Crypto nonsense continues

Wes Boudville
3 min readJun 19, 2022

Despite the big fall in crypto (look at BTC falling to $18k and ETH to $1k) this week, there is still plenty of nonsense put out by the crypto fans. Today noted CZ of Binance, “Look at fundamentals”.

Ok. Visa and Mastercard process transactions at 1700 TPS (transactions per second). Bitcoin does 5–7 TPS. Its rate has not budged in 4 years. It hit a hard plateau. It cannot scale faster. Visa and Mastercard already have, for years. (ETH numbers are similar — 15 TPS.)

Related to this, BZ said “#crypto is used for global fundraising, investments, x-border remittances, micropayments, DeFi for a new hundred million people.” Really, when BTC only does 5–7 TPS? His claims about all these use cases is about how crypto serves the unbanked (etc). But BTC and ETH are too slow.

Oh but you’ve heard of claims that ETH 2.0 will do 100,000 TPS, far faster than Visa or Mastercard. Really?????? That will immensely complicate ETH blockchain and give rise to another set of attacks.

ETH 2.0 is based on shards / sidechains. A sidechain needs some firm to handle the financial responsibilities, before the shard reconciles with the main chain. The firm needs to be able to (eg) say that party Alpha on the sidechain now owes $1 million and take this Alpha debit to the main chain and Alpha better have at least $1 million credit, to pay it off. What can possibly go wrong?

a) the firm running the side chain needs massive assets of at least $1 million in this example. Not easy The firm starts off with say $2 million net worth when it starts running the side chain. But it’s greedy. It loans the $2 million to a 3rd party, to make more money at (eg) 15% interest. And the 3rd party loses it, because it was making this 15% offer to all, and it now has to pay 15% on a massive amount. So it has to find investments where it can loan out and hope to make 15%+. Very risky. Inevitably the loans fail. The 3rd party fails and cannot return the principal to the firm running the side chain.

Sound familiar? So if the side chain incurs a debt, the firm cannot stand behind it.

If you say, well the firm has to lock down (“stake”) its $2 million, that won’t stop the firm. More complex financial contracts can be devised.

Plus, all this ssumes the contracts between the main chain and side chain are correctly written. Like it’s the Word of God. But written by fallible mortals.

Wes Boudville

Inventor. 23 granted US patents on AR/VR/Metaverse . Founded for mobile brands for users. Linket competes against Twitch and YouTube. PhD physics.