The Story Of Bitcoin: The Novel Technology Made By an Invisible Creator.
The Mysterious Creator
Although Satoshi Nakamoto remains a mysterious figure, the motivation behind his creation of cryptocurrencies was never a secret. Simply expressed, he invented it to reclaim financial authority from financial elites and provide the opportunity for common people to participate in a decentralized financial system.
Satoshi Nakamoto, the so-called father of Bitcoin,has brought a phenomenon to the financial world. A novel technology that has changed the course of history in financial technology. In 2008, He appeared out of nowhere to create the world’s first cryptocurrency and vanished just as suddenly three years later. He emailed a Bitcoin developer on his team on April 23, 2011 saying, “I’ve moved on to other projects,” adding that Bitcoin’s future was “in good hands.” Since then, he has not been heard from.
Today, the total crypto market is worth more than $1 trillion. Although Nakamoto’s identity may be merely a matter of conjecture for some people, for others, it has considerably greater significance: He is rumored to possess over a million Bitcoins with a current market value of over $60 billion. This represents approximately 5 percent of the total number of bitcoins in circulation.
Should the person behind the pseudonym Satoshi Nakamoto choose to sell even a small portion of this stash, the transaction will utterly disrupt the bitcoin market. Coinbase, a cryptocurrency trading platform, listed the potential disclosure of Nakamoto’s identity (and the movement of that person’s Bitcoin holdings) as a risk factor in its SEC IPO filing (SEC). Coinbase even sent a copy of the document to Nakamoto’s last known email account.
Why Satoshi Created Bitcoin
Satoshi Nakamoto, the creator of Bitcoin, envisioned eliminating banks from financial transactions and building a peer-to-peer payment system that did not require the confirmation of a third party. In this manner, banks were not required to be engaged in every transaction. It would rely on the “proof of work” standard, which uses mathematical methods to verify transactions without a central authority (banks). In place of the central network, the blockchain would be implemented.
In 2008, when the legendary U.S. investment firm Lehman Brothers Holdings Inc. filed for bankruptcy, it rocked people’s faith in the bankingsystem to such an extent that a new class of asset was created that was not backed by any official bank. The first mention of Bitcoin, the most prominent cryptocurrency, was in November 2008, almost two months after the Lehman crisis.
On November 1, 2008, a programmer named Satoshi Nakamoto emailed a cryptography mailing list: “I’ve been working on a novel peer-to-peer electronic payment system with no trusted third party. The document can be found at bitcoin.org/bitcoin.pdf.” The technical document can still be accessed using the link.
According to Satoshi, the primary characteristics of the system would be that electronic transactions would be peer-to-peer and would not require transmission to a financial institution. The system was supposed to be decentralized, so users of the currency would not be required to place their faith in a central authority, such as traditional central banks. In an additional article from early 2009, Satoshi stated that the newly constructed system is based on cryptographic evidence rather than faith.
Satoshi was also dissatisfied with the fact that central banks and banks have consistently violated the trust of their users by lending money deposited in credit bubbles while maintaining a negligible reserve. “The fundamental issue with conventional currency is the confidence required for it to function. The central bank first must be trusted not to devalue the currency, yet the history of fiat currencies is replete with instances where this trust was violated, “Satoshi authored.
See also: Why Is the Crypto Market So Wild? Factors That Move The Crypto Market.
Bitcoin’s Growth Over the Years
The genesis block, the first block in the blockchain, was mined on January 3, 2009, thus kicking off the blockchain’s existence. Approximately a week later, the first test transaction was carried out.
For the first few months of its existence, it was only available to miners validating the blockchain. There was no real-life case use. These miners employed powerful computers that solved complicated math problems to reveal new Bitcoins and verify that past Bitcoin transactions were valid and correct.
Bitcoin Pizza Exchange: The First Real Life Adoption of Bitcoin
When a Florida man ordered two Papa John’s pizzas for 10,000 BTC on May 22, 2010, it was the first commercial transaction on the Bitcoin network. At the time of the transaction, the value of a Bitcoin was less than one dollar.
Today’s worth of that amount of Bitcoin is close to $400 million. May 22 has been dubbed “Pizza Day” by cryptocurrency enthusiasts and proponents to commemorate this watershed milestone.
Blockchain Advancement: The Introduction Of 2nd Generation Blockchain.
Miners and coders began to build new networks, such as Ethereum and Litecoin, in 2011 and began to enhance the technology underpinning Bitcoin’s blockchain, adapting it for different purposes.
Having a more diverse set of applications brought in more people, which contributed to the rise in Bitcoin’s perceived value. Also, as some businesses began to accept Bitcoin alongside traditional payment, the currency’s value increased tremendously.
In 2010, when Bitcoin was first made available on exchanges, buying, selling, trading, and storing it became simpler. Thanks to these exchanges, Bitcoin has a consistent price against the U.S. dollar today.
At the time of writing, Bitcoin is currently trading at $30,000 USD on Coinmarketcap.
Three Pillars of Blockchain Technology
The Bitcoin network relies on blockchain technology.
Blockchain technology is the digital, distributed, and decentralized ledger that underpins most digital currencies like Bitcoin and is responsible for validating transactions without the need for a third party, which in this case would be the bank.
Blockchain technology is incredibly safe, and now many businesses worldwide are seriously considering using it for more than just financial transactions.
At the core of this technology are three foundational components:
- Decentralization
Before the development of blockchain, most Internet transactions required a central server. Data that supported the service provided by this server was kept in this server’s storage unit. The banking system is a typical example of a central server system.
A central server system has a major advantage which is also a flaw; everything is kept in one location. As a result, a central server becomes a prime target for cyber criminals. The entire system grinds to a standstill if a central server has operating faults.
Decentralization is the answer to these centralized problems. This is what the blockchain system is built on. Information is decentralized and stored across a network of computers in an open-sourced format so that anyone can access it at any time. Blockchain technology is open-sourced, yet it is impenetrable by hackers.
2. Transparency
The blockchain system is anonymous because it hides the identity of users, but it is also transparent in the sense that, anyone can access the information stored on the blockchain.
Public and private keys are important notions to grasp in this case. A public key is more like an address that shows that you have made a transaction. Your private key should not be shared.
For transactions to be valid, they are connected to your public key.
The public keys associated with each transaction can be viewed on the blockchain. There’s no other financial system with this level of transparency. Blockchain provides a much-needed level of accountability for financial institutions.
3. The Immutability of records
Blockchain technology provides immutable records. That is, transactions cannot be modified once they are verified. There is no way to undo a transaction done on the blockchain.
The immutability of blockchain stems from the cryptographic hash mechanism. The blockchain is essentially a record of all transactions that have ever occurred across the network. Each block has a hash pointer connecting it to the previous block. The entire blockchain will be affected if anyone tries to alter the details of a block and this is almost impossible.
Summary
As public mistrust of banks and the financial system rose during the Great Recession of 2008, a new kind of currency called Bitcoin was born.
Bitcoin was officially introduced via the White paper by Satoshi Nakamoto, who addressed the centralization of money and the need for confidence in handling citizens’ money.
In the traditional financial system, third parties can reverse or tamper with transactions, which results in increased transaction costs for all parties involved.
The idea behind Bitcoin was to eliminate the need for a middleman in financial transactions. Instead of relying on third parties like banks and other institutions, the Blockchain system uses cryptographic evidence to guarantee the network’s integrity.
