[Cryptography] Krugman blockchain currency skepticism

[jamesd at echeque.com]

On 05/08/2018 13:27, Peter Todd wrote:
> This would be a much better argument if Chaum-style e-cash actually existed.
> 
> Currently it doesn't, which makes me think there must be a downside you're not thinking about.
> 

The downside of Chaumian e-cash is very simple.  You need a single 
centralized trusted server holding a small number unshared secrets.  At 
two in the morning Mueller kicks down your door and demands you alter 
the behavior of your server in ways that make it profoundly 
untrustworthy.  While he is at, holds a gun to your head and takes the 
secrets, charges you with tax fraud, money laundering, etc, and puts you 
in solitary confinement pending trial so as to make it impossible to 
organize your defense.

A crypto currency needs to be centerless - it needs to able to survive 
the seizure of key servers by a hostile powerful party.

Trouble with bitcoin is that it is not centerless - proof of work winds 
up being centralized in a small number of extremely powerful and 
extremely expensive computers.

Thus we need a system with proof of stake, and not only proof of stake, 
but proof of client stake - the power over the system needs to reside 
with peers that have a lot of wealthy clients - and it needs to be hard 
to find who the clients are, and where they are keeping their secrets, 
so that even if Mueller seizes important peers on charges of tax evasion 
and money laundering, does not thereby gain control.