You can have Blockchain or Truth – but not Both!

Many of the claims about the usefulness of Blockchain revolve around the claim that Blockchain enables a unique form of “Immutable Truth” and therefore its gross inefficiency, particularly in regard of its inordinate usage of energy, can be justified as being worthwhile (to gain the holy grail of ‘Immutability’).

Here we will gloss over the claims of immutability of existing blockchains, such as Bitcoin, which have been shown to be mutable[i], usually at the discretion and directions of the systems developers. But instead, we will discuss the general problem of Blockchain Truth.

Perth Mint Gold Token (PMGT)

The story of the Perth Mint Gold Token (PMGT) is sad but typical of the many examples of digital tokens issued on blockchains that have gone nowhere – like thousands of other tokens that were discontinued by their issuers or live forever on some blockchain, dormant and unused.

In March 2023, the company that issued the PGMT token reported that it was about to withdraw support for PMGT and it is planning to phase the token out and to suspend trading in mid-2023.[An example of business if not technical mutability?]

The PMGT was, as it says on the wrapper, a crypto ‘Token’ that is based on the price of ‘Gold-backed’ certificates created and issued by the prestigious Perth Mint in the state of Western Australia. But rather than expand, the author will in this instance defer to the latest oracle – ChatGPT for illumination (see Attachment 1 for what turns out to be a quite good description, with appropriate caveats)

However, when asked about the history of PMGT prices, ChatGPT was much less forthcoming, in fact, very evasive, which was actually in the situation quite ‘intelligent’? (See Attachment 2.)

[As an aside, note the use of the first person pronoun 'I' by ChatGPT, what is that about?]

So, the author turned to more traditional sources to find out the price history of PGMT including the crypto exchange Coinbase

“Perth Mint Gold Token is 98.97% below the all-time high of $187,082.15. The current circulating supply is 687.95 PMGT”

And Forbes

“Gold reached its all-time high of $2,075 back in August 2020. But a growing number of analysts expect the precious metal to surpass that prior peak in 2023.13 Apr 2023”

There is an anomaly here, both Coinbase (with an all-time high price of $187,082.15) and Forbes (with an all-time of $2,075 for the price of Gold upon which PMGT is based,) cannot both be True, unless there was absolutely manic trading activity in PMGT on 6th May 2021?

The chart at the top of this piece shows this anomaly – an absolutely unbelievable spike, of about 1,000% in one day, in the price of PMGT on 6th May 2021.

Absent any information from Perth Mint, the cause of the spike was almost certainly a ‘fat finger’ problem, where someone, somewhere entered a wrong number into a computer screen. ii]

This happens all of the time in computing and is usually caught by so-called ‘reasonableness checks’, i.e., does this number feel correct, e.g., is it close to the previous number and within the range of normal variation?

And, of course, in most computer systems, there is always the opportunity to rectify any mistakes after they are discovered – but NOT in Blockchain where once 'on the chain', data is by definition unchangeable and TRUE!

It should be noted before discussing this point further that other PMGT price histories, such as from Coinmarketcap (see lower box). do NOT contain this particular data point, as their reasonableness checks would probably have discarded this piece of dodgy data and/or the data would have been deleted manually.

But the prices for PMGT are stored on an immutable Ethereum blockchain – forever wrong!

But what is the big deal? So, what if the PMGT Blockchain is Untrue?

Not only is the data incorrect, but also any inferences made from the data, such as the ‘volatility’ of the soon to be deceased PMGT, will ALWAYS be incorrect (overestimated), polluted by just one point!

And, while this particular data point stands out like a sore thumb, there are other anomalies in the PMGT price history that are much smaller but indicate unlikely swings in the recording of prices on the blockchain. And so, the whole history of the prices in the PMGT market are called into question unless entries are verified and any changes necessary are made.

Without the ability to correct mistakes in information recorded on a Blockchain (as Satoshi did when detecting errors), no Blockchain can be certain of being anywhere True!

One can have the Truth or Blockchain but not both.

?

Attachment 1 - ChatGPT – PMGT Background

ChatGPT – answer to question ‘What is the Perth Mint Gold Token’ 20/05/2023

“The Perth Mint Gold Token (PMGT) is a digital token issued by The Perth Mint, a renowned precious metals refinery and mint based in Perth, Western Australia. PMGT is a blockchain-based token that represents physical gold held in The Perth Mint's vaults. Each PMGT token is backed by 1 gram of 99.99% pure gold.

The purpose of PMGT is to provide a convenient and secure way for investors to buy, sell, and hold gold in a digital form. By tokenizing gold, The Perth Mint aims to combine the stability and intrinsic value of physical gold with the benefits of blockchain technology, such as instant transferability and divisibility.

PMGT tokens are typically traded on cryptocurrency exchanges and can be held in compatible digital wallets. The Perth Mint ensures the backing of each token with physical gold reserves held in their vaults. This allows investors to have exposure to gold without the need to directly own or store the physical metal.

It's important to note that my knowledge is based on information available up until September 2021, so there may have been developments or changes regarding PMGT since then. It's always a good idea to consult up-to-date sources or contact The Perth Mint directly for the most accurate and current information about PMGT.”

Attachment 2 - ChatGPT – PMGT Price History

ChatGPT – answer to question ‘What is the current price of a Perth Mint Gold Token?’

“As an AI language model with a knowledge cutoff in September 2021 and no real-time data access, I don't have the ability to provide you with the current price of the Perth Mint Gold Token (PMGT). The price of PMGT can fluctuate based on various factors, including the spot price of gold, market demand, and overall market conditions.

To obtain the most accurate and up-to-date price information for PMGT, I recommend checking reputable cryptocurrency exchanges or financial websites that list the token. These platforms typically provide real-time price data and trading information for various cryptocurrencies, including PMGT.

Additionally, you can visit the official website of The Perth Mint or reach out to their customer support for information about the current price and any specific details related to PMGT. They should be able to provide you with the most accurate and current information regarding the token's price.”

[i] In August 2010, a bug was discovered in Bitcoin code, which created some 184 billion Bitcoins, way beyond the 21 million supposed cap. The Bitcoin Core developers were quickly onto the case and “the 184 billion BTC transaction was purged from block 74638”. So not even the Bitcoin Blockchain is immutable!

[ii] The price in Australian dollars was A$ 232207.07 so the most likely number here would have been A$ 2322.07, i.e., the decimal point should have been before the first 07?