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Have Your Friends Asked you About Blockchain and Cryptocurrency?

A friend of mine asked me for an opinion on what to read or which news channel to monitor to learn about blockchain and cryptocurrency, at the same time apologetically wondering, as I work in cybersecurity, if I knew anything about it. You probably get these as well. The most recent question sent to me was:
"This may not be in your wheelhouse, but I thought I’d reach out to seek resources for wrapping my head around blockchain and cryptocurrency; books, lectures, whatever. If you have any ideas, I’d appreciate them. Thanks in advance."

Sharing this reply with TAG Cyber readers in case you find it useful or at least entertaining:

As a cyber security professional, both blockchain and cryptocurrency are firmly in my wheelhouse.

Blockchain is a technology that is used in multiple business applications, mostly financial, to keep track of business transactions and hold people accountable for changes to information. It creates a very hard to reproduce number for every change made to a multi-level transaction so it is possible to show with high probability that a given person or company authorized a change to data. It can be used to verify the integrity of any process wherein multiple parties participate in a step-by-step process and need incremental evidence to agree upon the outcome.

Because of this use case, it is the technology underlying cryptocurrency which, by contrast, is pretty much hype. Very much like gambling; the house always wins. One person or group creates the beginning of a blockchain, and there is no underlying value to it when you start, just a random hand of cards. One may argue that the dollar used to be based on a gold standard and it is no longer, but at least the dollar is still backed by the federal reserve. Neither the federal reserve nor any bank or financial institution will ever guarantee to exchange cryptocurrency for real dollars. Those that purchase it are doing so on pure speculation.

Speculators are drawn to it because it is harder to track than regulated banking transactions and therefore easier to evade monitoring of spending, There are non-nation-state organized (criminal money laundering) syndicates that swap real dollars for cryptocurrency so they can spend it as anonymously as possible with willing merchants who know that they can sell the cryptocurrency to other like-minded money launderers. Because there will always be a market for such nefarious activities, neophyte investors often think they can ride the tail of such investments, but for them it is simply rolling dice.

That said, the underlying technology of blockchain has helped government track money launderers so transactions are not as secret as they used to be. Also, it has come to world attention that cryptocurrency requires so much blockchain computing to operate that the data center electricity consumption is horribly bad for the environment. For these reasons, there will be constant changes in the cryptocurrency ecosystem.

Bottom line, a legitimate technology company selling blockchain-based software to the healthcare or insurance industry may be a good investment, but a cryptocurrency is emphatically not. That said, nation-states and national banks are dipping their toes in the water, and if our national currency makes the leap, we will all have to follow.

All that said, you simply asked what would make sense to read. The Economist had a good set of articles on blockchain and cryptocurrency the first few weeks of May, but whatever you read, read it through this lens.