Cryptocurrency Is An Abject Disaster

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Over the past several months, everyone in the industry who provides any kind of free CPU resources has been dealing with a massive outbreak of abuse for cryptocurrency mining. Someone found a way of monetizing stolen CPU cycles directly, so everyone who offered free CPU cycles for legitimate use-cases is now unable to provide those services. If not for cryptocurrency, these services would still be available.

Original story by Drew DeVault. Published 2021-04-26, Originally published 2021-04-26.
This work is available under the Creative Commons Attribution-ShareAlike license.

Bitcoin BTC price January 2020 to April 2021.jpg
Bitcoin (BTC) price January 2020 to April 2021.

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Note: Hey! If you write a comment about this article online, disclose your stake in cryptocurrency. I will explain why later in this post. For my part, I held <$10,000 USD worth of Bitcoin prior to 2016, plus small amounts of altcoins. I made a modest profit on my holdings. Today my stake in all cryptocurrency is $0.

Starting on May 1st, users of sourcehut’s CI service will be required to be on a paid account, a change which will affect about half of all builds.sr.ht users[1]. Over the past several months, everyone in the industry who provides any kind of free CPU resources has been dealing with a massive outbreak of abuse for cryptocurrency mining. The industry has been setting up informal working groups to pool knowledge of mitigations, communicate when our platforms are being leveraged against one another, and cumulatively wasting thousands of hours of engineering time implementing measures to deal with this abuse, and responding as attackers find new ways to circumvent them.

Cryptocurrency has invented an entirely new category of internet abuse. CI services like mine are not alone in this struggle: JavaScript miners, botnets, and all kinds of other illicit cycles are being spent solving pointless math problems to make money for bad actors. Some might argue that abuse is inevitable for anyone who provides a public service — but prior to cryptocurrency, what kind of abuse would a CI platform endure? Email spam? Block port 25. Someone might try to host their website on ephemeral VMs with dynamic DNS or something, I dunno. Someone found a way of monetizing stolen CPU cycles directly, so everyone who offered free CPU cycles for legitimate use-cases is now unable to provide those services. If not for cryptocurrency, these services would still be available.

Don’t make the mistake of thinking that these are a bunch of script kiddies. There are large, talented teams of engineers across several organizations working together to combat this abuse, and they’re losing. A small sample of tactics I’ve seen or heard of include:

  • Using CPU limiters to manipulate monitoring tools.
  • Installing crypto miners into the build systems for free software projects so that the builds appear legitimate.
  • Using password dumps to steal login credentials for legitimate users and then leveraging their accounts for mining.

I would give more examples, but secrecy is a necessary part of defending against this — which really sucks for an organization that otherwise strives to be as open and transparent as sourcehut does.

Cryptocurrency problems are more subtle than outright abuse, too. The integrity and trust of the entire software industry has sharply declined due to cryptocurrency. It sets up perverse incentives for new projects, where developers are no longer trying to convince you to use their software because it’s good, but because they think that if they can convince you it will make them rich. I’ve had to develop a special radar for reading product pages now: a mounting feeling of dread as a promising technology is introduced while I inevitably arrive at the buried lede: it’s more crypto bullshit. Cryptocurrency is the multi-level marketing of the tech world. “Hi! How’ve you been? Long time no see! Oh, I’ve been working on this cool distributed database file store archive thing. We’re doing an ICO next week.” Then I leave. Any technology which is not an (alleged) currency and which incorporates blockchain anyway would always work better without it.

There are hundreds, perhaps thousands, of cryptocurrency scams and ponzi schemes trussed up to look like some kind of legitimate offering. Even if the project you’re working on is totally cool and solves all of these problems, there are 100 other projects pretending to be like yours which are ultimately concerned with transferring money from their users to their founders. Which one are investors more likely to invest in? Hint: it’s the one that’s more profitable. Those promises of “we’re different!” are always hollow anyway. Remember the DAO? They wanted to avoid social arbitration entirely for financial contracts, but when the chips are down and their money was walking out the door, they forked the blockchain.

That’s what cryptocurrency is all about: not novel technology, not empowerment, but making money. It has failed as an actual currency outside of some isolated examples of failed national economies. No, cryptocurrency is not a currency at all: it’s an investment vehicle. A tool for making the rich richer. And that’s putting it nicely; in reality it has a lot more in common with a Ponzi scheme than a genuine investment. What “value” does solving fake math problems actually provide to anyone? It’s all bullshit.

And those few failed economies whose people are desperately using cryptocurrency to keep the wheel of their fates spinning? Those make for a good headline, but how about the rural communities whose tax dollars subsidized the power plants which the miners have flocked to? People who are suffering blackouts as their power is siphoned into computing SHA-256 as fast as possible while dumping an entire country worth of CO² into the atmosphere? [2] No, cryptocurrency does not help failed states. It exploits them.

Even those in the (allegedly) working economies of the first world have been impacted by cryptocurrency. The price of consumer GPUs have gone sharply up in the past few months. And, again, what are these GPUs being used for? Running SHA-256 in a loop, as fast as possible. Rumor has it that hard drives are up next.

Maybe your cryptocurrency is different. But look: you’re in really poor company. When you’re the only honest person in the room, maybe you should be in a different room. It is impossible to trust you. Every comment online about cryptocurrency is tainted by the fact that the commenter has probably invested thousands of dollars into a Ponzi scheme and is depending on your agreement to make their money back[3]. Not to mention that any attempts at reform, like proof-of-stake, are viciously blocked by those in power (i.e. those with the money) because of any risk it poses to reduce their bottom line. No, your blockchain is not different.

Cryptocurrency is one of the worst inventions of the 21st century. I am ashamed to share an industry with this exploitative grift. It has failed to be a useful currency, invented a new class of internet abuse, further enriched the rich, wasted staggering amounts of electricity, hastened climate change, ruined hundreds of otherwise promising projects, provided a climate for hundreds of scams to flourish, created shortages and price hikes for consumer hardware, and injected perverse incentives into technology everywhere. Fuck cryptocurrency.

"A personal note

This rant has been a long time coming and is probably one of the most justified expressions of anger I've written for this blog yet. However, it will probably be the last one.

I realize that my blog has been a source of a lot of negativity in the past, and I regret how harsh I've been with some of the projects I've criticised. I will make my arguments by example going forward: if I think we can do better, I'll do it better, instead of criticising those who are just earnestly trying their best.

Thanks for reading 🙂 Let's keep making the software world a better place."

Footnotes

  1. If this is the first you’re hearing of this, a graceful migration is planned: details here
  2. “But crypto is far from the worst contributor to climate change!” Yeah, but at least the worst offenders provide value to society. See also Whataboutism.
  3. This is why I asked you to disclose your stake in your comment upfront.
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Anonymous (4283827e)

3 months ago
Score -1
The foregoing is the expression of retardation.
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Anonymous (aedbd6e9)

3 months ago
Score -1
To nobody's surprise, Drew manages to reach yet another level of retarded takes.
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Anonymous (b6a52b5b)

3 months ago
Score 1
Rather than saying "the author is retarded", please at least try to argue the text. You're not contributing to a discussion, and instead you neatly fill the investor role he's expressing in the text.
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Anonymous (aedbd6e9)

3 months ago
Score 0

Nobody wants a discussion with a guy who's sweating over his 2005 era hardware being tortured and has no understanding of crypto whatsoever. Either he is playing stupid or he just heard about crypto two days ago.

"Y- you must be one of those investors!" is not a contribution either.
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Anonymous (9c5ba246)

3 months ago
Score 1
Even if it were 2005-era hardware (which it's not), he provides a usable service to the community, free of charge - and that should be valued. So I can understand his frustration of abuse of that hardware. Instead of shitting on him, ask yourself what you have done for a community in the past because you sure as hell ain't contributing anything with those statements.
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Anonymous (aedbd6e9)

3 months ago
Score -1

> Even if it were 2005-era hardware (which it's not), he provides a usable service to the community, free of charge - and that should be valued. So I can understand his frustration of abuse of that hardware. Instead of shitting on him, ask yourself what you have done for a community in the past because you sure as hell ain't contributing anything with those statements.

Hi drew, go be a retard somewhere else.
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Anonymous (e4468cc0)

3 months ago
Score 0

> Either he is playing stupid or he just heard about crypto two days ago.

Someone who is playing stupid or just heard about cryptocurrency two days ago calls it "crypto". "Crypto" is short for a whole field of things significantly predating cryptocurrencies.
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Anonymous (be334b16)

3 months ago
Score 0

Was this written in 2012? This article makes all the stale talking points from when crypto was a brand new thing. The loss of free computing services is a problem but fairly inconsequential collateral and these services have always been abused, as the article already says. CPU mining is not profitable so a small fee for these services, as sourcehut is now doing, mitigates the problem. The bigshots pumping money into crypto gives it MORE legitimacy, not less. Crypto has always been an investment vehicle first, currency second - it's too new and volatile at this point to be used as a real currency (even coins which are specifically made for currency replacements like Stellar). But a Ponzi scheme? This demonstrates no understanding of crypto at all. The author just falls back on the RICH ARE GETTING RICHER MAKING MONEY IS BAD NOOO leftie argument, and somehow, that's the reason crypto is an "abject disaster". Please. And you're not gonna get scammed by a crypto fraud unless you're a complete tool. Mining is not pointless, it processes transactions and contributes to the integrity and cryptographic strength of the network. It's inefficient by design and consumes a lot of electricity, true. But the total power consumption uses a significantly larger amount of renewable energy sources compared to other industries. See https://www....ergy-problem. And since mining can happen anywhere there’s an internet connection, mining pools are strategically placed next to renewable energy sources such as dams where the power would normally be wasted anyway. Thus, the "crypto is bad because it consumes as much electricity as Argentina" argument is somewhat hyperbolic. Although crypto is not used as a mainstream currency, we’ve still seen an incredible pace of adoption. 10 years ago crypto was something that nobody heard of let alone owned except nerds. Now it's considered a mainstream method of investment shoulder-to-shoulder with gold. That is a tremendous achievement.

This article is just clickbait written by an ignoramus. Move along.
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Anonymous (9c5ba246)

3 months ago
Score 0
I don't know at what data you are looking making that claim but crypto is not shoulder-to-shoulder with gold. It's an extremely volatile financial instrument, backed by no substantial counterweight. Yes, it can make you rich, but so can a visit of a casino. Gold is far less volatile and its physical counterweight actually has usability in many industries. So no, investing in crypto is anything but like investing in materials, especially precious metals.
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Anonymous (931be1bf)

3 months ago
Score 0
I don't even have a shred of cryptocurrency (yet) and I find this take to be cringe. Way to completely ignore those that can't even rely on the banks that refuse service because of some problematic ideas. A shame that Drew won't rely on something anonymous like Monero just because of ties to other "ponzi scheme" cryptocurrencies (and also NFTs) stealing the current limelight and/or contribute to climate change.
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Anonymous (9c5ba246)

3 months ago
Score 0

The current currency system depending on banks and centralized entities ain't great. It isn't even remotely good. But to say that cryptocurrencies solve any concrete problem would be a lie. The current state of crypto is millions of competing standards, all trying to fill some niche to establish themselves as the next iteration of currency, investment opportunity or distributed system based on a blockchain, while none of them actually being feasible to create a usable and sustainable ecosystem. No sane person can treat Bitcoin as a serious currency by now. It's exponential growth of worth in the past years is based solely on the hype of enthusiasts (and by now even financial enterprises), not on its utility it provides. The same story goes for Ethereum. While its contract system would definitely be a most welcome addition, it hasn't been adopted anywhere where it would matter. Yes, you have stablecoins but their adoption doesn't go past financial instruments. There are also issues regarding taxation and the exchanges being centralized. And don't get me started on hard forks, which just show that no cryptocurrency can truly be decentralized - it is controlled by a small team of engineers, their ulterior motive left to you to figure out.

While DeVault's calling cryptocurrencies Ponzi schemes is factually incorrect, I most certainly agree the statement that the current crypto ecosystem is a disaster and not worth the electricity to keep it running. The theoretical spirit of Nakamoto was great - to create a low-cost, verifiable digital transaction system, without a central regulator - the practical result is anything but that. It isn't transparent, it isn't decentralized, it's (tightly) regulated by 2021 and it's expensive to use.
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Anonymous (e4468cc0)

3 months ago
Score 0

Ponzi scheme might only be a metaphor with questionable fitness.

Compare to Louis Rossmann describing some of his early days of consumer device repair as being like "running a Ponzi scheme on my time": he offered a very competitive price but also specified the turn-around time could be a lot longer than his competitors. So work would come in and he would get paid but he didn't always know how long it would take him to actually finish it, while he was living on the pre-payment... I think. All these 3 things seem to have "fresh raw utility garnered with promises" keeping them running, so maybe it's not such a bad metaphor. (I don't claim to know exactly what Rossmann meant and of course he actually succeeded enough that he could stop doing that, which is also where the metaphor completely breaks down, as all metaphors do anyway)
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