Slava Gomzin - Crypto Basics: A Nontechnical Introduction to Creating Your Own Money for Investors and Inventors

This Apress imprint is published by the registered company APress Media, LLC, part of Springer Nature.

The registered company address is: 1 New York Plaza, New York, NY 10004, U.S.A.

I met Slava Gomzin a decade ago; at the time, criminal hackers were successfully targeting major retailers' point-of-sale systems, harvesting credit cards en masse with customized malware specifically designed for these systems. The industry was in a panic and looking for help. At the time, I was working for a security vendor who specialized in monitoring the security configurations of these systems and wanted to learn more about how they are compromised. That is when I learned of Slava Gomzins first book, Hacking Point of Sale, and I reached out to him with some questions, and he responded. Slava and I even did a joint webinar on the topic of point-of-sale malware, and we have been friends since. Slava is a great teacher and knows the ins and outs of payment systems unlike anyone else I know, from how transactions are made to how theyre secured, and has a clear understanding of both the history and future of payment systems.

Like my interest in point-of-sale systems, my interest in cryptocurrencies was piqued when I saw it was being used in underground forums and by criminal syndicates who were taking advantage of the pseudo-anonymous nature of Bitcoin to evade detection by regulators and law enforcement. It has been disturbing to see how cryptocurrency and the underlying blockchain technology quickly became overhyped in mainstream media as a get-rich-quick scheme fueling a craze of speculative investment, often by individuals who did not understand the underlying technology or risks associated with such a venture.

This hype reminds me of another hype cycle in cybersecurity when every cybersecurity vendor claimed to have Artificial Intelligence solutions that would replace the security analysts, mostly in attempts to land large rounds of funding from VCs. The promise of AI replacing security analysts not only turned out to not be true but also took attention away from the real and practical research that has been done utilizing machine learning which is a tool of AI to aid security analysts in their work, versus replacing them.

Similarly, the speculative investment hype around cryptocurrencies fueled by countless initial coin offerings and exchanges has taken attention away from the practical use of cryptocurrencies as actual currency, facilitating the decentralized exchange of goods and services. Instead, cryptocurrencies became centralized through exchanges and further diminished by associating with overpriced NFTs and Web3, all of which have made the crypto space appear to be more of a Ponzi scheme from the outside than a revolutionary egalitarian technology for the masses to circumvent existing centralized currency and controls. The unfortunate result of this speculative investment and hype is that the original intention of cryptocurrency, as laid out by Satoshi Nakamoto in the original Bitcoin: A Peer-to-Peer Electronic Cash System paper which gave rise to Bitcoin, is lost. Nowhere in the Satoshi Nakamoto paper is there a mention of investment in cryptocurrencies, mechanisms to exchange for fiat currency, or even tying Bitcoins value to fiat currency; this all came later and was driven by greed and speculation.

It is important for businesses to understand how cryptocurrencies work to better understand where they can be used not as a speculative investment but how and where they can be used as a legitimate payment method. Many companies now accept cryptocurrencies such as Bitcoin, including AT&T, Microsoft, and Tesla, to name a few. Security professionals should be familiar with how cryptocurrencies work, as they are the de facto currency of cybercrime, whether its used by cybercriminals to pay for services and tools or ransomware gangs demanding payment in cryptocurrency, taking advantage of their pseudo-anonymous nature. Financial professionals also need to know how cryptocurrencies operate as there are increasing regulations related to the use of cryptocurrency due to its capability for financial crimes such as money laundering, as well as tax implications of trading cryptocurrencies.

In this book, Slava walks through how cryptocurrencies work, from how cryptocurrency is created and traded to how it is secured. He provides a history of currencies so the reader understands how cryptocurrency fits within a historical context and highlights how some of the popular cryptocurrencies, such as Bitcoin and Monero, work and how they are different from each other. This book isnt a get-rich-quick scheme like you may find with some other books that hype cryptocurrencies as an investment vehicle, but more a guide to explain how cryptocurrencies operate and function to demystify them so that you, the reader, can make educated decisions on how and why to make use of them.

Ken Westin