Some of the buzzwords that have been floating around are Bitcoin and Blockchain. I’m sure unless you were not lost in an island, you must have heard of it. This is because of its trending. It’s a favourite topic these days. If it hasn’t caught your attention yet, then still be prepared to hear something on these in the near future. Twice before I tried to get something on the subject from other sources but failed. The underlying technology behind Bitcoin is Blockchain. The entire concept seems knotty initially. I was wondering why Blockchain is so complicated with all those crypto techniques and complicated maths? Has it been explained well? I reckon the key reason is that Blockchain is not a single thing, but it’s a piece of knowledge stitched together from a wide variety of subjects across multiple disciplines. What are these multiple disciplines? It’s Computer Science, Cryptography, Economics, Finance, Mathematics, and Politics. Let’s not run away and instead take a plunge into the topic. You never know, it’s going to play a key role in our future. For your information, at the time of writing this review, one Bitcoin is equal to Rs.622515.
Bitcoin is a type of cryptocurrency, which was created in 2009. Blockchain is the technology that powers cryptocurrency, thus representing an effective solution to secure data in a transparent and secure manner through its decentralized structure. The aspect that makes Bitcoin remarkable and interesting is that no banks, credit card companies or mainstream institutions are involved in transactions. In other words, it’s operated by decentralized authority and no middleman is standing in the way. So, Bitcoin offers the promise of lower transaction fees compared to an online payment mechanism. Blockchain ensures transactions through a distributed network of computers towards a common set of goals, eliminating the need for any third party. The data verification process is streamlined.
Usually in conventional transactions, a single entity like a bank verifies its veracity. On the contrary, in Bitcoin, everyone collectively agrees that a transaction had happened. When you send someone a Bitcoin, the transaction gets added to a giant shared list of all past transactions, known as ledger, which is an official record of all past payments. Everyone can see past transactions. Since the ledger is shared, no single person owns it. There is no concept of physical Bitcoins. Only balances are kept on a public ledger. The balances are kept using public and private keys which are long strings of numbers and letters linked through algorithms.
There are individuals and companies, who participate in the Bitcoin network and verifies the transactions. They are known as miners. These miners are incentivized for every block of transaction that they verify or mine. Massive computing power is required to mine a block. The mining is a process through which Bitcoins are released for circulation. This involves discovering a new block that is added to the Blockchain. As the Bitcoins in circulation increases, the mining process becomes more difficult. Mining expense is huge. A better part of expense goes towards powering and cooling computers. The region with cheap electricity and cold weather are suited for mining. A sound internet connection is essential too. Around 80% of the Bitcoins are mined in China. It’s because of its dirt-cheap coal power. Iceland for its abundant and cheap geothermal energy and Russia for its cheap nuclear and hydroelectric power are also a preferred destination for mining.
The Blockchain is a chain of blocks and its mathematically tied to one before it. Miner’s job is to attach a new block to the end of the chain. Payments are verified and approved by other people in the Bitcoin network and not a bank or credit card company. Money is paid out by the mining algorithm instead of a central institution. The official history of payments lives on Bitcoin user’s computers instead of a bank’s database. Bitcoin is a decentralized digital money system where people, and not an institutional middleman own the system.
Blockchain progress threatens to disrupt many industries. What has piqued people's interest? It’s the ability to seamlessly secure data in a fully transparent and verifiable way through a decentralized system. Many have jumped on to board the bandwagon. All along, we had discussed public Blockchain where transactions are publicly transparent and it cannot tamper. However, some features are a barrier for a business that want to keep their customer data confidential. They operate private Blockchain, which is scalable, faster and centralized but prone to manipulation. public and private blockchain does not compete with one another. It’s just that they have two very different offerings. Anyone can participate by submitting transactions to the public Blockchain. Ledger is distributed as all nodes in the Blockchain participate in the transaction validation. When something is written in public Blockchain, it cannot be changed. Bitcoin and Ethereum are popular Blockchain platforms. In private Blockchain, there is a restriction on who is allowed to participate in the network and in what kind of transaction. Public Blockchain is good in scenarios where the anonymity of users is important. This is different in the corporate world where the identity of participants in full transparency is desired. In private Blockchain, you may not want to share all your business data with the participants. You can control the read, write and sharing of data. Due to the lesser number of nodes to mine, private Blockchain is very fast. The two solution types differ. Public Blockchain tends to focus more on B2C scenarios while Private Blockchain is structured for B2B scenarios.
The key question that comes to mind is “who invented Bitcoin”? Well, no one knows. The original white paper was released in 2008 and original Bitcoin software was released in 2009. The person or the group of person associated with it was Satoshi Nakamoto. Nobody has verifiable proof of Satoshi’s identity. The name is a pseudonym. The name had appeared in various forum posts and academic paper but Satoshi never appeared in person. He hasn’t written anything after 2011. Bitcoin analysts have interpreted that Satoshi Nakamoto's paper was released as a consequence of the 2008 financial crisis. The head of the treasury in the UK had considered pumping taxpayer money into failing British Banks. Satoshi Nakamoto distrusted the banking system and was angry that the depositor was paying for bank’s mistake. So he came out with a currency that no bank or government could control. Why is Satoshi anonymous? There are endless debates on prime motivation for keeping his identity a secret. Who was Satoshi and whatever his intentions were, his inventions had far more impact than he probably ever thought was possible.
The cryptocurrencies are very volatile. It’s not docile as well. So, under normal circumstances, it seems no country wants to abandon the government-run currency in favour of cryptocurrency. Having said that cryptocurrency swings are less compared to some collapsing currencies. In the last decade, Venezuelan Bolivar and Zimbabwean Dollar immediately come to mind. Under the normal economic scenario, it’s unlikely that the citizen would want to switch from government-backed currency to a non-government cryptocurrency. Non-government run cryptocurrencies will have their due place in the monetary system but it’s too much to expect that it’s going to topple strong currencies like Dollars and Euros.
The cryptocurrency has been successful. The irony is that it has succeeded by doing exactly the opposite of what it was originally intended. Bitcoin and Ethereum are close to the founding ethos of decentralization. However, its government-run cryptocurrencies and private Blockchain that’s going to emerge as a winner. On the flip side, due to user anonymity, tracing of payments is very hard. That’s why it's preferred for the mode of payments for cybercriminals. Bitcoin has been in news for wrong reasons like money laundering, drug trafficking, and tax evasion. There have been regulatory headaches, which can cause affliction. Many countries still do not have a system that restricts, regulate or ban the cryptocurrency. Overall, cryptocurrency remains in a legal grey area for much of the world and the governments are taking a very gingerly approach. In China, banks and financial institutions are prohibited from dealing in Bitcoins. In Russia, its payment for goods or services is illegal. Vietnam does not consider it a legitimate payment method. Other countries where its banned or discouraged are Bolivia, Bangladesh, Iran, Nepal, Bolivia, Thailand, Denmark, and Ecuador.
Let’s find out the position of cryptocurrency in Indian financial ecosystem. Bitcoin in India is mainly bought from digital currency exchanges like ZebPay, CoinDelta, and CoinSecure through a credit card. A high-level government panel has recommended a ban on all kinds of cryptocurrencies. If interested, you can read its complete recommendation in the website of the Department of Economic Affairs. The RBI had cautioned the Indian public in the past over cryptocurrencies. There has not been any blanket ban on Bitcoin as no law has been formulated until now. Supreme Court had asked the Indian government to come up with cryptocurrency regulation policies. As per media reports, if the ban does come into effect, individuals may be given a few months to dispose of their assets. Recently, Finance Minister Nirmala Sitharaman issued a statement saying that many countries have cautioned her against rushing into cryptocurrencies. As per IMF, terror funding and money laundering are two major concerns around cryptocurrencies. These points towards malaise despite its stupendous success. We can conclude that India does not have a positive stance towards Bitcoins and other cryptocurrencies.
Apart from the concept, the book sets out to answer a few questions. Is cryptocurrency a revolution or a bubble? Will it rule by anarchy or efficiency? Whatever be the outcome, it’s sure going to have a tremendous impact. With Bitcoin, Satoshi Nakamoto had envisioned a financial institution that shall be independent of bank, government or any powerful institution. The other cryptocurrencies have a similar ethos. The experience with cryptocurrency suggests that an economy cannot be built entirely around cryptocurrencies alone. There are issues related to speed and volatility. The cryptocurrency began to achieve more success only after its term with banks and governments began to improve. Cryptocurrency started revolutionizing the payment system. It’s becoming a mainstream vehicle for investments. They, however, are deviating from their values. It cannot exist without a strong currency. The early innovators of blockchain intended a decentralized way to track any kind of asset. Public Blockchain is closer to that. But the real success of Blockchain is coming from Private Blockchain, which is centralized. They have really been making a good contribution to the world. Thankfully, the book stands out from similar kinds of other books on the subject. Unlike other books, it’s less technical and that’s exactly what I was looking for. The authors have made an honest attempt to put across and rather hammer the concepts into the reader’s head. There are still many unanswered questions. However, the book is a good option to take you on a ride. Grab a copy today. This book is recommended.
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A well crafted book for beginners in understanding Blockchain and Cryptocurrency. The topics are explained in the lay-man language which is very good for a beginner and someone who does not have a background. Looking forward to read the next book by the 3 authors. Great piece of work. 💪
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Anonymous
Thorough and simple.
Reviewed in the United Kingdom 🇬🇧 on 19 February 2021Verified Purchase
Richard Nemčovič
A great book about everything you need to know to start your own path within blockchains.
Reviewed in the United Kingdom 🇬🇧 on 27 February 2021Verified Purchase
Richard Nemčovič
Reviewed in the United Kingdom 🇬🇧 on 27 February 2021
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doc_wellsy
Ok for the right audience.
Reviewed in the United Kingdom 🇬🇧 on 9 May 2022Verified Purchase
@Timothy_Hughes
What does bitcoin, blockchain and all that really mean? If you want a simple guide this is it
Reviewed in the United Kingdom 🇬🇧 on 13 January 2022Verified Purchase
Gavin Deadman
Digestible, balanced and comprehensive guide on blockchain and crypto
Reviewed in the United Kingdom 🇬🇧 on 21 February 2021Verified Purchase
Gavin Deadman
Reviewed in the United Kingdom 🇬🇧 on 21 February 2021
By the end of reading it, I've been able to give my verdict on what parts of the tech are bubble and which are evolution.
The book is full of balanced stats and data which help put key points across and it was an easy and fun read.
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