The Age of Cryptocurrency: How Bitcoin and the Blockchain Are Challenging the Global Economic Order

The Age of Cryptocurrency: How Bitcoin and the Blockchain Are Challenging the Global Economic Order

Bitcoin became a buzzword overnight. A cyber-enigma with an enthusiastic following, it pops up in headlines and fuels endless media debate. You can apparently use it to buy anything from coffee to cars, yet few people seem to truly understand what it is. This raises the question: Why should anyone care about bitcoin?

In The Age of Cryptocurrency, Wall Street journalists Paul Vigna and Michael J. Casey deliver the definitive answer to this question. Cybermoney is poised to launch a revolution, one that could reinvent traditional financial and social structures while bringing the world’s billions of “unbanked” individuals into a new global economy. Cryptocurrency holds the promise of a financial system without a middleman, one owned by the people who use it and one safeguarded from the devastation of a 2008-type crash.

But bitcoin, the most famous of the cybermonies, carries a reputation for instability, wild fluctuation, and illicit business; some fear it has the power to eliminate jobs and to upend the concept of a nation-state. It implies, above all, monumental and wide-reaching change―for better and for worse. But it is here to stay, and you ignore it at your peril.

Vigna and Casey demystify cryptocurrency―its origins, its function, and what you need to know to navigate a cyber-economy. The digital currency world will look very different from the paper currency world; The Age of Cryptocurrency will teach you how to be ready.

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3 thoughts on “The Age of Cryptocurrency: How Bitcoin and the Blockchain Are Challenging the Global Economic Order”

  1. Graham H. Seibert says:
    69 of 72 people found the following review helpful
    5.0 out of 5 stars
    Major implications not only for currencies, but for the management of all life’s transactions. This you have to know, February 2, 2015
    By 
    Graham H. Seibert (Kiev, Ukraine) –
    (TOP 1000 REVIEWER)
      
    (REAL NAME)
      

    The authors of this book are reporters, and as a piece of reportage it is broad, deep, and well-balanced. They take you through the history of bitcoin, the alternatives to bitcoin, all the technology behind bitcoin, and extended uses for this disruptive technology which could have wide implications throughout society. They provide a broad discussion of the projects underway in 2014 to employ bitcoin.

    If the book has one shortcoming, it does not define how it all works quite precisely enough for a techie. The reader of this review may find it useful to mix my point of view with that of the book itself in trying to envision the mechanics.

    The casual reader is somewhat familiar with the bitcoin phenomenon. It appears to have been started by a single idiosyncratic individual calling himself Satoshi Nakamoto but whose identity remains unknown and who dropped out of sight some three years ago. What this gifted technician did was to envision the architecture of an entire system, implement that system, find a group of disciples, fanatics if you will, to carry it on, and then quietly disappear. This is truly the stuff of science fiction

    The thing that he invented is the thing that is most difficult to describe. Here I go in my own words, rearranging some thoughts from these authors.

    The first question is what a currency is. We are familiar with fiat currencies such as the dollar the euro and the yen. We are familiar with the fact that these have all evolved from metallic representations, such as silver dollars and $20 gold pieces, to paper certificates indicating that metal was once held in storage to back them up, to fiat currencies which have nothing whatsoever behind them. The dollar today is an artificial construction, a unit of exchange.

    Actually, what every currency must be is three things. It must be a unit of exchange, something that can be offered in exchange for goods or services. It must also be a store of wealth, so that today’s labor can be converted into currency and stored to be spent later. Or vice versa, it can be borrowed against future earnings. The third measure is a unit of account. Everybody has income stated in some currency or another. You may make $2,000 a month and have a net worth of 700,000 Francs. Businesses especially need such a measure of their performance.

    That’s what currencies are. They have different strengths and weaknesses. Gold his difficult to carry and safeguard and doesn’t come in small denominations. Fiat currencies are imminently bankable, they can be moved around electronically with great ease. However, they are subject to counterfeiting and inflation. The counterfeiter can create false paper money, and a financial manipulator or central bank can arbitrarily dilute current holders, expanding the money supply by creating dollars out of thin air. Moreover, the rapacious bankers scrape off a slice of every transaction, from 3% on a typical credit card transaction to 10% and more on international remittances. No currency is ideal.

    One characteristic that all traditional currencies have had is that they are fungible. If I have $1,000 in the bank, I could not possibly say who previously owned those dollars. It’s a silly question even to ask, like asking what happened to a raindrop falling into the ocean. Even the tangible stuff like the pennies in my pockets carry no history with them.

    I make an analogy that the authors do not: to real estate. Real property is recorded by a registrar. The fact that I own my house is known to the state and it is public information available to anybody. Not only that, but who I brought my house from, and who they bought from, is a matter of public record. How the land my house sits on was defined is public record. It was probably subdivided from some farm back in time. Thus, where land records are complete, there is a chain of ownership reflected in land records that guarantees the authenticity of a title.

    This is the most essential difference between bitcoin and other currencies: a perpetual chain of ownership. There is a permanent record electronic record of every past owner of every particular coin or fraction thereof, and of every transaction ever completed within the system.

    The implications of being able to trace the history of every transaction in which a piece of money has been involved are extremely broad. It means that there can be no question as to the validity of a transaction. Unlike with a bank, there cannot be an overdrawn account. If the money isn’t there, the transaction is not accepted. If it is, the transaction is final. Unlike paper money you cannot have counterfeit. Unlike a Federal Reserve System you cannot have $85 billion created every month out of thin air. The whole bitcoin universe knows where every piece of money came from.

    The bitcoin concept ,which is called the block chain concept is…

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  2. Athan says:
    28 of 29 people found the following review helpful
    4.0 out of 5 stars
    The canonical book on Bitcoin, April 29, 2015
    By 
    Athan

    This is a tremendous introduction to Bitcoin. If you are not technically minded, it’s as good as you could possibly hope for.

    On the other hand, if you are a bit of a technophile, perhaps you may want to look for the fine detail somewhere else.

    First comes all the necessary background. You get a thorough introduction on what money is, or rather what it is that that turns something into money, you get an introduction to the biosphere out of which Bitcoin sprung, including a long list of its predecessors, and that part of the book is rounded up by a brief history of the “genesis” of Bitcoin itself.

    Next comes an explanation of the Blockchain. Problem #1 with digital money is “how do I know this money is good money” and problem #2 is “how do I know that you are not presenting this good money twice at the same time to make two purchases.” The Blockchain is a technology that puts together four pre-existing technologies in an inventive way, to incentivise independent agents to solve these two problems:

    1. Public-key encryption
    2. The hash
    3. The peer-to-peer network of “nodes”
    4. Proof of work

    Feel free to skip if you know / to set me right if I’ve understood it wrong -it’s not all there in the book and I’ve had to fill in the blanks myself by spending time on the Internet

    ——————————————————————————————————–

    First, public-key encryption:

    This is a fantastic new way to write coded messages. The simplest one, RSA, works out as follows:

    1. Take two prime numbers and multiply them with one another 3 x 23 = 69
    2. Subtract one from each and multiply them again with one another 2 x 22 = 44
    3. Add one to the second number 44 + 1 = 45
    4. Find two numbers that don’t have any common factors and multiply to this third number 9 x 5 = 45
    5. You’re done. The public key is (9, 69) and the private key is (5, 69). To encrypt do mod(x^9,69) and it turns out that (mod(mod(x^9,69))^5,69) = x

    So, for example, suppose I want number 20 to be my message
    20^9= 512000000000 and mod(512000000000,69) = 5. So the coded way to say “20” is “5”
    But 5^5 = 3125 and mod (3125,69) = 20, so, lo and behold, “5” is decoded as “20”

    The beauty of this code is that if I pick two very large prime numbers a and b, NOBODY has the computing power to factorize a x b. And if they are very big, then (a -1) x (b – 1) can have a very wide choice of co-prime numbers c and d such that c x d = (a – 1) x (b – 1) + 1.

    Ergo, if I give away (d, a x b) nobody has the computing power to figure out what c is. So I can put out there (d, a x b) as a code for anybody in the world to send me a message. They can post it on the Internet. And only I can break the code. Even better, even if somebody out there rats me out and says: “here’s how to encode messages for Athan to read” that still does not help the CIA read my messages.

    More prosaically, you can send me Bitcoin and you can sign it with my public key. Everybody can verify that it is my Bitcoin, because my Bitcoin addresss is (or is derivable from) my public key. But only I can turn around and assign the Bitcoin to somebody else, because only I have the private key that is necessary to do so. Neat, huh?

    It all kind of breaks down if somebody one day writes a computer that can calculate hyper-fast and goes through all the numbers in the world, but the fastest computers on earth would currently take longer to break a good-enough code than mankind has existed! (It helps that raising to a power is not cake)

    N.B. The above is merely an example; Bitcoin does not use RSA, it uses elliptic curves-based encryption, which (among other advantages) obviates the need to change private key every time you’ve changed your public key.

    Second, the hash:

    The hash is a 26 to 34-character string that is the output of a function that generates a fixed-length alphanumeric representation of the data it received. To build it I need input (example 1: the sentence “to be or not to be”; example 2: the complete works of William Shakespeare) and I need a “hashing” algorithm. The big deal here is that “hashing” always brings the same input to the same short string of characters.

    My wallet is the place where I keep my Bitcoin. At all points in time my wallet has a public key and a private key. The rest of the planet knows my wallet by the 26 to 34 character hash (you guessed it) that is a (hash of) my public key (it’s not the public key itself, chiefly for error-correction purposes, one of the few times Bitcoin looks after you). After every time I deal my wallet changes its public key, so nobody can keep track of what I’m doing except for me…

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  3. Spencer says:
    24 of 30 people found the following review helpful
    2.0 out of 5 stars
    If you’ve been following Bitcoin, there isn’t much to learn., March 14, 2015
    By 
    Spencer

    The Age of Cryptocurrency makes a fundamental mistake. It assumes – in the title no less – that we live in the Age of Cryptocurrency when obviously that’s yet an open question.

    What I liked:
    – Their explanation of bitcoin is intuitive (ch. 4).
    – I learned stuff about early proto-cryptocurrencies (ch. 2).

    What I didn’t:
    – They give Bitcoin an easy pass. For example, Chapter 7 has lots about venture capital raised but nearly nothing on capturing market share much less about actual business operations.
    – It’s a book about digital money, they spend two pages discussing buying coffee from Starbucks, and yet they don’t mention how Starbucks has one of the largest digital payment services.
    – Nor is there discussion of Square or Google Wallet, why those services have struggled, and why Bitcoin may be able to succeed in comparison.
    – In Chapter 8, on mobile payment services in Africa, they conflate the expensive fees charged by international remittance services with the very low fees charged in domestic transfers. That remittance services may be expensive due to regulation and fundamental costs isn’t discussed.
    – It’s telling that while inflation and saving are in the index, deflation and inequality aren’t. When discussing the future of money, it merely broadcasts the tropes you’ve read on /r/bitcoin.

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