Is blockchain dangerous bullshit? Nicholas Lenz Analysis

For Nicholas Lenz, a computer science student in Germany, blockchain solves nothing. In a blog post, Nicholas Lenz pointed out that blockchain as a technology is indeed flawed in its basic concept.

Blockchain technology promises to eliminate trust in central institutions. Initially, this could have applied to a currency: bitcoin (which Linz identified as a speculative commodity rather than a currency). Instead of central banks managing account numbers, bitcoin uses a decentralized ledger, the blockchain, for this.

To Lenz, the idea of ​​untrusted centralized organizations may seem attractive, but it doesn’t work: Blockchains don’t remove trust, they only change who you trust. Don’t believe the hype, says tech entrepreneur Ewan Kirk.

What tech entrepreneur Ewan Kirk thinks:

The Bitcoin blockchain handles just under three transactions per second, which requires massive amounts of electricity to operate. Some argue that blockchain is increasingly using electricity from renewable sources, but this is a red deterrent. If bitcoin was to use this renewable energy, someone else would have to use coal and gas to power their home.

All block chains are more inefficient than any other alternative. For example, Ethereum uses the same amount of energy as the Netherlands. Bitcoin produces nothing. It only destroys the environment.

According to Lenz, trust in human-controlled institutions and adherence to the applicable laws and rules of the blockchain is replaced by unconditional trust in the infallibility of code (in the code we trust is a common phrase in the industry). Since the code is written by humans, it is rarely infallible.

Remember that the Dutch tax authorities destroyed thousands of lives after using an algorithm to identify suspicions of social security fraud. For some analysts, the Dutch scandal is a warning to Europe about the risks associated with the use of algorithms.

For Lenz, even if all code is error-free, blockchains cannot do anything against threats such as scams, scams, hacking of devices containing blockchain keys, or simply writing errors in the transmission of fragments.

Usually, cases of fraud or error can be corrected or reversed by the bank or similar institutions after a human review of the situation. However, in the world of blockchain, there is no human oversight authority. It is independent of banks, states and laws, and is precisely the main selling point of all this technology.

Technology presents other problems. Lenz says that completely harmful use of energy in times of climate change is just one of them (mainly due to proof-of-work, which is still used by all relevant public blockchains, and inefficiencies in general).

Blockchain as a universal miracle cure

The main purpose of the blockchain is to decentralize trust and approval. This does not stop a lot of people from promoting blockchain as an innovative silver bullet for problems where it is just nonsense.

A recent example of this madness is, in Germany, the development of a digital vaccination certificate in early 2021. Initially, the use of blockchain technology was planned. In this case, they didn’t want to use one, but five. After widespread public criticism, the plan was scrapped and replaced with a simpler, non-blockchain architecture, which is still in use today.

Another, more recent example, which, unfortunately, has not yet been abolished, is digital voting in North Rhine-Westphalia. For Lenz, this concept is already completely absurd. The issue in question has been solved for decades and no one needs a complex, inefficient and expensive blockchain for this. Very soon after it was released to the public, the project was revealed to be completely insecure, despite the security of the blockchain.

For Linz, these are just two of the countless projects where blockchain technology has been incorporated without any regard for common sense. Neither I nor anyone I know has ever heard of any use of the blockchain being beneficial in any way.

The malicious spread of blockchain technology

But why does blockchain spread so quickly if it is useless? To understand why, Linz suggests taking a look at the original and still prevalent use of the technology: cryptocurrencies and their newer derivatives, such as NFTs, DAOs, and web3.

According to Kirk, the hype around Web3 is just another reminder of the tech industry’s short-term memory. For someone who has been mining bitcoin since 2012, Web3 is clearly just a new version of the blockchain technology that we have been discussing for ten years.” Web3 followers want to add a layer of blockchain to our internet infrastructure and radically decentralize the network, or So they claim.

This stuff is useless bullshit that exists to extract mass money from people who don’t know any better. However, a huge industry has sprung up around them. “This industry burns incredible amounts of energy, money, and human labor time without contributing or producing anything of value to humanity,” Lenz said.

From this industry stem increasingly frequent attempts to export its core technology, the blockchain, to other areas of life. Blockchain is being pushed everywhere in society. This forced release is supposed to give the blockchain industry a reason to exist outside of being a financial bubble, give it a glimmer of respect and trustworthiness, and thus attract more people to the cryptocurrency market.

This market desperately needs these people and their money. This is a huge and fairly obvious speculative bubble. There is absolutely no real value in the market as a whole and it does not produce any value on its own. To prevent the bubble from bursting, or at least slow it down, and not let profits dry up, real money and a real economy must be injected into the cryptocurrency market. This money should be found elsewhere. Not in the blockchain world, in the real world. And this is how the ubiquitous blockchain is presented as “modern”, “disruptive”, “innovative”, “secure”, etc. In fact, it is not, says Lenz.

Many companies and government institutions, fainted by the glare of crypto-bubble revenue standards, are looking to the top. Everyone wants a piece of the blockchain cake and is trying to cram a little blockchain into something, anything. Originally driven by the blockchain industry’s lobby and backed by the brilliance of its massive profits, it created quite a buzz. It has taken on a life of its own for a long time now, and not only is the blockchain industry promoting this technology everywhere.

Lenz concludes: The proliferation of blockchain technology is not just crazy nonsense, it is effectively harmful and dangerous. For these reasons, we need to act against the hype by publicly revealing the absurdity of the technology and how the blockchain industry is promoting it in order to increase its profits. For the future of technology and computing and to protect people from the predatory crypto market.

Source: Nicholas Lenz’s blog

And you?

What do you think about it?

See also:

Intel’s BonanzaMine chip, an ASIC bitcoin accelerator, with dual SHA256 hash engine, said to be optimized for bitcoin

Can Web3 Change the World? It’s not just a new joke, says tech entrepreneur Ewan Kirk, don’t believe the hype

Gartner reveals seven mistakes to avoid in blockchain projects, drawing on the capabilities and limitations of this technology

The Dutch scandal is a warning to Europe about the risks associated with the use of algorithms, the tax administration has destroyed thousands of lives using an algorithm

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