@ -16,23 +16,19 @@ More than all of these parts, bitcoin is a digital economy platform, just like t
=== History of bitcoin
==== A brief history of money
//// Would the audience for this book need an introduction to money? I think we can leave most of this out or incorporate it into a briefer description. -AM ////
Money is a means of transferring or storing wealth, at its most basic. It exists in many abstract forms, least abstract (food) to highly abstract (personal cheque). Money has existed for thousands of years. The earliest form of money, recorded as an abstract account of value in written form, is heads of cattle. This is also the origin of the word "capital". Of course, a cow is not abstract, you can eat it. Very early in recorded history we see the emergence of money as an abstract token that represents some other value. Various cultures have used shells, coconuts, beans, salt, spices, feathers etc. These abstract forms of money may hold no inherent value but act only as a representation of value. Abstract forms of money are usually:
.A brief history of money
****
Money is a means of transferring or storing wealth. It exists in many abstract forms, least abstract (food) to highly abstract (personal cheque). Over time, money has become increasingly abstract.
Most forms of money fit some of the following criteria:
* Lightweight and portable
* Hard to counterfeight
* Scarce in the local environment (doesn't grow on trees)
* Fungible (each unit is indistinguishable and interchangeable with another, a penny is a penny)
((("precious metals")))
Precious metals have been the predominant currency for thousands of years across the world, usually stamped into coins. Modern paper money started as representative of precious metal deposits, but is now representative of treasury debt issued by the central governments. National currencies are issued by government "fiat" and are commonly referred to as _fiat currencies_ by economists. Most of what we consider common features of our monetary system are really only recent inventions, of the late 20th century. While precious metals are excellent for storing value they are easier to counterfeit (alloys) and not lightweight or portable in large quantities.
Digital money appeals to many people because it tends to combine some of the characteristics of precious metals (fungible, scarce, store of value) with the characteristics of paper money instruments (lightweight, hard to copy). In the past, currencies represented a compromise of sorts between the various desired characteristics of money. Bitcoin appeals to many as it is seen to be "no compromise" money.
////The comparison between digital money and precious metals/paper money is interesting but I think this could function well as a text box/sidebar element rather than its own section. -AM ////
****
=== History of Cryptographic-Currencies
((("crypto-currency")))
@ -54,13 +50,6 @@ The result of this deliberate decentralization is that bitcoin has removed two m
When a transaction occurs in a traditional financial payment network there are at least three parties to the transaction: the buyer, seller, and counteparty clearing house. This introduces a source of risk in the system - counterparty risk. Buyers and seller must not only trust each other, but also trust the central clearinghouse. With national currencies the central clearinghouse is the central bank and is therefore inextricably connected to the political process. Trust in the counterparty (central bank) is simply an extension of trust in the government and democratic process. Where digital currencies struggled to create the clearinghouse and imbue it with trust, bitcoin completely removes the need for counterparty trust by removing the counterparty.
* External Risks
All world currencies today are controlled by sovereign nation states. This control has significant political and economic benefits and is, of course, zealously protected. As a result, attempts to create competing and independent digital currencies, have quickly come under legal, or sometimes extra-legal, attack. Without a central organization, clearinghouse or controlling authority, bitcoin is not easy to attack. It is resilient to interference because control of the network and security of the currency is distributed as much as possible.
////Again, this is good info, but I don't see how it fits into the History of Cryptocurrencies. I might include this in as introductory material in a section on security. - AM////
=== Stories
It is easiest to experience bitcoin from the perspective of a few specific stories that we will explore in detail throughout the book.
@ -72,7 +61,6 @@ Each story represents a specific real use of bitcoin in different contexts.
Alice wants to buy a cup of coffee using bitcoin. She visits Bob's Cafe, a coffee shop that accepts bitcoin payments, as advertised by a sign declaring _"Bitcoin Accepted Here"_ in the window. At the counter, the prices may be listed in a local currency like Euros or Dollars. At the register, Bob would ring up a coffee, displaying
//// Is this a realistic example of how Bitcoin is used right now? Should you be qualifying this example? - AM ////
----
Total:
@ -86,11 +74,9 @@ Alice would use a smartphone to scan the barcode on display and send the payment
[TIP]
====
In the USA, it is customary to tip 20% for good service at coffee shops. Alice may choose to tip in dollars, or may add bitcoin.
Bitcoin can be used in a few pioneering coffee shops, as described above, but you might have to search for one.
Andreas M. Antonopoulos
11 years ago