## Metadata - Author: [[Paul Vigna , Michael J. Casey ]] - Full Title: The Age of Cryptocurrency - Category: #books ## Highlights - In effect, the Medici created a high-powered system of money creation—money being not a physical currency but a system for organizing, expanding, and sharing society’s debts and payments. ([Location 86](https://readwise.io/to_kindle?action=open&asin=B00L73JQ18&location=86)) - Enter cryptocurrency—the category to which bitcoin belongs. The simple genius of this technology is that it cuts away the middleman yet maintains an infrastructure that allows strangers to deal with each other. It does this by taking the all-important role of ledger-keeping away from centralized financial institutions and handing it to a network of autonomous computers, creating a decentralized system of trust that operates outside the control of any one institution. At their core, cryptocurrencies are built around the principle of a universal, inviolable ledger, one that is made fully public and is constantly being verified by these high-powered computers, each essentially acting independently of the others. ([Location 100](https://readwise.io/to_kindle?action=open&asin=B00L73JQ18&location=100)) - “If you think about what a modern economy is all about, it basically involves ever more exchange,” he told us. “And exchange, unless it can be literally simultaneous, always has real issues of trust. So, what the breakthrough in communications and computer science represented in bitcoin does is to support deeper exchange at lower price. ([Location 146](https://readwise.io/to_kindle?action=open&asin=B00L73JQ18&location=146)) - Now, here’s what gets techies, economists, and futurists most excited about bitcoin the technology. They see its open-source protocol as a foundation on which to develop new tools for doing commerce and for managing exchanges. You can think of it as an operating system. (Because it’s based on open-source software, we’d use the analogy of Linux for PCs or Google’s Android for smartphones rather than Microsoft’s Windows or Apple’s iOS.) The difference is that bitcoin’s operating system is not providing instructions to a single computer on how to run itself but to a network of computers on how to interact with each other. Its core features are its decentralized model of “trustless” proof and an automatically generated database that contains every transaction ever completed, is made available to everyone in real time, and can never be tampered with. ([Location 172](https://readwise.io/to_kindle?action=open&asin=B00L73JQ18&location=172)) - You need some kind of model of trust to run a monetary system. Bitcoin seeks to address this challenge by offering users a system of trust based not on human beings but on the inviolable laws of mathematics. Its own trust challenge lies in the fact that not many people are filled with confidence by the overall image of bitcoin—its sense of insecurity, its volatility. To many, too, math is kind of scary, as is the notion that computers, rather than human beings, are running things—though applying such concerns to bitcoin alone would betray an ignorance of how computerized our fiat-currency-based financial markets have become. ([Location 377](https://readwise.io/to_kindle?action=open&asin=B00L73JQ18&location=377)) - “The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve.” ([Location 1117](https://readwise.io/to_kindle?action=open&asin=B00L73JQ18&location=1117)) - For all the technical and legal wizardry employed by Wall Street’s denizens, for all the financial innovation practiced by the Street’s bankers, trust was the most important element of capital markets—trust that counterparties were good for the money they pledged; trust that market prices really did reflect all available information at the time; trust that if an asset was represented on the balance sheet as being worth X amount of dollars, it actually was worth X amount of dollars. The collapse of Lehman and AIG shattered all that. ([Location 1132](https://readwise.io/to_kindle?action=open&asin=B00L73JQ18&location=1132))