Hehe, this author actually got me to stop reading by saying the following:


Unbelievable, usually an author saying "stop here if xzy" just keeps me going.

Did anyone read it to the end. Does it continue like it started off?

FAIL #3: The whole technological basis is flawed.

Bitcoin is, fundamentally, a cryptosystem. Some people argue that it's "as strong as SHA256" and that "if someone could break SHA256, then banks would be in trouble as it is."

Wrong on both counts.

First of all, I admit, I don't totally understand the bitcoin algorithms and systems. I don't really need to. I understand only this: the road to crypto hell is paved with the bones of people who thought that a good cryptosystem can be designed by combining proven algorithms in unproven ways. SHA256 may be the strongest part of bitcoin, but a cryptosystem is only as strong as its weakest link.

You want to replace the world economy with a hard-to-guess math formula? Where's your peer review? Where are the hordes of cryptographers who have spent 30+ years trying to break your algorithm and failed? Come talk to me in 30 years. Meanwhile, it's safe to assume that bitcoin has serious flaws that will allow people to manufacture money, duplicate coins, or otherwise make fake transactions. In that way, it's just like real dollars.

But what's *not* like real dollars is the cost of failure. With real dollars, when people figure out how to make counterfeit bills, we find those people and throw them in jail, and eventually we replace our bills with newer-style ones that are more resistant to failure. And the counterfeiters are limited by how many fake bills their printing press can produce.

With bitcoin, a single failure of the cryptosystem could result in an utter collapse of the entire financial network. Unlimited inflation. Fake transactions. People not getting paid when they thought they were getting paid. And the perpetrators of the attack would make so much money, so fast, that they could apply their fraud at Internet Scale on Internet Time.

(Ha, and don't even talk to me about how your world-changing financial system would of course also be protected by anti-fraud laws so we could still punish people for faking it. If we still need the government, what is the point of your currency again?)

The current financial system is slow, and tedious, and old, and in many ways actually broken or flawed. But one thing we know is that it's *resilient*. One single mathematical error will not send the whole thing into a tailspin. With bitcoin, it will.

And no, a break in SHA256 would not break the current financial system or ruin any banks. How could it? What would even be the mechanism for such an attack? How would it make the paper bills in my pocket stop working for buying hot dogs? Can't we just hunt down and arrest the people who forged the fake transactions?