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Features Enough with the ICO-Me-So-Horny-Get-Rich-Quick-


Lambo Crypto
What are cypherpunk legend Timothy May's thoughts on the bitcoin white paper? Keep
the text but throw out the hanger-ons that have came with it.

By Timothy C. May Oct 19, 2018 at 12:00 a.m. EDT Updated Sep 13, 2021 at 4:30 a.m. EDT

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Up

CoinDesk asked cypherpunk legend Timothy May, author of the "Crypto


Crypto Anarchist
Manifesto
Manifesto,," to write his thoughts on the bitcoin white paper on its 10th anniversary. What
he sent back was a sprawling 30-page evisceration of a technology industry he feels is
untethered from reality.

The original message is presented here as a fictional Q&A for clarity. The message remains
otherwise unchanged. Read more in our White Paper Reflections series.

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CoinDesk: Now that bitcoin has entered the history books, how do you feel the white ADVERTISEMENT

paper fits in the pantheon of financial cryptography advances?

Tim: First, I'll say I've been following, with some interest, some amusement and a lot of
frustration for the past 10 years, the public situation with bitcoin and all of the related
variants.

In the pantheon, it deserves a front-rank place, perhaps the most important development
since the invention of double-entry book-keeping.

I can't speak for what Satoshi intended, but I sure don't think it involved bitcoin exchanges
that have draconian rules about KYC, AML, passports, freezes on accounts and laws
about reporting "suspicious activity" to the local secret police. There's a real possibility
that all the noise about "governance," "regulation" and "blockchain" will effectively create a
surveillance state, a dossier society.

I think Satoshi would barf. Or at least work on a replacement for bitcoin as he first
described it in 2008-2009. I cannot give a ringing endorsement to where we are, or
generate a puff-piece about the great things already done.

Sure, bitcoin and its variants – a couple of forks and many altcoin variants – more or less
work the way it was originally intended. Bitcoin can be bought or mined, can be sent in
various fast ways, small fees paid and recipients get bitcoin and it can be sold in tens of
minutes, sometimes even faster.

No permission is needed for this, no centralized agents, not even any trust amongst the
parties. And bitcoin can be acquired and then saved for many years.

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But this tsunami that swept the financial world has also left a lot of confusion and carnage ADVERTISEMENT

behind. Detritus of the knowledge-quake, failed experiments, Schumpeter's "creative


destructionism." It's not really ready for primetime. Would anyone expect their mother to
"download the latest client from Github, compile on one of these platforms, use the
Terminal to reset these parameters?"

What I see is losses of hundred of millions in some programming screw-ups, thefts, frauds,
initial coin offerings (ICOs) based on flaky ideas, flaky programming and too few talented
people to pull off ambitious plans.

Sorry if this ruins the narrative, but I think the narrative is fucked. Satoshi did a brilliant
thing, but the story is far from over. She/he/it even acknowledged this, that the bitcoin
version in 2008 was not some final answer received from the gods..

CoinDesk: Do you think others in the cypherpunk community share your views? What
do you think is creating interest in the industry, or killing it off?

Tim: Frankly, the newness in the Satoshi white paper (and then the early uses for things
like Silk Road) is what drew many to the bitcoin world. If the project had been about a
"regulatory-compliant," "banking-friendly" thing, then interest would've been small. (In fact,
there were some yawn-inducing electronic transfer projects going back a long time. "SET,"
for Secure Electronic Transfer, was one such mind-numbingly-boring projects.)

It had no interesting innovations and was 99 percent legalese. Cypherpunks ignored it.

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It's true that some of us were there when things in the "financial cryptography" arena ADVERTISEMENT

really started to get rolling. Except for some of the work by David Chaum, Stu Haber, Scott
Stornetta, and a few others, most academic cryptographers were mainly focused on the
mathematics of cryptology: their gaze had not turned much toward the "financial" aspects.

This has of course changed in the past decade. Tens of thousands of people, at least,
have flocked into bitcoin, blockchain, with major conferences nearly every week. Probably
most people are interested in the "Bitcoin Era," starting roughly around 2008-2010, but
with some important history leading up to it.

History is a natural way people understand things… it tells a story, a linear narrative.

About the future I won't speculate much. I was vocal about some "obvious" consequences
from 1988 to 1998, starting with "The Crypto Anarchist Manifesto" in 1988 and the
Cypherpunks group and list starting in 1992.

CoinDesk: It sounds like you don't think that bitcoin is particularly living up to its
ethos, or that the community around it hasn't really stuck to its cypherpunk roots.

Tim: Yes, I think the greed and hype and nattering about "to the Moon!" and "HODL" is the
biggest hype wagon I've ever seen.

Not so much in the "Dutch Tulip" sense of enormous price increases, but in the sense of
hundred of companies, thousands of participants, and the breathless reporting. And the
hero worship. This is much more hype than we saw during the dot-com era. I think far too
much publicity is being given to talks at conferences, white papers and press releases. A
whole lot of "selling" is going on.

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People and companies are trying to stake-out claims. Some are even filing for dozens or ADVERTISEMENT

hundreds of patents in fairly-obvious variants of the basic ideas, even for topics that were
extensively-discussed in the 1990s. Let's hope the patent system dismisses some of
these (though probably only when the juggernauts enter the legal fray).

The tension between privacy (or anonymity) and "know your customer" approaches is a
core issue. It's "decentralized, anarchic and peer-to-peer" versus "centralized,
permissioned and back door." Understand that the vision of many in the privacy
community — cypherpunks, Satoshi, other pioneers — was explicitly of a permission-less,
peer-to-peer system for money transfers. Some had visions of a replacement for "fiat"
currency.

David Chaum, a principal pioneer, was very forward-thinking on issues of "buyer


anonymity." Where, for example, a large store could receive payments for goods without
knowing the identity of a buyer. (Which is most definitely not the case today, where stores
like Walmart and Costco and everybody else compiled detailed records on what
customers buy. And where police investigators can buy the records or access them via
subpoenas. And in more nefarious ways in some countries.)

Remember, there are many reasons a buyer does not wish to disclose buying preferences.
But buyers and sellers BOTH need protections against tracking: a seller of birth control
information is probably even more at risk than some mere buyer of such information (in
many countries). Then there's blasphemy, sacrilege and political activism. Approaches like
Digicash which concentrated on *buyer* anonymity (as with shoppers at a store or drivers
on a toll-road), but were missing a key ingredient: that most people are hunted-down for
their speech or their politics on the *seller* side.

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Fortunately, buyers and sellers are essentially isomorphic, just with some changes in a few ADVERTISEMENT

arrow directions ("first-class objects").

What Satoshi did essentially was to solve the "buyer"/"seller" track-ability tension by
providing both buyer AND seller untraceability. Not perfectly, it appears. Which is why so
much activity continues.

CoinDesk: So, you're saying bitcoin and crypto innovators need to fight the powers
that be, essentially, not align with them to achieve true innovation?

Tim: Yes, there is not much of interest to many of us if cryptocurrencies just become Yet
Another PayPal, just another bank transfer system. What's exciting is the bypassing of
gatekeepers, of exorbitant fee collectors, of middlemen who decide whether Wikileaks —
to pick a timely example — can have donations reach it. And to allow people to send
money abroad.

Attempts to be "regulatory-friendly" will likely kill the main uses for cryptocurrencies,
which are NOT just "another form of PayPal or Visa."

More general uses of "blockchain" technology are another kettle of fish. Many uses may
be compliance-friendly. Of course, a lot of the proposed uses — like putting supply chain
records — on various public or private blockchains are not very interesting. Many point
that these "distributed ledgers" are not even new inventions, just variants of databases
with backups. As well, the idea that corporations want public visibility into contracts,
materials purchases, shipping dates, and so on, is naive.

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Remember, the excitement about bitcoin was mostly about bypassing controls, to enable ADVERTISEMENT

exotic new uses like Silk Road. It was some cool and edgy stuff, not just another PayPal.

CoinDesk: So, you're saying that we should think outside the box, try to think about
ways to apply the technology in novel ways, not just remake what we know?

Tim: People should do what interests them. This was how most of the innovative stuff like
BitTorrent, mix-nets, bitcoin, etc. happened. So, I'm not sure that "try to think about ways"
is the best way to put it. My hunch is that ideologically-driven people will do what is
interesting. Corporate people will probably not do well in "thinking about ways."

Money is speech. Checks, IOUs, delivery contracts, Hawallah banks, all are used as forms
of money. Nick Szabo has pointed out that bitcoin and some other cryptocurrencies have
most if not all of the features of gold except it also has more features: it weighs nothing,
it's difficult to steal or seize and it can be sent over the crudest of wires. And in minutes,
not on long cargo flights as when gold bars are moved from place to another.

But, nothing is sacred about either banknotes, coins or even official-looking checks. These
are "centralized" systems dependent on "trusted third parties" like banks or nation-states
to make some legal or royal guaranty.

Sending bitcoin, in contrast, is equivalent to "saying" a number (math is more complicated


than this, but this is the general idea). To ban saying a number is equivalent to a ban on
some speech. That doesn't mean the tech can't be stopped. There was the "printing out
PGP code," or the Cody Wilson, Defense Distributed case, where a circuit court ruled this
way,

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Printed words are very seldom outside the scope of the First Amendment. ADVERTISEMENT

CoinDesk: Isn't this a good example of where you, arguably, want some censorship
(the ability to force laws), if we're going to rebuild the whole economy, or even partial
economies, on top of this stuff?

Tim: There will inevitably be some contact with the legal systems of the U.S., or the rest of
the world. Slogans like "the code is the law" are mainly aspirational, not actually true.

Bitcoin, qua bitcoin, is mostly independent of law. Payments are, by the nature of bitcoin,
independent of charge-backs, "I want to cancel that transaction," and other legal issues.
This may change. But in the current scheme, it's generally not know who the parties are,
which jurisdictions the parties live in, even which laws apply.

This said, I think nearly all new technologies have had uses some would not like.
Gutenberg's printing press was certainly not liked by the Catholic Church. Examples
abound. But does this mean printing presses should be licensed or regulated?

There have usually been some unsavory or worse uses of new technologies (what's
unsavory to, say, the U.S.S.R. may not be unsavory to Americans). Birth control information
was banned in Ireland, Saudi Arabia, etc. Examples abound: weapons, fire, printing press,
telephones, copier machines, computers, tape recorders.

CoinDesk: Is there a blockchain or cryptocurrency that's doing it right? Is bitcoin, in


your opinion, getting its own vision right?

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Tim: As I said, bitcoin is basically doing what it was planned to do. Money can be ADVERTISEMENT

transferred, saved (as bitcoin), even used as a speculative vehicle. The same cannot be
said for dozens of major variants and hundreds of minor variants where a clear-cut,
understandable "use case" is difficult to find.

Talk of "reputation tokens," "attention tokens," "charitable giving tokens," these all seem
way premature to me. And none have taken off the way bitcoin did. Even ethereum, a
majorly different approach, has yet to see interest uses (at least that I have seen, and I
admit I don't the time or will to spend hours every day following the Reddit and Twitter
comments.)

"Blockchain," now its own rapidly-developing industry, is proceeding on several paths:


private blockchains, bank-controlled blockchains, pubic blockchains, even using the
bitcoin blockchain itself. Some uses may turn out to be useful, but some appear to be
speculative, toy-like. Really, marriage proposals on the blockchain?

The sheer number of small companies, large consortiums, alternative cryptocurrencies,


initial coin offerings (ICOs), conferences, expos, forks, new protocols, is causing great
confusion and yet there are new conferences nearly every week.

People jetting from Tokyo to Kiev to Cancun for the latest 3-5 days rolling party. The
smallest only attract hundreds of fanboys, the largest apparently have drawn crowds of
8,000. You can contrast that with the straightforward roll-out of credit cards, or even the
relatively clean roll-out of bitcoin. People cannot spend mental energy reading technical
papers, following the weekly announcements, the contentious debates. The mental
transaction costs are too high, for too little.

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The people I hear about who are reportedly transferring "interesting" amounts of money ADVERTISEMENT

are using basic forms of bitcoin or bitcoin cash, not exotics new things like Lightning,
Avalanche, or the 30 to 100 other things.

CoinDesk: It sounds like you're optimistic about the value transfer use case for
cryptocurrencies, at least then.

Tim: Well, it will be a tragic error if the race to develop (and profit from) the things that are
confusingly called "cryptocurrencies" end up developing dossiers or surveillance societies
such as the world has never seen. I'm just saying there's a danger.

With "know your customer" regulations, crypto monetary transfers won't be like what we
have now with ordinary cash transactions, or even with wire transfers, checks, etc. Things
will be _worse_ than what we have now if a system of "is-a-person" credentialing and
"know your customer" governance is ever established. Some countries already want this
to happen.

The "Internet driver's license" is something we need to fight against.

CoinDesk: That's possible, but you could make a similar claim about the internet today
isn't exactly the same as the original idea, yet it's still be useful in driving human
progress.

Tim: I'm just saying we could end up with a regulation of money and transfers that is much
the same as regulating speech. Is this a reach? If Alice can be forbidden from saying "I will
gladly pay you a dollar next week for a cheeseburger today," is this not a speech
restriction? "Know your customer" could just as easily be applied to books and publishing:
"Know your reader." Gaaack!

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I'm saying there are two paths: freedom vs. permissioned and centralized systems. ADVERTISEMENT

This fork in the road in the road was widely discussed some 25 years ago. Government
and law enforcement types didn't even really disagree: they saw the fork approaching.
Today, we have tracking, the wide use of scanners (at elevators, chokepoints), tools for
encryption, cash, privacy, tools for tracking, scanning, forced decryption, backdoors,
escrow.

In a age where a person's smartphone or computer may carry gigabytes of photos,


correspondence, business information – much more than an entire house carried back
when the Bill of Rights was written – the casual interception of phones and computers is
worrisome. A lot of countries are even worse than the U.S. New tools to secure data are
needed, and lawmakers need to be educated.

Corporations are showing signs of corporatizing the blockchain: there are several large
consortiums, even cartels who want "regulatory compliance."

It is tempting for some to think that legal protections and judicial supervision will stop
excesses… at least in the US and some other countries. Yet, we know that even the US
has engaged in draconian behavior (purges of Mormons, killings and death marches for
Native Americans, lynchings, illegal imprisonment of those of suspected Japanese
ancestry).

What will China and Iran do with the powerful "know your writers" (to extend "know your
customer" in the inevitable way)?

CoinDesk: Are we even talking about technology anymore though? Isn't this just
power and the balance of power. Isn't there good that has come from the internet even
if it's become more centralized?

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Tim: Of course, there's been much good coming out of the Internet tsunami. ADVERTISEMENT

But, China already uses massive databases – with the aid of search engine companies –
to compile "citizen trustworthiness" ratings that can be used to deny access to banking,
hotels, travel. Social media corporate giants are eagerly moving to help build the
machinery of the Dossier Society (they claim otherwise, but their actions speak for
themselves).

Not to sound like a Leftist ranting about Big Brother, but any civil libertarian or actual
libertarian has reason to be afraid. In fact, many authors decades ago predicted this
dossier society, and the tools have jumped in quantum leaps since then

In thermodynamics, and in mechanical systems, with moving parts, there are "degrees of
freedom." A piston can move up or down, a rotor can turn, etc. I believe social systems
and economies can be characterized in similar ways. Some things increase degrees of
freedom, some things "lock it down."

CoinDesk: Have you thought about writing something definitive on the current crypto
times, sort of a new spin on your old works?

Tim: No, not really. I spent a lot of time in the 1992-95 period writing for many hours a day.
I don't have it in me to do this again. That a real book did not come out of this is mildly
regrettable, but I'm stoical about it.

CoinDesk: Let's step back and look at your history. Knowing what you know about the
early cypherpunk days, do you see any analogies to what's happening in crypto now?

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Tim: About 30 years ago, I got interested in the implications of strong cryptography. Not ADVERTISEMENT

so much about the "sending secret messages" part, but the implications for money,
bypassing borders, letting people transact without government control, voluntary
associations.

I came to call it "crypto anarchy" and in 1988 I wrote "The Crypto Anarchist Manifesto,"
loosely-based in form on another famous manifesto. And based on "anarcho-capitalism," a
well-known variant of anarchism. (Nothing to do with Russian anarchists or syndicalists,
just free trade and voluntary transactions.)

At the time, there was one main conference – Crypto – and two less-popular conferences
– EuroCrypt and AsiaCrypt. The academic conferences had few if any papers on any links
to economics and institutions (politics, if you will). Some game theory-related papers were
very important, like the mind-blowing "Zero Knowledge Interactive Proof Systems" work of
Micali, Goldwasser and Rackoff.

I explored the ideas for several years. In my retirement from Intel in 1986 (thank you, 100-
fold increase in the stock price!), I spent many hours a day reading crypto papers, thinking
about new structures that were about to become possible.

Things like data havens in cyberspace, new financial institutions, timed-release crypto,
digital dead drops through steganography, and, of course, digital money.

Around that time, I met Eric Hughes and he visited my place near Santa Cruz. We hatched
a plan to call together some of the brightest people we knew to talk about this stuff. We
met in his newly-rented house in the Oakland Hills in the late summer of 1992.

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CoinDesk: You mentioned implications for money... Were there any inclinations then ADVERTISEMENT

that something like bitcoin or cryptocurrency would come along?

Tim: Ironically, at that first meeting, I passed out some Monopoly money I bought at a toy
store. (I say ironically because years later, when bitcoin was first being exchanged in
around 2009-2011 it looked like play money to most people – cue the pizza story!)

I apportioned it out and we used it to simulate what a world of strong crypto, with data
havens and black markets and remailers (Chaum's "mixes") might look like. Systems like
what later became "Silk Road" were a hoot. (More than one journalist has asked me why I
did not widely-distribute my "BlackNet" proof of concept. My answer is generally "Because
I didn't want to be arrested and imprisoned." Proposing ideas and writing is protected
speech, at least in the U.S. at present.)

We started to meet monthly, if not more often at times, and a mailing list rapidly formed.
John Gilmore and Hugh Daniel hosted the mailing list. There was no moderation, no
screening, no "censorship" (in the loose sense, not referring to government censorship, of
which of course there was none.) The "no moderation" policy went along with "no leaders."

While a handful of maybe 20 people wrote 80 percent of the essays and messages, there
was no real structure. (We also thought this would provide better protection against
government prosecution).

And of course this fits with a polycentric, distributed, permission-less, peer to peer
structure. A form of anarchy, in the "an arch," or "no top" true meaning of the word
anarchy. This had been previously explored by David Friedman, in his influential mid-70s
book "The Machinery of Freedom." And by Bruce Benson, in "The Enterprise of Law.

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He studied the role of legal systems absent some ruling top authority. And of course ADVERTISEMENT

anarchy is the default and preferred mode of most people—to choose what they eat, who
they associate with, what the read and watch. And whenever some government or tyrant
tries to restrict their choices they often finds way to route around the restrictions: birth
control, underground literature, illegal radio reception, copied cassette tapes, thumb
drives ….

This probably influenced the form of bitcoin that Satoshi Nakamoto later formulated.

CoinDesk: What was your first reaction to Satoshi's messages, do you remember how
you felt about the ideas?

Tim: I was actually doing some other things and wasn't following the debates. My friend
Nick Szabo mentioned some of the topics in around 2006-2008. And like a lot of people I
think my reaction to hearing about the Satoshi white paper and then the earliest "toy"
transactions was only mild interest. It just didn't seem likely to become as big as it did.

He/she/they debated aspects of how a digital currency might work, what it needed to
make it interesting. Then, in 2008, Satoshi Nakamoto released "their" white paper. A lot of
debate ensued, but also a lot of skepticism.

In early 2009 an alpha release of "bitcoin" appeared. Hal Finney had the first bitcoin
transaction with Satoshi. A few others. Satoshi himself (themselves?) even said that
bitcoin would likely either go to zero in value or to a "lot." I think many were either not
following it or expected it would go to zero, just another bit of wreckage on the
Information Superhighway.

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The infamous pizza purchase shows that most thought of it as basically toy money. ADVERTISEMENT

CoinDesk: Do you still think it's toy money? Or has the slowly increasing value sort of
put that argument to rest, in your mind?

Tim: No, it's no longer just toy money. Hasn't been for the past several years. But it's also
not yet a replacement for money, for folding money. For bank transfers, for Hawallah
banks, sure. It's functioning as a money transfer system, and for black markets and the
like.]

I've never seen such hype, such mania. Not even during the dot.com bubble, the era of
Pets.com and people talking about how much money they made by buying stocks in "JDS
Uniphase." (After the bubble burst, the joke around Silicon Valley was "What's this new
start-up called "Space Available"?" Empty buildings all around.)

I still think cryptocurrency is too complicated…coins, forks, sharding, off-chain networks,


DAGs, proof-of-work vs. proof-of-stake, the average person cannot plausibly follow all of
this. What use cases, really? There's talk about the eventual replacement of the banking
system, or credit cards, PayPal, etc. is nice, but what does it do NOW?

The most compelling cases I hear about are when someone transfers money to a party
that has been blocked by PayPal, Visa (etc), or banks and wire transfers. The rest is hype,
evangelizing, HODL, get-rich lambo garbage.

CoinDesk: So, you see that as bad. You don't buy the argument that that's how things
get built though, over time, somewhat sloppily…

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Tim: Things sometimes get built in sloppy ways. Planes crash, dams fail, engineers learn. ADVERTISEMENT

But there are many glaring flaws in the whole ecology. Programming errors, conceptual
errors, poor security methods. Hundreds of millions of dollars have been lost, stolen,
locked in time-vault errors.

If banks were to lose this kind of my money in "Oops. My bad!" situations there'd be
bloody screams. When safes were broken into, the manufacturers studied the faults —
what we now call "the attack surface" — and changes were made. It's not just that
customers — the banks — were encouraged to upgrade, it's that their insurance rates
were lower with newer safes. We desperately need something like this with
cryptocurrencies and exchanges.

Universities can't train even basic "cryptocurrency engineers" fast enough, let alone
researchers. Cryptocurrency requires a lot of unusual areas: game theory, probability
theory, finance, programming.

Any child understands what a coin like a quarter "does," He sees others using quarters
and dollar bills and the way it works is clear.

When I got my first credit card I did not spend a lot of time reading manuals, let alone
downloading wallets, cold storage tools or keeping myself current on the protocols. "It just
worked, and money didn't just vanish.

CoinDesk: It sounds like you don't like how innovation and speculation have become
intertwined in the industry…

Tim: Innovation is fine. I saw a lot of it in the chip industry. But we didn't have conferences
EVERY WEEK! And we didn't announce new products that had only the sketchiest ideas
about. And we didn't form new companies with such abandon. And we didn't fund by
"floating an ICO" and raising $100 million from what are, bluntly put, naive speculators who
hope to catch the next bitcoin.

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Amongst my friends, some of whom work at cryptocurrency companies and exchanges,


the main interest seems to be in the speculative stuff. Which is why they often keep their
cryptocurrency at the exchanges: for rapid trading, shorting, hedging, but NOT for buying
stuff or transferring assets outside of the normal channels.

CoinDesk: Yet, you seem pretty knowledgeable on the whole about the subject area...
Sounds like you might have a specific idea of what it "should" be.

Tim: I probably spend way too much time following the Reddit and Twitter threads (I don't
have an actual Twitter account).

What "should" it be? As the saying goes, the street will find its own uses for technology.
For a while, Silk Road and its variants drove wide use. Recently, it's been HODLing, aka
speculating. I hear that online gambling is one of the main uses of ethereum. Let the fools
blow their money.

Is the fluff and hype worth it? Will cryptocurrency change the world? Probably. The future
is no doubt online, electronic, paperless.

But bottom line, there's way too much hype, way too much publicity and not very many
people who understand the ideas. It's almost as if people realize there's a whole world out
there and thousands start building boats in their backyards.

Some will make, but most will either stop building their boats or will sink at sea.

We were once big on manifestos, These were ways not of enforcing compliance, but of
suggesting ways to proceed. A bit like advising a cat… one does not command a cat, one
merely suggests ideas, which sometimes they go with.

Final Thoughts:

STORY CONTINUES BELOW

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Terra, Web 3 and Acceptable Risk in Innovation

Don't use something just because it sounds cool…only use it if actually solves some
problem (To date, cryptocurrency solves problems for few people, at least in the First
World).

Most things we think of as problems are not solvable with crypto or any other such
technology (crap like "better donation systems" are not something most people are
interested in).

If one is involved in dangerous transactions – drugs, birth control information – practice


intensive "operational security"….look at how Ross Ulbricht was caught.

Mathematics is not the law

Crypto remains very far from being usable by average people (even technical people)

Be interested in liberty and the freedom to transact and speak to get back to the
original motivations. Don't spend time trying to make government-friendly financial
alternatives.

Remember, there are a lot tyrants out there.

Image via Consensus archives

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