Monday, October 15, 2018

Why Blockchain is a busted flush

I recently wrote a piece explaining why I think Blockchain may not be such a good idea in education and training, arguing that it is an opaque solution looking for problems, that is hungry on energy consumption, storage and bandwidth. In discussing this piece with others I uncovered what I think may be a deeper problem – that Blockchain itself may be a busted flush.
Cryptocurrencies based on Blockchain (or variants) have plummeted in value, many by 70-80%. In a blizzard of scams and frauds, ‘trust’, the very thing Blockchain was supposed to capture, has evapourated. 
Professor Nouriel Roubini, from NYU’s Stern School of Business, was the Senior Economist for International Affairs in the White House's Council of Economic Advisers during the Clinton Administration, and has worked for the International Monetary Fund, the US Federal Reserve, and the World Bank, describes Blockchain as nothing more than a ‘glorified spreadsheet’. He argues that it’s a dangerous neo-liberal idea that tries to disengage from governments, banks and other trusted sources. He may be right as it has all the hallmarks of the bait and switch tactic, where you promise democratisation, decentralisation and disintermediation with one hand… then concentrate power in miners and a few techo-folk and businesses on the other. The messiahs who suck you in, when hacked, simply fork to another currency. To allow this to flourish beyond the law and normal protections of sovereign states may be a big mistake. Far from creating wealth it may concentrate wealth.
More specifically, why would any organisation want to put their transactions on public decentralized peer-to-peer permissionless ledgers? We have database technology that works, under the supervision and governance of organisations. In the end people employ governance, and not just coders or Blockchain companies. In practice another bait and switch process is taking place. Private blockchains with guarded permissions are not really blockchain at all but relatively small private databases under the control of the bank or organisation. They are not decentralised.
After giving a talk in 2016, where I saw some potential in Blockchain, I’m not ashamed to say I’ve flipped. It’s a bait and switch technology, a busted-flush. Almost all of the projects in education will die.

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