Book Reviews

Cryptocurrency: How Bitcoin and Digital Money are Challenging the Global Economic Order by Vigna and Casey

cryptocurrency

 

About the Book

There’s no doubt in my mind that cryptos are going to be big.

Now that the notion of having a decentralised monetary system is out in the open, it’s going to be hard to forget.

The rabbit has jumped from the hat.

With this in mind, I wanted to discover more about the amazing technology and history behind cryptocurrencies like Bitcoin.

Prior to reading this book, my knowledge was limited. Jargon such as Blockchain felt pretty alien.

Now, however, I feel like I have at least a fuzzy understanding of what’s going on.

What makes this book such a great read is the amount of detail is goes into in terms of how Bitcion was founded and what the potential ramifications could look like.

I’l admit that a lot of it went straight over my head. Nonetheless, it gives any newbie to the crypto space an excellent foundation from which to build.

 

Favourite Passages:

  • “Enter cryptocurrency – the category to which bitcoin belongs. The simple genius of this technology is that it cuts away the middleman yet maintains an infrastructure that allows strangers to deal with each other. It does this by taking the all-important role of ledger-keeping away from centralised financial institutions and handing it to a network of autonomous computers, creating a decentralised system of trust that operates outside the control of any one institution.” Intro

 

  • “The network-based ledger – which in the case of most cryptocurrencies is callled a blockchain – works as a stand-in for the middlemen since it can just as effectively tell us whether the counterparty to a transaction is good for his or her money.” Intro

 

  • “Some fear that if we follow bitcoin’s model, its mechanism for incentivising computer owners to maintain and manage the public ledger – which drives them to compete for batches of newly issued bitcoin every ten minutes – could encourage a politically disruptive concentration of computing power.” Intro

 

  • “Some worry, too, that bitcoin could foment economic crises because it strips government policymakers of the capacity to adjust the money supply and to offset people’s instinct to hoard it at times of mass panic.” Intro

 

  • “We’re going around in circles. The only conclusion we can reach is tautological: gold is valuable as a currency or investment because we believe it is valuable…” Chapter 1 – From Babylon to Bitcoin

 

  • “‘The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be treated to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve.'” Chapter 2 – Genesis

 

  • “Whenever you swipe your credit-card during your shopping rounds, you are participating in that money creation. The problem is not debt per se – credit is a vital lubricant for the economy – it’s the complexity of the system for clearing that debt. By handing Starbucks your card, you’re not so much transferring money as creating a series of IOUs between you, your bank, Starbucks’ bank, and Starbucks.” Chapter 4 – Roller Coaster

 

  • “… lack of a predictable pattern against the other measures of value makes it much harder for a businessperson or an investor to design an effective hedging strategy that could guard against a loss of value in his bitcoin holdings. Whereas you can hedge against a fall in the dollar by owning gold, it’s not clear what you could buy to protect against a fall in bitcoin.” Chapter 4 – Roller Coaster

 

  • “Seller remorse in a rising market is a normal feature of investing in stocks or other volatile assets, but for a currency you want both sides in a transaction to feel satisfied that they’re not giving up too much. Regret is not a constructive emotion when it comes to currencies…” Chapter 4 – Roller Coaster

 

  • “Gil Luria… argues that volatility (in bitcoin) is a good thing, on the grounds that it draws profit-seeking traders into the marketplace. Their presence encourages the development of sophisticated exchanges and more reliable mechanisms for swapping bitcoins into fiat currencies…” Chapter 4 – Roller Coaster

 

  • “… investing in hashing power is like buying extra lottery tickets – there’s no guarantee of winning but your chances rise with each additional ticket.” Chapter 5 – Building the Blockchain

 

  • “Back in April 2013, various press reports recounted that bitcoin was consuming 131,000 megawatt hours a day, at a daily cost of $19.7 million.” Chapter 6 – The Arms Race

 

  • “… Hearn’s imaginary taxi: it has no owner. The car owns itself- or, more precisely, the operating computer program owns it. This program would pay the car’s running costs and take in its own revenue; all of this would be made possible by cryptocurrency and the invention of the blockchain.” Chapter 9 – The Everything Blockchain

 

  • “You can’t just create bitcoin money out of thin air in the way that bank credit does in the fiat-currency system. Yes, that removes inflationary risks and means central banks no longer need to manage the money supply with imperfect policy tools such as interest rates, but bitcoin’s critics will counter, with some merit, that shackling credit would starve economies of growth.” Chapter 11 – A New New Economy

 

  • “The challenge for technologists and their venture-capitalist backers is to frame the disruption within a politically digestible narrative of overall progress, says Andreessen Horowitz… ‘On the one hand you have the bank person who loses their job, and everyone feels bad about that person, and on the other hand, everyone else saves three percent, which economically can have a huge impact because it means small businesses widen their profit margins. But from a narrative perspective it doesn’t feel as good. There are individual losses and socialised gains.'” Chapter 11 – A New New Economy

 

  • “… the ultimate measure of whether cryptocurrency can succeed: whether, when it is weighed against the competition, people can be convinced of cryptocurrency’s benefits, dissuaded from fearing its pitfalls, and made willing to abandon the government-issued currencies with which they were raised. That’s no simple task.” Conclusion – Come What May

 

What Others Are Saying

reviews for cryptocurrency book

 

Star Rating:

4/5: Having gone through the notes I made for this book to write the above section, it’s clear that it’s taught me a hell of a lot! It’s crammed full of information and I particularly liked the political discussions around the implementations of cryptocurrencies.

My only real drawback is it’s slightly long-winded. Having said this, the sections are broken down nicely so it’s possible to dip in and out of the narrative.

All in all, this is a really good starting point for those wanting to learn more about this emerging technology.

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