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“Blockchains Are…Bad”: David Gerard on Libra, CBDCs, & the Facts of Life

The cryptosphere–especially from the inside out–is, well, a bit of an echo chamber.

After all, the technology that runs cryptocurrency and blockchain networks–as well as the possible use-cases for this technology–are so new and so esoteric that there’s almost a language barrier between crypto community members and the rest of the world; people on the inside speak about decentralization, hash rates, and Byzantine fault tolerance without blinking an eye, while onlookers simply scratch their heads.

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It is exactly this gap in information that has at once led to the alienation and glorification of blockchain technology: crypto and blockchain seem both too outlandish to use in a widespread and serious manner, and also so ground-breakingly innovative that they must be great investments.

In other words, most of the narrative around blockchain technology is very polarized: the perception seems to be that either you’re an all-in, born-again Bitcoiner, or you’re a skeptic who couldn’t possibly understand the tenets of Satoshi Nakamoto’s creation nor its progeny.

This lack of nuanced conversation of the blockchain world has had disastrous consequences in the past–the ICO boom and bust of 2017 was largely fueled by a whirlwind of hype and misinformation; the financial fallout–as well as the reputational damage to individuals and companies working to make blockchain technology meaningful to society–still continues today.

Therefore, developing a culture of healthy skepticism and deep understanding of blockchain and cryptocurrencies–warts and all–is essential.

David Gerard, crypto journalist, historian, and author of Attack of the 50-Foot Blockchain, is doing just that.

Finance Magnates recently sat down with David to speak about the current state of blockchain and crypto, the newest iteration of Libra, and what (if anything) blockchain is actually good for.

On Libra: “It was bizarre.”

“I’m not actually a great fan of this stuff,” he began, “I don’t think any of it works very well, I don’t think it’s a good investment; I think there’s lots and lots of reasons to stay away from it, particularly for a retail investor–but it’s also really totally fascinating, and really interesting to follow.”

For Gerard, this seems to be particularly true for Facebook’s Libra project, which officially published a ‘2.0’ version late last week.

He explained that in the early days of Libra–and even before Libra–”no one could work out what [Facebook] was doing or how it would make sense.”

Indeed, the earliest iterations of the Libra project–and even the first official version–were so far out of the mainstream view of the financial realm that it was difficult for society to contextualize.

As opposed to, for example, “being a money transmitter”, which is typically regarded as “a respectable business [model] that’s well-understood, well-regulated”, the Libra project involved a largely novel–even quirky–technological basis.

“People went, ‘oh! They’re doing a cryptocurrency? No, they can’t be doing a crypto, that doesn’t make any sense!’ And then we saw what they came out with in June, and it made no sense,” Gerard said.

“There’s reversibility built into the banking system at quite high levels,” Gerard explained. “Fraud is traceable and generally reversible–this is why clearances generally take a day or two, because there are good reasons for it.”

And indeed, “none of the problems with remittances and delays in international transmission are technology,” Gerard explained. “None of the problems are. We know how to change numbers on computers; we’re quite good at it.”

Therefore, “when you transmit money from one bank to another bank internationally, they just shuffle numbers in their computers,” he continued. “But they do it under the purview of a regulatory regime.”

“[…] All delays in international payment are basically [because of] regulation and making sure things are done very, very properly,” he said. “Because, of course, crooks are very creative.”

This is an excerpt. To hear Finance Magnates’ full, fascinating interview with David Gerard, visit us on SoundCloud or Youtube.


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