Bitcoin (BTC), created in 2008, immediately after the 2008 financial crisis, and seeing its initial release on January 9, 2009, is an entirely decentralized digital currency invented by an unknown individual or group of individuals under the pseudonym of Satoshi Nakamoto. The entity or entities involved in its creation disappeared without trace from the online space just two years into Bitcoin's existence.
As presented in the original Bitcoin Whitepaper, and as can be figured from its nature, the currency was created as a means of experimental opposition and alternative to fractional reserve banking as well as centralized monetary policies and powers.
The root problem with conventional currencies is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. — Satoshi Nakamoto.
Satoshi Nakamoto provided citizens of the world with the ability to participate in a fully decentralized and anonymous financial system wherein transactions are protected by cryptography.
Since its inception, the value of Bitcoin, as well as its reputation continued to grow, rapidly. And what was initially viewed by many, especially regulatory bodies, as merely but a means to transact for illegal activities on the dark web, has since bloomed into a time and pressure tested global and borderless P2P financial system and laid the foundation for an entirely new industry and market of decentralized applications, cryptocurrencies, potential, innovation, speculation, and entrepreneurship.
Nice, but…
How does Bitcoin work?
In simple terms, Bitcoin is software, a mixed set of protocols and processes. Bitcoin runs on open-source code known as blockchain (a transparent publicly accessible to anyone with an internet connection ledger of the full collection transactions in the bitcoin network stored as a chain of discrete blocks of chronological information). The entire bitcoin system is basically a bunch of computers (sometimes called “nodes”) that all run bitcoin’s code and store a copy of its Blockchain. Anyone can run the blockchain and bitcoin code, from anywhere in the world. Many people do, and therefore the network is decentralized.
These “nodes” also called miners, participate in the bitcoin network and “mine” new bitcoins into existence (at a pre-programmed, deflationary rate), which they receive as a reward for competing against each other by solving sophisticated mathematical programs to complete a block of transactional data and add it to the blockchain. Bitcoin transactions are initiated when one individual sends Bitcoins from his Bitcoin wallet to another. The total supply of Bitcoin that there can ever be in existence is limited by code and set to 21 million units, with each one being divisible up to 8 points.
Of course, there's way more technical stuff that could be covered on Bitcoin. All of the above makes it a borderless, though volatile store of value that can be used to anonymously transfer that value (money) across the internet within minutes. Add to that the fact that there's no Central Bank presiding over Bitcoins emission, rather that's up to the nodes, and keeping an eye on whose sending value where, and the value Bitcoin should be quite clear.
With its limited emission rate and decentralized nature, Bitcoin proved to be a rather good inflation hedge and store of value during 2020–2021, gaining over 1,500% in value on a parabolic rise from the depths of $3,000 to over $50,000 and attracting massive attention from big names as Governments were “printing” currency, issuing stimulus to help ease financial damages as a result of the Covid-19 Pandemic.
This parabolic rise in a time of active and centralized government financial activity strengthened Satoshi’s core value proposition and the ideological belief of many Bitcoin supporters and speculators that Bitcoin's position in the world of money as an alternative financial system is “legit”.
