Digital Gold by Nathaniel Popper

I know I’m a bit late to the game on cryptocurrency and the blockchain. About a month ago, I decided I wanted to get a better understanding of this trillion-dollar market. The result was a mixture of confusion and amazement. I had kept an eye on Bitcoin and Ethereum over the past few years but even with some background knowledge, the ecosystem struck me as incoherent. Faced with that fact, I made the decision to go back to the beginning. This book was my way of doing that.

Popper does a comprehensive job of pulling all the pieces together into a neat package. And since that’s what I was looking for, I’m satisfied with this book and the insights it provided. Popper was able to interview almost everyone that was integral to the rise of crypto. Private communications and first-hand accounts are common in Digital Gold and it’s all the better for it. Based on the reviews I read online, it seems that this book offers the most complete picture of Bitcoin and the new age it ushered in. Of course, given that the story of Bitcoin isn’t over, it ends on a less than final note. But that’s to be expected.

Popper’s writing is a bit dry for my taste. Not to say that it’s bad, just that it was at times unexciting even though it was in the context of perhaps the most important financial revolution in recent memory. Popper is, to be fair, a journalist first. That shows quite clearly in this book. With all that said, I don’t envy someone that has to put the pieces together of the sprawling story that is the beginning of cryptocurrency. It’s far from the worst writing I’ve read and I do have to give kudos to Popper for not using a purely journalistic tone in the book. The small moments where his own opinion comes out are unexpected but welcomed. After all, it’s not plausible for someone to not have an opinion on these things after spending so much time with the people at the center of it all.

The insights I gained by way of this book can be summarized easily:

• Bitcoin always has been and probably always will be a purely speculative investment.
• Bitcoin is a horrible store of value and no reasonable person should store any more wealth in it than they are willing to lose.
• The only practical benefit that I can see of Bitcoin is for transferring money across borders when it is expensive or difficult to do so via traditionally methods.
• The underlying technology behind Bitcoin - the blockchain - is an incredible achievement that has innumerable applications for not only finance, but most industries.

You can probably replace Bitcoin with most other coins in the points above and the result will be the same.

To the people that have become millionaires and billionaires from crypto investments, I salute you. I’d be lying if I said I’m not envious of the people that caught Bitcoin in its early days and were able to turn a few thousand dollars into millions. But that game is over now. The market has matured and the two ways to make real money in crypto today are fraud or arbitrage.

For fraud, look no further than stablecoins like Tether and USD Coin. More on this to come but ask yourself this simple question: how can we trust a few corporations to sit on billions of dollars and not do something stupid with it?

For arbitrage, see products like Santiment (https://santiment.net/). An interesting idea and one I’d like to explore myself.