In early 2021, I started an informal poll where I asked my girlfriends: “do you follow what’s going on in crypto?” If you guessed the whopping majority of people responded “no”, you are right. I think this is due to 2 factors: 1) we are already inundated with news and information and 2) the crypto world uses its own vernacular which is really complicated. Cryptobunnies? Miners? Beeple? Ethereum? How do we even begin to process the news that the video, “Charlie bit my finger”, was sold as a NFT for over $750,000? Does that mean that we won’t be able to see it anymore on YouTube? Does it mean that the owner will charge for us to see it? It’s hard to wrap your brain around this type of stuff.
This year I move into my sixth(!) decade and as I look around me, I notice quite a few friends who have assets and investable income. If there are Gen Z-ers investing in cryptocurrencies and making fortunes, doesn’t it seem like a missed opportunity to look the other way? So, I decided to hunker down and went down a crypto rabbit hole. I enrolled in a16z’s Crypto Startup School (in hindsight, that program is geared towards developers and most of the time I was lost), read the original bitcoin white paper by its mysterious founder, read/listened to as much content from two super smart guys named Balaji Srinivasan and Naval Ravikant, and read a book on blockchain called Unblocked, by Alison McCauley. Remember the Winklevoss brothers? Those twin handsome rowers from the movie The Social Network who claim Zuckerburg stole the idea of Facebook from them? They’re big into this world and have done an excellent job making complex blockchain information understandable.
I am writing to an audience of people like me: middle aged-ish women who are getting left behind in this global paradigm shift and are looking for a simple way to understand it. If you are getting this maiden voyage newsletter, it is because you’re a trusted bestie and I am hoping you’ll share with others and let me know feedback. Who knows, maybe we’ll want to create an NFT someday?
Technologists speak in code, literally and figuratively speaking. In doing my deep dive, I felt somehow reminiscent of another period in my life: when I moved to Spain in 1999. For years, I had no idea what people were talking about at the dinner table and just sat there, listening, until finally things started to make sense. Something similar is beginning to happen although I have a long way to go. My goal is to put out a short and simple crypto newsletter every few weeks so that we can get up to speed in a fun and easy way.
This first newsletter covers a few basic elements behind blockchain.
It’s just a ledger- that everyone can actually trust.
Until blockchain technology launched, the internet was subject to the control of central organizations from large entities/ corporations like Amazon, Microsoft, governments, banks and other institutions. Blockchain, however, is comprised of network of computers that store information. I think of it as a “forest” of databases. The way the technology works is that each “tree” is constantly updated so if someone tried to change any information incorrectly, the other “trees” would leave it behind, rotting. The forest remains virtuous, so to speak. Fundamentally this is why it’s a game changer: it is truly decentralized. This fact makes it trustable between people who don’t know each other. Once I understood this, I thought about where trust is important in my daily interactions and had an aha moment! You can actually start to see how blockchains will affect all industries, not just banking, since anyone at any point can add a block to the chain. In the grocery store the other day, I was looking at the marketing on all the products and thought to myself: “with blockchain, we will be able to know if all these claims are actually true”
Ok— but how does it work?
You’ve probably heard about bitcoin miners.
Miners are the people involved in the processing and verifying transactions using cryptology— or, the study of codes. They are constantly recording these transactions, or blocks on the blockchain. What holds the blocks together is called a “hash” which leaves an indelible mark in the transaction. As a reward for their computation (which involves a lot of energy), miners receive transaction fees. They act essentially like the referees to this whole network.
Almost everywhere you look, you see “peer to peer” when describing blockchain and what is meant is that two entities can trade anything of value and trust that it not fraudulent. This is why they use the term “network effects” so you can transfer anything of value without needing a middle man.
What do they mean by “double spend”?
The issue of double-spending is a problem that cash does not have. Think of it this way: if you pay for a glass of wine with a $10 bill, turning that bill over to the bartender, you cannot turn around and spend that same $10 elsewhere. However, given that blockchain is digital, what prevents you from copying and pasting the same code- essentially saying you’ve got the same $10 twice? Here’s where the miners come in to referee. Their computing, or “proof of work”, detects fraud and refutes falsified claims.
When performing a transaction using blockchain, you are issued a private and public key. These keys are made up of hundreds of zeros and ones and are practically impossible for an outsider to guess, which is why the whole thing works! Users can only see the public key, obviously so you can rest assure you are the only one with the private key.
Ok, that is all for today! Please send me your feedback and any particular topic that you’d like me to cover in future newsletters. See you next time!
—Susan
If you were forwarded this newsletter, please subscribe