This fall Nick Paumgarten reported in The New Yorker on the Blockchain Week in NYC , including some interesting personal impressions of the Ethereum leadership, from Buerin to Zamphir. It is nice to read some disinterested observations on this activity—Paumgarten is no enthusiast, nor is he a blind luddite.
Having closely followed cryptomania for many years, I can’t say I was especially surprised by his reports. If anything, I was worried because he saw things that confirmed what I suspected but hoped were not true. The Emperor’s new clothes really are pretty threadbare.
But the best part of the article was his quote from Sensei David Chaim (who really did invent much of the technology back in the 80’s ).
“There’s never been, in the history of civilization, this much money aggregating as a result of doing nothing” (, p. 75)
I’m not sure whether Paumgarten understood the depth of the dig in that remark. He cites it in the context of all the non-progress and non-success of the crypto movement.
But it’s actually a wonderfully sophisticated techno-dig.
As I have said in the past, Nakamotoan cryptocurrency drives me mad because I was (and still am, I guess) a professional software engineer. My entire career has been, to a first approximation, all about making software go faster. Most of what I know is all about ways to speed things up, not least by avoiding unnecessary computational work. (The fastest code is the code that doesn’t run at all.)
Nakamoto’s innovation (and the important thing he added to Chaum’s pioneering work) is the “proof of work” mechanism, which provides a difficult to cheat distributed substitute for a timestamp. The classic version, used in the grand patriarch Bitcoin, is a scratch-off lottery, computing a cryptographic hash function over and over until a winning ticket comes up. The whole idea is to use up so much computing power that it is practically impossible to short cut to the answer. (This makes the answer “trustworthy”, because the computation can’t be redone or faked.)
So, the entire Nakamotoan project is based on an algorithm that is, by design, as inefficient as needed. In fact, if and when we get better at computing this nonsense hash, there is a ‘knob’ on the protocol that is adjusted to make the computation slow down, to preserve the level of inefficiency.
This is so backwards and upside down. It breaks my old-fashioned software engineers brain! Everything I know how to do is wrong!
(Note: I understand the logic of Nakamotoan proof of work, which really is a clever, if unsustainable innovation. I’m not saying it is wrong, just that it is backwards from 99% of software algorithms.)
So, to me, Chaum’s zinger is really on target. The core innovation underlying all the crypto enthusiasm is this proof-of-work, which is “doing nothing”, at least nothing useful.
As he says, there is a lot of money being thrown at this doing “nothing”. (And by the way, we starving academics can’t help but be irritated that we get so little funding for a lot of important “somethings” that we are trying to do.)
(By the way, the same issue of The New Yorker has a great piece by Charles Duhigg about the Google/Waymo dustup .)
- David L. Chaum, Untraceable Electronic Mail, Return Addresses, and Digital Pseudonyms. Communications of the ACM, 24 (2):84-88, 1981.
- Charles Duhigg, Stop, Thief! When Google Sues To Keep Its Secrets, in The New Yorker. 2018, Conde Nast: New York. p. 50-61.
- Nick Paumgarten, The Stuff That Dreams Are Made Of: Cryptocurrency’s Priests Envision A New Society, in The New Yorker. 2018, Conde Nast: New York. p. 62-75.