I’ve been interested in Bitcoin for a decade or so, but unfortunately was never brave enough to put any of my hard earned money into it. Nevermind. I’ve read bits and pieces over the years about how it got started and its earlier history, but it was only with the start of a new job where I’m working with cryptocurrencies on a daily basis that I thought it was time to dig a bit more deeply. Nathaniel Popper’s book was recommended in several different lists of things one should read about Bitcoin, so just a short while ago I purchased my paperback copy from Amazon. Yes, I know, “I only read hardbacks”, but this was a very recent book, so the easiest way to acquire it was to just mash the big buy button.

Popper traces the history of Bitcoin from the initial whitepaper announcement by the mysterious Satoshi Nakamoto in 2009 through its tumultuous first five years or so. It reads like a thriller in parts, and a whole cast of eccentric characters thread through the story. For the first six months or so very little happened, with only a small handful people even caring about it. The initial interest was driven by ultra-libertarians who dreamed of a medium of exchange free from central control, but although there was plenty of talk of it replacing fiat currencies, there was almost nothing available to purchase. That was until the emergence of Silk Road, a dark-web site where users could buy and sell drugs. As an aside, have you ever noticed that it’s only software vendors and drug dealers who call their customers users? Silk Road was created by Ross Ulbricht AKA Dread Pirate Roberts who was also motivated by extreme libertarian ideals. It at last created a demand for Bitcoins and a demand for an easy way for people to purchase them. The first Bitcoin exchange was Mt. Gox, created by Jed McCaleb, who soon sold it on to French engineer Mark Karpelès. Karpelès had the field to himself for the first few years and built Mt Gox into a sizable enterprise. In the meantime Silk Road had come to the attention of the FBI and a taskforce was created to track down Dread Pirate Roberts. Ulbricht knew the feds were after him and became ever more paranoid and eccentric. He tried to organise several abortive murders of Silk Road users who threatened to expose him. One of which was simulated by the FBI team who were trying to track him down. He was eventually captured by the feds in an elaborate sting operation. Mt Gox also ran into trouble when a hacker stole most of the Bitcoin held by the site. Karpelès realised far too late that his customer’s Bitcoin was leaking away and by the time he acted most of it was gone. He too was arrested, this time by the Japanese authorities.

The ultra-libertarians were gradually replaced by Silicon Valley investors and new exchanges such as Coinbase emerged. Early big investors included the Winklevoss twins, famous for their lawsuit against Facebook. They invested a big chunk of their winnings from the trial in Bitcoin. Another early adopter was Argentinian entrepreneur Wences Casares who is described as “ground zero” for Bitcoin in Silicon Valley. He was apparently instrumental in persuading Bill Gates, Reid Hoffman and many others to take an interest in it. Bitcoin became gradually more regulated and professionally managed, much against its initial libertarian inspiration. The real identity of Satoshi Nakamoto has never been revealed. He disappeared without a trace, leaving Bitcoin development in the hands of an open source team headed by Gavin Andresen. It’s estimated that Satoshi mined around one million Bitcoin in the early days, and would today have a wealth of tens of billions of dollars, but none of those initial Satoshi bitcoin have ever been transacted. Popper’s main thesis throughout the book is that Bitcoin is better seen as a store of value rather than a currency for exchange; thus the title “Digital Gold”. Later developments have proved him correct. It’s still rare to use Bitcoin to buy and sell goods and services. Its primary use is still speculation. Some say this makes it just a ponzi scheme, but if that’s true then, as Popper points out, gold too is just a 6000 year ponzi scheme. Value is merely a human cultural concept, it makes no difference if you can’t actually use the thing to dig a hole or light a fire.

Popper writes very well, and the book easily flowed by 50 pages or more at a time. There’s very little technical discussion of how Bitcoin works. I guess, if one is interested, there are plenty of other places that explain the details. This book is all about the very human personalities and drama that surrounded the technology. It’s almost mythical with the legendary vanishing Satoshi, and crime and contract killings around Silk Road. Even now it’s treated with great suspicion by many people and still has a whiff of criminality around it. The real genius is that it’s survived for over 16 years and continues to thrive. Indeed the core blockchain technology is being deployed in ever more applications. I still regret not buying a few Bitcoin back in the early 2010s when I first became aware of it, but at least it now indirectly provides me with employment.