Blockchain is Zombie tech.
Blockchain is dead. It has been since 2015. MIT and many other colleges have already done the research, the science is conclusive. Major tech giants like IBM have already abandoned the idea. They will take your money and then gently persuade you to go another way. This is an old song and dance. The only people who believe in Blockchain, either has stopped taking their meds or are late to the party. Of course, It’s the new religion for your politicians and snake oil salesmen selling conferences. The blockchain, a catch-all word for distributed ledger technology, is just not viable at any level. It’s dead, has been for years but like a zombie, it keeps coming back.
As my COO recently joked at a conference, they don’t let me speak in public often because I tend to say what people don’t want to hear.Regulating Blockchain is like passing building codes for monopoly. Crypto is the gamification of finance. Like Monopoly is for real estate. It is not a technology that can work for finance. It never was intended to. The founders of the industry have all told you that. The tech was an experiement. The science has been done. However, the noise from the feeding frenzy has long since drowned us out. The voices of reason has been slienced. Crypto is a collectible and it always will be. No amount of VC pretentions will change that. Now that there is yet another Crypto winter (no this isn’t the first one) some people are willing to listen. The problem is this zombie tech is consuming resources and capital, and dictating the regulatory landscape of technology in its infancy.
Most people reason from analogy. Nowhere is this more prevalent than in this field. There is what the technology actually is and then there is what “potentially” it can do. The fallacy is that when you define the technology by its potential rather than a description and distinction, then extrapolate implications what you get is a myth. Add greed and you get a myth that won’t die.
You don’t need 12 years in the business to figure the truth out for yourself. Finance is a science because it is based on the assertions of accounting. No technology is going to change the science of something. It’s just not. Blockchain is not a store of value. You cannot store value because the value is something you add. You can store data. The term store of value is a contextual term and the context is economics. Using the term outside of that context is a flawed ideal. A store of value is an asset that maintains its relative value. Is this true of crypto? You can put the rest together yourself. An asset is property owned, regarded as having value. The distinction of an asset is that it is owned. To be owned presupposes that there is an owner. The elements of an asset are that it is “property” that is of “value” to an “owner.” To be owned said property must be endowed with the right to Ownership. Every first-year law school student knows the principle that Ownership is a bundle of rights. Ownership is established by legislation (law) and enforced by regulation. The most important right in that bundle is the concept of the right to exclude. If you cannot exclude someone from possession or the use of your property, there is no “value” in owning it. Thus for something to be an asset, there must be an owner. It cannot be annomous. Is this true of crypto? Having a password (private key and email address (public key) does not meet that standard. Ownership can be private, but it cannot be anonymous because anonymity invalidates a claim, which is the core tenet of the concept of an asset. Finally, Finance is a science based on core assertions of accounting. Accounting & Auditing are fundamental assertions of an independent third party: the assertion of rights and obligations, the assertion of existence, and the assertion of valuation. The root of all accounting assertions, as a practical matter, all comes down to one thing: proof of exclusive ownership, and evidence of this is the title. This is the hard physics of finance. When you get back to the first principles, you understand why the idea of avoiding or getting around these ideas is ill-conceived. At the concept level, the idea doesn’t hold water.
At the business level, an open transaction processing network where providers compete to process transactions is a noble ideal but not very practical. No one wins. The premise of millions of machines spending billions of CPU cycles processing a game, where the winner gets the prize of being able to process a transaction, that a single machine could process in a few CPU cycles, is not a good value proposition. It is also not good for anyone. The environment, the business, and the customer, all have a needless expense of inefficiency. This is not something getting better that is the definition of something getting worse.
Then there is often the idealistic fantasy of trust-less. Technology can NOT eliminate trust. Technology is a machine process that means either it works or it does not. You do not “trust” it. You have confidence in its performance and that performance is a function of its efficiency. Trust is a belief. Humans have beliefs. Trust is a component of the experience. Trust like value is something humans add. It is not a property that a thing possesses. You cannot code trust any more than you can use code to eliminate trust. The very philosophical foundation of economics is trust. The less you have the higher the economic price you pay. For all that blockchain espouses it is done more to damage trust in financial systems than any system before it.
Let me be clear. I have financially benefited tremendously from this industry. There are real living breathing innovations driving fin-tech. Many men and women are working on genuine technology that has and will continue to advance the fin-tech industry. I am also not saying you can’t make money in crypto. That is absurd. It is a market driven by the next greater fool theory and if anything is true it is that a fool and his money are soon parted. Crypto is the gamification of finance. It is a very lucrative game of collectibles. The playing pieces are alphanumeric strings (coins). The board is a distributed ledger. The danger is treating it as something more than what it is, a game. It is a costly error in judgment in acting as if this zombie is the future of finance. It most assuredly is not, never was, and never will be. The irony is that it never was intended to be. The risk is that you kill the future of digital assets before it even gets started.
A good speech answers three questions: What? So What? Now What? The “What” is Blockchain is like a zombie. It has died years ago. However, greed is a powerful virus that keeps spreading the infection. The “So What” is that if the government and regulators keep thinking like this they risk killing the larger fin-tech industry. The “now what”. Do the analysis yourself. Stop reasoning from analogy. Separate what it is, how it actually works, from what it “hopes” to eventually do. You will find that blockchain is dead and has been for sometime now.
