The Layman’s Guide to the Blockchain Chapter 2: A brief history of Bitcoin and how it came to be
Okay, I know …I said this series wasn’t technical documentation. But here’s the thing, having a basic understanding of the space is essential. It was Sun Tzu (you know, the “Art of War,” Sun Tzu) that said, “Know thy enemy and know thyself,” and that sentiment rings true. You cannot be efficient in your navigation of the space if you don’t know the players.
The Blockchain is the bread and butter of crypto-land. It’s the fulcrum and tokenization is the lever in which we can move the world (that was an Archimedes reference). All cryptos are matched against BTC, and most can only be traded with BTC. Essentially Bitcoin is to cryptocurrency what the USD is to fiat currency.
So what is a Blockchain? Well rather than try and reinvent the wheel, the TED Institute has put together what I believe to be the best possible explanation of how the Blockchain works. It’s only 2min so even the most attention deficit can enjoy -
Even with this basic understanding, it’s plain to see why some herald the Blockchain as a savior while intermediaries (like financial institutions) have reason to disincentivize its usage.
Satoshi Nakamoto and the Rise of Bitcoin
So now you know what a Blockchain is. Super. So where (and when) does Bitcoin come into play? And who the fudge is Satoshi Nakamoto?! These are essential questions to ask so lets wind back the clock.
Long ago when the world was young, in the ancient year of 2008 someone published a paper on the metzdowd.com Cryptography mailing list titled “Bitcoin: A Peer-to-Peer Electronic Cash System.”
This paper that would go on to be the bedrock of all blockchain, Yet it’s origins are shrouded in mystery.
Enter, Satoshi Nakamoto, the pseudonym used by the person or persons responsible for the paper. Nakamoto claimed to be Japanese, born April 5th, 1975 and in addition to the whitepaper, would go on to manufacture the Genesis blockchain. His participation in development and coding would continue for two more years. In April of 2011, the Mastermind would disappear leaving only the words “I’ve moved on to other things,” and 1 million bitcoins (or $15.5 billion (Probably more by the time you read this) USD ) in his wallet.
The speculation around Nakamoto’s identity is almost as mysterious as Bitcoin itself, with identity claims ranging from Australian academic Craig Wright to Tesla’s Elon Musk. Almost a decade later, we have no concrete answer. If you’d like to try a hand at cracking the mystery yourself, Netflix has done a great job with its 2017 documentary “Banking on Bitcoin,” which is an excellent place to start.
Pizza for Bitcoin
The mysterious origin of the story aside, Bitcoin wasn’t even really “usable” until 2010. You could exchange them for USD but you could not for real goods and services. Then the fateful day of May 18th 2010 on the Bitcointalk forum, a Floridian man put the call out offering 10,000 bitcoins in exchange for two large pizzas. That’s approximately 180 million USD by today’s standard, but back then it accumulated a measly $41.
Of course in this period of history, no pizza provider in their right mind would take Bitcoin as payment and so Lazlo’s offer was a long shot. Despite this, someone did answer the call taking Lazlo’s coins, and paying for his pizza from Europe via credit card in exchange. This transaction validated the concept of bitcoin as a transactional medium and set into motion a chain of events that would eventually lead to the entire financial industry doing mental jumping jacks over how to adapt.
These humble roots are semblances of a different time, without Instagram, Snapchat or Uber. A time when crypto had almost no value, and it’s because of this it acts as a prudent reminder that while for now Bitcoin may be king, eventually it could return to being valueless BUT may change the world in the process.
~ referral links:
- Start buying Crypto: Coinbase
- Get a hardware wallet to keep your digital assets safe from hacks: Ledger
- Popular altcoin exchanges: Binance
~ More Chapters
Laymans Guide to the Blockchain: Chapter 1
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