Starring Michael Fassbender, Joseph Gordon-Levitt, and moi.
Two days ago, I jumped on the Bitcoin bandwagon. I bought .0009 Bitcoin in ten minutes.
Today, my Bitcoin holdings are worth $5.00 USD. Tomorrow? $5,000,000 or 0, hard to tell.
Per the advice of YouTuber financial advisors, I did my due diligence before I bought Bitcoin. In particular, I read as much as I could about the blockchain technology behind Bitcoin and other cryptocurrencies. Owing to my underemployment, I had days to devote to this research.
Here are my three takeaways:
- Everyone should grasp the fundamentals of blockchain technology. Really smart people believe this is the biggest innovation since the Internet.
- Anyone can grasp the fundamentals of blockchain technology. You might need to learn a few new words, but your brain doesn’t need to create new neural pathways.
- Most of the writing on blockchain is painful to read. Many of the articles I read were either poorly written or as boring as mahjong night at the nursing home. Or both. ?
I’m hot on Bitcoin, but I don’t have any technical skills with which to advance the Bitcoin cause. I am a writer. However, that title confers on me the ability to bring narrative and humor to any subject. If you will indulge me this sidestep from the myopic self-help stories for which I am Medium-famous, I would like to broach the topic of blockchain technology.
My primary goal is to help you understand blockchain so that you better understand, and consider buying, Bitcoin.
My secondary goal is to entertain you.
Chapter 1: A Letter to Love ?
I’m not shy about dropping subtle hints of my love for Michael Fassbender. Even so, I never dreamed he would notice, much less respond.
Then I got this email:
I have read your Medium stories with much delight. Why a publisher has not yet offered you a six-figure book deal is beyond me. Yours is a Cathy-comic-strip wit and a very gifted 8th grader’s way with words.
If you donate either €1,000 or .20 Bitcoin to my Irish charity, the Shelter for Shivering Shorn Sheep, I will repay your kindness with a candlelit dinner for two at an Irish pub.
The only stipulation is that you must donate before sundown. With winter coming, the shelter is overrun with shivering, shorn sheep. We are in dire need of funding.
I lost my shit. Screw underemployment! Screw student debt! I want my candlelit dinner at O’Malley’s or O’Riley’s or O’Connelly’s or whatever!
There is no question that I will donate either €1,000 or .20 Bitcoin to the shelter. But I have a U.S. bank account. Which is the better move?
Chapter 2: Blushing at the Bank ?
I go to a bank to look into transferring €1,000 to the shelter from my U.S. bank account.
I walk up to the teller. She looks helpful enough.
“Hi!” ? I wave through the glass barrier. “I need to transfer €1,000 to a shelter in Ireland.”
“Ok,” the teller doesn’t look up. “We charge $30 per transfer.”
I gulp. I guess I’ll skip two meals to make this candlelit dinner happen.
“Alright,” I mumble, “As long as the money gets to the shelter today — ”
“Oh it definitely won’t,” the teller interrupts.
“Do I need to pay extra to expedite the transfer?”
With full knowledge of my bank balance, the teller looks up. “Not possible even if you could.” She continues, “The shelter’s account will be credited within 2–5 working days.”
I become flustered at the thought of missing out on a date with Michael.
“Don’t you just click a few buttons to send money?” I argue. “We’re not sending physical cash.”
“We surely aren’t,” the teller sneers. “If we were sending physical cash, nobody would keep track of that $1,000. If you lost the money, nobody would care — if anyone believed you sent $1,000 in the first place.”
I blush. She’s right about that.
“Honey, you need this bank to keep track of your money.”
I look towards the exit. I don’t think she’s right about that.
Chapter 3: Curious About Crypto ?
It’s been hours since I received Michael’s email. I imagine the candle that will illuminate our shared calamari appetizer burning to the wick as time slips by. I don’t know how Bitcoin works, but I hope it works fast.
To learn more about Bitcoin, I’ve asked my unusually handsome nerd friend, Joseph Gordon-Levitt, to meet me at a third-wave coffee shop.
“Jessica!” Joseph smiles when he sees me. “Coffee is on you, right?”
“Absolutely! Just don’t make me pay in Bitcoin.” We laugh because I’m hilarious.
When we sit down, Joseph asks if I’ve already opened up a Coinbase account. (Author’s note: No affiliation, Coinbase is just what I use and know).
“I did,” I respond. “And buying Bitcoin seems straightforward enough. But I’m concerned about security with this newfangled currency. The teller pointed our that when I use a bank to send money, the bank makes sure the money gets from point A to point B. Do I have those assurances when I send Bitcoin?”
“You do,” Joseph confirms, “but those assurances don’t come from a bank. They come from the blockchain!”
I give Joseph a puzzled look.
“When you send money with a bank, the bank records your transaction in a ledger.” Joseph sketches a diagram that looks remarkably like it was patched together in PowerPoint:
“Your transaction is secure because everyone believes the ledger,” Joseph explains. “You believe it, the shelter believes it, Michael believes it. Everyone believes the ledger because everyone trusts the bank to keep the ledger accurate.”
“It’s convenient to trust a bank, or any third party, to control the ledger,” Joseph continues. “But that convenience comes at a price. As you know, your transactions are subject to the bank’s fees, terms, and timelines.”
“But if I do away with the bank, do I also do away with the trustworthy ledger?” I ask.
“Not when you deal with Bitcoin. In the Bitcoin universe, the ledger is decentralized. Thousands of computers, called nodes, maintain identical copies of a ledger that contains every Bitcoin transaction. This ledger is called the blockchain. Transactions on the blockchain are batched into blocks. Nodes add new blocks about every ten minutes.”
I nod along. So far, so good.
Chapter 4: Avoiding Alicia ?
On the back of a napkin, Joseph sketches another PowerPoint-esque diagram, this time of the blockchain. Multiple nodes have identical entries for a single transaction:
I freeze. The last node Joseph sketched belongs to Michael Fassbender’s girlfriend, Alicia Vikander.
“Very funny, Joseph,” I say, pointing to Alicia. “If she gets word of my transaction with Michael’s shelter, it’s lights out for our candlelit dinner.”
“I thought you’d notice that,” Joseph smirks. “But you need not fear Alicia.”
“I mean, obviously I don’t fear Alicia because I’m prettier. ? But if Alicia is a node, can’t she see that I’m sending money to Michael’s shelter? If so, can’t she interfere with the block that contains my transaction?”
“No on both counts,” Joseph replies. “To address the first concern, when you deal with Bitcoin, your identity is obscured via public key cryptography. Tess Rinearson does a a great job of explaining public key cryptography here.”
“As to whether Alicia or anyone else can meddle with the blockchain, that’s virtually impossible. You have to understand that nodes aren’t updating with blockchain out of the goodness of their hearts.”
Joseph continues: “Nodes earn Bitcoin when they add a new block — that is, when they confirm a new batch of transactions — to the blockchain. To add a new block to the blockchain, a node must win a cryptographic math race: It must be the first to compute the block’s digital fingerprint, known as its hash. This process is known as mining.”
“Joseph, if you make me do math, I swear to god — ”
Joseph goes on: “All you need to know for now is that your transaction with Michael’s shelter is an input of your block’s valid hash. Once a node declares it has found the valid hash, the other nodes double-check the math. Once they confirm the hash, the winning node earns Bitcoins and the others say, ‘Right on, next block!’”
“If Alicia tampers with your transaction — an input — then her node will come up with a different hash — the output. Her node will, in effect, disagree with the other nodes. However, in a decentralized network, majority rules. When more than 50% of the nodes validate a block’s hash, the hash gets added to the blockchain, dissenting voices be damned.”
I pause. “And once my transaction is on the blockchain?”
“Everyone in the Bitcoin ecosystem trusts your transaction is valid, because they trust the math involved in finding your block’s hash.” Joseph answers. “Best of all, this whole process takes minutes.”
“Well then, Joseph,” I say, “today shall be the day I pop my Bitcoin cherry.”
Chapter 5: Wool Over My Eyes ?
After coffee with Joseph, I rush home to send .20 Bitcoin to the shelter. Following Coinbase’s instructions, this only takes a few keystrokes. Coinbase confirms my transaction and I await word from Michael.
Moments later, an email appears. I open it:
You can never know the gratitude of the ba-ba-black sheep who, thanks to your donation, has a roof over his head as a bitter Gaelic wind roars outside.
True to my promise, I have attached a coupon for a FREE dinner for two at Kilkenny Irish Pub. I regret that I can’t join you and your dining companion for a pint of Guinness and some shepherd’s pie. Know that I’m toasting your generosity from afar.
My heart drops. Confused, I go back to Michael’s original email. Reading it more literally, it’s plain that Michael never promised he would have dinner with me. He simply promised a free dinner. On that promise, he was true to his word.
My phone buzzes with a new text:
Joseph: So when’s your date with Michael? ??
Me: Ugh, no date. Turns out he promised me a free dinner for two…not a free dinner with him. ?
Joseph: Whaaaat! That confirms the premise of Bitcoin: Better to trust math than people. ?
Me: Word. On another note: Dinner at Kilkenny’s Irish Pub tonight? ?
For some good in-depth primers with less GIFs, check out (in order of technical nuance): Blockchain Explained in Under 100 Words, Making Money by Tess Rinearson, WTF is Blockchain by Mohit Mamoria, and A gentle introduction to blockchain technology.