May 14, 2022•1,831 words
I used to be a cryptocurrency enthusiast, though not of the type who became billionaires by mining bitcoins on a single CPU for 30 minutes in the early 2010s. The story began in 2016, the year when I graduated from high school and finally became an undergraduate student. Naturally, I had a bit more financial freedom than I did in high school, which led me thinking about, well, "investment". Around that time, Bitcoin and blockchain in general was gaining unprecedented popularity, with a lot of money pouring in and new exchanges being founded almost every single day. Mining farms were being build everywhere in China. There were a few close friends of mine who started playing with blockchain, some of whom invested a considerable amount into Bitcoin. As someone who loves new technologies, I could not resist the trend but to also set up my own Bitcoin wallet and start to play around in the Bitcoin market.
Lucky for me, there was a serious uproar in the Bitcoin market nearing the end of 2016, right after my first ever investment made in Bitcoin. I vividly remember it was in a Monday morning, when I was on my way to the university, that I saw the unbelievable exchange rate on my phone. My heart started pounding like crazy. Even though I had next to zero experience in any sort of trading before, I still knew that such a ridiculous sudden climb in prices will not, on itself, hold for very long. As the seconds passed, I stared at my phone screen, with my hands sweating uncontrollably, hovering over the "sell" button. As the price reached around CN￥8000 (~US$1500), I made up my mind and clicked on the button.
That was the first time I earned anything through investment. I was thrilled, and even more thrilled later after learning that the Bitcoin market crashed a while after that peak. I was relieved that I made the right call, and also quite a bit complacent for my "ability" to make the right call at the right point. However, I did not really make a lot more investment into Bitcoin after that, simply due to the fact that I was worried I ran out of luck and will be tremendously disappointed the next time. Despite that, the first-time earning definitely sparked my interest in the technology as a whole. Following that year, I started to learn a lot about blockchains, including Bitcoins and other cryptocurrencies. I started mining CPU-based coins using a server I have idling. A lot of other decentralized software, not limited to just blockchains, entered my field of view as well. Some notable ones include ZeroNet and IPFS, and a plethora of content distribution systems, based on blockchains or not.
Though I did not continue investing a lot in Bitcoin or other cryptocurrencies themselves, I was nevertheless a firm believer of the entire blockchain ecosystem. The fact that these systems can work without a central authority, at least not technically, fascinated the young me who just started my CS program. To me, this was the future -- the decentralized future, where all centers of power are dissolved and a censorship-less, privacy-first internet, and, beyond that, such a society, would arise -- a pretty naïve technological anarchist, I know, but that was what I believed in. Despite not making direct investments into any cryptocurrency out of fear of volatility, I held onto a small but significant amount of Monero from my mining machines. For a brief moment, I even attempted to run a full Monero node. I tried to use cryptos for payment of everything, including my VPS, my dedicated servers, and donations to various foundations.
All good and dandy until I eventually started to realize the countless downsides of blockchain. Aside from the obvious fact that proof-of-work is extremely wasteful (which I did not realize at that point), the inconvenience of Bitcoin-based payments definitely bugged me a lot during those years. I held on to Monero, but I still had to use Bitcoin for payment quite a bit due to its popularity. Every time I try to do so, I had to sit in front of a screen waiting eagerly for the transaction to go through. Five minutes, ten minutes, one hour, until a confirmed check mark is finally shown on the transaction. This is simply excruciatingly painful. Although this is quite specific to Bitcoin due to its popularity and, well, inefficiency as a first-comer, and they did make the effort to improve the situation, it is nevertheless way more annoying to use than everything else.
This was far from the major deal-breaker for me with blockchain-based cryptocurrency, though. That turning point came way later, when I realized how 90% of new cryptocurrencies were simply money grabs, or worse, pretty much frauds. This realization was from my participation in a (at that time) new cryptocurrency which shall not be named. It promised great returns on investment. It promised great earnings from mining -- which is why a few friends and I all thought about mining and trading some of it. What I could not help but notice though, is that even though they mentioned all of these great investment prospects, they failed to present any technical innovation, not even the tiniest bit. They just forked the code of Monero, changed the name and the genesis block, and started a campaign. Did they believe in decentralization, free software, or even privacy? I fear not, as if so, they would have at least mentioned it in their whitepaper and homepage. At the very least, someone who really cares would not, in my opinion, do something like this without any substance.
After that, I went and checked a bunch of newly-launched cryptocurrencies. To my surprise (but probably to nobody else's), most of them fell into the exact same category -- loads of buzzwords about financial gains, but little or no technical substance whatsoever. My later experience with a few professors in my university who work on blockchains certainly did no help in improving my plunging impression about them. One of them, who shall not be named, allegedly might have mined cryptocurrencies in the university. The course he taught, which is supposed to be about foundational operating system concepts, ended up being nothing about what you expect from an OS course. Instead, the coursework literally asked students to write papers about blockchains or other related areas. He even ran one of his own conference-style thing about cryptocurrency for these substance-less papers. Another one was better than the previous one by a million light years, and I thank him sincerely for his appreciation of my skills and help in my academic life while I was working in his lab, but this still did not give me a better impression on the entire cryptocurrency community. His work, and work I have done with him, definitely had some substance in them instead of being money-grabbing bullshit like the others, or at least I believe so. However, at the end of the day, I still had no idea what our work meant, if cryptocurrencies were to be the future of economy. Did I work on something that make them better? I often ask myself. And the answer, to me, is a no.
Do I hate my professors? Other than the first one, no, not at all. On the contrary, I am extremely grateful for all that they have done for me as an undergraduate student. But the experience doing research in the field simply makes me realize the cold fact about the area -- most people are too profit-driven and few are really working in the field for what Satoshi Nakamoto originally believed in. And I don't even blame them personally -- were there an easy opportunity to become a millionaire, I would do it as well. This does show, however, that true decentralization cannot work purely based on what Nakamoto laid out as the blockchain technology. It creates a self-fulfilling market and the entire community built around such a market. Whatever Nakamoto envisioned for his brave new world, the truth is that everyone is working not for decentralization, but re-playing what has already happened -- centralization of wealth -- just on a different medium.
Nowadays, the sentiment against blockchain-based coins / technology is growing like wild fire. I should be happy, right? Maybe not. For all my hatred towards people who claim to be enthusiasts of cryptocurrency while chasing only profit, I cannot say the same to the technology itself. Don't get me wrong, the blockchain technology as it is today can never be something I will actively advocate for due to its countless pitfalls and shortcomings, not to mention the extreme centralization of computing power and the privacy issues in current popular implementations. But it is not like the non-blockchain financial system is much better in any of these aspects -- centralization of power, tick; privacy issues, tick; the only advantage of it is the power consumption because it does not involve any proof-of-work. Blockchains currently do not solve these problems per-se, but it is so far the only one that looks promising in any capacity at all. At the very, very least, trying to "freeze" accounts or "block" / "reverse" transactions on blockchains with proof-of-work is way harder than in your traditional banks, who have made the headline multiple times in the past year.
I could argue for days why this exact property of blockchains is a good thing or a bad thing, but at the end of the day, just like many things in society, what we need is a balance. The existence of an alternative to traditional banking systems, to me, is not to replace everything, because that would be impractical. Of course, something better than proof-of-work may be able to finally push blockchains towards practicality in general, but at this point it just does not seem likely without another few Satoshi Nakamoto. We have potential ideas for improvement, but they are delayed and delayed and the date of deployment seems pretty far away, not to mention that these ideas generally trade some of the advantages of a PoW blockchain for better performance. Not to mention that the ability to block accounts or reverse transactions can be desirable sometimes. Rather, in my imagined future, these systems, when they (potentially) become mature enough, should act as a check on the old systems, such that abuse of power in the old ones carries an additional risk from people fleeing into the other system.
Where does this put me now? I am not actively holding any number of cryptocurrencies at the moment, and I personally do not want to invest into them in the near future. Nor do I want to be involved in the current cryptocurrency community, academic or not, in any capacity. But I do hope that the technology will come to fruition one day, even though this day may be far, far in the future.