[Cryptography] Krugman blockchain currency skepticism

[Benjamin Kreuter]

On Sat, 2018-08-04 at 11:08 -0400, Patrick Chkoreff wrote:
> Benjamin Kreuter wrote on 08/03/2018 08:23 PM:
> 
> > Except that we know how to solve that problem without all the
> > expense
> > of blockchains.  You use Chaum-style e-cash that supports at least
> > one
> > offline transaction "hop."
> 
> Except that a Chaumian e-cash issue would be hosted on an individual
> server (or group thereof), and state actors could interfere with
> access
> to that server.

Which is why I said at least one offline hop.  Once you have a
certificate from the bank, your ability to use the system cannot be
revoked unless you are caught cheating.  With one offline hop, you can
receive and spend money without communicating with the bank.

Sure, the government might decide to just kill the whole system, but
how exactly is cryptocurrency different?  If the state wanted to cut
off access to Bitcoin, it could -- for example, nobody in North Korea
can access Bitcoin.

>   Also a Chaumian e-cash issue would presumably be
> redeemable for assets on demand, and the vaulted assets would be
> vulnerable to seizure.

Modern banking does not work like that.  Nothing is "vaulted," it is
all just book entries until you withdraw cash, and there is no reason
it would be any different with e-cash.

Now, it is true that a state could force banks to rewrite their ledgers
and deny someone their money.  If that is something you are worried
about, you are stuck living an all-cash life; or, if e-cash were
deployed, you could use e-cash only, assuming you have the chance to
get a certificate from the bank in the first place (I think this fits
the threat model you are describing, where someone already had a bank
account and the government decided to raid it).

Perhaps cryptocurrencies also protect against these sort of abuses, but
they do so at great expense and the security model is not nearly as
well-understood as the e-cash security model.

-- Ben
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