Legendary investor warns of blockchain ‘crisis’

Legendary investor warns of blockchain 'crisis'

Legendary investor Mark Mobius explained why he believes blockchain technology is inherently risky.

Could blockchain instigate a financial crisis? Mark Mobius, a founding partner of Mobius Capital Partner, believes it very well could.

A noted financial expert, Mobius believes that blockchain technology is highly vulnerable to hackers.

“A lot of people say, ‘blockchain can’t be broken into.’ No, it can be. Anything that’s created by man can be broken into. And it could create a big crisis,” he recently told CNBC’s Squawk Box.

Security risks remain

Mobius’ remarks are perhaps far more likely than most crypto fans would like to admit. For instance, opportunities to defraud investors of smaller cryptocurrencies have surged in the past year.

This is due to the fact that miners, who verify crypto transactions by exercising extensive computing power, have consolidated as an industry.

As such, they have much more leeway in taking over a cryptocurrency (as it’s currently a fairly inexpensive proposition).

If successful, the bad-faith miner could create an alternative version of a cryptocurrency and spend the same cryptocurrency twice.

Investors who use software clients to trade cryptocurrencies or run a node may also precipitate a crisis.

Last September, developers of Bitcoin Core, Bitcoin’s main software client, hurriedly fixed a bug that would have potentially allowed attackers to mint more bitcoins that the system is supposed to allow.

The risks of faith-driven currencies

And yet, as Mark Mobius notes, investors continue to have faith in cryptocurrencies.

“There’s a whole generation of people who have faith in the internet. They have faith in these cryptocurrencies,” he said.

“That’s all it takes. People believe in the U.S. dollar because they have faith that with dollars in their hands they can buy something.”

Indeed, cryptocurrency valuation is merely based on a combination of public sentiment and supply and demand.

And while many…

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