Professional Documents
Culture Documents
When he made this reference, we all got it; the media got it. It
made it easier for everyone to understand it and to work with it.
With the promise of abundant richness of information online, we
put up with the squealing dog whistle that shrilled from our state-
of-the-art 14.4k modem. We put up with images that sluggishly
traced their way, one line at a time, onto the gargantuan off-white
concrete blocks we used to call computer monitors. We put up
with the basic content because we didnt know any better. It
was new, game-changing and, ultimately, life-changing.
The blockchain has the power to remove the need for trust.
With it, it has the power to reduce our reliance upon the traditional
custodians of trust - the financial institutions, the bankers, the
auditors and the lawyers. Being at the very epicentre of trust as
we know it today, they are facing change of tsunamic proportions
as the technology grows, develops and evolves, bringing with it
disruption that these traditionally very conservative segments of
our society have never had to face before.
green fields where the very foundations of the next paradigm shift
in business were being shaped; lush green fields that challenged
everything - technically, intellectually and even philosophically.
Lush, green fields that have the potential to impact and improve
peoples lives across the globe very positively. If you have an
open mind and your eyes are opened, this journey of discovery
will have the potential to impact and improve yours perhaps
irrevocably as, together, we go Down the Rabbit Hole.
Tim
Preface iii
How Best To Use This Book vii
For the Goldman Sachs Equity Research team, that day will
be viewed as a landmark. It was a landmark that recognised
something very powerful was truly happening. It was a landmark
that earmarked a new paradigm shift was about to erupt. It was a
landmark where a core technology had begun to evolve that had
the sheer, unbridled power to enable dramatic, transformative,
1
http://www.goldmansachs.com/our-thinking/pages/macroeconomic-insights-
folder/what-if-i-told-you/report.pdf
2 http://santanderinnoventures.com/wp-content/uploads/2015/06/The-Fintech-
2-0-Paper.pdf
Bitcoin itself first came onto the scene in January 2009. The
Global Financial Crisis (GFC) was in full flow; major banking
institutions had closed their doors; financial confidence was
dead, and recession was the de facto standard globally. With its
core principal of replacing trust using cryptography, Bitcoin had
slowly become a new digital currency that enabled transactions
to be conducted online without the need for a trusted third party
such as banks or credit card companies. Also, by its almost
anonymous nature, it meant that transactions could happen
between two individuals who would only be represented by their
public key address a string of alphanumeric characters that
represent a destination address for a Bitcoin payment. This sense
of anonymity was a fact that was quickly picked up by perhaps
the earliest, and most headline-grabbing, innovators, the criminal
fraternity.
3 The
sealed complaint: United States of America vs Ross William Ulbricht
dated 27th September 2013 Ste of New York.
were being lost left and right, and economies were slowly grinding
to a halt. The engines of major economies were showing signs
of seizing up as the flow of lubrication, in the form of inter-bank
finance, was drying up. Desperate times called for desperate
measures, and on 3 October 2008, the Emergency Economic
Stabilization Act of 2008 usually referred to as the bailout of
the US Financial System was effected into law in the US.
5 https://bitslog.wordpress.com/2013/04/17/the-well-deserved-fortune-of-
satoshi-nakamoto/
6
http://www.ourbabynamer.com/meaning-of-Satoshi.html
7 http://www.ancestry.com.au/
8 https://en.Bitcoin.it/wiki/Genesis_block
9
https://en.Bitcoin.it/wiki/Genesis_block
10 https://en.Bitcoin.it/wiki/Genesis_block
11 The
full Cypherpunk manifesto can be viewed at http://www.activism.net/
cypherpunk/manifesto.html
which was to ensure the privacy of its users. Through the use
of secured keys, third parties were prevented from accessing
personal information through online transactions. In many ways,
this technology was markedly ahead of its time, as e-commerce,
as we understand it today, was in its pre-natal stage. With limited
support from users at the time and only minimal support from
finance institutions, Digicash Inc. filed for Chapter 11 bankruptcy
in 1998. Various other attempts to create a digital currency have
followed in its path, but most used the existing infrastructure, the
payment rails, of the existing financial system.
I want to take you back into the darkest depths of time. I want
to take you back to the time when life was so much simpler; to
a time when technology did not rule our lives; to a time when
technology wasnt right at the very core of our day-to-day lives.
For me, that time was February 12th, 1995 at 2.16 in the afternoon.
It was a cathartic moment for me. It was the exact time at which
my eyes and my mind were opened to the unbridled power and
potential of the internet.
adoption was low, and it felt very niche and very geeky. However,
in early 2015, I re-visited that view when I started looking more
deeply beneath Bitcoins hood at the underlying technology
that drove it. It was there I had my deep feeling of dj vu.
Back in 1995, the first use case of the Internet was email. It
meant we could replace written letters with electronic ones. We
didnt need to worry about the underlying technology being
TCP/IP Transmission Control Protocol and Internet Protocol
we just sent an email, and the other person received it. It was
relatively easy but it solved so many problems for us. We could
communicate as quickly internationally as we could locally. It
saved us time, effort, and cash; no stamps, no envelopes. With
the blockchain, however, Bitcoin was the first proven use case.
13 http://Bitcoin.stackexchange.com/questions/2847/how-long-would-it-take-a-
large-computer-to-crack-a-private-key
to solve the puzzle, and whichever miner solves the puzzle first
is rewarded with a Bitcoin.
Introduction
Bitcoin was an amazing invention. The more I have written about
Bitcoin and more latterly the blockchain, the more I have been
impressed by the underlying strengths of the very foundations
that Bitcoin created. It has opened so many new possibilities that
have never been seen before. It is these possibilities that are
catching the imagination of so many people, including the media.
In this and the next chapte, we will consider the ten core
strengths and the ten core weaknesses of the blockchain.
Both are vital to understand, as they will provide you with an
Tim