This is technically a draft, and still needs to be edited and finished. This should be done by Friday 24 June, approximately 12pm. Back to the article….
What is Bitcoin?
Just take a look at the front page of this newspaper from 2008:
Considered to be the worst financial crisis since the Great Depression, what happened in 2008 ruined millions of lives. Primarily those of the working class. Senior citizens lost their retirement savings, millions of jobs were lost, and inflation soared. All because a handful of people at the top made incredibly greedy decisions. These people at the top were not only the executives of the “too big to fail” banks, but also the very government officials who are meant to protect the working class.
People who should have gone to jail for crashing entire economies got payout packages. And government officials who should have been fired were looked upon as heroes.
The rot was deep in the core of the system. And the common man on the street had no say in the matter. Remaining at the mercies of these megalomaniacs.
On 3 January 2009, an anonymous computer genius released to the world a revolutionary technology called “Bitcoin”.
Satoshi Nakamoto, as he named himself, announced his new technology by way of a “white paper”, explaining the core details of the tech and why he started it.
Who was this Satoshi Nakamoto? There have been some theories behind who Nakamoto is, but none have been conclusive. For now, he (or they), remain anonymous. They went off the grid in 2011, and haven’t been heard from since. It could be one programmer, it could be a group of programmers. Whoever they are, they are clearly very intelligent and experienced computer technologists, but not only that, they also understand economics intricately well. The white paper and subsequent communication from “Nakamoto” seem to point to him being one person. Whoever he was, his intention was always to remain anonymous. He invented Bitcoin with the purpose of creating an economic platform that placed everyone on even standing. Having someone as its public inventor would give him “king-like”, almost “god-like” status which defeats the very purpose of Bitcoin.
Back to his White Paper announcing and explaining his invention:
In it he made statements like: “Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve.”
This was the core philosophy behind his technology.
Public banks had become so addicted to debt that they were lending immoral amounts of money backed against no assets whatsoever. Traditionally, a bank would lend out money based on how much its members had deposited. If a bank’s deposited assets totaled $1 billion, it had the ability to lend out $1 billion. An even sum game.
But in modern times, banks became so addicted to the potential profit in loans, that they began lending out more than the total of their assets. If they had $1 billion in assets, they were suddenly lending out $10 billion. It was fake money.
Anyone with basic logic can understand that such a system would eventually collapse.
In September 2008 that’s exactly what happened.
Unfortunately it is very likely to happen again (or continue to happen) because these weak economic policies haven’t been addressed. By the traditional economic sector that is.
Bitcoin changed that.
There is a whole new sector emerging: “Cryptocurrency”.
Yes, there is an entire market of “Cryptocurrency” out there. But before we get there, let’s finally get to what Bitcoin actually is.
To understand its mechanics, you have to understand the philosophy behind it. Hence I gave such an elaborate introduction.
The core aspects of Bitcoin are:
- Its transaction ledger is 100% open and decentralized.
- There will only ever be 21 million Bitcoins. Making it commoditized currency, like gold or silver from as recent as 50 years.
The remainder of this article will expand on these points, and explain HOW they work, and WHY they are important points to a good economy and society.
Primary premise of what Bitcoin is: Digital commoditized money like gold based on an open ledger. (From a Vine I did a few months back).