Understanding Crypto 6: Bruce Schneier: Security, Trust, and Blockchain
Welcome back to another episode of our limited addition Crypto Series on the Rational Reminder Podcast, a weekly reality check about sensible investing and financial decision-making. Are cryptocurrencies and the associated technologies beneficial? Could they change the world for the better? There is a lot of controversy surrounding the use and application of cryptocurrencies and the associated technologies. Some say the innovation is ultimately useless while others think it is the answer to society’s problems. To help us unpack this complicated and hot-button topic is Bruce Schneier, an internationally-renowned security technologist, author, and educator. The focus of his work is the intersection of security, technology and people. Bruce also has an immense passion for educating people about cryptocurrencies. Examples of his well-known books include Liars and Outliers and Data and Goliath, which provide much-needed insight to readers about DeFi technologies and big monopolies. He also lectures in public policy at the Harvard Kennedy School and is a fellow at the Berkman Klein Center for Internet and Society. In our conversation, we discuss the debate surrounding cryptocurrencies such as privacy concerns of digital cash, what makes Bitcoin different from earlier digital currencies, aspects of public blockchain technology, the misapplications of crypto technology, the different forms and approaches to cryptocurrencies, and whether DeFi technologies can be beneficial to society, and what the biggest concerns are regarding cryptocurrencies. Join us today as we take a detailed look into the value and drawbacks of crypto and DeFi technology with Bruce Schneier! Key Points From This Episode: What the objective was of early digital cash projects, like DigiCash. [0:03:27] The privacy concerns associated with digital cash. [0:04:45] Whether financial surveillance should be a concern for people. [0:05:45] Differences between Bitcoin and earlier forms of digital cash. [0:08:35] How good technology is at solving economic and political problems. [0:09:30] Details about the pieces that come together to make public blockchains work. [0:10:29] Why Bruce considers proof of work to be an idiotic way to form consensus. [0:13:43] Whether alternatives to proof of work resolve wasteful energy practices. [0:16:01] The new properties that public blockchains offer. [0:17:04] We find out if public blockchains do what their proponents say they do. [0:17:37] The claims that crypto proponents make regarding blockchain are discussed. [0:19:29] We discuss the misapplications of crypto and DeFi technologies. [0:20:23] Outline of the systems of trust that humans use to incentivize good behaviour. [0:23:26] Whether cryptocurrency technologies will become secure and trusted. [0:27:49] Reasons for the perspective ‘code is law’ from crypto technologists. [0:30:02] Whether ‘one CPU, one vote’ is how blockchains are working in practice. [0:31:35] We discuss other ideas and emerging technologies in the crypto space. [0:33:24] If government intervention is needed for crypto technologies and currencies. [0:36:21] How cryptocurrencies can be included in the mainstream financial system. [0:39:06] Bruce shares his opinion on the future of NFTs for artists to be able to capitalize on their creativity. [0:40:08] What the potential impacts of crypto technologies on younger generations are. [0:43:48] How blockchain erodes moral and reputational incentives to act responsibly. [0:45:26] Ways in which cryptocurrencies can help people who are ‘bankless’ and avoid high bank fees. [0:46:13] Break down of a real-world scenario where blockchain is being used in an alternative way. [0:49:00] Bruce tells us whether Bitcoin is suitable as a global currency. [0:50:55] The message that Bruce hopes his students will take away after his class. [0:51:59] If the government is beginning to take regulation of cryptocurrencies seriously. [0:52:43] What aspects, if any, excites Bruce about cryptocurrencies. [0:53:04] What Bruce’s biggest concerns about cryptocurrencies are. [00:53:43]