Blockchain is completely useless. And that's why

The collapse of bitcoin in January became a cold shower for crypto-currency fans. The fall twice provoked a new round of talks about the financial bubble. The reasons for the fall were even explained by the Chinese New Year. However, the political establishment and the economic elite have a stable opinion: bitcoin is bad, blockchain is promising and revolutionary. "" understood whether the world can not do without blockchain.

Crypto-currencies are regularly criticized as a source of bubbles and speculation, threatening investors with the loss of all their savings, while the attitude to the blockchain is still interested. Most countries recognized the blockchain as a revolutionary solution.

The prospect of blockchain is disputed by few, but their criticism deserves attention. For example, the financier Kai Stinchcombe in his article went through key industries, where they want to introduce the blockchain. In his opinion, at the moment there is no real application of this technology and certainly it's imposible to say that the blockchain will destroy the modern financial system.

Consider for three

Fans of new technologies insist that crypto-currencies based on the blockchain can become an ideal payment system, where there will be no intermediary commissioning such as Visa and Mastercard. Stinchcombe contests this thesis, because such a system has long existed - it's cash. As for payment institutions, their advantages over blockchain are obvious: yes, they require their interest from each transaction, but it is possible to refund money for goods that the consumer did not like.

The main problem of crypto currency as a payment system is the processing speed of transactions. For example, Visa handles 60 thousand operations per second, bitcoin - only seven (not thousands). Technical improvements of the system continue, but at the moment the effectiveness of bitcoin is just over 0.01 percent of the Visa indicator. Bitcoin will be able to process as many transactions as traditional global payment systems, provided that half of the world's electricity is consumed. The situation with other crypto-currencies is not fundamentally different.

Those who believe that deals should be carried out without state supervision pose special hopes on the blockchain. Control of the authorities can really be tedious, but state structures, for all their slowness, provide a certain level of reliability. The owner of the cryptowallet will not be able to ask for any guarantees in case of password theft: there is no regulator - no guarantees. And such a shortage of the system is located both at the user level and at the level of the entire system - several large trading crypto exchanges websites were forced to close due to lack of security.

In addition, the authorities themselves will not want to part with the control over the movement of funds trite because of the need to counteract terrorism, organized crime, etc. Most citizens, of course, are against the control of their accounts, but many will say yes to the question: "Do law enforcement bodies have the right to verify the operations of suspects in the spread of child pornography?"

Expensive and stupid

Perhaps the future of blockchain lies in the implementation of microtransactions? For example, pay a musician for a song or read a fresh newspaper on the Internet. After all, deals with bitcoin should be fast, almost instantaneous and free. Stinchcombe also calls into question a similar perspective - clearing each transaction takes eight minutes and requires costs of 4 cents. In addition, the microtransactions themselves are not too popular - people are much more likely to prefer subscription services to them.

Interbank payments by means of blockchain also do not develop at the fastest rates. For example, through Ripple, a promising platform for such payments, passed two billion dollars in the last thirty days. In parallel, the SWIFT working system already transfers such money within 40 seconds. The ratio is approximately the same as between the sales of toothpicks and US GDP.

Great hopes are placed on "smart contracts" (this, for example, is the basis of the Ethereum system), suggesting that instead of the text, the code appears in them, and no personal signature will be required to conduct transactions using such a system. However, the actual application of "smart contracts" so far led only to a mistaken investment of $ 50 million. Even the most ardent supporters of the blockchain recognize that the discussion of contracts between people is preferable to the situation when it will be accepted by the software, at the moment not as "smart" as the fans of the detachment would like.

Do not stand criticism of the arguments in favor of the use of blockchain platforms as a reservoir of encrypted information or an assistant in the issuance of shares. In all such cases, notes Stinchcombe, existing systems are more profitable and/or safer than blockchain. There is not a single reason to abandon the NASDAQ exchange, which enjoys universal confidence.

The financier emphasizes that the most difficult on the Internet is the transfer of money from point A to point B or the storage of records about certain transactions or interactions that have taken place. In reality, this part of the operation is just the simplest, fastest and highly automated. As for the cancellation of the intermediary, in the majority of participants of transactions are directly interested in its existence - at least for the opportunity to dispute this transaction if "something goes wrong."

As a result, notes Stinchcombe, the scope of blockchain and crypto-currency is extremely narrow. In fact, nothing remains but speculation and illegal transactions. But in this capacity, crypto-currencies have been working for a long time and expansion of this field is not foreseen. People who invest millions in blockchain-technology, have not even been convinced of the real demand for such payment systems. In the ten years that have passed since the spread of the blockchain, no noticeable improvement in technology has occurred.

There is no faith

Analytic answers to Stinchcomba's claim to the blockchain did not follow. Optimists only pointed out that the technology is still too young and, perhaps, variants of its application will be found in the near future, or even claimed that many new know-how passed a period of skepticism. The problem is that the list of technologies that have appeared in the dump of history or found only a modest niche application is just as much a list of scientific and technical breakthroughs. Suffice it to recall the electric vehicle, which appeared even before the internal combustion engine. Only now, 120 years later, electric vehicles have become relevant, and that, thanks to expensive oil and global concerns, the topic of global warming and green energy.

Kai Stinchcombe is not the first specialist who claims that "the king is naked." Rob Fleishman, Software Engineer at Akamai Technologies at one time was also delighted with the blockchain. "But as I communicated with people from high-tech, I became more and more convinced that this technology is completely stupid and useless for almost any tasks," he notes.

A couple of months ago, such skepticism would have only laughed at. At a time when bitcoin is constantly growing in price, skeptics are not in demand. But in the new year the conjuncture is beginning to change, and coupled with extremely negative attitude to the crypto-currency from the financial sector, sound criticism is becoming popular. Skeptics, of course, may be wrong, but an objective dialogue of the industry is necessary, if only to cool hotheads that have rushed to bitcoin, ether, and other "crypts" as a means of instant enrichment.

Philipp Kensington
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