Category Archives: “About Cryptocurrency Narratives”

“Blockchains for Science”

Or is it “CryptoTulips for Science”?

I’m a long time veteran of scientific computing, including the extremely tough problems of electronic publishing and knowledge dissemination, which requires good ways to deal with provenance and trust.

So I’m a bit surprised to learn that there is a magical solution to these insanely wicked problems:  blockchain!

Specifically, the First International Conference on Blockchain for Science, Research and Knowledge Creation happened this month in Berlin.

This appears to be a conference of hammer-makers, so everything looks like nails to them. : – )  The “hammer” is the blockchain, and digital science looks like a box of nails.

According to the conference prospectus, the blockchain is more of a Swiss Army Knife, which can “to reestablish trust into scientific data”.  Maybe it can “fix the reproducibility crisis”.

“As the ‘trust machine’ Blockchain in Science bears the potential to reestablish trust into scientific data. Some claim that it might even be good to fix the reproducibility crisis. New ways to rethink research subject privacy and whole data marketplaces are on the horizon. Blockchain might even play a large role in scientific publishing, where it questions the current role and business models of scientific publishers. New ways to incentivise peer-review or reproduction of results may arise. “

More plausibly, it might be useful for “data marketplaces” (assuming that scientists can afford to participate).

And it might also be a useful begging cup to help finance publishing and peer-review.

Much of the conference program is about blockchain technology (“get your cryptotuliips here!”), not so much about the alleged problems to be solved, let alone working solutions.

I’ll note that I don’t see any of the big names in Provenance or escience  (e.g., Sensei Carole Goble really should have been a key note speaker, IMO)  How can you talk about trust and reproducibility if you ignore the work that has already been done?

The thing is, blockchain qua blockchain offers little that can’t be done with conventional data systems plus public key cryptography.  (I’ve said this before, and I’ll probably have to say it again.)

In fact, blockchain technology is a terrible fit for a lot of the problems, just as it is for other applications.

Science is a tiny, underfunded enterprise that does not need a global public blockchain.  Science deals in weird, unique, often bulky data that ain’t never going to be on the actual blockchain.  Reproducibility requires incredibly complicated records of information flows and processes, which could be recorded on a blockchain, but probably shouldn’t.

I’ll note that one of the most crucial operations of science is revision and retraction of errors.  Blockchains cannot support that operation at all.  Flooding the world with fake data that cannot be removed is not going to be a real advance.

IBM’s contribution to this field reflects this very  fact:  Zach Seward reports that IBM has registered a patent for using blockchain for “open science” [1]. IBM’s idea of “open” science may not be the same as mine, but they certainly understand the problem.  Their system is basically a change log for data, reports, and whatever. This approach tracks and makes a public record of who did what, including corrections and retractions.

The thing is, of course, that we already have change logs (see, perhaps Github, which is the fourth or more generation of this technology), and we have been using them for several decades now. We were working on these “digital notebooks for science” fifteen years and more ago [2].  I assume that the new thing is implementing this on a blockchain which is technically clever but who knows if anyone actually needs it.

And, by the way, “science” is not a single enterprise, it is a bunch of small, inbred communities. I might have use for some kinds of data, but almost certainly have no way to even understand 99% of the data out there. So the blockchain will carry rafts and rafts of data that only a handful of people actually are able to use any part of.

It is interesting to consider that “scientific consensus” bears no resemblance to Nakamotoan “consensus”, because—it’s too complicated to go into here.  The point is, scientific results are not valid of important because the author thinks so, or because of the number of downloads.  The blockchain may assure accessibility and tamper resistance, but the evaluation of results will still work the old fashioned way.

For example, take a look at Wikipedia.  It is a giant change log.  There is a public record of who did what.  This has worked amazingly well for a long time–without blockchain.  Reimplementing it on blockchain would do nothing much, because the hard parts of Wikipedia are what the humans do.

I wonder if some of these notions about “incentvizing” publication, reviewing, and replication are a good idea or not.  I understand why there is a temptation to scramble for funding, but it is a slippery slope to put science on a market driven model.  This must inevitably distort what is done and published, rewarding trendy and politically favored topics, and starving less popular work. It may also be used to further cut public funding, on the excuse that “those scientists are raking in all that cryptocurrency”.


To me, this conference looks like a bunch of Tulip merchants trying to convince people to buy their magic CryptoTulips.

I may have to create a special CryptoTulip of the Year citation, for “type 3 CryptoTulips”. A “type 3” error is “asking the wrong question”, so a “type 3 CryptoTulip” is a confident solution based on misunderstanding of the actual problem.


  1. Zack Seward (2018) IBM Says Blockchain Can Power ‘Open Scientific Research’ in New Patent Filing. Coindesk, https://www.coindesk.com/ibm-says-blockchain-can-power-open-scientific-research-in-new-patent-filing/
  2. James Myers, Luigi Marini, Rob Kooper, Terry McLaren, Robert E. McGrath, Joe Futrelle, Peter Bajcsy, Andrew Collier, Yong Liu, and Shawn Hampton, A Digital Synthesis Framework for Virtual Observatories, in UK e-Science All Hands Meeting. 2008: Edinburgh.


Cryptocurrency Thursday

Yet Another Innovation: “Reversible” ICOs

One of this year’s leading contenders for the CryptoTulip of the Year is “ICO” technology.  This post-Nakamotoan technology continues to develop, even in the face of disaster after disaster, not to mention global failure of unprecedented magnitude.

Of course, and “Initial Coin Offering” was originally modelled after an “Initial Public Offering” of stock—except without the pesky regulations.  At base, it amounts to “send me money, and I’ll send you a token”.  Ideally, the token will be worth something in the future, though it is not always clear just what the token could be used for.  And roughly 50% of the time, the tokens are never worth anything.

Surprisingly enough, this opaque and immutable blockchain technology has led to serious problems for the punters. In the very possible event that the ICO takes the money and runs, there is no way to complain, let alone get your money back. (The code is the law.)  And even honest ICOs have had disastrous bugs that cause massive losses of funds, with no way to  fix things.

One of the biggest problems with ICOs has been their fundamental design. A key pillar of Nakamotoan trustless trust is that the blockchain is immutable.  Noone can change history and steal your stuff. “Smart contracts” extend this principle to immutable executable code, which is both unchangeable (and therefore, unfixable) and makes immutable actions (and therefore, accidents cannot be repaired).

In several splashy cases, these codes had bugs in them that resulted in disastrous losses.  (Indeed, Ethereum was awarded CryptoTulip of the Year for 2017, largely on the basis of these impressive failures.) These bugs and the illegitimate results could not be fixed, at least not without rewriting history in a radially anti-Nakamotoan way.  (Again, see the 2017 CyptoTulip Award.)

Responding to these entirely forseeable challenges, the “godfather” of ICOs is now proposing a new variant:  Reversible ICOs [1]. (He apparently does not see the irony in the acronym RICO, more familiar in the wider world as the US Racketeer Influenced and Corrupt Organizations Act, used to bring down mobsters.)

Fabian Vogelsteller, early developer and said “godfather” of ICOs, has proposed a new executable contract that lets investors return their tokens for a refund at any time.  This is not exactly a breathtaking innovation in the real world, but it is revolutionary for cryptocurrencies.

Actually, it is not so much revolutionary as reactionary.  One of the key goals of Bitcoin was to eliminate the cost and inconvenience (to vendors) of cancelled payments. For that matter, these refunds are essentially rewriting history, which kind of defeats the purpose of using a blockchain in the first place.

As far as I can tell, these “reversibles” make the IPO more of a credit instrument.  The “purchaser” is making an unsecured, no interest loan that might be convertible to something else in the future.  No points awarded for inventing “debt“.

Furthermore, in order to make this work, the ICO issuer will have to maintain reserves of fiat cash or other assets, to be able to redeem cash outs.  This is a good thing, if not at all Nakamotoan.

ICOs will also be subject to “bank runs”, if everybody decides to exit at once.  Say, in the event that  a catastrophic bug in the software destroys confidence in the enterprise.  In the real world, enterprises generally maintain adequate reserves only when forced to by regulation.  So it isn’t clear how prudent unregulated RICOs will actually be.

So these RICOs are essentially recreating many of the features of  conventional, “centralized”, finance, atop the inefficient, unregulated, and bug ridden “decentralized” blockchain infrastructure.

Clearly, with the RICO proposal, ICO technology has reached a new level of irrationality.  It is certainly a leading candidate for the CryptoTulip of the Year in 2018.


  1. Rachel Rose O’Leary (2018) The Godfather of Ethereum ICOs Wants to Let Investors Take Their Money Back. Coindesk, https://www.coindesk.com/ethereums-token-standard-creator-wants-to-make-icos-reversible/

 

Cryptocurrency Thursday

Another CryptoTulip Contender: StableCoins

The race for CryptoTulip of the Year certainly isn’t over.

Yet another technology may slip in at the end:  so-called StableCoins.

The idea of a “stablecoin” is to create a cryptocurrency that is pegged to the dollar or some other fiat currency at a stable rate.  The goal is to mitigate the exciting uncertainty of fluctuating exchange rates that makes cryptocurrencies difficult to use in the still dominant “fiat” economy.  If your Bitcoin is worth $10,000 today and $7,000 tomorrow and who knows what next week, it can be hard to trade for dollar denominated goods or services.  How do you buy a carton of milk, if you pay with a token that may be worth a lot more or less tomorrow?   Who would want to sell you a carton of milk for this kind of crazy pseudomoney?

Basically, a lot of people would like a cryptocurrency that is worth a set number of Tulips, no matter how the Tulip market fluctuates.  The advantages of a free market without the risks of the free market.  That sounds good!  Does that sound plausible?

Until recently, the most popular StableCoin was Tether, which was supposed to be pegged to the USD.  The thing is, guaranteeing a fixed exchange rate requires a (centralized) service that maintains liquidity in dollars and crypto.  This variant of “reserve banking” isn’t especially Nakmotoan, and there are fundamental questions about the business model.  Just where do all the dollars and coins come from?  What kind of rake-off is done to support the system?  Is it sustainable?

In the case of Tether, long standing questions about liquidity and ownership (not to mention basic honesty) were exacerbated by the failure to deliver a promised audit. These troubles have come to roost as users walk away.  (The Tether coin was trading below the pegged $1 value—kind of a problem.)

There are other “stablecoins”, with varying exchange rates to the dollar.  The news is full of recently launched GeminiCoin is backed by the Winklevosses [3].  The big names give credibility and deep pockets to this otherwise pedestrian efforts. The start power and deeply wishful thinking have GUSD trading considerably above the nominal $1 mark (which doesn’t seem either logical or sustainable to me).

As they come and go, these “stable” tulips don’t seem particularly stable [2].

But more important, they are pretty totally anti-Nakamotoan.  Pegging cryptocurrency to the hated “fiat currency” is just wrongity, wrong, wrong, and I challenge you to justify it based on the sacred text [5]. Bitcoin is supposed to disrupt and obsolete the dollar, not extend the value of the dollar into cryptoland.

(We could also note that the GeminiCoin seems to carry extra value due to the patronage of celebrities [1]. This “trustless” system relies on “trust”—trust in famous people.  This is certainly not part of the Nakamotoan vision of how economics, or “trust”, should work.)


I have to say that stablecoin technology has both the “this is surely the wrong way to go” and the “this is deeply dubious” vibe that marks a strong contender for Cryptotulip of the Year.  Plus, the very spectacle of the instability of something called a stable coin” is so very, very Tulip-y.

Stablecoins have to be in the consideration for the award this year.



  1. Michael J Casey (2018) The Delicate Psychology of Stablecoins. Coindesk, https://www.coindesk.com/the-delicate-psychology-of-stablecoins/
  2. Nikhilesh De (2018) Stablecoins All Want to Be $1, But They’re Not Worth the Same. Condesk, https://www.coindesk.com/which-stablecoin-is-the-riskiest-the-crypto-market-is-pricing-that-in/
  3. David Floyd (2018) Gemini Stablecoin Volume Doubles on Top 10 Exchange Amid Tether Turmoil. Coindesk, https://www.coindesk.com/gemini-stablecoin-volume-doubles-top-10-exchange-bibox-tether-turmoil/
  4. David Floyd (2018) Bitfinex Is Publishing Data for a Tether Market That Doesn’t Exist. Coindesk,  https://www.coindesk.com/bitfinex-is-publishing-data-for-a-tether-market-that-doesnt-exist/
  5. Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System. 2009. http://bitcoin.org/bitcoin.pdf

 

Cryptocurrency Thursday

CryptoTulip 2018: Bitcoin vs Ethereum

The heavyweights are battling it out for the CryptoTulip 2018 award!

Defending CryptoTulip Award winner Ethereum has thrashed all year on basic governance and scaling issues, with no resolution in sight.  Ehthereum is also the platform of choice for other notable CryptoTulip contenders, including EOS, FOAM, and the plethora of ICOs.  (Ethereum:  the Tulip that other Tulips grow on!)

But the grand patriarch of the Nakamotoan family, Bitcoin, is not to be denied.  With a stunningly non-Nakamotoan bug fix (at least we hope the bug is really fixed!), and the neverending scaling debates, Bitcoin has done its own thrashing.  (And, by the way, the bug in Bitcoin has been copied into any number of other “coins”, so it affects a whole extended family of cryptocurrencies. )  (Bitcoiin: the Tulip from which all other Tulips are descended!)

This month we see further action from both these contenders for the non-coveted CryptoTulip of the Year Award.


This month, a cunning plan was floated to help Bitcoin scale.  It is now clear that this great idea is not only not strictly Nakamotoan, it also relies on a wrinkle in the consensus protocol that many consider to be a bug [2].    Yessiree, let’s turn a bug into a feature!

Astonishing enough, many people want to fix the bug (which would kill the scaling concept), and many people want to keep the ‘bug’ (and use it to improve the network).  It also seems that the Bitcoin code has grown complex enough that it isn’t even easy to plug this hole in the protocol if you wanted to, at least not without a side effect of splitting the network.  (I don’t understand the details of these fixes, I’m relying on second hand info.)

A tough choice—valid data, or scaling up the network.  Bitcoin is certainly contending for the CryptoTulip Award this year.


Of course, Ethereum continues to thrash along on its own path.  The long awaited, much debated “Constantinople” upgrade—way overdue, still contested, and somewhat trimmed down—is entering live testing.

Or, it would be, if only people would do the tests.  At this stage, the proposed new version was booted on a test network, but “stalled”, not processing more data.  It is reported that there aren’t enough miners who are running the code.

However, the testing did succeed in revealing a serious bug “which caused two different iterations of the same software upgrade to run on testnet.  I don’t really understand this problem, but it doesn’t sound ready for release, to me. But what do I know?

This test run doesn’t bode well for the November release date.  Enthusiasm seems to be low, quality seems iffy.  So just when, if ever, will this upgrade really happen?

Update 20 October 2018:  The release has been pushed back to January 2019 or later.

With this disaster, Ethereum certainly might repeat as CryptoTulip of the Year this year.  We’ll see what happens.


Both these contenders are showing that the software is buggy and the maintenance process unworkable.  Plus, significant fractions of the “community” don’t even want the upgrades to happen at all.

This is a technical and governance horror show, and it is not the universe Nakamoto envisioned!

But we all still believe, really believe, in our CryptoTulips!

That’s the essence of CryptoTulip Mania, isn’t it?

  1. Alyssa Hertig (2018) ‘Bitcoin Bug’ Exploited on Crypto Fork as Attacker Prints 235 Million Pigeoncoins. Coinbase, https://www.coindesk.com/bitcoin-bug-exploited-on-crypto-fork-as-attacker-prints-235-million-pigeoncoins/
  2. Alyssa Hertig (2018) Not Everyone Wants to Fix Bitcoin’s ‘Time Warp Attack’ – Here’s Why. Coindesk, https://www.coindesk.com/not-everyone-wants-to-fix-bitcoins-time-warp-attack-heres-why/
  3. Christine Kim (2018) Ethereum’s Next Blockchain Upgrade Faces Delay After Testing Failure. Coindesk, https://www.coindesk.com/ethereums-next-blockchain-upgrade-faces-delay-after-testing-failure/

 

Cryptocurrecy Thuraday

Say It Aint So: EOS Has Vote Buying Problems

EOS is certainly pushing hard for the coveted CryptoTulip of the Year Award this year.

This month we’re Shocked, Shocked! to learn that EOS blockchain voting can be corrupted.

Just as predicted.


Actually, the story is far more complex and interesting.  As Brady Dale reports, this blockchain based governance system not only has technical flaws, it has grievous vulnerabilities to vote buying and just plain vote stealing [2].  Not exactly the brave new world Nakamoto imagined.

Even worse, this system has blundered into real life, very non-Nakamotoan geopolitics, as Chinese and American users vie to control the network.

“we saw EOS holders announcing that they’d no longer vote for any China-based block producers at all.”

Hmm.  What is wrong with this picture?

EOS is supposed to be governed by a “constitution”, which every participating node is supposed to agree to and implement.  Shockingly enough, it seems that not everyone is faithfully following this constitution, and the consensus mechanisms aren’t doing much to prevent or work around the problem.  (Who’d a thunk it?)

The other “innovation” is that the consensus is not simply peer-to-peer a la Nakamoto.  The nodes “vote” to select 21 nodes to execute each round.  The theory is that this type of crowd sourcing will self regulate, picking only well behaved and efficient nodes.

Astonishingly enough, this voting scheme has been plagued by extraneous politics and the whiff of old fashioned corruption.  (Who’d a thunk it?)

And, the icing on the cake is that the tokens are distributed in the usual pattern:  the founders control an overwhelming amount of the wealth and votes [1].  So, whatever the “community” may want, and however users may behave, a handful of people have the power to control the rules.

Very “decentralized”.


Clearly, EOS is successfully “disrupting” the Nakmotoan paradigm, and exploring some new ways for really old problems to be implemented.

EOS must certainly be a strong contender for the CryptoTulip of the Year.


 

  1. Brady Dale (2018) Block.One Is Taking a Bigger Role With EOS (And That’s a Big Deal). Coindesk, https://www.coindesk.com/block-one-is-taking-a-bigger-role-with-eos-and-thats-a-big-deal/
  2. Brady Dale (2018) Vote Buying Scandal Stokes Fears of EOS Governance Failure. Coindesk, https://www.coindesk.com/vitalik-called-it-vote-buying-scandal-stokes-fears-of-eos-failure/

 

Cryptocurrency Thursday

Do you need a blockchain?

A year ago, Morgan Peck wrote an extremely useful piece for IEEE Spectrum, “Do you need a blockchain? [2].

The heart of the article is his chart, with caption, “I want a blockchain!”.

The flow chart has seven questions, starting with “Can a traditional database technology meet your needs?”  Following the flow, the decision tree winnows down the cases to  a relative handful that truly should consider blockchain technology.

It’s not quite “just say, no”, but almost always, “no” is the answer at the end.

One of the key principles is whether the system can and should have a trusted operator/admin.  If there is a trusted party, or the users can create a trusted party, then there is no point at all to using blockchain.  Use a database.

Other questions involve who will update data.  If only one party updates (essentially a multicast), then a blockchain gains very little over any other system with equivalent digital signatures.

And finally, if the data and/or transactions have to be private, then a permissioned blockchain might be justified (but see Champion de Crespigny on the shortcomings of private blockhains [1]), but a public blockchain would not work so well.  In this case, there has to be trust somewhere in the system, a trustless blockchain only pushes those issues to other mechanisms.

This is a really good, infographic that clears up so much of the bogosity in the blockchain world.  I’ve seen other explanations of these basic design questions, but this is remarkably clear and simple.

 

 


  1. Angus Champion de Crespigny (2018) How I Lost My Faith in Private Blockchains. Coindesk, https://www.coindesk.com/how-i-lost-my-faith-in-private-blockchains/
  2. M. E. Peck, Blockchain world – Do you need a blockchain? This chart will tell you if the technology can solve your problem. IEEE Spectrum, 54 (10):38-60, 2017.
  3. Morgen E. Peck, Do You Need a Blockchain? This interactive will tell you if a blockchain can solve your problem, in IEEE Spectrum – Blockchain World. 2017. https://spectrum.ieee.org/computing/networks/do-you-need-a-blockchain

 

Cryptocurrency Thursday

Big Bitcoin Bug

As the competition for CryptoTulip of the year contest enters the final stretch, we now hear from the arch, patriarch of all Tulips:  Bitcoin.

This month we learned that there was a huge, massive, bug in the oldest, stablest, “most secure” cryptocurrency of them all, Bitcoin   (There are also an unknown number of copycats who use code from the Bitcoin source base, so the bugs may affect other systems, too.)

Actually, there were two bugs, one a possible denial of service attack, and another that could allow double spending.  Nothing major, just a potential for a crippling shutdown and/or counterfeit coinage!  The bugs were accidentally introduced two years ago!

Whoa!

The bugs themselves aren’t especially notable. All software has bugs.  Bitcoin is software.  Ergo, Bitcoin has bugs.

The interesting and Tulip-y thing is how it was handled.

Notably the “open source”, “transparent” development team took it upon themselves to keep quiet about most serious part of the problem until there was a patc [1].  This is, of course, perfectly standard and reasonable behavior for proprietary code.  The developers took responsibility for the welfare of the code and its users, and tried to get the patch out before the details of the flaw were explained to potential attackers.

This is a sensible process, but it is not exactly a Nakamotoan process.  Bearing in mind that many enthusiasts advocate the principle that “the code is the law”, which means that, for a while, it was perfectly proper, even “intended” that people might be able to ravage Bitcoin through these loopholes in “the law”.  And the unelected developers in fact took it upon themselves, without consultation or notice, to change “the law” to preclude these highly profitable moves.

Naturally, this being cryptoland, the unannounced bug was, in fact, soon unofficially leaked by non-cooperative folks. (Thanks for helping, guys.) And even according the official announcement, only half the affected systems had been patched so far- probably.  The bug notice itself essentially begs people to update with the bug fix. And no one can do more.

Apparently, many Bitcoinistas believed their own propaganda about how ‘secure’ this stuff is, and about how invincible ‘open source’ code is.  So some people were “shocked” by this bug. [2]   In response, there have been naïve calls for more and better testing, as if any software ever has enough and good enough testing.  (And, by the way, decentralized, asynchronous, network protocols are really, really hard to test.)

There have also been calls for multiple implementations, which is a good idea until it isn’t a good idea.

As Alyssa Hertig reports, “developers don’t necessarily agree on exactly what needs to be done.”

At this point, we might ask, “Is this bug really patched?”  Who knows?

At this time we believe over half of the Bitcoin hashrate has upgraded to patched nodes. We are unaware of any attempts to exploit this vulnerability.” (from [1])

Not exactly a ringing assurance.


This episode shows just how vulnerable this technology really is.  There can and surely will be huge bugs, but they can be patched only through the indirect and voluntary cooperation of many anonymous operators.  And, as we have seen with Ethereum and the DAO, a bug can be exploited in seconds, but may take years to fix.

The CryptoTulip award will surely have to consider this episode.


Bitcoin was lucky this time (as far as we know).  With billions on the line, it’s only a matter of time before this CryptoTulip explodes.


  1. BitcoinCORE, CVE-2018-17144 Full Disclosure.  Bitcoin Core Notice, 2018. https://bitcoincore.org/en/2018/09/20/notice/
  2. Alyssa Hertig (2018) In Wake of ‘Major Failure,’ Bitcoin Code Review Comes Under Scrutiny. Coindesk, https://www.coindesk.com/in-wake-of-major-failure-bitcoin-code-review-comes-under-scrutiny/
  3. Alyssa Hertig (2018) The Latest Bitcoin Bug Was So Bad, Developers Kept Its Full Details a Secret. Coindesk, https://www.coindesk.com/the-latest-bitcoin-bug-was-so-bad-developers-kept-its-full-details-a-secret/

 

Cryptocurreny Thursday