Empire State Building
Bitcoin,  Distributed Leisure

Using bagels and pizza to explain blockchain and bitcoin

A professor declares his group New York’s official blockchain meet-up, but does it bite?

On a cold evening last week, we searched for a seminar in a building in the shadow of the Empire State Building to learn a little about blockchain.

The speaker was Jamiel Sheikh, an adjunct professor at the CUNY School of Professional Studies (SPS) and NYU, and the organizer of the BlockchainNYC Meetup group which he describes as the “official” Blockchain meetup in New York City. In other words, he unilaterally declared his group the centralized organization of a technology built on decentralization. The only problem is that the rest of the world hasn’t been informed of this yet or else refuses to comply.

Sheikh led off the seminar with his definition of blockchain and then used a scenario of a world suddenly without any currency to describe how one might then try to go about purchasing necessities like bagels and pizza.

First, his definition:

“A blockchain is a decentralized, distributed, immutable, and public digital ledger that persists transactions based on a quorum strategy or consensus algorithm, linked and secured with cryptography.”

Seems simple, right? Well, perhaps, but not to us.

In his scenario of a world suddenly without currency, he first tries to buy bagels at the corner bodega. Since he is known at the place and also because bagels go stale pretty quickly, they accept his IOU. However, things turn out differently when it comes time to arrange for some remote work, and there is no way to pay. Issues of trust, potential repeated use of the same digital currency, confidence, and value are not so easy to solve.

His explanation of a potential solution mirrors how a real blockchain works, but instead of using mathematical problems to solve as a proof of work to prevent double spending his scenario involves writing provably original and long essays via email. This still does not get the remote work done for him. However when he subsequently uses the same method to buy lunch from his cousin who owns a pizzeria, the confidence that his cousin has in him and his methods gets him the pizza.

Pizza, as many know, is important to the mythology of bitcoin. In 2010, the first purchase of goods with bitcoin occured when two pizzas for ‘only’ 10,000 BTC. Nowadays, we might regard this as the most expensive pizza ever purchased. But at the time, it was very possible to view this initial transaction as a loss of the list price for the pizzas of $25. It took confidence in the new currency to give it some level of acceptance and thus value.

Spurred on by this, we later found a place to exchange dollars for pizza. O.K., it was only one dollar and the pizza was not very good, but that’s another story.

The BitcoinNYC meetup has been holding free events around New York with Sheikh and other speakers to explain the basics of bitcoin, smart contracts, and ICOs along with blockchain. We have found the free events that we attended to be a good start in understanding the industry and technology.  

If only the post-event pizza were better.

 You May Also Like

Michael Hillmeyer has primarily been an independent consultant in the financial services, technology and healthcare industries since 2004. Prior to this, Michael was a senior sell-side equity research analyst at Merrill Lynch covering several technology industries. He owns no positions in any cryptocurrency but writes the “Distributed Leisure” column for Modern Consensus.