Last week Yvonne and I closed on the sale of our Austin home and the purchase of another home in the Dallas area. The process was simpler than I remember from the past, and since we paid cash for the new home, we didn’t even need a notary. I just downloaded a few forms, signed them on the kitchen table, scanned into the computer, and sent them back to the Title Company through a secure email service. This experience foretells the future, but are crypto-currencies safe? Really safe?
The US Department of Health and Human Services (HHS) is soliciting research papers related to blockchain applications in healthcare. Blockchain is the enabling technology behind BitCoin and other crypto-currencies, and it’s catching on fast — maybe too fast. Judge for yourself.
Much more consumer education on the basics and workings of crypto-currency is needed, as well as a healthy bit of skepticism. This video, produced by the founders of Bitcoin and naturally biased, is a start. But does it fully address your skepticism?
Crypto-currency sure seems to be a lot better than government based currencies based on promises rather than gold, but the complexity of how it works gives many consumers pause, and for good reason. They worry about the potential for fraud or simple misunderstandings. That’s because they remember the global financial collapse, which was triggered by a housing bubble and complex financial instruments that no one, including regulators, understood. Thanks largely to misguided trust in complex mathematical principles; risky loans were packaged into mortgage-backed securities and derivatives that were given AAA ratings by Moody’s and Standard & Poors.
Could this happen again with crypto-currencies?
Have we learned enough from past mistakes? (See Texas Homebuilding and the Global Financial Collapse. I wrote this whitepaper in 2010 as Communications Director of Homeowners of Texas, a nonprofit consumer advocacy organization, to analyze the role homebuilding played in the collapse.)
Are crypto-currencies fail-safe?
Can they survive power failures, network outages, cyber criminals, or ransomware? How might individuals, organized crime syndicates, or rogue nation states exploit blind trust in crypto-currency for their own benefit? What vulnerabilities might be found with supercomputers and artificial intelligence available now, or in 50 or 100 years, given Moore’s Law and the exponentially accelerating rate of tech innovation? What could possibly go wrong? And what would be the impact? Until we have good answers to these difficult questions, skepticism is warranted.
As a technologist, I like the crypto-currency trend and see the benefits, but I also remember past results from putting so much faith in technologies we don’t fully understand or know how to regulate. That’s why I recommend reading my 2010 white paper.