The specialist Bitcoin press looks like a normal specialist section of the press, but most of it is just “boosterism” for specific cryptocurrencies or products aiming to make money from the hype


Interview with David Gerard




David Gerard, author of “Attack of the 50 Foot Blockchain: Bitcoin, Blockchain, Ethereum & Smart Contracts” is interviewed by Martin Walker of CEBMa about cryptocurrencies and Blockchain. He talks about poor quality information available, the “cult-like” faith of many enthusiasts and the common sense questions managers should be asking about these technologies.


Q.  One of the main themes of your book is the unreliability of claims about the benefits of cryptocurrencies and Blockchain related technology. What is your favourite example of the gap between hype and reality that you have found?

There are two major gaps between the claims and reality: anonymity and de-centralisation.

It’s hard to claim anonymity when every transaction’s recorded on a public Blockchain, as is the case for Bitcoin. If your activities get the interest of the authorities, they will track you down. The recent seizure of the BTC-e exchange revealed coins that had originally been stolen from the Mt. Gox Bitcoin exchange in 2013. Every Bitcoin is traceable and the authorities are not stupid.

The other big claim is around the benefits of de-centralisation. De-centralisation of systems is usually bad and super inefficient. A little bit of trust can have a major impact on efficiency. As Jimmy Wales [the founder of Wikipedia] notes, every day people walk into restaurants and are extended up to hundreds of pounds of credit, for the duration of the meal. The ironic thing about Bitcoin is that the “Proof of Work” (1) model has a natural tendency to economies of scale, and hence re-centralisation – 75% of Bitcoin are mined in the same building in China.


Q.  How reliable in general are the sources of information about cryptocurrencies and Blockchain, such as the conventional media, specialist Blockchain news websites, social media (such as Reddit) and consultancies?

In general, the information sources about cryptocurrencies and Blockchain are very poor.  The specialist Bitcoin press looks like a normal specialist section of the press, but most of it is just “boosterism” for specific cryptocurrencies or products aiming to make money from the hype. They have a tendency to talk about hypothetical applications of the technology as though they were real. “Potential” becomes “real”, “planned” becomes “is”.

The big problem with the conventional press is that it treats the specialist Bitcoin press as though it were any other specialist area of the press and assumes they know what they are talking about, ignoring that they are just advocates of anything that might further Bitcoin. So the conventional press typically ends up repeating the exaggerated claims without checking the details. In some cases, the problem in the conventional press is that they see a press release from a major IT company and simply repeat the exaggerated claims about Blockchain with no attempt at verifying them.

Most of the claims coming from the consultancies are a bit “aspirational”. Generally, the benefits now being claimed for Blockchain were previously being claimed for Bitcoin. They’ve simply replaced the word “Bitcoin” with the word “Blockchain.” A lot of consultants are claiming “magical” results, just put something on the Blockchain and the problems disappear. Current financial infrastructure is creaking, but it generally works, and there are no shortcuts in building better systems – it’ll be a major software replacement project with or without Blockchain. Blockchain will not remove the need for systems to feed each other data, nor remove the need to do reconciliations.

Social Media – the worst people are the fans, who are typically “serial suckers”. Many of them are intelligent but share a common problem of intelligent people – they think they can quickly become more expert than real domain experts by working things out from “first principles.” Then there are the fanatics who don’t understand the technology but want to get rich quick, and end up acting like members of a cult. Bitcoin and Blockchain is really more of a psychology than a technology story. Then there are also a lot of people at work in social media promoting their own schemes or interests. Ironically the only place on Reddit where you get sensible discussion is the “Buttcoin” parody forum. Even fans of Bitcoin participate because it’s the only place you can have a sensible evidence-based discussion of the topic.


Q.    What do you think are the most reliable sources of information in this area?

There are hardly any, unfortunately. There are nearly no trustworthy bloggers on the subject that know their stuff, for instance. (I try to provide an accurate picture on my Facebook page.) Mainstream commentators tend not to have wrapped their heads around the jargon or how the technology really works. At present the main thing to do is to learn how to read the bad sources and press releases.

There are some good sources. Emin Gün Sirer of Cornell University, on his blog Hacking Distributed, is a Bitcoin fan, but he’s provided some of the most expert analysis of the technical flaws in various cryptocurrencies and Blockchain technologies. In the mainstream press, read Matt Levine at Bloomberg, Izabella Kaminska at the Financial Times and Nathaniel Popper at the New York Times. I hope we can educate some more.


Q.   How easy is it in general to get to the truth behind the headlines in the area?

You always need to track down the original source of the story.  Search for the organisation’s name and “Blockchain”, until you find the original press release.

You will generally find that wherever the original press release says “could”, it will have been reported in the specialist press as “is”. You will also find that specialist Bitcoin and Blockchain press is very sloppy even with the basic facts, so even they need to be verified. I found this over and over with the book.


Q.   The Nobel prize winning physicist Max Planck said “A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die and a new generation grows up that is familiar with it” Do you think an overcritical approach to these ideas and technologies could block future innovation?

The opposite happens in the Blockchain/Bitcoin sphere. Bad ideas never go away – they just keep popping up again.

Lots of money is going into R&D on this stuff. I think it’s likely a sinkhole, but something interesting and useful might come out of it. R&D by its very nature isn’t “efficient,” the whole point is that there’s no guarantee it will produce a product. So some products might result from all this investment, but it won’t necessarily resemble a Blockchain. A tamper proofed ledger using a Merkle tree would likely be useful, but it doesn’t need a Blockchain.


Q.   Based on your experience, what is your advice about assessing the quality of the evidence for people who have to make important decisions about this area such as banks, regulators, investors, IT departments?

A lot of it is about psychology, not technology. If you understand that most Blockchain and Distributed Ledger Technology hype comes from the Bitcoin world, you can see how those claims trace back to their source.

Apply the same common sense you would use for any other business decision.  Ask what the technology can do for you right now and in the immediate future. There’s no point “getting in on the ground floor” of something that doesn’t exist yet. Ask for examples of everything. It’s important that you make use of that sense that tells you when something is not quite right.

These are my six questions you can use on any Blockchain salesman:

  • Are they confusing “might” and “is”? Almost all business Blockchain claims are full of “might” and salespeople talking about “the possibilities.” Do they have present-day working Blockchains that do every one of the things they’ve claimed you can get from Blockchains? If not, which ones are missing?
  • Will the system scale to the size of your data? How?
  • How do you deal with human error in the “immutable” Blockchain or smart contracts?
  • If this is for working with people you trust less than the people you deal with now, how are they assuring the security of the chain – what’s the security threat model? Get your system administrator along to ask pointed questions.
  • If it’s for working with people you can already trust to that degree, why are you bothering with a Blockchain?
  • What does this get you that a centralised database can’t? How, precisely? Drill down.


“Attack of the 50 Foot Blockchain: Bitcoin, Blockchain, Ethereum & Smart Contracts” is now available in paperback and for the Kindle.



1.     Proof or Work is technical model used in Bitcoin to verify transactions and to generate new Bitcoins

2.     Merkle Trees are a technique used in cryptography that can be used to verify any kind of data stored, handled and transferred between computers.


Martin Walker is the Director for Banking and Finance at the Center for Evidence-Based Management. His varied financial career has included senior IT management roles at Dresdner Kleinwort and RBS Markets, strategy and business analysis roles at HSBC and Merrill Lynch, product development at the R3 Distributed Ledger consortium and capital markets research at Finadium LLC.