The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order
by Paul Vigna
In "The Age of Cryptocurrency," Paul Vigna explores the transformative potential of Bitcoin and digital currencies, situating them within the historical and philosophical context of money. Central to the book is the contention that the value of currency,whether it be gold, fiat, or cryptocurrency,is largely an abstract social construct, dependent on collective belief rather than intrinsic worth. Vigna delineates two primary schools of thought regarding the nature of money: the metallist perspective, which posits that money must be backed by tangible commodities, and the chartalist view, which emphasizes the trust and credit relationships embodied in currency. He advocates for a chartalist understanding, suggesting that cryptocurrencies like Bitcoin could democratize finance, removing intermediaries and ensuring a fairer system. The book also addresses the technical foundations of cryptocurrencies, highlighting the importance of blockchain technology and its role in creating a transparent, secure ledger that mitigates the need for traditional banking. However, Vigna acknowledges the environmental concerns related to Bitcoin mining and the ongoing challenges posed by centralization and regulatory scrutiny. Ultimately, Vigna argues that cryptocurrency has the potential to disrupt existing economic structures, empowering individuals and fostering financial independence,especially for those in marginalized positions. The author urges readers to recognize this evolution as a significant shift in the global economic order, with profound implications for privacy, power distribution, and the future of money.
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Below are the most popular and impactful highlights and quotes from The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order:
gold is valuable as a currency or investment because we believe it is valuable (which is the same reason for valuing money itself). Gold’s value as currency is an abstract social construct.
For much of history since its beginning in ancient Egypt, the essence of cryptography—which takes its name from the Greek words for “hidden” and “writing”—lay in encoding language to keep a message secret.
centuries-long debate over the nature of money can be reduced to two sides. One school sees money as merely a commodity, a preexisting thing, with its own inherent value. This group believes that societies chose certain commodities to become mutually recognized units of exchange in order to overcome the cumbersome business of barter. Exchanging sheep for bread was imprecise, so in our agrarian past traders agreed that a certain commodity, be it shells or rocks or gold, could be a stand-in for everything else. This “metallism” viewpoint, as it is known, encourages the notion that a currency should itself be, or at least be backed by, some tangible material. This orthodox view of currency is embraced by many gold bugs and hard-money advocates from the so-called Austrian school of economics, a group that has enjoyed a renaissance in the wake of the financial crisis with its critiques of expansionist central-bank policies and inflationary fiat currencies. They blame the asset bubble that led to the crisis on reckless monetary expansion by unfettered central banks. The other side of the argument belongs to the “chartalist” school, a group that looks past the thing of currency and focuses instead on the credit and trust relationships between the individual and society at large that currency embodies. This view, the one we subscribe to and which informs
We have an opportunity to reform the financial system, to turn it into the public utility that it’s supposed to be—a level playing field that everyone can indiscriminately use in their bid to get ahead. Let that be the standard for the coming age of cryptocurrency.
Bitcoin is just six years old. It has gone from what was ostensibly one lonely coder’s pet project to a global phenomenon that has sparked the imagination and activism of libertarians, anticorporatists, crypto-anarchists, utopians, entrepreneurs, and VCs. Bitcoin has gone from being essentially worthless to dearly valuable, only to crash and rise again, a wild trading pattern that has few analogues in capital markets. It’s certainly gone from nowhere to somewhere, and where it goes from here may be as messy and chaotic as where it’s been.
At their core, cryptocurrencies are built around the principle of a universal, inviolable ledger, one that is made fully public and is constantly being verified by these high-powered computers, each essentially acting independently of the others.
The blockchain keeps everyone honest, and a whole layer of banking bureaucracy is removed, lowering costs.
