While blockchain technologies are often hailed as tamper-proof, transparent and revolutionary some folks don’t seem to get the hype. Or as Nouriel Roubini said, distributed ledgers are "one of the most overhyped technologies ever."
While blockchain technologies are often hailed as tamper-proof, transparent and revolutionary some folks don’t seem to get the hype. Or as Nouriel Roubini said, distributed ledgers are “one of the most overhyped technologies ever.”
As you know blockchain is the main technology that underpins cryptocurrencies. The system is believed to disrupt not only the financial sector but as well as healthcare, logistics and practically everything if we can believe what geeks say. Speaking of cryptocurrencies, blockchain provides decentralized platforms where traders can exchange tokens safely and despite that all nodes verify each transaction it is extremely hard to trace money transfers. Undoubtedly, this is something good but it has its drawbacks as well and money-laundering and crime funding are just the tip of the iceberg.
Smart contracts are probably one of the most promising applications blockchain has to offer. They cut the vast amounts of paperwork required which the parties have to deal with. Everything happens on the blockchain and the system records who and when made the change, thus enhancing transparency.
Anyway, the interesting thing is that despite the fact that most of the crypto haters praise the technology behind them, the economist Nouriel Roubini finds blockchain quite senseless and well, he has a point:
“This is absurd for a simple reason: Every financial contract in existence today can either be modified or deliberately breached by the participating parties. Automating away these possibilities with rigid ‘trustless’ terms is commercially non-viable, not least because it would require all financial agreements to be cash collateralized at 100 percent, which is insane from a cost-of-capital perspective. “Moreover, it turns out that many likely appropriate applications of blockchain in finance — such as in securitization or supply-chain monitoring — will require intermediaries after all, because there will inevitably be circumstances where unforeseen contingencies arise, demanding the exercise of discretion.”
Roubini does not believe that blockchain has the potential to ever reach the influence level of HTML for example. He has labeled cryptocurrencies a bubble many times in the past, stating that bitcoin’s price is steadily going to zero.
Finally, he correctly notes that some processes happen slower on a distributed ledger network, compared to traditional methods. His opinion does ring a bell but let’s admit it, blockchain is still developing and evolving. We believe it’s better we leave cryptographers do their job in the following years. Maybe they will prove Mr. Roubini wrong.