The Signal app creator is just one influential expert slamming crypto tech — and investors have taken notice

Signal founder Moxie Marlinspike recently criticized bitcoin technology.

Crypto technology has come under harsh criticism from the founder of messaging app Signal and others.
Swiss bank UBS mentioned the fault-finding in a note to clients, a sign that investors are taking notice.
The tech experts said crypto is actually very centralized, and its users focus more on money than on infrastructure.

The technology behind cryptocurrencies has come under savage criticism from several high-profile tech bloggers in recent weeks — and investors are sitting up and taking notice.

Swiss bank UBS highlighted a blog post by Moxie Marlinspike, the creator of encrypted-messaging app Signal, in a note to clients last week. It also flagged recent critical comments from other well-known tech experts, as it considered the case for a sharp fall in crypto prices.

Marlinspike argued that the crypto world is in fact far from decentralized and secure, despite what its supporters say. Instead, hugely powerful entities — such as NFT marketplace OpenSea — dominate access to the crypto-sphere, he said.

Marlinspike took aim at the idea of decentralized crypto technology itself, saying people don’t want to run their own servers, and that it’s too difficult to upgrade.

He said many supposed crypto fans don’t really care about decentralization, they’re simply chasing after money in what he called a “gold rush”.

Decentralized systems share out the activity needed to complete a process, rather than relying on a single central resource to do the work. In cryptocurrencies, the distributed work is tracked on a blockchain.

The lightning network that underpins El Salvador and Twitter’s bitcoin payments is predominantly run by people who manage individual channels and nodes, for instance.

The Signal founder’s intervention was widely shared in technology and financial circles. But it was just one of a number of recent posts by technology commentators who have taken crypto to task.

“The easy money to be made speculating on crypto assets seems to have distracted developers and investors from the hard work of building useful real-world services,” Tim O’Reilly wrote in December. Tech expert O’Reilly popularized the term “Web2” for the modern internet.

Web developer Laurie Voss concluded: “There is… something here. But maybe not as much as people are hoping.”

Read more: 2022 bitcoin price outlook: Here are the price targets set by top analysts from Goldman Sachs, JPMorgan, and other leading Wall Street banks so far this year

These and other “slowly dawning revelations” are building doubts about crypto among investors, according to James Malcolm, head of foreign-exchange strategy at UBS.

He mentioned regulation as another potential cloud on the horizon.

“People have not heard this side of the story,” Malcolm told Insider. “What’s important is that investors understand that there is another side of this story than the one that they have been bombarded with on a daily basis.”

Crypto prices have fallen sharply over the last two months as investors prepare for the Federal Reserve to turn off the stimulus taps in 2022. Bitcoin was down roughly 2% to $41,585 on Tuesday, well below November’s record high of more than $68,000.

The criticisms of the technology could feasibly weigh on bitcoin and crypto further, Malcolm said in a note to clients. They may even become one of several factors that force the sector into a “winter” where prices fail to recover.

However, crypto proponents have defended their project against Marlinspike and other critics.

Ethereum founder Vitalik Buterin said on Reddit that the crypto world isn’t as decentralized as it should be, but that critics are “missing where the blockchain ecosystem is going.”

Buterin said the industry is still young and predicted that systems will become easier for non-experts to use.

Read the original article on Business Insider

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