Book Review 2024-01 'The Promise of BITCOIN'

Book Author: Bobby C. Lee

I have been a Bitcoin skeptic ever since I first learned about it. I like the promise that the underlying technology of Blockchain. At Zensar, we have done several innovations around blockchain, including a recent one for a US client where we demonstrated BNPL Merchant settlement automation using Blockchain. In one of my recent papers on Crypto currencies, we had also advocated financial services institutions to explore offering Crypto related facilitation services mainly as a fee revenue stream. However, Bitcoin specifically was something where I had personally not ventured as an investment asset. One of the key reasons being the strong reservations against it by RBI (the central bank of India). On a lighter note - Cyrpto isn't illegal in India but is it legal :)?

At the Money 20-20 event in Las Vegas in October 2023, I got a chance to listen to some Bitcoin proponents and also meet Bobby C. Lee who was generously gifting his book and a cold storage wallet to all delegates. In Jan 2024, I finally got around to reading his book and wrapped it last night. Am I a Bitcoin convert, definitely not but I am certainly willing to research more and potentially invest in it as an alternate Investment asset (very small percentage of my portfolio). Here are my key takeaways from the book:

1. The most obvious one - Satoshi Nakamoto (if he is for a real) is pure genius. Hats Off!

2. The book is really good in helping one understand the core concepts around Bitcoin - the genesis, the finite 21 million bitcoins, the security, mining,?halving event every 4 years, entire mining completion by 2140, wallets for secure storage, and exchanges for transactions.

3. The author points out the challenges with the current Fiat currency-based system governed and controlled by (central) banks and makes a rationale argument for bitcoin as the alternate. He views Bitcoin as digital equivalent of gold and can be considered a store of value. It has finite availability, decentralized nature and permissionless set up and a very wide and distributed global base of users/owners, making it a candidate for a global instrument of exchange.

4. Bitcoins ETF helps with wider acceptance, but the real acceptance will only come with 2 possible changes - clear regulations across governments but most importantly - when central banks start pegging their respective currencies against Bitcoin and not US Dollar and start having Bitcoins reserves akin to Gold & US Dollars.

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A few questions/concerns that come to my mind and need further exploration (maybe the LinkedIn community can share pointers):

1. Bitcoin cannot work in offline mode, and so can it ever replace real money?

2. What happens after 2140 when all bitcoin has been mined? How do the miners make money and stay put? Will they start charging exorbitant transaction fees to survive or else who will validate the transactions and ownership?

3. Bitcoin storage is complex and should you accidentally forget/misplace your keys, it is lost. Bitcoins that get lost are lost forever. This doesn't bode well for any asset class!

4. Bitcoin even with decentralization is still for the Tech savvy and requires digital infrastructure and so it cannot be the solution for Financial Inclusion despite author's attempt to equate it with the same.

5. Global warming threat is real and Bitcoin Proof of Work approach is power hungry. Can Bitcoin embrace an Ethereum like Proof of Stake approach? What will that change entail? Else what is the Bitcoin cost to environment?

6. What happens if some alternate crypto currency comes with better features but similar/better decentralized, permissionless promise. Bitcoins evangelists claim of always increasing value is under threat.

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Bitcoin's rise has been fascinating! It continues to impress and confound in equal measures, but it has stood the test of time and continues to rise in value and acceptance.?? Thanks to the authors effort, I would certainly explore dipping my toes into the bitcoin world both in terms of investment, also to learn more and there's a whole lot to learn!

Happy Reading!