Del Wright - A Short & Happy Guide to Bitcoin, Blockchain, and Crypto

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Bitcoin, Blockchain, and Crypto

Del Wright Jr.

Professor
University of Missouri-Kansas City Law School

A SHORT & HAPPY GUIDE SERIES

The publisher is not engaged in rendering legal or other professional advice, and this publication is not a substitute for the advice of an attorney. If you require legal or other expert advice, you should seek the services of a competent attorney or other professional.

a short & happy guide series is a trademark registered in the U.S. Patent and Trademark Office.

2020 LEG, Inc. d/b/a West Academic

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Printed in the United States of America

ISBN: 978-1-68467-226-4

Preface

Why do we need crypto?

For readers looking for an answer to that question, the best answer I have found is the essay, A World Without Bitcoin , by Alex Gladstein, Chief Strategy Officer at the Human Rights Foundation. That essay is available on the February 11, 2020 Unchained podcast, hosted by Laura Shin, available and transcribed at www.unchainedpodcast.com/alex-gladstein-on-a-world-without-bitcoin/ .

This book is not written to answer that question. Instead, it aims to give the reader three things:

1)an overview of blockchains: how they work, how they are controlled, as well as the technological and policy challenges facing them;

2)an explanation of the value proposition for blockchain technologies and cryptoassets (crypto); and

3)an analysis of the laws that apply to crypto.

Although there is a lot of hype surrounding blockchains, many technologies are still in their infancy. Nevertheless, because blockchains serve as trust machines that can limit the need for, and costs of, third-party intermediaries, the possible uses of the technology are limitless. Thus, it is important for entrepreneurs, lawyers, policy makers, and regulators to understand the technology and its applications. This book provides an on-ramp.

Better a diamond with a flaw than a pebble without.

Confucius

This is a fast-moving technological and legal area, and the goal of this book is to provide an introduction and overview. To that end, in attempting to explain largely technical areas in an understandable way, it was often necessary to simplify concepts to make them accessible to readers. That created a challenge in drawing the line between too simple and too detailed. As with most things in life, the perfect is the enemy of the good, and I hope this book strikes the right balance.

Del Wright Jr.

12 April 2020

Acknowledgments

First and foremost, I would like to thank Cheryl for serving as lead editor, logic critiquer, task enforcer, and chief motivator. As with most of my accomplishments, I could not have done this without you.

Next, I would like to thank Nancy for setting all of this in motion, and Brandon, who began this journey with the question, Prof. Wright, what do you know about bitcoin? I would also like to thank Louis and Megan at West Academic, for entrusting me with this project and providing the support to bring it home.

I would also like to thank all the people who supported this project, either knowingly or unknowingly, through their work. That last group includes, but is not limited to, the following, with my sincere apologies for all omissions:

The Students

Ryan, Jazmine, Austin, Dan, Fluffy, Nihit, Sarah, Vince, Dara, Devin, Madeline, Kristen, Nate, Megan, Iman, and Tony

My Academic Colleagues

Andrew Hinkes, Carla Reyes, Dean Tonya Evans, Jonathan Glater, Stephen Wilkes, Kenneth Ferguson, Jamila Jefferson Jones, Khaled Beydoun, Dean Barbara Glesner Fines, Anthony Luppino, Chris Hoyt, and Andre Smith

Crypto & Other Professionals

Matthew Beck and Marissa Arnold at Grayscale Investments, Ilya Tabakh, Jesus A. Rodriguez, Caitlin Long, Andrea Tinianow, Caty Tedman at Cryptokitties, Marty Bent and Matt Odell from Tales from the Crypt, Laura Shin from Unconfirmed and Unchained , Anthony Pompliano at Morgan Creek Digital, David Kintu, Shekhar Gupta at the Government Blockchain Association, Tedrick Housh and Dale Werts at Lathrop Gage, and Shaun Stallworth at the Jackson County Bar Association

Academic & Professional Institutions

UMKC Law School and Law Review, the John Mercer Langston Writing Workshop, the Southeastern Association of Law Schools (SEALS), the University of Arkansas Bowen School of Law and Law Review, the Harvard Kennedy School, the Harvard Law School Forum on Corporate Governance, and the Practicing Law Institute

Lastly, a special thanks to Prof. Noel Myricks for pushing me, Prof. Richard Boldt for showing me the way, as well as Bibi, Chaun, and the Dels, for setting the bar high.

On to the next one.

Jay Z

About the Author

My interest in this subject predates blockchains, and strangely enough, began with a question I asked myself when watching Star Trek: What do they use for money? Until bitcoin, I had no satisfactory answer.

In the Star Trek universe, money as we know it largely did not exist, mostly because there was a device called a replicator that could reproduce almost any non-living thing, including money. Despite the existence of the replicator, people in the Star Trek universe still needed services (haircuts, guitar lessons, etc.), which meant there had to be a way to motivate people to provide those services. The Star Trek Wiki answer is Latinum,

a rare silver liquid used as currency by many worlds, most notably the Ferengi Alliance. Latinum cannot be replicated and the reasons for its rarity are unknown.

To me, that seemed like something the writers made up to explain what would otherwise be a logical gap in the show.

Then I learned about bitcoina non-reproducible digital asset that serves as a store of value, medium of exchange, and unit of account. Bitcoin became, and remains, the most robust answer to the question of what an advanced society would use for money.