Trustless Money : the virtues, limits and dangers of cryptocurrencies

This seminar will break our rules about a pre-distributed paper and take the form of a talk in plain language on the technopolitics of the crypto currency boom. The technologies originally developed to allow bitcoin to escape the need for trusted intermediaries have several interesting features that merit close understanding. Two that stand out are the computational transformations for signing each transaction, called hashing, and the immutable public daisy-chain of these hashes, or block-chain, that creates the partially public and immortal ledger of all prior transactions. This public blockchain has many political virtues. There are also many hard limits to the operation of the ledger that limit its ability to function as a payment system, which advocates typically prefer not to discuss. These include the costs and delays in settling low-value transactions, the geopolitical risks of the concentration of server farms used for confirming transactions, inequalities in the ownership of bitcoins, and the ledger’s designed resistance to the rule of law. Each of the problems has been partially addressed by competing blockchain assets, like Ether and Tether, but the basic problems remain substantially unchanged, and the changes introduce a new set of problems. Some of the most influential economists have recently argued that the stablecoins that the US government is now supporting introduce a further set of dangers that may undermine both the dollar and the global monetary system.