Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money

Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money

A New York Times technology and business reporter charts the dramatic rise of Bitcoin and the fascinating personalities who are striving to create a new global money for the Internet age.Digital Gold is New York Times reporter Nathaniel Popper’s brilliant and engrossing history of Bitcoin, the landmark digital money and financial technology that has spawned a global social...

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Title:Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money
Author:Nathaniel Popper
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Edition Language:English

Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money Reviews

  • Gwern

    Popper delivers a whirlwind tour of almost all dramatis personae in the rise of Bitcoin over the past 5 years. He seems to have gotten access to and interviewed everyone, from the early coders to especially all the late-entering business and entrepreneur types and the incestuous Silicon Valley VC community. (He didn't get access to Ulbricht, for obvious reasons - even the NYT name can't open all doors - but the evidence filings make up for it.) Even I, someone who's watched the space in detail f

    Popper delivers a whirlwind tour of almost all dramatis personae in the rise of Bitcoin over the past 5 years. He seems to have gotten access to and interviewed everyone, from the early coders to especially all the late-entering business and entrepreneur types and the incestuous Silicon Valley VC community. (He didn't get access to Ulbricht, for obvious reasons - even the NYT name can't open all doors - but the evidence filings make up for it.) Even I, someone who's watched the space in detail for years and made my own minor contributions to documenting Bitcoin history, learned a lot. (Karpeles had a Japanese wife & son who now live in Canada? I had no idea!) From the Winklevii opening the kimono to settle all their beefs with Charlie Shrem for bungling BitInstant into bankruptcy & personally into prison to Martti and Gavin and other early coders giving Popper Satoshi emails, he covers everything. Even the endlessly complicated story of SR1 gets a decent treatment (though necessarily not as thorough as Ormsby's

    , and like it, somewhat outdated, and passing over the post-SR1 DNM history). As far as histories of Bitcoin up to 2014 go, I don't know of any better single source to consult right now, and the inside access means any future histories will have to look over it carefully as a primary source. (See also

    &

    .

    If the book succeeds in capturing what a wide breadth of characters have been involved in Bitcoin (and yet, there are so many more things to cover - the MtGox leak, the ASIC scams, the DNM exit scams and wars, the Chinese market manipulation, the Cambrian explosion of altcoins with attendant pump-and-dumps, Ethereum's attempt to e all things to all people, the blocksize schism...), it perhaps does not succeed at offering any sort of overall synthesis or in giving closure to all the individual stories, or at least including a summary of where everyone and everything stood where the book closed. The description of growth can feel like just a chaos of events, one after another. (It's also fairly weak on explaining the technical aspects - I have to wonder if the lay reader comes away really understanding why Proof-of-Work works or what the Bitcoin blockchain really is.)

    ---

    That said, as in any book touching on so many topics, there are some errors. Here are some corrections I noticed in material touching on particular interests of mine, the DNMs and Satoshi:

    'deeply versed'? It cited Dai only because Adam Back had told Satoshi to cite Dai. It also didn't cite any of Szabo's work, even though Finney had pointed that out on the mailing list before. Further, it did not compare or contrast Bitcoin in any meaningful way with all the previous work on digital currency like the whole universe of techniques and approaches based on Chaumian blinding. Altogether, it looks like the opposite of 'deeply'.

    Everyone assumed from the inclusion in the complaint that the email was his downfall, but D-Y's testimony during the trial yielded the surprise (one of many) that he had found the email only shortly before the arrest and that the subpoenas had not yet come back with any information. They did help snag baronsyntax, but the actual cause was the FBI finding the Iceland server (thanks, presumably, to Tarbell hacking it), which had a VPN IP hardwired and had a clearnet backup server in Pennsylvania, both of which led back to Ross in San Francisco.

    Nothing bizarre about it. As I've pointed out repeatedly since then, Szabo already in 2008 explained what the redating was about; he was re-running older posts:

    That's all.

    This is evidence

    Szabo being Satoshi! The prototype was a big piece of software with a ton of moving parts and low-level details, written in a low-productivity language, with a GUI, mockups for an online store and poker playing, and so on just in the first release; coding it up and debugging it to the point of a public release in just 8 months would be a pretty impressive feat all on its own, and worse, Satoshi says it took 'a year and a half' in November 2008, so he probably started around May 2007.

    Skye Grey's claims

    ; stylometrics doesn't work like that, and when people

    , Szabo does not come out on top. (While not named in the article, I am told by an involved journalist that Szabo's writings were included but were a poorer match than Finney.)

    This is too high and was a mistake in that version of the paper. The percentage was biased upwards by a substantial amount because when you are scraping a site like SR1, you will only see a small fraction of the negative reviews from an exit scammer; if an exit scammer rips off 1000 people, he will be banned after a few dozen negative reviews, and then won't appear in your data at all. So as far as your analysis can tell, a 5-star seller just vanished overnight. For example, Tony76 could probably account for 1%+ of sales all on his own, yet his exit scam doesn't appear in the Christin data because they had scraping problems at the time and by the time they got another copy of SR1, that account was banned. Another issue is early finalization; to FE, you have to leave a review, which of course will be 5-stars, and then when you accept you've been scammed, you will probably never go back to update it to 1 star. So one of the changes made to the preprint version of Christin's paper was to address these issues, and the final version should be used instead:

    .

    (Also as far as this part of the book goes, it would be better to use Ross's own sales figures from the court evidence.)

    I'm a little annoyed to see someone else discovered this, but in any case, this is only partially correct. Freenode banned open proxies, Bitcoin only gained proxy support in the later version 0.2 in December 2009 (before, it couldn't've worked using Tor because it operated by running '/WHO' on other Bitcoin nodes and connecting straight to their IP), the Bitcoin prototype was designed to 'pay to IP', and in any case, the

    do not list; of the 3 nicks in the Bitcoin IRC channel, 1 was obviously Finney's client, Satoshi was probably the Tor-cloaked user 'x93428606' in the log, and he was also almost certainly the final nick, the naked Bitcoin node 68.x, which resolves to a residential address in San Diego before 2009. (I looked into the one person I was able to link to that address, but unfortunately neither he nor any of his relatives or friends on Facebook look remotely like possible Satoshi candidates, so for non-state actors, that is a dead end.) Hence, I believe Satoshi was indeed in California that day and this was a rare OPSEC failure by him in exposing his real IP. Also, as far as I am aware, Tor doesn't, can't, and shouldn't 'route users to nodes in the same geographic area', as that would require exit nodes to know where the user is and defeating the point.

    (Full disclosure: Popper offered a free copy of

    to me pre-publication to review, but I wound up not accepting because he was offering a physical book rather than an ebook. I also was a paid fact-checker on an earlier rival Bitcoin book, Dominic Frisby's

    .)

  • Katie/Doing Dewey

    If you’re like me before reading this book, you’ve heard of the digital money called Bitcoin only when it’s gotten negative press. Honestly, after hearing about many people losing the money they’d invested in Bitcoins, I thought this experiment was dead. I was still fascinated to learn about it though and especially about the people behind Bitcoin. As the subtitle indicates, this group included a wide variety of people, from millionaires to social revolutionaries, from hackers to drug dealers. L

    If you’re like me before reading this book, you’ve heard of the digital money called Bitcoin only when it’s gotten negative press. Honestly, after hearing about many people losing the money they’d invested in Bitcoins, I thought this experiment was dead. I was still fascinated to learn about it though and especially about the people behind Bitcoin. As the subtitle indicates, this group included a wide variety of people, from millionaires to social revolutionaries, from hackers to drug dealers. Like most narrative nonfiction I love, it was the way the author told these people’s stories that made this a great read for me.

    The author had interviewed many of the people involved in the creation of Bitcoin. This meant that he was able to share direct quotes and snippets of their personal communication. I felt that he also presented the many different views on Bitcoin and its possible uses in an unbiased way. I particularly loved the variety of people involved in Bitcoin. Learning about them meant learning about many different subcultures and careers that I previously knew nothing about. I was also impressed by the way the author explained the technology behind Bitcoin. Within the text, he presented the fewest technical details necessary for the story to make sense. These bits were all explained very clearly and referred readers to the appendix for more, equally well explained, technical information.

    For those of you who are curious, it turns out that not only is Bitcoin alive and well, Bitcoins are currently accepted by a number of retailers. The Bitcoin currency has two main advantages: Bitcoins can be transferred anonymously and they don’t need to go through banks, making even international money transfers fast and free. After reading Digital Gold, I see a few downsides to the currency as well. First, like every other currency, the wealthy are likely to gain wealth the fastest. Many wealthy individuals were the first investors in Bitcoin, concentrating the wealth in a few hands, and today, special hardware is required to earn new bitcoins. Secondly, the mining (computational work done to create new Bitcoins) has been made artificially more difficult to limit the rate at which Bitcoins are created. This means a lot of electricity and computing power that could be used to do useful scientific work are being wasted. Personally, I don’t want to support that and will probably never invest in Bitcoins, but whatever your stance on the currency, it’s origin story is an interesting one.

  • Mal Warwick

    If you’ve ever thought much about money, you may have wondered what gives it its value, especially if you’re aware that Richard Nixon took the dollar off the Gold Standard more than forty years ago. And if you’re at all involved in the world of finance and investment, you know perfectly well that very little money is tangible in any way: it’s almost all electrons, whizzing around the Internet at unspeakable speeds — and the ways in which we store and transfer money (bank accounts, credit and deb

    If you’ve ever thought much about money, you may have wondered what gives it its value, especially if you’re aware that Richard Nixon took the dollar off the Gold Standard more than forty years ago. And if you’re at all involved in the world of finance and investment, you know perfectly well that very little money is tangible in any way: it’s almost all electrons, whizzing around the Internet at unspeakable speeds — and the ways in which we store and transfer money (bank accounts, credit and debit cards, checks, cash) are all notoriously vulnerable to loss, theft, and misappropriation. Wouldn’t it stand to reason in this age of the Internet that there should be a better, faster, more secure, and more reliable way to transact business?

    That’s the thinking that has led many venturesome individuals to create alternative currencies. Traditionally — and unsurprisingly — most of these alternative currencies have been paper-based. (Yes, there are dozens of them.) In recent times, though, especially since the advent of the Internet, innovative thinkers have been programming computers to create entirely new forms of money that are completely divorced from material reality. After all, there are just three fundamental functions that money must perform: “providing a medium of exchange, a unit for measuring the cost of goods, and an asset where value can be stored.” And none of these requires that money must be something you can hold in your hands.

    Enter Bitcoin, the best-known of a long line of software-based alternative currencies. Introduced in 2009 by someone using the name Satoshi Nakamoto (probably a pseudonym), Bitcoin has attracted more media attention than all the other alternative approaches combined. The early adopters of Bitcoins were self-styled libertarians who saw the new currency as a way to free society from the grip of government everywhere. However, Bitcoins didn’t rise to the attention of many others until one early adopter — an anarchist, really, despite what he might have called himself — set up a website for drug dealers and arms traffickers called Silk Road. The enormous traffic in Bitcoins created by Silk Road raised the level of activity manyfold and helped Bitcoin gain wider acceptance.

    Later, more mainstream investors and entrepreneurs became involved in the Bitcoin phenomenon, and government agencies inevitably took notice. “The unmistakable irony of these wild days,” writes Nathaniel Popper in Digital Gold, “was that a technology that had been designed, in no small part, to circumvent government power was now becoming largely driven by and dependent on the attitudes of government officials.” Not just in the United States, either. The Chinese government cast an even more jaundiced eye on Bitcoins than the U.S. government.

    As the word about Bitcoin spread through the financial marketplace, word leaked out that JPMorgan “began secretly working with the other major banks in the country . . . on a bold experimental effort to create [a system based on the technology behind Bitcoin] that would be jointly run by the computers of the largest banks and serve as the backbone for a new, instant payment system that might replace Visa, MasterCard, and wire transfers.” In other words, what began as a libertarian and anarchist effort to seize power from the hands of the Federal Reserve Bank, Wall Street, and the other arbiters of our financial lives might end up granting them even more power!

    “[T]he system was set up so that, like gold,” Popper explains, “Bitcoins would always be scarce — only 21 million of them would ever be released — and hard to counterfeit. . . With a hard cap on the number of Bitcoins, users could reasonably believe that Bitcoins would become harder to get over time and thus would go up in value.” In fact, though Bitcoins were worthless when first created, the going price at this writing is now $235, having topped out last year at nearly $1,200. The price of Bitcoins is volatile, to say the least.

    Just in case you’re thinking of taking a flyer and filling your piggy bank with Bitcoins, you might ponder its vulnerability. “Bitcoin itself is always one big hack away from total failure,” as Popper writes.On several occasions, hackers have raised questions about the security of the currency: the holes they uncovered have been plugged, but it’s anyone’s guess whether there’s more to be discovered.

    Digital Gold represents a thorough job of research. Its picture of the many strange characters who have played seminal roles in the development of Bitcoin is colorful — worth reading for its entertainment value alone. If you’re interested in finance and money, you’ll enjoy this book.

  • Maru Kun

    A great book for understanding the history of bitcoin, technical aspects and the history of its development.

    It helps one appreciate why the currency is so popular in countries with experience of populist politicians undermining the stability of a country's currency with their insane political or economic ideas, such as Argentina, Ukraine and the UK (from March 2019).

    However, as far as I recall, even this book didn't talk too much about what might well be an important limiting factor - electricit

    A great book for understanding the history of bitcoin, technical aspects and the history of its development.

    It helps one appreciate why the currency is so popular in countries with experience of populist politicians undermining the stability of a country's currency with their insane political or economic ideas, such as Argentina, Ukraine and the UK (from March 2019).

    However, as far as I recall, even this book didn't talk too much about what might well be an important limiting factor - electricity consumption of the blockchain technology:

    New research reveals that cryptocurrencies require far more electricity per-dollar than it takes to mine most real metals. Includes a

    .

    Also, a video on the block chain data structure and bitcoin from what is probably the best maths channel on YouTube 3Blue1Brown:

  • BlackOxford

    If there is only time to read one book about Bitcoin, this should be the one.

    Bitcoin is not just a practical technology, it is also a philosophy and an economic ideology. Popper gives a reasonable nod to all three (Arguably it is the last which has proven essential in its initial successes but which has now run out of steam). But like all philosophies it has a problem.

    As a self contained system Bitcoin is a masterwork of self-verifying logic. This logic is an ingenious

    If there is only time to read one book about Bitcoin, this should be the one.

    Bitcoin is not just a practical technology, it is also a philosophy and an economic ideology. Popper gives a reasonable nod to all three (Arguably it is the last which has proven essential in its initial successes but which has now run out of steam). But like all philosophies it has a problem.

    As a self contained system Bitcoin is a masterwork of self-verifying logic. This logic is an ingenious combination of Kantian analysis (the blockchain is a giant double-entry ledger which automatically identifies errors) and Hegelian dialectics (any blockchain can only be integrated into the system through competitive trial and error toward the solution of a mathematical problem) and Lockean consensus (if there is disagreement about who wins in block competition, the consensus within the network rules). There is even a nod to Leibnizian monadology (the encryption of the blockchain allows an extreme compression of the entire ledger so that it an be stored simultaneously throughout the network of Bitcoin users). This combination of four philosophical solutions to the problem of integrity makes Bitcoin itself (but not necessarily its software) tamper-proof.

    Economically this means perfect efficiency: zero fraud, virtually no transaction cost, and almost instantaneous execution of transactions (well, ten minutes). Ideologically, libertarians see this as a way to become independent of central banks which may be tempted either to debase the currency (the maximum Bitcoin supply is 21 million, an amount which will be approached only asymptotically at a predictable rate) or to control where and when it can be used (there is no effective way to control cross-border flows of Bitcoin since they never leave the ledger).

    The problem arises not within the system but in the relation of the system to any other monetary system. This connection inevitably involves brokers and dealers and exchanges and traders which are not covered, as it were, by the Bitcoin guarantee of integrity or insulation from outside authority.

    So to the extent Bitcoin is accepted as a convention it is indeed significant. But getting into it or out of it is fraught with the same dangers, inefficiencies, and regulatory arbitrariness as any other currency. And as long as governments don't accept Bitcoin in payment of taxes (which makes fiat currency currency), Bitcoin is a monetary sideshow mostly of interest to the underworld (not necessarily criminal) which is forced to hack the currently dominant monetary system to survive. This alone is likely to be sufficient to ensure Bitcoin a place in economic and social history.

  • BlackOxford

    If there is only time to read one book about Bitcoin, this should be the one.

    Bitcoin is not just a practical technology, it is also a philosophy and an economic ideology. Popper gives a reasonable nod to all three (Arguably it is the last which has proven essential in its initial successes but which has now run out of steam). But like all philosophies it has a problem.

    As a self contained system Bitcoin is a masterwork of self-verifying logic. This logic is an ingenious

    If there is only time to read one book about Bitcoin, this should be the one.

    Bitcoin is not just a practical technology, it is also a philosophy and an economic ideology. Popper gives a reasonable nod to all three (Arguably it is the last which has proven essential in its initial successes but which has now run out of steam). But like all philosophies it has a problem.

    As a self contained system Bitcoin is a masterwork of self-verifying logic. This logic is an ingenious combination of Kantian analysis (the blockchain is a giant double-entry ledger which automatically identifies errors) and Hegelian dialectics (any blockchain can only be integrated into the system through competitive trial and error toward the solution of a mathematical problem) and Lockean consensus (if there is disagreement about who wins in block competition, the consensus within the network rules). There is even a nod to Leibnizian monadology (the encryption of the blockchain allows an extreme compression of the entire ledger so that it an be stored simultaneously throughout the network of Bitcoin users). This combination of four philosophical solutions to the problem of integrity makes Bitcoin itself (but not necessarily its software) tamper-proof.

    Economically this means perfect efficiency: zero fraud, virtually no transaction cost, and almost instantaneous execution of transactions (well, ten minutes). Ideologically, libertarians see this as a way to become independent of central banks which may be tempted either to debase the currency (the maximum Bitcoin supply is 21 million, an amount which will be approached only asymptotically at a predictable rate) or to control where and when it can be used (there is no effective way to control cross-border flows of Bitcoin since they never leave the ledger).

    The problem arises not within the system but in the relation of the system to any other monetary system. This connection inevitably involves brokers and dealers and exchanges and traders which are not covered, as it were, by the Bitcoin guarantee of integrity or insulation from outside authority.

    So to the extent Bitcoin is accepted as a convention it is indeed significant. But getting into it or out of it is fraught with the same dangers, inefficiencies, and regulatory arbitrariness as any other currency. And as long as governments don't accept Bitcoin in payment of taxes (which makes fiat currency currency), Bitcoin is a monetary sideshow mostly of interest to the underworld (not necessarily criminal) which is forced to hack the currently dominant monetary system to survive. This alone is likely to be sufficient to ensure Bitcoin a place in economic and social history.

    Postscript: After posting this review, this one day conference at MIT was announced. The technology is clearly advancing way beyond Bitcoin.

  • Atila Iamarino

    Uma ótima introdução à história da bitcoin. Popper dá uma timeline bem detalhada de 2008 a 2014, recapitulando um pouco das tentativas anteriores de criação de moedas, passando pelo artigo de Satoshi, os primeiros usuários de bitcoin e todo o processo de adoção dela.

    Em especial, gostei muito da descrição detalhada do livro para a criação e o declínio do Mt. Gox e do Silk Road. O ponto chato é que o livro termina em 2014, quando ainda se tinha uma visão mais parcial da falência do Mt. Gox, e fic

    Uma ótima introdução à história da bitcoin. Popper dá uma timeline bem detalhada de 2008 a 2014, recapitulando um pouco das tentativas anteriores de criação de moedas, passando pelo artigo de Satoshi, os primeiros usuários de bitcoin e todo o processo de adoção dela.

    Em especial, gostei muito da descrição detalhada do livro para a criação e o declínio do Mt. Gox e do Silk Road. O ponto chato é que o livro termina em 2014, quando ainda se tinha uma visão mais parcial da falência do Mt. Gox, e fica com uma visão de mais incompetência do que má conduta – do que mais parece má conduta atualmente.

    Não tem como um livro sobre algo tão dinâmico não ficar desatualizado em bem pouco tempo, mas esse foco no começo das criptomoedas dá o maior espaço para algo que não muda tanto e continua interessante. O maior prejuízo do que fica de fora e é cada vez mais interessante saber são as altcoins, mas o livro que estou lendo em seguida

    cobre isso muito bem.

  • Denis Vasilev

    Отличная книга по истории биткойна. Вызывает сомнения излишнее внимание к стартапу Xapo и Венцесу.

  • TS Chan

    I picked up this book after seeking recommendations on what to read to gain a better understanding of bitcoin and how it works. I didn't expect it to be a blow-by-blow account and history on the invention of bitcoin by the still mysterious Satoshi Nakamoto and the numerous personalities (and quite a few oddballs amongst them) behind the success story of cryptocurrency. To be fair, even though the book did not meet my expectations of what I am looking for, this is a very thorough and well-researc

    I picked up this book after seeking recommendations on what to read to gain a better understanding of bitcoin and how it works. I didn't expect it to be a blow-by-blow account and history on the invention of bitcoin by the still mysterious Satoshi Nakamoto and the numerous personalities (and quite a few oddballs amongst them) behind the success story of cryptocurrency. To be fair, even though the book did not meet my expectations of what I am looking for, this is a very thorough and well-researched book on the rise of bitcoin, which can be pretty entertaining at times.

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