Rationale for boycotting crypto currencies


I ran into https://stakes.social/ today and although I don’t understand most of it (there is a lot of concepts and vocabulary to learn), it is based on Ethereum and the core of the project is about Free Software, cryptocurrencies and sustainability.

I know of intuitive reasons why it would make sense to boycott most crypto currencies, primarily because of their environmental footprint. I don’t know of a good article that would explain that. Is there one?


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I find this website to be enlightening: it has data, rationale and explains how to read them.

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Based on my reading of CBECI I don’t think I will boycott cryptocurrencies. This is all quite new to me and maybe I’ll change my mind in the next few weeks.

I like this article very much. Not only does it present a well articulated critic of cryptocurrencies, it has also bits of humor which are rare in scientific literature.

This discussion applies quantitative finance methods and economic arguments to cryptocurrencies in general and bitcoin in particular – as there are about 10,000 cryptocurrencies, we focus (unless otherwise specified) on the most discussed crypto of those that claim to hew to the original protocol (Nakamoto 2009) and the one with, by far, the largest market capitalization.
In its current version, in spite of the hype, bitcoin failed to satisfy the notion of “currency without government” (it proved to not even be a currency at all), can be neither a short nor long term store of value (its expected value is no higher than 0), cannot operate as a reliable inflation hedge, and, worst of all, does not constitute, not even remotely, a safe haven for one’s investments, a shield against government tyranny, or a tail protection vehicle for catastrophic episodes.
Furthermore, bitcoin promoters appear to conflate the success of a payment mechanism (as a decentralized mode of exchange), which so far has failed, with the speculative variations in the price of a zero-sum maximally fragile asset with massive negative externalities.
Going through monetary history, we show how a true numeraire must be one of minimum variance with respect to an arbitrary basket of goods and services, how gold and silver lost their inflation hedge status during the Hunt brothers squeeze in the late 1970s and what would be required from a true inflation hedged store of value.

2106.14204.pdf (486.4 KB)

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I am still on the fence about supporting cryptocurrency payments. On one hand, it is an attempt at creating a global currency that isn’t affected by local politics and on the other hand, it is highly inefficient, volatile, and filled with Ponzi schemes.

Ethereum v2 uses a proof-of-stake based consensus algorithm, which should reduce the energy footprint by a very large amount, but it would be prudent to see it in action first.

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The article above makes a good argument to show proof-of-work crypto currencies are not and will never be a currency.

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From the initial proposal:

  • Accepting cryptocurrency signals endorsement of the cryptocurrency space by the Wikimedia Foundation and members of the Wikimedia Movement.
  • Cryptocurrencies, particularly the ones we currently accept, do not align with the Wikimedia Foundation’s commitment to environmental sustainability.
  • We risk damaging our reputation by participating in this.

Not accepting a fantasy currency would not be a boycott, because none of these currencies are legal tender anywhere. If you didn’t accept the Ruble or KPW, it would be a boycott.

I would like to also add this entertaining and critical video by münecat to the discussion.

Besides the ethical and economic arguments, maybe practicality should also be considered here.

In case you did accept cryptocurrencies as a payment method, what do you want to do with it?

There are two possible scenarios here:

  1. Keep the cryptocurrency as cryptocurrency is some wallet.
  2. Automatically and instantly exchange any cryptocurrency received for a fiat currency (USD, EUR, etc.)

Keep cryptocurrency as cryptocurrency

This exposes you to the price fragility and security threats. Nobody is truly guaranteeing your wallet’s security besides yourself.

If you keep your money in a bank account, and the bank is robbed or hacked or goes bankrupt or you fall for a scam/social engineering, your savings are insured and secured - at least up to a certain level and within time frame where fraudulent transactions can be reversed by the bank.

When you keep it in a cryptocurrency wallet and lose your key, seed phrase or the storage device, you have no real recourse to regain that cryptocurrency.

Automatically and instantly exchange any cryptocurrency

When you chose this option on the other hand, what benefit does using a cryptocurrency have for you?

You might have some customers willing to pay you in cryptocurrencies either out of curiosity and novelty (but that phase probably passed during the last two or three years) or because they don’t have access to a bank account - but the later is probably not the case when you want to host a Gitea instance and many people even when they don’t personally own a bank account have at least one family member with a bank account that holds the account on behalf of the entire family.

And through this system you’ll have to pay both the transaction fees imposed by the respective cryptocurrency (which make payments below a certain absolute threshold impossible, because fees are not a percentage, but essentially a competitive bribe to network operators to put your transaction into a log with an arbitrary or algorithmic space limitation) and the fees for the exchange services to automatically convert the cryptocurrency into fiat currency.


Don’t use cryptocurrencies:

  • You have increased
    security risks when keeping cryptocurrencies in personal wallets.
  • You are exposed to price fragility, even if you keep crypto only for an hour or two.
  • You have to pay enormous fees that aren’t just a percentage of the amount of money transferred but depend on the number transactions currently submitted to the system.
  • You don’t really gain a large customer base or a wider audience for hostea.