Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond
by Chris Burniske
In "Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond," Chris Burniske explores the burgeoning world of cryptoassets, emphasizing their potential as scarce digital assets akin to gold. A central theme is the significance of decentralization, which is crucial for ensuring network security and trust. Burniske stresses the importance of the "decentralization edge",the unique advantages that decentralized protocols offer in solving real-world problems. The book highlights the critical need for robust security mechanisms, such as the prevention of 51 percent attacks, and underscores the relevance of supply schedules coded into blockchain protocols. Investors are encouraged to analyze the utility value of cryptoassets, understanding how they can facilitate global transactions and services, thus driving demand. Burniske also addresses the evolving nature of issuance models and the importance of community and developer credibility in assessing a cryptoasset's potential. He warns against market manipulation, particularly in smaller networks vulnerable to cornering, and advocates for transparency and open-source principles to prevent scams. Finally, the author draws parallels between the historical evolution of stock markets and the crypto landscape, suggesting that as cryptoassets mature, speculative value may diminish while intrinsic utility becomes clearer, presenting opportunities for innovative investors. Overall, the book serves as a guide for discerning investors navigating the complexities of the cryptoasset market.
4 popular highlights from this book
Key Insights & Memorable Quotes
Below are the most popular and impactful highlights and quotes from Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond:
Cryptoassets, like gold, are often constructed to be scarce in their supply. Many will be even more scarce than gold and other precious metals. The supply schedule of cryptoassets typically is metered mathematically and set in code at the genesis of the underlying protocol or distributed application.
The only way attackers can process invalid transactions is if they own over half of the compute power of the network, so it’s critical that no single entity ever exceeds 50 percent ownership. If they do, then they can perform what’s referred to as a 51 percent attack, in which they process invalid transactions. This involves spending money they don’t have and would ruin confidence in the cryptoasset. The best way to prevent this attack from happening is to have so many computers supporting the blockchain in a globally decentralized topography that no single entity could hope to buy enough computers to take majority share.
When reading the white paper, the first question to ask is: What problem does it solve? In other words, is there a reason for this cryptoasset and its associated architecture to exist in a decentralized manner? There are lots of digital services in our world, so does this one have an inherent benefit to being provisioned in a distributed, secure, and egalitarian manner? We call this the decentralization edge. Put bluntly by Vitalik Buterin, “Projects really should make sure they have good answers for ‘why use a blockchain.
Standing for decentralized autonomous organization, The DAO was a complex dApp that programmed a decentralized venture capital fund to run on Ethereum. Holders of The DAO would be able to vote on what projects they wanted to support, and if developers raised enough funding from The DAO holders, they would receive the funds necessary to build their projects. Over time, investors in these projects would be rewarded through dividends or appreciation of the service provided.
