We are at the threshold of a new area of the internet that promises to transform the way we engage financially and take the power of data and privacy back from big corporations and give it to the individual through decentralization. This is sometimes called Web 3.0. While Web 1.0 transformed information sharing and commerce and brought us giants like Google and Amazon and Web 2.0 unlocked the social potential of the internet and created Facebook, Twitter, and Snapchat, exactly what will come of Web 3.0 remains to be seen.

It is indisputable that the seed of Web 3.0 is the technological, social, and economic  innovations that came together in Bitcoin and the blockchain technology it created. But where the first web iterations were relatively straightforward to understand, the inner workings of Web 3.0 remain more opaque and shrouded in mystique.

Current voices on Bitcoin and the blockchain revolution fall squarely into one of two camps; either technological "experts" who are all also invariably personally invested in the success of Bitcoin and the blockchain or "critics" who are typically deeply invested in the status quo and the failure of Bitcoin and blockchain. It seems like there is a need for a middle ground to provide the public with a more unbiased view of this important technology.

This book therefore aims to unveil some of the mystique and show how to unlock the potential of the blockchain revolution in a manner that does not dismiss out of hand even radical and outlandish ideas nor jumps on the bandwagon of hailing Bitcoin and the blockchain as the answer to all problems.

What you'll learn

• The nature of blockchain technology, how it works and what it does.
• The history of the technological developments that lead to the blockchain.
• A historical analysis of who the likely creator of Bitcoin is.
• How bitcoin and cryptocurrencies fit in the history of human exchange.
• The nature and history of electronic money.
• How blockchain technology solves problems in a novel way and what it cannot be used for.
• What web 3.0 could be.

Who This Book Is For

This book is for a general non-technical audience trying to understand the difficult and complex nature of blockchain and cryptocurrencies and the contours of the Web 3.0 revolution.

Introduction

Part 1 - Genealogy of bitcoin technology

The technological developments leading to bitcoin. This part is a technological history that reviews the technological developments that Bitcoin builds on. There are a few strands that developed more or less independently that combine into Bitcoin. Once they are explained it is possible to give a deeper explanation of how Bitcoin works. This understanding will inform the remaining parts of the book.

 

Chapter 1: Cryptography

The purpose of cryptography is to keep information private by preserving confidentiality, integrity and access to it.

Public private key encryption

Hashing

Zero knowledge proof

 

Chapter 2: Virtual Money

In this chapter we will go into the history of electronic or virtual money before bitcoin.

Digicash

E gold

Bitgold

b Money

Hash cash

 

Chapter 3: Peer-to-peer technology

The internet of today is a centralized type of computing working through a number of web servers that function in a hierarchy.

Properties of p2p networks

Discovering a peer

Secure sharing

File Sharing from Napster to BitTorrent

 

Chapter 4: Proof of work

An inherent problem with the networked world is that accessing and processing information is essentially free, which makes certain types of disruptive behavior easy, which we see in denial of service attacks, spam mail and robocalling. This brings new problems that did not exist when it cost significant money to send a letter, read a paper or book or make a phone call.

DDoS

Spam

Money transactions

 

Chapter 5: Public record

Since the time of the code of Hammurabi, the purpose of a public record has been clear: to establish indisputable truth. While this is seemingly the opposite of the privacy and confidentiality entailed by cryptography it serves the purpose of making information shared and immutable.

Historical technologies of public record

The purpose of public records

The accounting revolution and the development of ledgers, double entry bookkeeping to triple entry bookkeeping

 

Chapter 6: Bitcoin

From the previous chapters we are now able to piece together how bitcoin and the block chain works.

Virtual money - The Bitcoin

Encrypting for privacy - The Wallet

Public record - The Blockchain

Peer to peer network - The Miners

Proof of work - Transactions (cryptographic proof and the consensus algorithm)

 

Part 2 - Still searching for Satoshi - who is the historical Satoshi Nakamoto?

Much writing about Bitcoin has focused on who the historical person or persons behind Satoshi Nakamoto is. This part will apply a historical critical perspective to this question and sift through the evidence in order to create a better understanding of what we can and cannot say about the identity of Satoshi Nakamoto.

 

Chapter 7: Who dunnit?

A review of previous identifications of the person behind Satoshi. This has previously taken the shape of investigative journalism in the style of true crime reporting

Joshua Davis, The New Yorker 2011

Adam Penenberg, Fast Company 2011

Alec Liu, Vice 2013

John Markoff, New York Times 2013

Andy Greenberg, Forbes 2014

Leah McGrath Goodman, Newsweek 2014

Skye Grey, blog 2014

Dominic Frisby, Bitcoin the future of money 2014

Nathaniel Popper, New York Time 2015

Andy Greenberg, Gwern Branwen, Wired 2015

Sam Biddle, Gizmodo 2015

Izabella Kasminska, Financial Times 2016

Evan Ratliff, Wired 2019

Other sources - twitter, youtube, tv

 

Chapter 8: Ad fontes-What do the sources say?

By focusing on the sources we are able to extract a number of key characteristics to look for:

Historical analysis - establishes a couple of key points for historical analysis

The bitcoin whitepaper - the most crucial piece of evidence

The forums - the p2p forum and later the bitcoin forum are sources where Satoshi discussed with peers about bitcoin

The code - the code in itself may also contain clues

The blockchain - the record of transactions also provides an insight into the origin of bitcoin

Summary - what can the sources tell us?

 

Chapter 9: Motives

What were the motives behind the creation of bitcoin

Ideology - what can be said about the ideology of the author based on extant sources?

Why the synonym? - what could be the reason for the initial and continued secrecy surrounding the inventor?

Summary - why did the inventor invent bitcoin and in this particular way?

 

Chapter 10: The social network of early bitcoin

Who were the people involved in the beginning of Bitcoin

p2p forum communication

Bitcoin forum communication

Blockchain transactions

Summary - what can we learn from looking at the bitcoin initial network

 

Chapter 11: The usual suspects?

Rather than pointing definitively to one or another suspect we will try to integrate the knowledge we have gained with the list of known suspects.

An evaluation framework - developing an evaluation framework against which to measure the likelihood of any candidate being Satoshi Nakamoto

Prime suspects - the suspects that have gained most attention

-         Hal Finney

-         Nick Szabo

-         Dorian Sakamoto

-         Craig Wright and David Kleiman

-         Paul Leroux

Secondary suspects - suspects that have gained some attention

-         Vili Lehdonum and Michael Clear

-         Neal King, Vladimir Oksman, Charles Bry

-         Hal Finney, Nick Szabo and Adam Back

-         Shinichi Mochizuki

-         Ross Ulbricht

-         Adam Back

-         Gavin Andresen

-         Jed McCaleb

-         Elon Musk

-         Len Sassaman

-         Someone else

A new primary suspect - as in the movie The Usual Suspects, careful analysis points towards a surprising suspect who is not in the primary field of suspects.

 

Part 3 - Bitcoin in context

How is bitcoin viewed in the wider context of human civilization? Bitcoin does not exist in a technological bubble addressing only technological issues. It is firmly situated in a web of themes that are and have been central to human civilization. This may account for its notoriety but needs to be put in context.

 

Chapter 12: Money

Since prehistoric times humans have engaged in exchange. This falls in a continuum from barter, through intermediaries as cowry shells, gold and silver coins to purely symbolic means of exchange.

The history of money

Medium of exchange

Unit of account

Standard of deferred payment

Store of value

Types of money

-         Commodity

-         Representative money

-         Fiat

-         Digital money

-         Deposits

The politics of money

Money as a bridge between domains of value

 

Chapter 13: Ownership

Proving that you own something has been a central feature of human societies for millenia and disputes have fueled more than its share of violence and conflict.

Owners

-         Private

-         Public

-         Corporate

-         Communal

Property

-         Tangible

-         Intangible

Establishing and policing ownership

-         National

-         Transnational

 

Chapter 14: Social organization

Human societies have always been characterized by some sort of social organization. The different options have been debated since classical antiquity. This chapter will take a look at the space of social organization and narrow it down to the particular types associated with bitcoin and blockchain.

An ancient discussion: Monarchy, Oligarchy and Democracy - and anarchy

Centralization vs decentralization

Types of social organization in human groups

Open source

Cypher punks

 

Chapter 15: Religion

A rarely debated issue are the religious aspects surrounding Bitcoin and the blockchain movement. But these aspects are nothing new when it comes to human cultures. Understanding this helps explain a lot of the seemingly strange behavior of bitcoin believers without claiming that Bitcoin is an actual religion.

The prophet - Satoshi Nakamoto

Sacred scriptures- The Bitcoin whitepaper and the forum posts

Believers and heathens

Cargo cults

Millenarianism

 

Part 4 - Blockchain and the future

Where can blockchain technology be applied? Where, if anywhere, might we see cryptocurrencies and the blockchain in the future and how might it affect our lives? A case could be made that we are only in the beginning phases of the blockchain now, sometimes called Web3, where the worst of the teething problems are gone and the wild west ethos is receding.

Where not to use blockchain - First let us consider a number of areas where blockchain is currently suggested that might not be particularly relevant.

Parameters to be tweaked - Bitcoin was the first version of blockchain technology and certain choices were made. But subsequent and future blockchains need not make the same choices. We need to understand how this can be done in order to ascertain the future utility of the blockchain.

Transaction speed

Energy consumption

Degree of centralization

Public availability

Mining rewards

Banking - even though Bitcoin at its outset was antithetical to the banking industry there are particularly good use cases here.

Payment - bitcoin may not in itself have been very successful as a payments solution so far but there is no reason why another cryptocurrency will not be. Current payment systems are slow and expensive compared to what the blockchain can offer.

International payments

Remittance

Peer to peer payments

Micropayments

Certification - building on the ability to serve as a public record there are good reasons that a blockchain can serve as a public record for information about ownership

NFTs

Real estate

Media

Contracts - the ability to establish indisputable truth makes it possible to build contracts that automatically execute according to some logic. This can be used for escrow services and delivery of other services as well as insurance.

Regulatory compliance - the immutability of the blockchain makes it good for a great number of use cases where fraud has previously been an issue

Forensics - the public nature of the blockchain makes it a valuable tool for law enforcement, especially international law enforcement, which has already proven its worth in a number of high profile cases.

Supply chain - the blockchain is well suited for keeping track of things movement across time and place.

Health - keeping track of health trackers and personal health records could be done on a blockchain

Government - in government there are also areas where blockchain may be useful

Special purpose tokens

Voting

Identity

 

 

Glossary

Key concepts described

 

 

 

 

Although originally trained as a classical scholar with a PhD in Roman history, Anders Lisdorf has been working in the tech industry for decades bringing innovative technologies forth to solve real world problems. With an experience across many different industries, public as well as private, he has a wide interest in how we can make use of technology and data to improve the lives of everyone. As an entrepreneur he has started multiple tech companies and as an Enterprise Architect he has been responsible for modernization and development of the Data Services of the City of New York. Anders is the author ofCloud BasicsandDemystifying Smart Cities(Apress).