Review: ‘Age of Cryptocurrency,’ bitcoin and economy, by Paul Vigna and Michael Casey

By Daniel Gross January 23 at 4:06 PM

Daniel Gross is executive editor at Strategy+Business. His most recent book is Better, Stronger, Faster: The Myth of American Decline and the Rise of a New Economy.

The Age of Cryptocurrency

How Bitcoin and Digital Money Are Challenging the Global Economic Order

By Paul Vigna and Michael J. Casey

St. Martins. 357 pp. $27.99

Bitcoin is remarkably polarizing. Technology evangelists and central-bank critics ardently believe no, they know that the digital currency can liberate mankind from the tyranny of banks and government-backed paper money. Skeptics note that, like other new technological disruptions, bitcoin attracts innovators and hucksters in equal measure. How can a currency created by an anonymous coder and backed by no state, and whose value flaps around like a flag in a swirling wind, hope to challenge the global economic order and replace the dollar?

To their ample credit, Paul Vigna and Michael J. Casey, veteran Wall Street Journal reporters, resist the common temptation to hype their trendy subject. Theyve written a reported explainer that patiently documents bitcoins rise, acknowledges its flaws and highlights its promise. Smart and conscientious, The Age of Cryptocurrency is the most thorough and readable account of the short life of this controversial currency.

Bitcoin isnt actually money. Rather, its a highly disruptive technology a software and transaction verification system that lets people communicate with others that has the modest goal of freeing people from the tyranny of centralized trust. It came on the scene in 2008, when Satoshi Nakamoto (a pseudonym) introduced a peer-to-peer system that instructs computers how to keep track of transactions, using encryption and digital signatures, in a highly transparent way. The blockchain a universal ledger that grows with each completed transaction allows people to exchange all sorts of digitized items of value and any manner of useful data with confidence that the information is accurate. And it ingeniously provides financial incentives for people (or their computers) to keep the ledger up to date. How?

Transactions in bitcoin arent completed with a handshake or the issuance of a receipt. And unlike PayPal or electronic banking, they dont involve the documented transfer of funds in specific currencies between large, licensed institutions. Rather, computers connected to the network must reach a consensus on the validity of each transaction. Transactions between two individuals are validated only when a third party a miner equipped with a powerful computer performs a complicated mathematical puzzle. The first to solve the puzzle receives a bitcoin as a sort of commission and officially updates the universal ledger.

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Review: ‘Age of Cryptocurrency,’ bitcoin and economy, by Paul Vigna and Michael Casey