As blockchain and, its derivative, virtual currency become ubiquitous in commerce, business, and Main Street, there have been many attempts to explain what the underlying concepts are (e.g., by this author in “The Reality of Blockchain and Its Limitations,” CPA Journal, July 2018, https://bit.ly/3zQVKu2). This book, Blockchain Basics: A Non-Technical Introduction in 25 Steps, by Daniel Drescher, takes the reader by the proverbial hand and walks them through easy-to-understand steps of how blockchain is constructed and applied.
The good thing about this book is that you do not have to read all of it. The book is well-divided into 25 chapters, each beginning with a “metaphor,” followed by application of the metaphor into a technical description. The topics are very well organized, and the chapters conclude with a bullet-point summary of the area that was just covered.
For example, in “Step 2” (Chapter 2) the metaphor used is buying a car, a common experience for most readers. The metaphor of a car and the underlying different types of engines become the basis of the technical description whereby the system in a car is layered, from the engine as a foundation, to the electrical system and driving preferences as the highest levels. The metaphor is applied to describe the layers of systems within a car, drawing an equivalence to the layers within a payment system with an “engine” and “moving parts” that rely upon the engine for power. The technical description that follows describes two types of payment systems: one centralized, with a central ledger that records all transactions, and the other distributed, where multiple ledgers record most of the same transactions. The chapter compares the advantages and disadvantages of each approach (centralized vs. distributed) for payment systems, and then introduces new concepts, such as overhead in processing and security issues. It also describes how this chapter fits in with the other chapters, or “steps” that the book will follow (a section aptly called “Outlook”).
The chapters—or steps—are organized in a consistent manner, and after reading the first few introductory steps, diving deeper into more detailed information becomes more comfortable for any reader. That is the power of good organization of a book, because the reader knows what to expect; even if the technical summary may be new, the book makes it easy to understand by breaking down the topic and using relevant, everyday examples.
I read the book cover to cover. As a CPA with a degree in computer science, I found this volume was an easy read; however, this book can also be used as a starting point for anyone who wants to understand blockchain and its application at whatever level they are comfortable with. Depending upon one’s level of interest, background, and time available, a reader can study this book in parts, or just up to a point, and still gain valuable, usable knowledge.
This book does have one deficiency, which is the masking (perhaps by mistake) of the breaches and hacks that could be applied to blockchain (e.g., Geraldo Vasquez, “An Introduction to Blockchain: What Does it Mean for the Accounting Profession?” The CPA Journal, June/July 2021, https://bit.ly/3UDsQY4). The discussion of this relatively technical concept appears on Step 3, when most readers do not have all the know-how yet. It is a relevant topic, but I believe it would have been better presented later in the book, or even as a supplementary chapter.
The CPA Journal’s readership can benefit from reading this book in various ways: auditors, who need to understand the underlying processes and controls of blockchain system; CFOs, who are considering using blockchain systems such as smart-contracts or supply-chain databases; and finance professionals, who could and should be aware of how financial transactions (both virtual currency and fiat currency) are being handled in today’s marketplace.
This book was published in 2017, without hindsight of some of the virtual currency scandals that we are aware of today. As a result, this book’s approach is actually wider in scope: general ledger systems, supply chain controls, and banking systems can all rely on a blockchain technology separate, and apart from, the sometimes dubious uses of virtual currency.
The book overall gets an “A” for clarity, and a similar grade for technical accuracy.