Cryptocurrency, The Future of Money, Paul Vigna & Micheal J. Casey

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I found this a useful book to read, though a lot of it is names mainly of people working in the USA. For example, you read, page 246, Gavin Andresen opened the door to his threadbare office, located in a nondescript building above a Dunkin’ Donuts in the college town of Amherst, Massachusetts. There must be a name for this kind of writing. However, don’t let that put you off reading the book as it has many fascinating insights.

The book uses bitcoin, created by Satoshi Nakamoto in 2008/9 (the name may be a pseudonym, no one knows who the real person is), as its main focus. The aim was to provide a trusted system that is not centrally controlled based on blockchain cryptography. The appeal initially is to the libertarian, keep government out of the way, people. The system is given a simple explanation though not enough to satisfy the mathematically inclined. I am working on such an intermediate explanation but it is trickier than I thought at first.

One insight is the power of the open-source coding community. After a vulnerability in the bitcoin system allowed the theft of a lot of bitcoins, especially from one exchange, Mt. Gox, that ended bankrupt, that same Andresen and the small informal team who manage the updates of the core code had to resolve the problem: But something positive had emerged as well. … in the end the open-source set up served bitcoin’s software well … legions of talented coders in the community contributed thoughts and coding solutions, and they stress-tested the core team’s work.

A second insight is how important cryptocurrency could become for those excluded from the traditional banking system. Because there is no central back account, and the blockchain can be accessed through an app on a smart phone, and the transaction costs are minimal compared to traditional banking, many poor people could store value and transact business who had no chance before. The book starts with Afghan women signed up to a venture who have, in principle, control of their own bitcoin account.

A third insight is that the underlying technology, blockchain, can be used to provide a trusted store without a central authority for many other things such as property deeds and contracts. Big institutions are already exploiting that.

The book has a good index and notes that reference original material for those who want to know more detail.