Far more than a literary device, the chapter's opener of the 'truth being stranger than fiction' sets the stage perfectly for the dizzying historical menu of ways humans have attempted to represent money or exchange value. It was a fascinating hook and sneakily thrusts you into the rest of the chapter. If you want to slow down and dive into some history, there is a britannica.com link in the footnote to a longer read on the history of money.
Once you get through that first paragraph, the chapter not surprisingly goes into the history of Bitcoin, what gave rise to it, and some of the interesting early characters. Though the book is about Cardano, it's impossible to talk about any blockchain network without paying homage to Bitcoin.
As my goal for this read-along is not to regurgitate the book, I will highlight a couple of parts that stood out to me and leave the rest for you to share in the comments.
Store of value
Given the many national and global financial uncertainties I’ve lived through, crypto as a store of value was one of the first thing that stood out to me.The book defines store of value as “the property, whereby when you get money, it doesn’t fade, doesn’t evaporate into thin air, spoil or rot.”
Blockchain cryptocurrencies do not "rot" unless maybe if you count $hosky. The $hosky community likes to jest that their token is a shit coin so maybe think twice before using it as a store of value. While the chapter focused on fiat and blockchain cryptocurrencies’ physical and digital durability, it was a good reminder of crypto’s capacity to preserve purchasing power.
Let's compare a few different ways to preserve the buying power of 100,000 USD in 2013: Home, a traditional Savings Account, Stock Index funds, Bitcoin, and cash.
In 2023:
- If you just held your cash, it would have a buying power of 70,000.
- The homeowner will have a buying power of 150,000 (net +20%, accounting for inflation)
- Savings: 111,000 (net -9%)
- Index funds: 150,000 (net +20%)
- Bitcoin: 22,002,534 (net +22,000,000%)
Of course, there’s other ways to look at and experience this. If you bought Bitcoin at its high and now need fiat in hand, you could realize a loss. If you invested in another blockchain project that hit the skids, you could lose it all. And as history rolls between bull and bear markets, crypto is undeniably still among the more volatile stores of value. We wonder how this will look in another 10 years.
Blockchain Governance
The book suggests that Governance, when applied to blockchain, can be synonymous with sustainability. This stood out to me because both words by themselves have always been challenging to pin down. My understanding of the chapter’s loose definition of Blockchain Governance is having a mechanism for driving change and a way to fund the implementation of said changes.
“A blockchain needs to have a short-range microscope for near and present dangers, and a long-range telescope for technical challenges on the horizon.”
When blockchain governance is thought of this way, decisions about the gears, switches and gimbals of how you build a change management system optimistically seem straightforward and practical – and not especially polarizing or political. A quick stroll down any social media lane will quickly highlight that governance, so far, has been far from straightforward. The book made me consider that a less fraught governance culture could be within reach.
The chapter also discusses the value of Blockchain infrastructures and other use cases besides cryptocurrencies. If the Britannica article didn’t quite scratch your itch, the chapter also goes into the history Ethereum, Charles, and the founding history of Cardano, including key development milestones in Cardano.
What stood out to you? Please share in the comment section below!
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