A group of computer scientists and technology experts wrote an open letter to U.S. lawmakers asking them to resist lobbying by the crypto and blockchain industry.
The 26 experts and professionals who signed the letter included Harvard lecturer Bruce Schneier, IBM Fellow Grady Booch, former Microsoft engineer Miguel de Icaza and principal engineer at Google Cloud Kelsey Hightower.
“Today, we write to you urging you to take a critical, skeptical approach toward industry claims that crypto-assets (sometimes called cryptocurrencies, crypto tokens, or Web3) are an innovative technology that is unreservedly good,” the experts wrote in the letter.
Blockchain technology is lauded as a mechanism that can be used to track every transaction indelibly as part of Web3, also known as the decentralized web. It does so through widely distributed cryptographic ledgers and tokens that can be traded between users. The applications built on these blockchains are known as decentralized apps and are the basis for decentralized finance, or DeFi, which eschew traditional banking.
“The claims that the blockchain advocates make are not true,” said Schneier. “It’s not secure, it’s not decentralized. Any system where you forget your password and you lose your life savings is not a safe system.”
The letter went on to cite the risks of large-scale scams and volatility across the crypto industry. It noted, in particular, the “catastrophes” related to crypto-asset investments the signatory experts did not see as “growing pains” but instead “inevitable outcomes” of the technology.
The letter went on to state that many people who invest in crypto find themselves taking part in “highly volatile speculative investment schemes.” They fear this is problematic because it is being marketed to retail investors with little attention to the economic risks.
The crypto industry has recently been shrouded by a market downtrend as bitcoin fell below $30,000, its lowest point since July. Also in early May, the TerraUSD stablecoin lost its parity to the U.S. dollar, causing its related cryptocurrency Luna to lose 99% of its value. Billions of dollars were taken out of crypto markets during the crash. Data from trackers revealed that DeFi apps built on Terra fell to $75 million in locked-in value from $32 billion since the crash.
Lobbying from cryptocurrency companies has quadrupled since 2018, according to an analysis from Public Citizen. Crypto industry companies spent $9 million on lobbying efforts in 2021, up from $2.2 million in 2018; the number of lobbyists rose to 320 from 115 in that time as well. The crypto exchange Coinbase Inc. led the pack at $1.5 million spent.
“The computational power is equivalent to what you could do in a centralized way with a $100 computer,” said de Icaza. “We’re essentially wasting millions of dollars’ worth of equipment because we’ve decided that we don’t trust the banking system.”