Bitcoin is a strange thing: a virtual coinage, but real enough, each ‘coin’ tethered to a place. If you store bitcoins on your computer and spill coffee on the hard drive, that’s that; when you spend coins online, they travel from your wallet, just as cash physically leaves your pocket. When Mt Gox, a high-profile coin exchange, went out of business in 2014, bitcoins worth half a billion dollars simply disappeared. The bitcoin community hopes the coins will become established as a currency but speculators treat them like a commodity. The US tax authorities, meanwhile, have decided that they are property. In just six years bitcoin has gone from techno-fantasy, through Wild West, to something quite respectable; in Cryptocurrency, their fascinating book on the topic, Wall Street Journal columnists Paul Vigna and Michael Casey set out to convince readers that bitcoin is not only going straight, but also has the potential to change the world.

The most enjoyable parts of Cryptocurrency deal with the extraordinary history of bitcoin. The digital-currency movement has its roots in the ‘cypherpunk’ movement of the 1990s, a grouping of ponytailed hardline libertarian-utopian techno-anarchists, based loosely in the San Francisco Bay area and devoted to freedom, property rights and sound money, ideas that have hung together since the political theory of Locke. Digital currencies are by design non-expansionary and have a finite supply: the authors catch the flavour nicely when they imagine ‘Bretton Woods II’, a new gold standard with the techies firmly in charge.

The cypherpunks kicked around currency ideas throughout the 1990s, but none came to fruition until October 2008, when an anonymous programmer – or group of programmers – going by the name of Satoshi Nakamoto released a short paper purporting to solve crucial problems. Nakamoto proposed the ‘blockchain’, a public ledger comprising algorithmic codes (hashes), hard to construct but easily checked. Over the next few months he and a programmer called Hal Finney worked by email to set up the ‘Genesis block’ and mine the first currency. Finney earned one thousand coins, at their peak worth over $1,000,000. He died from Lou Gehrig’s disease in 2014; his bitcoins are paying to keep his body frozen until a cure can be discovered. In December 2010, Nakamoto’s emails stopped and he vanished.

If you’ve heard about bitcoin in the media, you will have heard of the ‘miners’ who work to discover new coins. This turns out to be not quite accurate. Miners work on producing the hashes for the ‘blockchain’, a computationally demanding task known to programmers as ‘forced work’. Each hash must contain the necessary information and also must match a random number generated by the central algorithm. The first to discover the ‘correct’ hash wins a prize of fifty bitcoins. This provides an incentive to reward those keeping the ledger up to date. But there have been unintended consequences: as the price of bitcoin soared, a computational arms race began. In 2009 it was possible to mine bitcoins using the graphics card of a high-specification gaming PC, albeit ‘running hot’. But the bitcoin system naturally increases the difficulty level on a regular basis, and by 2014 cloud-based mining rigs were processing ‘peta-hashes’ – one thousand trillion hashes – every second. At that intensity of computing, electricity matters; Vigna and Casey believe that the total power consumption of the bitcoin grid is somewhere between that of a small town and a small country.

While they acknowledge the grid’s hunger for power, Vigna and Casey make an enthusiastic and plausible case for the emancipatory potential of bitcoin. Globally, five billion citizens are denied access to banking, a basic requirement of our material existence. All one needs to own bitcoin is a mobile phone able to access an online ‘wallet’; many, from migrant labourers to oppressed women, could gain real benefits from access to cheap, basic financial services. Moreover, there is a possibility that digital currencies could form a hidden business-to-business infrastructure, cutting out the many charges put in place by middlemen. There is some way to go, though: bitcoin’s infrastructure can process a maximum of seven transactions per second, while the mighty Visa can manage ten thousand. Less plausible are the suggestions that the blockchain itself will provide an infrastructure for recording transactions and so put all sorts of intermediaries out of business, replaced by algorithmic property lawyers and self-owning, robot sole traders.

At times, the detail that so illuminates the book’s technical and historical accounts does become overwhelming.  During lengthy discussions of techno-utopian possibilities the reader is drowned by the tidal wave of twenty-something coders barefooted in San Francisco hacker hostels, third-generation Silicon Valley venture capitalists looking for the new, new thing, and would-be entrepreneurs determined to bring bitcoin to the bottom of the pyramid. But Vigna and Casey are well aware of the ironies of hoping to get fabulously rich and save the world at the same time. While strong believers in the power of free markets and critics of the rent-seeking financial services that bitcoin challenges, they make a measured case for the possible futures of digital currency. One of which, of course, is that the winning crypto-currency won’t be bitcoin at all.

Bitcoin has done much to prove the concept of digital currencies. It has been carried along by the turmoil of the credit crisis and has survived the speculative frenzy of 2013. But it does seem to have drawbacks, most of all the massive energy consumption involved in building the ledger and creating new coins. Some view these efforts as the source of bitcoin’s value: an increasingly scarce commodity ‘mined’ through raw computational power, guaranteed against inflation by the core algorithm. Vigna and Casey make much of the ‘metallism’ versus ‘chartalism’ debate in monetary theory, and come down on the side of the chartalists, emphasising the token nature of money and its reliance on socially constructed institutions. On this final point, however, they may be on the wrong side of the argument. John Locke, the great metallist, asserted that sound money, its value beyond the reach of states, is a necessary part of political liberalism. Bitcoin’s appeal is just that: the would-be gold of a digital age.