Recently, I came across crypto-currencies in three ways. First, I read Scott Sumner’s blog post about a crypto-currency stabilized in terms of NGDP. Second, I watched an interview with Ethereum creator Vitalik Buterin shared by Tyler Cowen. Third, a friend of mine asked me what I know about Bitcoin.
I had a bit of an answer but it made me realize I should probably brush up on my knowledge of Bitcoin. I browsed the Wikipedia page for Bitcoin and then moved over to Ethereum. I had so many questions. What is Bitcoin ‘mining’? How are blockchain transactions verified? What is in the blockchain? What is the difference between Bitcoin and Bitcoin Cash? What are the pros and cons of Proof of Work vs Proof of Stake? How scalable are these technologies?
Many of these questions have stumped me before. I was on vacation last week so I had the time to dive into each area, including reading the original Satoshi whitepaper twice. I still have so, so much to learn but I finally feel I have a decent grasp on what these tools are and why they are so exciting. I also have a better handle on what I think are the realistic limitations and criticisms of them.
On one hand, I think the “buy and HODL” mentality is foolish. On the other, I think there is so much value to be unleashed that it would make sense for these assets to be a smart long-term bet. Regardless, I’m not really interested in crypto-currencies from an investing standpoint. I have never been able to get involved (even if so far, very lightly) in such a cutting-edge technology. Anyone who has the skills can contribute to the Bitcoin or Ethereum code.
I have not been so excited about a learning project in a long time.