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The blockchain’s biggest problem isn’t technology, it’s trust

The impersonal technology that powers ICOs has a very human problem

Mike Butcher

Mike Butcher of Tech Crunch (graphic courtesy of BlockShow)

How well do you know what you’re putting money into when you invest in the latest and greatest ICO? Do you know if it’s a legitimate project backed by knowledgeable people? To hear one pundit explain it, trust is the main ingredient that will carry blockchain technology into the mainstream.

TechCrunch star correspondent Mike Butcher was keynote speaker at BlockShow, filling an auditorium of crypto-geeks in Berlin to give a presentation titled “Disinformation Will Kill Crypto.” Clad in his notorious leather jacket, Butcher tackled the gigantic topics of trust and money head-on.

“Capitalism requires trust to work, and ICOs are a minefield,” Butcher said. He cited a bleak study by the Wall Street Journal revealing that, of 1,450 ICOs studied, approximately one in five showed warning signs of fraud. They looked for a number of potential red flags, including plagiarized white papers, pointing to non-functioning websites, or guaranteeing a return on investment, something the SEC explicitly forbids.

“Fraud threatens the democratic underpinnings of cryptocurrency,” he said. His presentation thankfully went deeper than merely sounding the alarms. He acknowledged that regulators are certainly paying attention, but cautioned that “we can’t leave it up to the regulators.” Butcher called for enhanced education in the blockchain space, and for more support of transparent crypto media. He had some especially damning words for outlets that blur advertising with editorial and reporters engaging in pay-for-play publication: “This is corruption.”

Blockchain systems present themselves as “trustless” technology, having transactions verified by the crowd instead of a single bigwig individual or organization. It was refreshing to hear someone of Butcher’s stature speak plainly on a problem facing this emergent, well-hyped technology.

“Unequal outcomes are inevitable, but no one wants to roll loaded dice. People must trust that the system isn’t rigged,” he said. “No trust in decentralization will mean a return to centralization.”

Dylan Love is an editorial consultant, contributing reporter, and fiendishly curious technology enthusiast. He owns no cryptocurrencies.