about_the_book.html.pm

#lang pollen

◊(define-meta title "About the book")
◊(define-meta subtitle "A perspective beyond the hype")
◊(define-meta published "2019-04-12T00:00:00+01:00")
◊(define-meta updated "2021-05-07T19:11:00+01:00")
◊(define-meta uuid "7ea80c78-aff2-46a1-8d05-1253d7033dc6")
◊(define-meta template "chapter.html")

◊(clear-sidenotes)

◊epigraph{
  ◊qt[#:author "Steve Eisman"]{
    What value does cryptocurrency add? No one’s been able to answer that question to me.
  }
}

Whenever the topic of cryptocurrencies---where Bitcoin and Ethereum are the most known---come up in conversations they're almost always misunderstood or dismissed.

If you're a cryptocurrency skeptic I honestly can't blame you. The only times you ever hear about it on the news is how ◊link[cnn-bitcoin-rallies]{Bitcoin rallies} and how ◊link[independent-worthless]{Cryptocurrencies are about to become worthless}. Maybe you'll see claims that cryptocurrencies will lead to ◊link[cnn-environment]{an environmental disaster} or how they're only used for ◊link[independent-illegal]{illegal purposes}.

Curiously enough, the news doesn't explain what cryptocurrencies are or what they can be useful for. But it's to be expected as the news today focuses on dramatic stories; ◊mn{news} it's why unsettling events like murder gets a disproportional amount of focus.

◊ndef["news"]{
    It's interesting when the news handles something you have a good understanding of---they're often completely wrong. Makes you wonder, how wrong are they about things you're not familiar with?
}

Maybe this is why most people --- even cryptocurrency fans --- only see cryptocurrencies as a form of investment? After all, there are few things as exciting as the possibility of becoming rich very quickly.

What hope does average Joe have when even the famous security technologist Bruce Schneier ◊link[blockchain-and-trust]{concludes that}:

◊qt[#:author "Bruce Schneier"
    #:src "Blockchain and Trust"
    #:url blockchain-and-trust
    #:quote-src #t]{
  Honestly, cryptocurrencies are useless ◊mn[#:top -6]{schneier}
}

It's almost a universal phenomena. I've heard these arguments from students, co-workers, friends, family and in highly technical online communities:

◊ol{
  ◊li{It's a scam.}
  ◊li{It's just a speculative bubble and cryptocurrencies are really worthless.

    Here many draw parallels to Beanie Babies◊sn{beanies} or the Tulip mania◊sn{tulips}. And to be fair, cryptocurrencies have displayed bubble behavior---several times.
  }
  ◊li{They don't do anything better than other payment systems like PayPal or VISA.}
  ◊li{There's no legal use case.}
  ◊li{They don't do anything valuable.}
}

◊note-pos[#:top -9]{beanies}
◊note-pos{tulips}

It seems everyone has an opinion but few are capable of explaining what they are or what they do differently.  Of course, most aren't dismissive but simply don't understand what it's all about. Many are curious and want to learn more.

With this book, I hope to show how cryptocurrencies can be useful, what use cases exist, and how they can help people. I'll briefly go over how they work in a more conceptual level and I might throw in some historical notes here and there. I'm not trying to make anyone a cryptocurrency fan; I just hope to bring some nuance and help answer some common questions.

I must admit I'm also being selfish---writing a book is on my bucket list.


◊subhead{What this book is}

This book tries to describe what value cryptocurrencies have using several examples. In particular I'll argue that:

◊ol{
  ◊li{Cryptocurrencies aren't just scams.◊mn{scams} ◊note-pos{scams}}
  ◊li{It's more than just a speculative asset.}
  ◊li{They do many things better than any alternative.}
  ◊li{There are legal use cases.}
  ◊li{They have valuable use cases.}
}

Of course, everything new brings positive and negative aspects with it. It's up to you to decide where on the global spectrum of good and bad cryptocurrencies lie.


◊subhead{What this book isn't}

This isn't a deep dive on a technical level, and we won't focus on a single implementation. Bitcoin is the first cryptocurrency, but there are hundreds more.◊mn{cryptos}

There are many problems with cryptocurrencies as they exist today, for instance:

◊ul{
  ◊li{Why aren't cryptocurrencies used more?}
  ◊li{Bitcoin uses a public ledger where all payments are visible---what about privacy?}
  ◊li{How can a cryptocurrency scale globally?}
  ◊li{What about Bitcoin's energy usage?}
  ◊;li{How can payments be made secure enough for retail, in a couple of seconds?}
  ◊;li{User experience is far from the level of VISA or Apple Pay.}
}

I don't dismiss these problems, and I discuss them in more detail in the chapter ◊link[challenges]{Challenges for cryptocurrencies}, but the focus of this book isn't to explain them or to look at how we might address them.

A problem-centric view is great for an engineer or a problem solver, but it also limits foresight. For example, the computer had many problems and drawbacks when first introduced, but today we ridicule statements like these:

◊qt[#:author "Thomas Watson, president of IBM" #:date 1943]{
    I think there's a world market for maybe five computers
}

◊qt[#:author "Ken Olsen, founder of Digital Equipment Corporation" #:date 1977]{
    There is no reason anyone would want a computer in their home
}

Instead of putting on blinders and getting stuck at these problems---which I believe can be addressed---we'll focus on the potential cryptocurrencies have. Only with this vantage point can we see if the problems are worth working on, or if we instead should scrap the whole idea.

◊center{
  ◊strong[#:style "font-size: 1.1rem"]{And of course, none of this is investment advice.}
}

Well, the only advice I'll give is to understand what you're investing in, and my hope is that this book can help with that.

◊ndef["schneier"]{
    Schneier brings an interesting perspective and he's right about one very important aspect: contrary to popular belief cryptocurrencies don't remove ◊strong{all} trust.

    To counter his point that "cryptocurrencies are useless" all you have to do is provide one counterexample where they're useful. This book is full of them.
}

◊ndef["beanies"]{
    Beanie Babies is a type of fluffy toy that people used to speculate with. ◊link[beanie]{It became a mania} where people would sell---and buy---these toys at 10x, 100x, or even 1000x their original price. The mania managed to make the creator, Ty Warner, one of the richest men in the world before it crashed (he's still insanely rich though).

    If you're looking for the digital version of Beanie Babies then look no further than ◊link[cryptokitties]{CryptoKitties}, a blockchain game running on Ethereum. There, someone spent $114,000 on a virtual kitten.
}

◊ndef["tulips"]{
    ◊link[tulip-mania]{Tulip mania} is one of the first recorded speculative bubbles, which occurred 1636--1637 in the Netherlands. There, people speculated on tulip bulbs, which reached spectacular prices before crashing down abruptly.
}

◊ndef["cryptos"]{
    Although there are hundreds and perhaps thousands, most are just copies or outright scams.
}

◊ndef["scams"]{
    Please take care and do your research, there are ◊strong{many} scams out there.
}

◊(define blockchain-and-trust
   (x-ref
     "2020-02-18"
     "https://www.schneier.com/blog/archives/2019/02/blockchain_and_.html"
     "Bruce Schneier (2019) Blockchain and trust"))
◊(define cnn-bitcoin-rallies
   (x-ref
     "2020-02-18"
     "https://money.cnn.com/2017/12/06/investing/bitcoin-rally-hits-12000/index.html"
     "CNN Business (2017) The bitcoin rally is back on: It just zoomed above $13,000"))
◊(define independent-worthless 
   (x-ref
     "2020-02-18"
     "https://www.independent.co.uk/voices/bitcoin-cryptocurrency-price-crash-bank-of-england-agustin-carstens-a8645356.html"
     "Independent (2018) Cryptocurrencies are about to become worthless – and this is what will happen when they crash"))
◊(define cnn-environment
   (x-ref
     "2020-02-18"
     "https://money.cnn.com/2017/12/07/technology/bitcoin-energy-environment/index.html"
     "CNN Business (2017) Bitcoin boom may be a disaster for the environment"))
◊(define independent-illegal
   (x-ref
     "2020-02-18"
     "https://www.independent.co.uk/life-style/gadgets-and-tech/news/bitcoin-price-fall-criminals-blockchain-anonymous-cryptocurrency-zcash-monero-dash-a8174716.html"
     "Independent (2018) Bitcoin price is so high because criminals are using it for illegal trades, research suggests"))
◊(define cryptokitties
   (x-ref
     "2020-02-18"
     "https://www.cnbc.com/2017/12/06/meet-cryptokitties-the-new-digital-beanie-babies-selling-for-100k.html"
     "CNBC (2017) Meet CryptoKitties, the $100,000 digital beanie babies epitomizing the cryptocurrency mania"))
◊(define tulip-mania
   (x-ref
     "2020-02-18"
     "https://www.britannica.com/event/Tulip-Mania"
     "Britannica: Tulip Mania"))
◊(define beanie 
   (x-ref
     "2020-02-18"
     "https://nypost.com/2015/02/22/how-the-beanie-baby-craze-was-concocted-then-crashed/"
     "New York Post (2015) How the Beanie Baby craze was concocted — then crashed"))