If Shakespeare were a modern techbro, he’d look at a New Hampshire bill, House Bill 639, and write something like “Cry Havoc! And let the Bitcoin dogs loose.”
The bill, proposed by six state representatives and one senator, all Republicans, would virtually prevent any local or state regulation of the computerized creation of cryptocurrencies, whether on your basement computer or in a commercial warehouse full of specialized units. This is necessary, the bill asserts, because the current situation “undermines investor and consumer confidence and stifles beneficial innovation.”
If passed, the bill would prevent setting noise, pollution or zoning limits for “mining” — computers performing millions of meaningless calculations in the hopes of succeeding and earning a bitcoin — unless the limits are also set for other industrial applications. Importantly, this would also prevent the Public Utilities Commission from charging crypto farms a different electricity rate than other industrial applications.
It includes some interesting legal measures, such as allowing trusts based on the blockchain technology underlying cryptography and creating a new superior court docket to “hear and determine disputes related to blockchain technology.” On the technology side, it comes down to the question of “proof of stake” to validate Bitcoin.
Overall, this is a very innovative proposal. It’s also terrible.
I say it’s terrible because cryptocurrency has proven to be terrible. We absolutely do not want to give him free rein.
Like many, I was first fascinated by Bitcoin and blockchain. These are incredibly smart and innovative designs that think path off the beaten track, and the geeks couldn’t help but remove our caps in admiration. I’ve written my share of naive stories that bordered on fanboy-dom.
A decade later, things have changed. Cryptocurrencies have proven useful to almost no one except scammers, blackmailers, ruggers, and sellers of the world’s slimiest products, from sex slaves to bombs. A few huge fortunes dominate them now, some accumulated at lightning speed by the current administration, but there were also huge Dutch tulip fortunes.
Despite the efforts of the Winklevoss twins and the autocrat of El Salvador, experience has shown that cryptocurrency cannot do anything that can be done as well, or better, by “fiat currency” – what you and I call “money.”
Crypto’s only strength is that it avoids the financial regulation that has been built over centuries in response to the type of social disasters that crypto encourages. Hence its popularity with criminals.
On top of that, crypto mining might be the most wasteful technology ever developed in terms of the energy used to create something that, in many ways, doesn’t exist. Done on a large scale – and only on a large scale does it make financial sense for investors – mining can strain the power grid and lead to higher electricity bills for everyone. If a venture capitalist decides to install a crypto mining facility in your utility’s service area, you’ll pay for it on your electric bill.
Blockchain, which is essentially a distributed ledger, is less terrible but has been disappointing. It seems like this should be a revolutionary change in many business practices, but after all this time, it has only chipped away at the boundaries of a few industries. Generally, the benefits aren’t worth it.
This is why “cry chaos” is an appropriate response from our time-traveling Shakespeare. This means the unleashing of chaos, which I fear is one of the likely outcomes of unleashing crypto, as this bill would do.
Regulation is boring, that’s for sure. But sometimes it’s very, very necessary.
