The Basics of Bitcoins and Blockchains

Last December I was approached by a publisher, Mango, who asked me if I would write a book about blockchain technology.  A little nervously, I agreed, and I’m excited to announce the result of six months of effort:

The basics of bitcoins and blockchains - book cover

The Basics of Bitcoins and Blockchains is an essential guide for anyone who needs to learn about cryptocurrencies, ICOs, and business blockchains.  Written in plain English, it provides a balanced and hype-free grounding in the essential concepts behind the revolutionary technology.

I wrote The Basics for an audience of business people, students, practitioners, and those who are simply interested in this technology.  I tried to make it entertaining even for those who are already working in the cryptocurrency or blockchain industry.  For example, did you know:

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Useful new ICO metrics for 2018

I’ve been at a few events recently where people talk about the “market cap(italisation)” of utility tokens issued in ICOs, and comparing them to the market cap of cryptocurrencies or (even worse) listed companies.  This is truly dreadful and misleading, perhaps sometimes intentionally so.  In this post I introduce two useful metrics for comparing across ICOs: the Reserve ratio, and the Commitment ratio.

For a non-hypey introduction to ICOs please see A gentle introduction to ICOs.

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Bitcoin price, gold, and nonsense – how not to value bitcoins

Important note: If you own more than $1,000 worth of cryptocurrency then you should definitely be using a hardware wallet instead of keeping coins on exchanges.  I recommend a Trezor which you can buy for €89 directly from their website.


Every few days I hear the argument “If x% of the money in gold (or other asset class) moved into bitcoin, a single bitcoin should be worth $y”.  This article explains why this argument is utter nonsense.

The (flawed) reasoning is as follows: the total value of gold in circulation is estimated at US$8 trillion.  If some small fraction of the people holding gold (say, 5%) sold their gold for US Dollars (releasing $400 bn), and the USD proceeds were used to buy bitcoins, the total value of bitcoins (commonly referred to as “market capitalisation”) would increase by that amount of dollars ($400bn), and because we know the total number of bitcoins in circulation, we can derive a price per bitcoin.

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MAS just released Corda for Central Banks… so what?

I’m absolutely thrilled to be able to write about the open sourcing of Project Ubin Phase II, a key project that our team has been working on for the past seven months with the Monetary Authority of Singapore (MAS), ten banks, and our partner Accenture.

UbinPhase2
Ubin Phase 2 report

What is Project Ubin?  It’s probably the most advanced starter kit out there for anyone wanting to explore blockchains for banking:

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In a nutshell: Ian Grigg’s Ricardian contracts and digital assets prehistory

I enjoyed listening to Episode 151 of the podcast “Epicenter” (previously “Epicenter Bitcoin”) featuring Ian Grigg, inventor of Ricardian Contracts and blogger at Financial Cryptography. Here are my notes – part transcription, with some edits. This one is a goldmine and covers many topics: bonds, contracts, cash, Chaumian e-cash, DigiCash, financial cryptography, Ricardian contracts, digital signatures, smart contracts, dispute resolution, Ethereum, triple entry book-keeping, oh my!

Misunderstandings and paraphrasing errors are entirely mine.

This gets fairly technical; if this is hard to follow, it may be helpful to read my introduction to smart contracts first.  Hmm, if it’s still hard to follow, also read about blockchains and bitcoin and Ethereum, and digital tokens.

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The emergence of blockchains as Activity Registers

This post tries to describe two very different uses for blockchain technology: Digital Token Ledgers that record ownership changes of digital tokens, and Activity Registers that record timestamped proofs of existence of data or agreements about data.  Bitcoin is used for both.

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Confused by blockchains? Revolution vs Evolution

Cryptocurrencies vs Industry Workflow Tools

This article attempts to explain the difference between the revolutionary disruptive innovation of bitcoin and the evolutionary efficiency innovations of industry workflow tools, and why calling them both “blockchains”, even as a generic term, is incredibly confusing.
Cryptocurrencies vs Industry Workflow Tools

For the rest of this post, I will use the phrase “industry workflow tools” instead of industry blockchains, as some of the emerging solutions being proposed in this space are not blockchains (eg, R3’s Corda is not a blockchain but Digital Asset’s solutions are – however, both companies are proposing industry workflow tools).

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On loyalty point schemes and blockchains

Over the past year I’ve been asked my thoughts about ‘loyalty points on blockchains’ many times. The thinking seems to be bitcoin -> digital currency -> digital tokens -> loyalty points and at first pass it feels like a natural extension of a theme. People read about cryptocurrency trading and interoperability then think “Wouldn’t it be really cool if I could exchange my loyalty points for other ones, or if I could buy and sell them with real money?”.

This post attempts to describe how I understand the purpose of loyalty points, and in this context, how applicable blockchains are as a technical solution.

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What you get for free with blockchains

Is blockchain solutioning from Fear Of Missing Out?

Over the past year I have come across many blockchain ‘proof of concepts’, that take existing business ideas or challenges and apply a specific technical design (blockchains) to the solution. The usual problem/solution decision process has been turned on its head:

Is blockchain solutioning from Fear Of Missing Out?
Is blockchain solutioning from Fear Of Missing Out?

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