Everything about digital currency Bitcoin, from its futuristic name to its association with the ‘Silk Road’ online black market, is like something out of a thriller. The value of a single bitcoin soared from just a few cents in 2011 to a peak of $1,242 near the end of last year. It’s slipped since, leading some critics to dismiss it as a modern-day tulip mania.
But in Bitcoin: The Future of Money?, regular MoneyWeek contributor Dominic Frisby argues that bitcoins and other ‘cryptocurrencies’ could revolutionise everything from the banking system to the modern state.
The book is aimed firmly at non-specialists. Frisby explains just what Bitcoin is, how it works, and a bit about its history. He meets the hobbyists, programmers and investors driving the project forward. He reveals his theories on the identity of “Satoshi Nakamoto”, the elusive and (so far) anonymous mastermind behind Bitcoin.
And he looks at the long-term implications of digital currencies – how they could undermine government control in the developed world and help the emerging world create a more efficient banking system.
As you would expect from a professional comedian, Frisby is an engaging and witty writer. He clearly has a good understanding of the technology involved, but keeps the jargon to a minimum, even in the section dealing with the hunt for Satoshi.
And while he’s extremely enthusiastic, almost evangelical, about the potential for digital currencies, his arguments come across as reasoned. Indeed, he deliberately avoids the hype that makes most technology writers sound like double-glazing salesmen.
Of course, his positivity about Bitcoin’s social and economic outcomes does not always convince. Other than an account of buying drugs with bitcoins, Frisby doesn’t really address concerns about enabling criminal behaviour.
Those who believe we need a strong state to provide public services, such as health and education, may not be thrilled by his prediction that Bitcoin will rewind the clock to the Victorian era. And a cynic could argue that if Bitcoin does threaten governments, they will find a way to ban or regulate it.
We’ll have to wait until the technology has matured to get a better idea of how Frisby’s forecasts will pan out. However, he is to be congratulated for producing an extremely readable guide to a field that might just have radical implications for our financial system.
Bitcoin: The Future of Money? by Dominic Frisby. Published by Unbound (£8.99, unbound.co.uk).