Recently I have been reading a variety of interesting books, including Digital Gold: The Untold Story of Bitcoin by New York Times reporter Nathaniel Popper, and the Edith trilogy by eminent Australian author Frank Moorhouse.
Digital Gold tells the story of Bitcoin, the digital crypto-currency, which began with the publication of the white paper by the mysterious Satoshi Nakamoto in November 2008. Viewed as dubious or a curiosity at first, Bitcoin has increasingly become accepted by the public. Bitcoin is no longer automatically linked to the online black market Silk Road in the public’s mind, and it is acknowledged by luminaries such as Bill Gates as having great potential to replace traditional payments systems (while having a number of drawbacks, particularly the volatility of its value). The book is a great read and the protagonists who feature in the book are fascinating, including a range of anarchist IT geniuses, entrepreneurs, hedge fudge managers, the Winklevoss twins made famous by The Social Network, and Ross Ulbricht, the founder of Silk Road, now serving a life sentence for nefarious dealings.
An excellent feature of the book is a technical appendix explaining the logic behind Bitcoin and how transactions are verified on the Bitcoin network without the need for intermediaries such as banks. As you would expect, given the book was published earlier this year, it does not include an important very recent development: the revelation that mysterious Bitcoin creator Satoshi Nakamoto could be the Australian technology entrepreneur Dr Craig Steven Wright (see Bitcoin: Sydney home of suspected founder Craig Steven Wright raided by AFP over ATO warrant).
Of course, Popper’s book is likely just one of the first of many histories of Bitcoin. Indeed, there is a lot of R&D occurring at the moment regarding the blockchain technology underpinning Bitcoin, with The Economist (see The trust machine) recently speculating it could “transform how the economy works”, particularly by lessening the need for financial intermediaries such as banks.
While Bitcoin’s shared public ledger is an incredible innovation, and may have substantial applications across financial markets, I doubt Bitcoin itself will come to replace our existing national currencies to any great extent. As Bank of England officials have pointed out, Bitcoin is more like a commodity than money, and its tendency to fluctuate substantially in value rules it out as a currency in widespread use (see the excellent article The Economics of Digital Currencies).
In addition to Digital Gold, as I noted above, I am also reading Frank Moorhouse’s Edith trilogy, which tells the story of (fictional) Australian woman Edith Campbell Berry, born around the turn of the 20th century, who goes to work for the League of Nations in Geneva in the mid-1920s. Edith is a great character: intelligent, ambitious, idealistic, and adventurous. Grand Days, the first volume of the trilogy covers her rise to prominence in the League secretariat (as well as her amorous exploits, which feature heavily throughout the trilogy). Dark Palace, the second volume, sees Edith experiencing the failures of the League in the 1930s, its lack of relevance during World War II, and its ultimate rejection by the great powers when they replaced it with the United Nations at the war’s end. Cold Light, the final volume which I have yet to read, sees Edith returning, deflated, to Australia and taking a job in Canberra, which was then, in the mid-forties, still largely under construction.
After he presented the inaugural Fryer Lecture in Australian Literature at the University of Queensland earlier this month, I mentioned to Frank Moorhouse that, as a former Commonwealth Treasury official, I was very pleased to see a novel set in the early days of Canberra, at the time our national capital was being established and so much important work in post-war reconstruction was being done. Recognising my interest in economics, Frank was nice enough to write the message below in my copy of Grand Days.
At the lecture, Frank mentioned he gets a special pleasure knowing that a few people every day are finding and reading his novels for the first time. If you have not done so yet, I suggest you do the same. The Edith trilogy will no doubt be considered as an incredibly important contribution to Australian literature in the years to come.