RSA Co-Founder: A World Without Cryptocurrencies Would Be Better

The cryptographers' panel seems somewhat pessimistic this year.

RSAC The Cryptographers' Panel was rather somber on this occasion. RSA Conference In San Francisco on Tuesday, two leading figures from the industry were rather pessimistic....

Adi Shamir, one of the creators of the RSA encryption method and co-founder of RSA Security, expressed criticism towards cryptocurrencies. Although he found Satoshi Nakamoto’s original whitepaper [PDF] on Bitcoin and its blockchain technology quite ambitious, Shamir believes that these digital currencies have failed to live up to their initial potential. In his view, they were supposed to offer a decentralized platform for electronic transactions free from governmental control and independent of traditional banking systems, but this vision has not materialized as expected.

All financial activity is concentrated within just a few massive exchanges. These platforms aren’t being utilized for regular transactions; they’re only used sporadically for speculation purposes," he stated during the discussion. "In my view, global economics would be improved had digital currencies never existed.

He went on, "It was cryptocurrencies that made all the malware possible. Extracting such vast sums of money from businesses would have been significantly harder without them."

Ed Felten, who is an Emeritus Professor of Computer Science at Princeton University, took a more optimistic stance. Addressing the conference attendees, he acknowledged that achieving what Nakamoto originally envisaged isn’t simple; transitioning to a decentralized monetary system presents significant challenges. However, considering how new this field is and acknowledging that fundamental social structures are just beginning to establish guidelines, there’s room for optimism.

He indicated that governments are progressively grasping both the advantages and disadvantages of this transition. Moreover, the endorsement by major financial institutions through their development of products like stablecoins signals significant progress.

"It would be unwise to attempt defending every cryptocurrency globally or everyone involved in that sector. However, in many respects, it brings back memories of the early internet era," Felten suggested.

Many individuals engage in foolish activities, others partake in risky and illegal actions, yet numerous persons construct innovative projects. This is particularly true in regions where the national currency issued by the local administration isn’t very reliable.

Shamir agreed that the basic blockchain technology is sound, but its implementation in cryptocurrency isn't. Having anonymous currencies that can move around the world without hindrance or responsibility isn't ideal, he said. (Bitcoin, for what it's worth, isn't actually anonymous.)

Regarding cryptography, Whitfield Diffie, who is renowned for his work on public-key encryption and as one of the inventors of the essential Diffie-Hellman key exchange method, shared similar concerns. He expressed worry that entities like the NSA might be stockpiling older encrypted communications which they cannot currently decrypt. However, with advancements in computational capabilities and cryptographic methods, these stored messages could potentially become readable in the near future.

"What the intelligence community refers to as gather-today, utilizeTomorrow forms the core of espionage,” he stated solemnly. “The National Security Agency along with all similar institutions have extensive archives dating back many years.”

Quantum-resistant cryptography, developed over many years and currently being implemented incrementally, aims to prevent entities like the NSA from decrypting present and future encrypted communications once powerful quantum computers become available. However, the effectiveness of this protection won’t be confirmed until functional quantum computers are actually operational. Additionally, data secured before incorporating these defenses might still be vulnerable when such advanced computing capabilities come into play.

Diffie recognized that some individuals are working on what they call hybrid post-quantum cryptography. He compared this effort to attempting to create a cryptographic system during World War II capable of withstanding the computational power of modern computers used for breaking codes.

Shamir concurred, stating that failing to transition to hybrid technology sooner was "a significant error." He forecasted that the initial genuine quantum computers would likely emerge by 2040, though he admitted this prediction carried substantial risk.

Regarding the classic conflict between governments and individuals concerning encryption and backdoors, Diffie harshly criticized the UK’s recent efforts aimed at possibly surveilling Apple users. He contended that these endeavors would likely prove ineffective since those who wish to protect their communications or data from British authorities—whether innocents or not—have numerous secure alternatives available beyond just Apple’s iCloud.

Next, we have the case of U.S. Secretary of Defense Pete Hegseth using Signal for official duties. Diffie criticized this practice within the government as an attempt to evade record-keeping regulations meant for the public sector. He also expressed concern that it might be misused to covertly share end-to-end encrypted communications.

"I find it concerning that Signal requires frequent updates every couple of days or so, insisting on using the most recent version. This means that someone with a court order could potentially insert a bug into an update, distribute it, and force everyone to use it," he cautioned.

Signal firmly believes in the security of its application and has stated that it will withdraw from any country trying to compel it to create a concealed backdoor.