Nicholas Weaver, a senior researcher at the International Computer Science Institute at the University of California-Berkeley, called Bitcoin ‘bovine excrement’ during a recent episode of Bloomberg’s “Odd Lots” podcast.
This is not the first time Weaver has panned Bitcoin and “blockchain,” distributed ledger technology that undergirds bitcoin and other cryptocurrencies.
In February, Weaver told cybersecurity researchers in Burlingame, California that blockchains and cryptocurrencies are unoriginal, inefficient, suited to criminal use, bug-prone and foolish:
“In conclusion, it is a dismal space. Private and permissioned blockchains are an old idea—a good idea—just with a new buzzword on it. The public blockchains are grossly inefficient. The cryptocurrencies don’t work to provide anything against drugs and ransoms and stuff like that. Smart contracts are an unmitigated disaster unless you like comedy gold. And the field is just recapitulating 500 years of failures. So in the end, the only winning move is not to play—unless you like playing with flamethrowers.”
In his latest comments to Bloomberg broadcasters, Weaver said Bitcoin’s junky nature was immediately evident to anyone technologically-versed:
“So what happened when the cryptocurrencies first came out in 2010 and 2011 is most people who looked at it with technical understanding went, ‘Oh, this is bovine excrement,’ and walked away.”
Weaver added that, because public blockchains inefficient, they are suited to, “very few non-criminal uses”:
“The big fatal flaw is that it doesn’t actually work as currency. If you can’t use it as a competitor to all the other actual digital currency systems we have, like, oh, PayPal…. All of these payment systems are vastly more efficient than the cryptocurrencies, unless you’re interested in criminal activity.”
Weaver added that that cryptocurrencies essentially fail as money because sellers receiving anything but cash be be ripped off if buyers cancel a card payment.
Because transactions must be recorded across all the computers in a blockchain network, ryptocurrency transfers can take several minutes or moreto settle, and once initiated, cannot be reversed. This can give scammer time to cancel a credit or debit payment as the cryptocurrencies move slowly and irreversibly into their digital wallets.
Weaver also pointed out that cryptocurrencies can be difficult for the average person to store securely, as numerous hacks on crypto exchanges and individual wallets have demonstrated.
Weaver also questioned the notion of “merchant adoption”:
“The dirty little secret is the merchants who say they accept cryptocurrency…aren’t actually accepting cryptocurrency.”
Merchants are rather using third party services such as BitPay, which immediately converts the cryptocurrencies to regular currencies, which are then sent to merchants.
Weaver also said that Bitcoin’s deflationary model makes it poorly suited to being used as a currency:
“As we remember our economic history from the Great Depression, the only thing worse than inflation is deflation…These cryptocurrencies are supposed to be deflationary, which means if you, say, buy a pizza back in 2010, you end up dining on regret when (prices suddenly increase in a bull run).”
Bitcoin has been described by enthusiasts as indestructible, but Weaver sees two factors that could contribute to the network extinguishment of Bitcoin.
The first is the untimely end of the controversial “stable coin” Tether. The second is the possibility that bitcoin mining could someday become unprofitable:
“There’s two things that can really burn the system with fire. The first is the federal government getting their act together and going after this cryptocurrency called Tether….If Tether is destroyed, that…removes the entire bitcoin exchange ecology.”
“Number two is…[a] death spiral situation,” said Weaver, which would involve the price of Bitcoins dropping so low that many miners left the network, leaving the remaining network so “centralized” that remaining miners or bad actors could attack it.