The bitcoin boom produced new billionaires and videos of beach parties and Lamborghinis. The crypto crash brought devastation for retail investors and bankruptcy for many companies.
Blockchain technology underpins crypto and has been hailed as a world-changing innovation, but does it have utility beyond creating speculative financial instruments?
AFP asked crypto critic Stephen Diehl, author of the recently published Popping the Crypto Bubble, to rule out some of the most popular claims about blockchain technology.
– Vote safer? –
As tension and confusion gripped the United States after the 2020 election, Changpeng Zhao, billionaire founder of crypto firm Binance, had a proposal.
A “blockchain-based mobile voting app,” he tweeted, would mean “we don’t have to wait for results or have questions about their validity.”
His fellow crypto billionaire Vitalik Buterin responded that there are “significant challenges” but he thinks it’s “100 percent correct.”
So far, the experiments have been very small.
For Diehl, the blockchain was more of a problem than a solution.
“From an American perspective, each individual district runs its own electoral program,” he said.
“This is seen as a feature because to corrupt an election you would have to corrupt many, many officials.
“Centralizing the voting system in a digital place would be quite risky – then you just corrupt the blockchain and you could corrupt democracy.”
– Automated house purchase? –
At its core, blockchain is a ledger, a way of storing transactions that — according to fans — is secure, transparent, and durable.
These qualities have led countless enthusiasts to suggest the technology could replace paper contracts for things like buying a home.
Diehl said it was “absurd” that the blockchain would “revert to things that were solved a millennium ago to justify its own existence.”
“This is the system we’ve had since the Middle Ages – you have a state land registry, title and deed that are transferred when ownership changes,” he said.
“The blockchain solves nothing here.”
– Payments without banks? –
The blockchain emerged from a 2008 white paper on Bitcoin, which was designed as an alternative to fiat currency.
The opening line reads, “A pure peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”
Bitcoin was the first cryptocurrency. There are now more than 10,000 others sitting on many different blockchains.
Big companies have been desperate for ways to accept payments in crypto.
Diehl pointed out that cryptoassets are speculative instruments not suitable for payments.
“When was the last time you paid for your coffee with Apple stock?” he asked.
“It just doesn’t happen. You want something that’s stable so the price of your coffee is the price of your coffee next week.”
– Supply chain tracking? –
Do you want to know where your mango comes from? Some supermarkets believe the best way to find out is by accessing a blockchain-based system that tracks fruit from the tropics of Central America to your corner store.
Walmart and Carrefour are among the companies touting blockchain systems.
Carrefour told AFP earlier this year that shoppers could scan a QR code and discover the provenance of a range of products.
Businesses hope for security, certainty and transparency from the blockchain.
Diehl pointed out that digital supply chain management has existed for years and is completely sufficient without blockchain.
“Blockchain doesn’t add incorruptibility to the system,” he said, noting that people in the supply chain could lie as easily on blockchain as on any other platform.
“If I have a box of apples and report that I put 100 percent of them on the truck, but then skim 50 percent for myself, the blockchain won’t prevent that.”
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