UNDERSTANDING BITCOIN IN 46 SECONDS

The rising popularity of bitcoin, invented in 2009 by the enigmatic Satoshi Nakamoto, has only been equaled by its persistent mischaracterization by supposed experts, according to debut author Russell.

A lack of understanding of bitcoin has led some financial giants like Warren Buffet to dismiss it as a tradable asset, preferring to view it as merely another digital payment delivery system. The author contends, however, that, properly understood, bitcoin meets all the conventional criteria for currency. It’s portable, divisible, of limited supply, and functions both as a medium of exchange and a store of value. In fact, bitcoin is essentially “cash for the Internet.” As far as bitcoin’s value is concerned, it’s determined much like any other currency—an amalgam of market factors and the simple fact that people decide it has value. One of the chief points of bitcoin’s attractiveness is its independence. It’s ungoverned by a central bank, single corporate entity, or nation, and even its open-source software is meritocratically superintended by freelance developers. And it operates without the burden of capital controls or any intermediary arbitrarily postulating rules about the kinds of transactions permissible. The author explains, using step-by-step instructions, how to acquire and use bitcoin, including the establishment of a secure online identity. And since public discourse regarding the currency is so often clouded by ignorance, Russell furnishes a list of credible and enthusiastic advocates, including Bill Gates, Ashton Kutcher, and Al Gore. The writing here is consistently accessible, mercifully so when discussing the more technical aspects of bitcoin, like the nature of its creation and distribution. Also, while the author is an unabashed enthusiast of the currency, he also discusses some of its weaknesses; for example, since it suffers from greater price volatility than other major currencies, it doesn’t serve well as a unit of account. Further, Russell expertly explains the different advantages and disadvantages of bitcoin from the perspectives of both retailers and consumers. It’s hard to imagine a more seamless combination of theoretical description and practical counsel.

A remarkably cleareyed assessment of bitcoin’s virtues and vices.