"Having observed the unsuppressable libido of capitalism, I’m inclined to think that if Bitcoin succeeds, some corporation will hijack its anarchist roots and make a lot of money the usual way."I think I'll stick with the BIS Quarterly Review this weekend.
From the New York Times:
Money, “The Age of Cryptocurrency” explains, is “a medium of exchange, a unit of account and a store of value.” But for Schopenhauer it was “human happiness in the abstract,” and for Dostoyevsky “coined liberty.” These passion metaphors reflect the febrile excitement about Bitcoin that Paul Vigna and Michael J. Casey, both of The Wall Street Journal, share in their wide-ranging, interesting account of the origin, past and possible future of this virtual-money wannabe.Money was traditionally viewed as a tangible commodity (like gold) or an i.o.u. token of trust for settling debts. Then, out of the blue in 2008, the pseudonymous Satoshi Nakamoto created Bitcoin, the name of both the digital Internet currency and its software infrastructure.“Cryptocurrency” devotes detailed, anecdote-filled chapters to the genesis and reception of Bitcoin. Its political origin lay in the 1990s anarcho-libertarian community of the Cypherpunks, cryptographers who developed software to preserve privacy in the face of snooping Big Brother governments and corporations.
HT: Abnormal ReturnsHow does a purchase with Bitcoin work? Think first about what happens when you pay cash: You can spend a dollar bill once only, the transaction is anonymous, and involves no fee.Now, the book explains, think about using a debit or credit card: No actual dollars change hands, but the bank, a central authority, knows what you’ve bought and from whom, adjusts your balance to prevent double spending and charges a transfer fee.Bitcoin software ingeniously mimics cash. It allows anyone to transfer Bitcoins to anyone else — securely, anonymously and directly — preventing double spending, and avoiding the involvement of a central privacy-invading authority that takes more than a nominal fee. It accomplishes this by means of the block chain, a distributed software ledger on the Internet that keeps track of all Bitcoin transactions. The block chain and Bitcoin production are the hardest things to understand, and the book explains them lengthily and well.What is a Bitcoin worth? Part commodity (it’s scarce) and part fiat money (of no intrinsic value), it depends on the market, and its price has increased greatly since 2008, with dramatic commodity-like fluctuations. If or as it gets used more widely, its price will stabilize....MORE
Previous Dermanettes:
Emanuel Derman, Tyler Cowen et al On "Why is Thomas Piketty's 700-page book a bestseller?"
"Derman, Rodrik and the nature of statistical models"
Emanuel Derman: "Money Changes Everything?" or Spinoza on Pain, Pleasure and Desire
Mr. Derman is a blogger based in New York City.Book Review: "Models.Behaving.Badly: Why Confusing Illusion with Reality Can Lead to Disaster, on Wall Street and in Life "
He also teaches at Columbia.
Before that he was head of the quantitative strategies group in the equities division, and then head of quantitative risk strategies at Goldman Sachs
And before that he was a theoretical physicist.
I hate him.
From the Frankfurter Allgemeine Zeitung's Feuilleton...
Here is his personal homepage.
...Psst...I don't really hate him.
But do visit his homepage to see why one could.
The Financial Modelers' Manifesto
