“I am a computer science professor. Like my colleagues, I know that bitcoin technology is rubbish."

In early May, Jorge Stolfi, Professor of Computer Science at the University of Campinas (Brazil), posted this tweet in English: “Every computer scientist should be able to see that cryptocurrencies are totally dysfunctional payment systems and that the “

technology ” (including “smart contracts”) is technological fraud.

Could you say it out loud?"

Stolfi now has 9,400 followers.

So he had less.

To the discreet world of computer science, the 2,000 retweets and 7,000 likes he received made him go viral.

Stolfi was saying something that he had repeated before.

He didn't even see it as controversial.

But the current apparent “crypto-winter”, where the price of bitcoin has gone from almost 60,000 euros to 20,000 since November, gave it life.

The tweet was the impetus for a letter that 1,500 specialists signed to send to the US Congress: “We write to urge you to take a critical and skeptical approach to the industry's claim that crypto assets are an innovative technology that is indisputably good. ", they were saying.

Among the signatories is Harvard professor Bruce Schneier or Kelsey Hightower, chief engineer at Google Cloud.

Every computer scientist should be able to see that cryptocurrencies are totally dysfunctional payment systems, and that "blockchain technology" (including "smart constracts") is a technological fraud.

Would they please say that out loud?

– Jorge Stolfi (@JorgeStolfi) May 5, 2022

In this video call from Campinas with EL PAÍS, Stolfi explains what the computer community sees so clearly, why bitcoin works like a pyramid scheme and what could be the reasons for its possible bankruptcy.

Ask.

Why have they decided to send the letter now?

Response.

The usual reaction from my colleagues is: "Bitcoin and

technology doesn't interest me, technologically it's rubbish, I'm going to continue doing my own research."

The tweet woke these people up.

Q.

It will be garbage, but billions of dollars are invested in crypto.

A.

Yes, and that's why people still believed it was important to sign the letter.

For example, one of the signatories is a professor at Berkeley.

In his department, another professor has a

company .

I don't know what the internal politics of universities look like from the outside, but it is common for professors not to speak in public about what other colleagues are doing, even when it is something really bad.

P.

But the other one does think that

is useful.

R.

Well, you have a company.

I don't know if he believes in it, but he's making money.

That is a problem.

There are hundreds of

doing

.

They all get money, it's their time.

For the people involved in those projects, it's money.

It is a motivation to believe in technology.

These pyramid schemes collapse when there are no more fools to fool

Q.

Where is the profit of investing in bitcoin supposed to come from?

A. The only way to get money out of bitcoin is by selling it to someone else.

When you do, someone agrees to buy your bitcoin for, say, $2,000 more.

If you buy or sell from another investor, that does not change the total money there is: you receive the money that the other puts.

But if you buy it from a miner, the money leaves the system.

You can compute the money that has come out: about 20,000 million dollars.

It is the difference between what investors have put in and what they have taken out.

It is the size of the losses.

P.

Is it possible that as a society we invest millions in something that we do not understand?

A.

It is exactly what happens in the crypto industry.

Very few people seem to know that there is money coming in from investors and money going out for the creators of various cheats and miners.

These pyramid schemes collapse when there are no more fools to fool.

Q.

That is why you say that bitcoin will not exist in 20 years.

A.

I wouldn't dare to predict when the supply of dumb people runs out.

I would not know how to put a date for its end, but it will come.

It can't go on like this forever, because it depends on more people putting money in than taking it out.

That will never change.

Q.

Bernie Madoff's pyramid scheme lasted 25 years.

That was hidden.

Here everyone can see how it works.

A.

Yes, it is brilliant.

The information that it is a pyramid scheme is out there, but most people who invest don't know about it.

People say it's not a pyramid scheme because there's no figure and nothing is hidden, but scheme definitions don't require those two things.

The only requirement is that the benefits for investors come from new investors.

Q.

What advice would you give to people who have money in crypto?

A.

Sell if you can and don't look back.

I personally know people who have sold their house to invest in bitcoin.

Q.

What do you tell them?

R.

I do not tell them anything.

Do you want me to go and tell them I heard you invested in bitcoin and you're dumb?

Q.

In the letter they say that it does not help ordinary people.

Bitcoin has six networks that control 80% of the mining power.

Therefore, they can control what goes into the blocks

A.

Like all pyramid schemes there is no way of knowing when it will explode.

Bankruptcy is guaranteed to happen before most people realize it.

They are the ones who will lose money.

There will always be smaller investors willing to buy, who will be the losers.

There are at least 10 million people who have invested and continue to invest in bitcoin, according to some estimates.

Q.

What if the supply of suckers never runs out?

Wouldn't that be a pyramid scheme anymore?

A.

The same can be said of any pyramid scheme.

Like the Nigerian prince scams, they target people who don't get it.

It's like the lottery.

It's stupid because only 40-50% of the money that people put into the game comes back as prizes.

Mathematically it doesn't make sense: people put money in and will take out less money.

Rather than waiting for the bobo supply to run out, two things can happen: one, regulatory authorities can shut it down because it's a pyramid scheme, or two, entities like the FBI can shut it down because it doesn't comply with money laundering regulations.

I don't know which one will go first.

The reasons for the original tweet

P.

In the original tweet it says two things.

First, that cryptocurrencies are not used to pay.

Why?

A.

They are not comparable to payment systems such as credit cards or Paypal.

Bitcoin has a limit of four transactions per second.

Visa makes 10,000 per second.

Bitcoin does not reach 400,000 in a day and there are 4 million people using it: that implies a payment per user every 10 days.

It cannot be a significant commercial payment.

Q.

And second:

is a technological fraud.

A.

Because it promises to do something that it really can't deliver, and even if it could, it's not something that's useful for building real systems.

It promises a decentralized database where multiple organizations can contribute tamper-proof: you can't delete or change, only add.

But that has been used forever.

A large bank or a critical system should have such a database for several reasons: if the system crashes, you have to go back and see what happened, for example.

People have known how to do distributed databases for years.

P.

And decentralization?

R.

It is the only thing that

could contribute: the absence of a central authority.

But that only creates problems.

Because to have a decentralized database you have to pay a very high price.

You must ensure that all miners do "work tests" or "participation".

It takes more time.

It is also not that safe because in the past there have been occasions where they have had to rewind several hours to eliminate bad transactions, in 2010 and in 2013. The conditions that allowed rewinding are still there.

There is a small group of networks that can be called to rectify.

That's why it's a fraud: it promises to do something that people already know how to do.

Q.

But it allows avoiding a government or central bank.

A.

Bitcoin has six networks that control 80% of the mining power.

Therefore, they can control what goes into the blocks.

That is not what [Bitcoin creator] Satoshi envisioned, which was that power would be distributed among hundreds of thousands of anonymous and independent miners and therefore they could not collude.

Q.

Satoshi wasn't that smart?

A.

In the early 1990s, computer scientists already showed that you couldn't have a decentralized payment system.

His idea was that a network of volunteers would bear the costs.

They proved that there could not be a decentralized network because if half of the volunteers were dishonest it could sabotage the system and prevent consensus on the state of the accounts: half of the network could think that Alice had paid Bob and the other half that Alice had paid Bob. he had paid Charlie.

But the cyberpunks, the community that dreams of building an internet society beyond the reach of governments, were still excited about something like this because it was essential for their society to work: a way to pay without depending on banks that could be controlled by governments.

Q.

And Satoshi arrived.

R.

Satoshi believed that he had found a solution.

He was brilliant in a way because he said let's try to build a network out of greedy selfish bastards who only care about money.

So anyone who wants money will want to play by the rules.

If a miner tries to sabotage, he won't earn anything.

Instead of a currency, [bitcoin] became something to invest and hold.

That's terrible for the money

Q.

What did you miscalculate?

R.

Two things.

One, that mining instead of distributing among thousands of anonymous volunteers will not end up in a group of huge networks.

He didn't envision those networks at first, they appeared in 2010 or so.

The situation we have ended up with is that all cryptos are alike: a small group of miners who control networks and most of the power.

The second thing is that he believed that inflation was bad.

He put a limit so there would be no inflation.

But already in 2009, the first bitcoin user after Satoshi saw that it was best to keep it because it would be more valuable in the future.

Instead of a coin he became something to invest and hold.

That's terrible for the money.

If people keep the money under the mattress, there is less in circulation, the value goes up.

But if someone decides to sell a handful, the value plummets.

It is what we have seen since 2009, it goes up and down, which makes it useless as a trading currency.

You can't sell something in a currency that loses 10% of its value a few hours after receiving it.

Q.

Could it not be like gold?

A.

Gold also goes up and down, but on scales of years.

Not as fast as bitcoin.

Gold is a metal that has a fixed demand for jewelry and other applications.

Even if nobody invested in gold, it would have a certain price.

Bitcoin does not have this type of demand.

Q.

Crypto doesn't work well as a currency except if you're a criminal.

Without crypto, there would have been no

A.

It is the only digital system that does not follow the money laundering regulations.

That's why criminals use it.

Once you have paid, there is no way for the victim to cancel the payment and get the money back, not even the government can do it easily.

It is anonymous and when a

encrypts your files, he does not have to enter your system directly, where he would leave traces.

He has

computers that he has already

, so tracking him down is difficult.

With bitcoin you only pay to a certain address on the

and nothing links it to the

.

The payment can stay there for years.

The criminal does not have to interact with the system and can hide from the police.

Q.

What do you think of Web3?

A.

Web3 basically tries to use

to do all kinds of things that the internet already has: forums,

, services.

Since

technology has nothing new to offer, nor does it deliver what it promises, Web3 is quackery, a technological fraud just like

.

There is nothing new.

Q.

And the famous NFTs?

R.

One way to think of NFTs is as a cryptocurrency that has only one coin that you cannot split.

Thus, the NFT market is the same as the crypto market, only there is only one seller and a handful of buyers.

The price of an NFT is indefinite because there is no market.

The owner of an NFT can say that he sells it for 1 million dollars.

If someone buys it from him, the price will be 1 million dollars.

But after that we won't know the price anymore because we don't know if there will be a second guy willing to buy it for 1 million.

Each NFT is a digital file that is a work of art.

But it doesn't make much sense because you can't own a digital file like a painting or a house or a physical object.

The physical object may only be in one place.

On the other hand, the digital file can be in a thousand places and the copies are not copies,

Q.

What dangers does it have?

A.

The problem with copyright in digital files is that it doesn't work the same.

NFTs include a

which is a kind of numbering that serves as a unique magical summary of the file.

But that doesn't establish your copyright, rather it gives you ownership of that specific file.

But if you change a single bit in the image you get a different

and then you don't have any automatic way of saying that one is a copy of the other.

You copyright a specific image, but any image sufficiently similar to the original is considered copyrighted.

Who decides that two images are equal enough?

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