One of the few things that has grown as fast this year as the price of cyptocurrencies, such as bitcoin, is the number of books available about them, along with blockchain technology and their many derivatives. There are now in excess of 500 books available on Amazon on these topics. These books include excellent technical guides like “Mastering Bitcoin: Programming the Open Blockchain” by Andreas M. Antonopoulos, breathless accounts of the (short) histories of these technologies and wildly enthusiastic visions of a cryptocurrency- or blockchain- based future.
To the people who have sat through lectures on these topics at financial institutions around the world, there may a feeling of surprise that there are 500 people who understand this topic. However, a fair number of these books are frankly deranged, offering no real explanation of how these technologies work or how they will live up to the promises made.
You would think this would leave the reader spoilt for choice but there is a key type of book missing: “the critique”. Criticism of the cryptocurrencies in the media and more broadly on the internet has been growing for some time, with their association with organised crime, ransomware and money laundering. In spite of this we have seen a bubble emerge in both the valuations of cryptocurrencies and the security-like “coins” sold in initial coin offerings (ICOs), a blockchain-based cousin of the initial public offering (IPOs), when a company sells stocks in the market for the first time. Cynicism about the application of blockchain-type technologies in banking and capital markets has also increased, as people in the financial sector have grown impatient for the delivery of tangible products.
Attack of the 50 Foot Blockchain: Bitcoin, Blockchain, Ethereum & Smart Contracts, by David Gerard, is the first real, “no holds barred”, attack on the whole bitcoin/cryptocurrency/blockchain movement. Unlike many of the bitcoin/blockchain fanboys, Gerard is a true techie with long history in IT. He is also one of the founders of the notorious Reddit “buttcoin” forum, which combines bitcoin parody with often expert, logical analysis.
The book is primarily focused on bitcoin and the other cryptocurrencies, where it provides some excellent analysis of the reality behind many of the headlines. Do you believe that bitcoin is saving the people of Venezuela from starvation or helping the billions of unbanked climb their way out of poverty? You may change your mind after reading Gerard’s analysis of the truth behind the hype.
Equally informative is his detailed explanation of how the crypto-markets and their infrastructure work (often sporadically) in reality. If have been lulled into quiet belief that bitcoin and the other cryptocurrencies are turning into another asset class worth diversifying into, the reality will make you think otherwise. In just a few short years, everything that was bad about capital markets (which both regulators and the industry itself have worked so hard to deal with) have been replicated in the bitcoin/cryptocurrency world. Fraud, market manipulation, regulatory arbitrage, insider trading, unreliable infrastructure, blatant support of criminal activity and Ponzi schemes are rife.
There is less material on the more general application of technologies such as smart contracts and blockchain in finance but the chapters on these topics are a very useful antidote to frequently exaggerated claims. Gerard carefully points out the major technical and legal problems with the basic concept of a “smart contract”. The computer programs referred to as “smart contracts” are seldom either legal contracts or even particularly smart. In his blockchain chapter, he does not reject the possibility that research and development in this area may eventually produce something of value but he does provide a very useful set of questions to ask “blockchain salesmen” to establish whether their products are real software or simply dreams.
Enthusiasts will criticise this book for lack of balance but this is not an area where it is easy to find any alternative views. If you are interested in cryptocurrencies or blockchain (even if you already an enthusiast) it is worth reading this book simply to challenge your assumptions.
- The post gives the views of the interviewee, not the position of LSE Business Review or the London School of Economics.
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Martin Walker is Banking and Finance Director at the Center for Evidence-Based Management (CEBMa) and produces research for financial consultancy Finadium. He has extensive experience in investment banking IT and operations. His roles included Global Head of Securities Finance IT at Dresdner Kleinwort and Global Head of Prime Brokerage Technology at RBS Markets. He also held roles at Merrill Lynch and HSBC Global Markets, where he was the Blockchain lead in Markets Operation. Additionally, Martin worked for the R3 CEV Blockchain collaborative on product development and has published two papers on the topic: Blockchain And The Nature of Money, and Bridging the Gap Between Investment Banking Architecture and Distributed Ledgers (R3 CEV Research – Mar 2017)
Thank you very much 🙂
I must note that this is not the first critical book on Bitcoin/blockchain. Two predecessors that need noting, and are worth your time:
* Jeffrey Robinson: BitCon: The Naked Truth About Bitcoin – the first serious critical book on the subject. I didn’t manage to hear of this book until I’d published mine – I’ve just bought a copy to write up on the blog 🙂
* David Golumbia: The Politics of Bitcoin: Software as Right-Wing Extremism – an academic treatment of the sources of Bitcoin’s weird politics, and many of its more bizarre claims. This was an essential source for chapter 2 of my own book, and I’ve gotten to know David chatting online and he’s a great guy who knows his stuff. I earnestly recommend this book to all.
I’m amused to see my competitors described as “deranged”, though in fairness I wouldn’t go that fer 🙂 They’re generally very sincere. But I think they’re wrong in important ways, and I wrote a book to explain why. I do occasionally boggle looking at my book’s Amazon page and seeing the “Customers who bought this item also bought” listings … I wonder what they made of the two Bitcoin advocacy pieces in conjunction with “50 Foot Blockchain”.
Thank you for the comments and clarifications. I hope I didn’t give the impression that I think all the authors of books in this area are “deranged”. I have co-authored two papers on the topic of money and blockchains, so that would make me deranged as well.
The point was rather that amongst the many, many (uncritical) books on this area there is a huge range of coherence in the arguments made in favour.
I admit that I have not read David Gerard’s book and I probably won’t waste the time since I am familiar with his work and criticism. He lacks the technical understanding to truly give any insight into Blockchain technology imho.
Mentioning David Gerard and Andreas M. Antonopoulos in the same article is quite a stretch btw. Did he pay you to write that?
Thank you for finding the time for read my piece.
Conflicts of interest and financially motivated opinion pieces seem rife in the world of cryptocurrencies and ICOs. So I would like to declare that I did not receive any form of inducement from David Gerard. I did however buy David a cup of coffee and I hope this does not offend your ethical standards.
> He lacks the technical understanding to truly give any insight into Blockchain technology imho.
If you could detail what in the book is wrong, I’d be most pleased to hear it. I did footnote it heavily.
I have read this book thoroughly and I agree with you that the book is not balanced in several aspect; especially the technological aspect. While the book talks extensively about the analysis of how cryptocurrencies has captured the imagination of people all over the world through blockchain service; it has failed to demonstrate the process in which the technology already works. It would rate it as one face of the coin and its other face i.e. technology remains unexplored.
If you are looking for a technical critique of Blockchain/Bitcoin, I would suggest you read my recent book “Bitcoin: The Snare” available on Amazon. The book was written in the form of a fictional novel, but was really about making people understand the fundamental technical flaws with the Blockchain/Bitcoin design.
You can find the following key points in Chapter 18 and the explanation in Chapter 19. It explains why the Bitcoin network is consuming such huge amount of computing power and energy while processing so few transactions. Its per-transaction processing cost (network wide) is truly astronomical and the problem is inherent with the technical design itself.
– It is paradoxical to claim distributed processing while it is actually massively replicated centralized processing with no bound on replication or on exploding per-transaction processing cost.
– It is paradoxical to claim that user transactions do not place any trust on any third party while regular user wallets in practice implicitly put trust wholly on a small number of mining nodes it can connect but may not even know who they are.
– It is paradoxical to claim user privacy and security while all transactions are explicitly made public and the full money trails are explicitly revealed by the Block Chain.
– The proof-of-work scheme for deciding the granting of a coin is nothing more than a competition to see who has wasted more computing power and energy in gambling than everybody else has, with no meaningful work done.