Saturday, May 30, 2020

Vitalik, Roubini In A Head to Head Discussion on the Anonymity Crypto Offers

At Deconomy currently on-going in South Korea, Vitalik Buterin, a co-founder of Ethereum network and Nouriel Roubini a top crypto pessimist known as Dr. Doom were involved in a face-off on the advantages and disadvantages of cryptocurrency.

Crypto’s Importance

During the face-off, Roubini first opened the floor by highlighting the deficiencies of cryptocurrency. He stated his usual purview of cryptocurrency, of being volatile, inefficient, non-scalable, with price manipulations, pump and dumps, fake volumes, constant hacks, and fraud in ICOs.

On the other hand, Buterin highlighted censorship resistance as a feature of cryptocurrency. He cited the example of the rise of corporate censorship which at the time is done in collaboration with the government as shown by Operation Chokepoint. Also, he cited the importance of use for international payments, though he conceded it gives genuine conveniences which might be stronger for people that engaged in unconventional activities, but is also applicable to everyone.

Even though Roubini sees little positivity about cryptocurrency, he stated that “I don’t think crypto payments for criminal activity is going be the future of it.” Also, they’re not anonymous and even for cryptos that try to be anonymous like Monero, kleptocratic governments will make sure your wallet is registered said Roubini. This seems the first positive thing mentioned by Dr. Doom on cryptocurrency.

The Tech Cold War

In the face-off, Buterin noted that there is a tech cold war going on between the people trying to evade systems of control and those trying to create them. He noted that after the internet launched, there were national restrictions on sites, people used VPN, then there’s the stories on file-sharing. However, offline, surveillance cameras are popping up everywhere, which has made resisting authority become more difficult.

Roubini stated that there are good reasons for the government to be aware of everyone’s’ financial activities, as news of billions in off-shore taxes heaves. He further emphasized that no government will allow anonymous cryptocurrencies. U.S. won’t allow cryptocurrency to become the next Swiss bank account” he said.

In a counter argument, Buterin mentioned that there is a misconception on tax evasion. He stated that in practice people get caught for tax evasion because they report a yearly income of $20,000, but have five mansions.

Crypto Scalability

On the subject of scalability, Roubini thinks cryptocurrencies are not scalable. In his view, scalability requires some degree of centralization and can’t have thousands of computers recording all transactions. He also faults the decentralized nature of crypto as more centralized, as well as the economies of scale in mining, which has oligopoly. This allows charge of heavy fees he said.

Buterin argued that it is not impossible to have scalability, decentralization, and security, but it is very hard. There is sharding, which increases decentralization and scalability, there’s Plasma, state channels, all actively being developed he said.

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