The Age of Cryptocurrency: A Beginner’s Guide to Investing in Bitcoin and Other Cryptocurrencies is a timely book: from the growing interest in Bitcoin and other so-called “altcoins” to the increasing adoption of blockchain technology in industries beyond financial services and supply chains.
Consequently, there are now more than ever before opportunities for investors as well as a new wave of start-ups. The Age of Cryptocurrency explores how we got here, where we might be going next, and what kind of future awaits this brave new world of digital money.
This review article covers the main ideas discussed in Paul Vigna and Michael J. Casey’s latest book.
Why You Should Read It…
The History And Definition Of Money
A good starting point for understanding cryptocurrency is the concept that it only exists because we believe in it; there’s nothing intrinsically valuable about gold or any other currency.
Money has value when it’s spent on a system of trust: if you know someone will accept your money when you buy something from them, then that currency has some value to you as well.
“gold is valuable as a currency or investment because we believe it is valuable (which is the same reason for valuing money itself). Gold’s value as currency is an abstract social construct.”
Money is also unique in that cultures often don’t share the same values when it comes to what they consider worth exchanging for goods and services—or how much they’re willing to pay them with—and what kind of currency should be used as payment (paper dollars vs coins).
The Trouble With Economists
It is a common refrain in the cryptocurrency community that economists have trouble understanding the concept of cryptocurrency.
You can see this in many of their arguments against it: they often fall back on the idea that there must be some central authority controlling Bitcoin, or some other way for it to be tracked and regulated (like dollars). They also claim that cryptocurrencies aren’t real because you can’t physically hold them in your hand.
The truth is, however, that more and more people around the world are beginning to view Bitcoin as real—and not just because they want to buy into its potential returns.
In fact, many simply want to use it as a means of exchange between themselves and others who accept BTC payments—no matter what an economist might say about its value!
The Beginning of Bitcoin
The Age of Cryptocurrency is dedicated to introducing the reader to Bitcoin, the world’s first decentralized digital currency.
Bitcoin was launched in 2009 by an unknown person or group of people called Satoshi Nakamoto, but it was not until 2013 that it achieved any significant level of adoption — in the form of investment, especially among Silicon Valley tech enthusiasts.
As Vigna and Casey point out, bitcoin first found mainstream attention thanks to the Silk Road, becoming known as the currency used to pay for illegal drugs on the dark web.
Subsequently, the price of bitcoin and other digital currencies surged, mainly due to speculation. But why did bitcoin achieve such staying power?
The authors argue that there are several reasons. One is that the technology behind cryptocurrency — blockchain — is revolutionary. Another is that the cryptocurrency industry is now mature and has scaled up massively, with new institutional investors and large-scale businesses entering the market.
And a final reason is that governments have had trouble regulating cryptocurrencies, thanks to their distributed nature.
By creating a system in which all transactions were recorded publicly on a public ledger known as the blockchain, Satoshi created a “trustless” system where no one needed to trust each other because the rules were enforced by code instead of regulators and banks.
“We have an opportunity to reform the financial system, to turn it into the public utility that it’s supposed to be—a level playing field that everyone can indiscriminately use in their bid to get ahead. Let that be the standard for the coming age of cryptocurrency.”
Cryptocurrency is a digital asset with a monetary value. It can be used as a medium of exchange or it can be traded as an investment vehicle. Cryptocurrencies are also treated as units of account, which means they can be used to measure value and store wealth.
“At their core, cryptocurrencies are built around the principle of a universal, inviolable ledger, one that is made fully public and is constantly being verified by these high-powered computers, each essentially acting independently of the others. In theory, that means we don’t need banks and other financial intermediaries to form bonds of trust on our behalf.
The network-based ledger—which in the case of most cryptocurrencies is called 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.”
A key feature of cryptocurrencies is their anonymity, or “crypto” means hidden. Bitcoin protects its users by keeping their identities secret, but this can also be used for illicit purposes like buying drugs online or committing fraud against people or companies.
Some people believe that cryptocurrencies have the potential to radically change our global economy by removing middlemen and providing anonymity for consumers (although these features have been called into question recently).
The Impact of Crypto on Economy
The authors of this book are convinced that cryptocurrency will have a strong impact on the economy. Due to Bitcoin, people are able to send money globally in seconds at minimal cost and without having to trust a third party with their funds.
This can help people escape poverty by enabling them to receive international remittances and increase financial inclusion for those living in areas where banking services are not available or prohibitively expensive.
The authors believe that Bitcoin will also help people to keep their money more securely – a crucial step toward escaping poverty.
“The potential is great for people in the informal economy to exploit the blockchain’s middleman-free way to exchange assets and information and its irrefutable public record that’s free from the control of any one central institution.”
Bitcoins are mined, which keeps them from spiraling out of control. The mining process involves solving complex mathematical problems with computers to earn new coins and verify transactions on the blockchain using cryptography (the art of coding messages).
It requires immense computing power—an amount roughly equivalent to 500 top-of-the-line laptop computers working simultaneously for an entire year—to solve these problems and make each new batch of coins (a block) available for use by miners who then share their revenue with those who helped validate their transactions during that period by verifying theirs first within 10 minutes (or less).
This Is Not The Apocalypse You Were Expecting
This book is not a treatise on cryptocurrency, since the authors have written plenty of those. It’s also not a how-to guide on investing in crypto, although it will help you understand the basics. What it is, instead, is a detailed history of cryptocurrencies that argues that these currencies represent more than just another bubble or Ponzi scheme: they are part of an ongoing technological revolution that has only just begun.
The authors don’t expect you to agree with them right away; they know skeptics will be skeptical and believers will be…well…believing! But they make compelling arguments—and backing them up with historical examples and hard data—about why you should give cryptocurrency a chance.
About the Authors
The Age of Cryptocurrency: A Beginner’s Guide to Investing in Bitcoin and Other Cryptocurrencies by Michael J. Casey and Paul Vigna is a must-read for anyone who wants to understand the world of cryptocurrency. The authors are both journalists at the Wall Street Journal.
The book starts with an introduction that describes what money is and how it works. This introduction gives you all the basic information about Bitcoin, Ethereum and other cryptocurrencies that are on today’s market.
Then they talk about where these coins came from and what motivated them to create them in the first place. After this section comes a part where they explain why all these things have been invented: to solve many problems (like lack of privacy) that come with traditional banking systems!
Takeaway from The Age of Cryptocurrency
Cryptocurrency is about establishing trust between people and organizations, creating new financial systems with different levels of security, accessibility and user experience, arranging new marketplaces, building new voting systems and governance models, even changing the way we raise funds and manage our charities.
“The Age of Cryptocurrency” looks at all of these issues from a historical perspective; it dissects what has led to this point in time, what the future might look like, and how we can best prepare for it.
There are many ways to try and understand the importance of Bitcoin. You can talk about the technology, or the risks it poses to the status quo.
Or you can look at market prices to see what people think. But there is one way that stands out from the rest. The safety and stability of our money is one of humankind’s deepest instincts. This is why, throughout history, people have tried to create systems that protect their money from political chaos and financial calamity.
And yet, despite these attempts, the system that has evolved over the last century has been riddled with flaws. In fact, it’s not clear that our financial system as it currently exists is suitable for the modern world, let alone for a future of hyper-connected, hyper-automated economies.
As such, Bitcoin may be the greatest contribution to the field of finance in the last 100 years, and one of the most important developments in recent history. And knowing where it came from will help us understand not only where we are now, but where we’re going next.
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