Educated Guesswork

Let's Build a Cryptocurrency

Posted 2021-04-20

If you haven't been living under a rock for the past five years, you've heard of Bitcoin, "the blockchain", etc. Much of the coverage focuses either on technoutopianism (or mocking technoutopianism) or on technical detail you don't care about. This post is different: the purpose is to tell you what you actually need to know.

Background: Money #

It's most useful to think a little about how money works. And by money what I mean here is regular money, what the cryptocurrency people call "fiat"[1] If you're in a mostly cash economy, it's natural to think of money as being pieces of paper, but in much of the world most money is actually just entries in some database. When Alice pays Bob, what actually happens is that one database entry gets posted to debit Alice's account and another posted to credit Bob's account.


  1. This is actually kind of a misnomer given that the same basic rules apply to ordinary currencies, whether they are backed by specie (e.g., gold) or not ("fiat money"). ↩︎


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