More on this book
Community
Kindle Notes & Highlights
Bitcoin is not a company. It is not an organization. It is a standard or a protocol just like TCP/IP, or the internet. It’s
There are many other alternative currencies — altcoins, as they’re known—that use the same basic technology of a decentralized asset ledger using consensus in the network with Satoshi’s algorithm. Some of these currencies are inflationary, some deflationary, some use demurrage or negative interest rates, some are charitable and redistribute a proportion of the income to charitable organizations.
At the end of the day, bitcoin is programmable money.
Researchers then watch the monkeys to see what they will do with this new information. They very quickly invent armed robbery. They figure out that if you beat up the other monkey and take its stones, you can exchange them for bananas. Surprisingly, the second thing they invent is prostitution. They figure out that sexual favors can be exchanged for stones, which can be used for bananas.
The first major technological evolution is to start exchanging something that you can’t eat—a
Precious metals combine some of the most important characteristics of money: hard to find (scarce); easily transportable (at least when compared to a giant rock or a whole barrel of feathers); easy to divide (you can cut a gold coin into pieces and subdivide the pieces); and universally valued for aesthetic purposes. That’s the second major transformation in money technology.
If I deposit gold with someone trustworthy, they can give me a piece of paper that says that I have gold in this trustworthy vault. Then I could trade the paper instead of the gold. It’s easier to carry. As long as I can trust that my money is in the vault, then I’ve got a new form of money.
Then, about 60 years ago, we saw a new form of money in the form of plastic cards.
Bitcoin is the first network-centric, protocol-based form of money.
refers to an architecture used in terms of computer science or networking or distributed systems to describe the relationship between participants and a system. The architecture of bitcoin is peer-to-peer because every participant in the network speaks the bitcoin protocol on an equal level. There are no special bitcoin nodes; all nodes are the same.
Peer-to-peer means that when you send out a transaction to the network, every peer treats it the same. It has no context inside the peer’s system other than what it gets from the network.
find it almost impossible to answer these questions.
architecture, where the secondary party only has a
When I use the word bitcoin, I am not talking about the currency. I am talking about a broader concept: the concept of completely decentralized, network-based, flat networks for providing trusted applications.
In a centralized system, the further out you are, the less control you have. The closer you get to the system, and the farther you move up the hierarchy, the more controlled, the more limited the access is. But not with bitcoin. With systems like bitcoin, every node on the network has equal access to all of the financial services. In a centralized system, if you want to build a new application, you must first ask permission. And then permission is only granted if that application can apply to a very large population and be profitable.
Bitcoin is censorship-resistant.
In bitcoin, censorship resistance is an artifact that is created by neutrality, the architecture of a flat network without borders. The architecture of neutrality that doesn’t ascribe any meaning to source, destination or value, is what creates censorship resistance.
That represents the cognitive dissonance between the powers of centralized secrecy and the power of privacy as a human right that we now have within our grasp. If you think this is going to be easy or that it’s going to be without struggle, you’re very
Every time that message is broken by cognitive dissonance, bitcoin wins. All bitcoin really has to do is
Throughout history, the most amazing technology is adopted by criminals first.
The network doesn’t fear you because its security doesn’t depend on keeping bad actors out. In fact, bitcoin works fine with plenty of bad actors right in the core of the system because there is no core of the system; there is no center.
Bitcoin isn’t currency. That’s a really important thing to realize. Currency is an app that runs on the bitcoin network. Bitcoin is the internet of money, and currency is just the first application.
a system of digital currencies that has no banks, no governments, no central control and is available for anyone to use without asking permission — will change the world. Thank you.
One of the key concepts in economics is the idea of a tragedy of the commons. This is when you have a common resource that can be consumed, without limits, by all those who participate until the resource is depleted and the entire system collapses. It’s a form of market failure called “the tragedy of the commons.” The
We need to get used to a world where we have to judge currency not by who issued it, but by who uses it. Or rather, by how many people use it and what they use it for.
To those people, it doesn’t matter who issued the currency; what matters is whether it has purchasing power or not. The currency is now evaluated purely on its monetary basis, because of adoption, because of use. There is one fundamental difference between those two currencies. One has a predictable, stable, algorithmic monetary supply. The other has an old white lady named Elizabeth on it. So, in fact, one of them has some real intrinsic value because it has removed some of the uncertainty of the monetary system from it. The other one doesn’t really.
our unified wallet interface will do that, by trying to see what we’re trying to achieve with our currency. If
What makes good money? Something that is rare. Shells, feathers. You can use shells as money, unless you live on a beach; if you live on a beach, you can’t use shells as money. You can transport the value easily. So, it has to be portable. With
Other characteristics of money . . . It has to be difficult to forge; it has to be difficult to create more of it. You should be able to detect at a glance or relatively easily that it is real. It should be fungible.
If it’s abstract—if it doesn’t have any practical use in itself—then as an abstraction of money it represents something else, some shared value.
Design metaphors are extremely powerful tools. They allow us to create expectations. Metaphors are tools by which we create expectations.
You expect it to behave like the object that it’s pretending to be. That’s a design metaphor. Design metaphors are extremely powerful, but they’re also extremely dangerous when misapplied.
You took the most abstract representation of money and named it after the most tangible representation of money. Only an engineer could come up with that brand.
So, you’ve got a “wallet” that doesn’t contain “coins”—because the coins are actually on the network and they’re not coins, they’re outputs—and what you’re really holding is a keychain. Transactions are not from a sender to a recipient. Addresses don’t have balance in bitcoin. There’s no such thing as a balance of an address. An address controls outputs, and if you trawl through the blockchain and add up all of the outputs, you can figure out some notional balance. Whether that’s actually spendable or not, how much it is, is actually quite difficult to determine. There is no “balance.” You
...more
Coase coefficient, which is the overhead created by organization. If we want to do something as a team, two people can do more than what one person can do. Three people can achieve even more. But there’s a limit to that. Once you get too big, the communication overhead between participants in the group is greater than the marginal increase in efficiency.
They confused the medium for the message.
They made the mistaken assumption that their control over the medium was the source of quality. And long after quality disappeared, they clung to control and thought that control was the only way to achieve quality, and if you removed control, you removed quality.
That is stinky, unabashed elitism at its absolute worst. It assumes that the gatekeepers are the source of quality, when all they are is gatekeepers. They assume that the fact that they have the expensi...
This highlight has been truncated due to consecutive passage length restrictions.
Every generation mistakes the medium for value and considers the next iteration of the medium—that widens access, that opens availability, that broadens the range of expression—they consider that medium trivial, vulgar, cheapening the message.
Then the medium changes because the technology becomes more available. People start using it for a broader range of expression, but the gatekeepers still cling to the old ideas. They still try to do the grandiose with their medium. They print hardback, heavy, leather-bound books—Principia Mathematica. Then the medium opens up again and things become softcover, and photographs become available to the everyday person in 24 exposures. The gatekeepers of the past still cling to the past, but now they can’t really pretend that it’s grandiose, so they just do grandstanding. They say, “There’s a
...more
Grandstanding. The grandiosity is gone. The quality is gone. Now, it’s just a matter of clinging to the control and pretending that control is still quality.
The banks are saying, “Your truck has sharp corners and your burger is too expensive and took more than 45 seconds." What they’re really saying is, “Your transaction fees are too high and you’re too slow and you can’t possibly scale." They’re missing the point. The point is that we’re not trying to sell a billion burgers at 45 seconds each; we’re trying to unleash the creativity of an entire generation. We’re building a system, on top of which a thousand applications that require trust can be built.
But that breaks the fundamental capability of bitcoin, which is net neutrality.
Bitcoin doesn’t care who the sender or the receiver is, what the application is, what the value of the transaction is. All it cares about is, did you pay the fee?
The very act of paying the fee legitimizes the transaction.
This is how bitcoin is going to play out. This is not going to be solved; we will have the scaling discussion every year for decades into the future, hopefully. Every year, we will fail to scale for the next application and succeed to scale for the previous ones. As soon as we do better, people will invent new applications and we will fail to scale again. The internet: failing to scale gracefully for 25 years. Bitcoin: let’s keep failing to scale gracefully, and bitcoin is not yet dead.
