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 Bitcoin rallies and how Cryptocurrencies are about to become worthless. Maybe you’ll see claims that cryptocurrencies will lead to an environmental disaster or how they’re only used for 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; it’s why unsettling events like murder gets a disproportional amount of focus.
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 concludes that:
Honestly, cryptocurrencies are useless
It’s almost a universal phenomena. I’ve heard these arguments from students, co-workers, friends, family and in highly technical online communities:
- It’s a scam.
It’s just a speculative bubble and cryptocurrencies are really worthless.
Here many draw parallels to Beanie Babies1 or the Tulip mania2. And to be fair, cryptocurrencies have displayed bubble behavior—several times.
- They don’t do anything better than other payment systems like PayPal or VISA.
- There’s no legal use case.
- They don’t do anything valuable.
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.
What this book is
This book tries to describe what value cryptocurrencies have using several examples. In particular I’ll argue that:
- Cryptocurrencies aren’t just scams.
- It’s more than just a speculative asset.
- They do many things better than any alternative.
- There are legal use cases.
- 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.
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.
There are many problems with cryptocurrencies as they exist today, for instance:
- Why aren’t cryptocurrencies used more?
- Bitcoin uses a public ledger where all payments are visible—what about privacy?
- How can a cryptocurrency scale globally?
- What about Bitcoin’s energy usage?
I don’t dismiss these problems, and I discuss them in more detail in the chapter 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:
I think there’s a world market for maybe five computers
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.
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.