made a point about distinguishing public blockchains from privately-controlled distributed ledgers, which he says have been available for over half a century.
“Private blockchains are completely uninteresting. These are not anything new; they’re distributed append-only data structures with a list of individuals authorized to add to it. Consensus protocols have been studied in distributed systems for more than 60 years. Append-only data structures have been similarly well covered. They’re blockchains in name only, and, as far as I can tell, the only reason to operate one is to ride on the blockchain hype”.He also has a dig at cryptocurrencies themselves. “Honestly, cryptocurrencies are useless. They’re only used by speculators looking for quick riches, people who don’t like government backed currencies, and criminals who want a black-market way to exchange money.”