Image for post
Image for post

How Cryptocurrency was Invented

Vincent Otieno Owee
Nov 8, 2018 · 4 min read

The greatest invention that will determine the future economy

On September 28, 1928, Alexander Fleming ,a Scottish researcher, accidentally discovered Penicillin : the antibiotic that revolutionized the world of medicine.

At the time, Fleming was experimenting with influenza virus in a laboratory at St. Mary’s Hospital in London.

Often described as a careless lab technician, Fleming returned from a two-week vacation to find that mold had developed on an accidentally contaminated staphylococcus culture plate. On examining the mold, he realized that the culture prevented the growth of staphylococci; he had discovered the world’s first antibiotic. That is how cryptocurrency was invented too; accidentally.

Satoshi Nakamoto, the unknown inventor of bitcoin, never intended to create a currency.

He wanted to build a decentralized digital cash system. Many people had tried to create a centralized cash system in the nineties but all of them had failed. Satoshi now decided to build a digital cash system without a central entity. He succeeded.

The solution is in the problem
To get digital cash you need a payment network with accounts, balances and transactions.

The problem that every payment network has to prevent is one entity spending the same amount twice. This is done by a central server that keeps record of the transaction and the balances.

The decentralized payment network lacks this server, so every person in this network must keep record of the transactions that have occurred.

Every peer in the network must have the list of all transactions to check if future transactions are valid or prevent an attempt to double spend.

If the peers in the network disagree about only one minor balance, then everything is broken.

There is a need for an absolute consensus. This is the opposite of Centralized cash system where a central authority declares the correct state of balances.

The game changer

Satoshi came, nobody believed that a consensus could be achieved without a central , recognized authority.

He proved it was possible when he invented the bitcoin, the first and most important cryptocurrency.

By now you must be wondering who this Satoshi Nakamoto is. Well, many people say that he is a Japanese. Others say that Satoshi Nakamoto is just a pseudonym used by the creator of bitcoin.

On November of 2008 someone used that name to mail the bitcoin white paper to a cryptographic mailing list. This list contained famous people who believed in decentralization and cryptography.

Satoshi the anonymous

He is assumed to be Japanese man because of the name he used, but his almost perfect English in the white paper raises doubts about this assumption.

Satoshi Nakamoto invented the bitcoin software in October of 2008, and made it an open source in January of 2009 .And in 2010 Satoshi disappeared.

The billionaire

It is believed that Satoshi owns 1 million bitcoins or more which makes his net worth to be $3.2 billion by the time I am writing this article.

In January 2009, Satoshi mined the genesis block and in 2010, he officially stopped communicating. Between this period, the bitcoins that came into existence exist on the block chain ledger but they have not been used or spent. This shows how much wealth Satoshi owns.

The Ponzi scheme

1 million BTC is a huge number which if dumped suddenly, could cause turmoil in the crypto market. That is why bitcoin has earned the name Ponzi scheme.

Many types of cryptocurrencies have been created since the invention of the Bitcoin. However the bitcoin still remains the most famous cryptocurrency and most other cryptocurrencies have zero non-speculative impact.

Some of the most popular cryptocurrencies of today include : bitcoin, ethereum, ripple, litecoin and monero .

They are like MLMs: Everyday new cryptocurrencies come up with great promises of changing the world and most never survive the first six months.

Only the early investors make profits off their investments.

Image for post
Image for post
Image for post
Image for post

The Startup

Medium's largest active publication, followed by +716K people. Follow to join our community.

Medium is an open platform where 170 million readers come to find insightful and dynamic thinking. Here, expert and undiscovered voices alike dive into the heart of any topic and bring new ideas to the surface. Learn more

Follow the writers, publications, and topics that matter to you, and you’ll see them on your homepage and in your inbox. Explore

If you have a story to tell, knowledge to share, or a perspective to offer — welcome home. It’s easy and free to post your thinking on any topic. Write on Medium

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store