The History of Bitcoin
The unusual story of a Bitcoin Baby that turned into a Global Giant is fascinating. If you like to learn about new, future technologies, hop on.
A basic understanding of Bitcoin’s beginnings can help you get a grasp of what it’s all about.
In my last crypto article, I detailed how I want to help people understand cryptocurrency. It’s the future of money. People are becoming less scared of horror stories and open to finding out more.
The Birth Of Bitcoin
It all started on October 31st, 2008, with the appearance of a whitepaper written by someone using the pseudonym Satoshi Nakamoto. The 9-page whitepaper was entitled Bitcoin: A Peer-to-Peer Electronic Cash System.
Who is Satoshi Nakamoto?
The controversy around the whitepaper started in 2008, and it is fair to say that the battle still rages. There are so many questions that came from one earth-shattering whitepaper. A mixed bag of curiosity, such as:
- Who is Satoshi Nakamoto?
- Is Satoshi a genius?
- Was it created by a group of people and not an individual?
- Was it created by bankers to change the monetary system forever?
- Could the whole thing be an elaborate joke?
Nobody honestly knows for sure. People have thrown their hats in the ring, claiming they are Satoshi. Computer scientist David Wright is a good example. It’s a messy situation, but above all, it’s a complete mystery.
Forget The Controversy And Look At The Facts
It doesn’t matter where you sit on the subject of Satoshi. What is important is the whole concept itself. It is a revolutionary technology that decentralises money. It’s something incredible, but at the same time, inevitable.
You can instantly teleport money anywhere in the world and cut third party fees.
Why is that important, you might ask?
When you find out that credit card companies are making +$40 billion a year in transactional fees, it makes you sit upright. Is this right in modern society? Why are businesses making so much money from our hard-earned money?
Advantages of Cryptocurrency
There are many advantages of cryptocurrency that the mainstream news never mentions. Some are obvious, and others are pretty mind-blowing. If you advocate for creating a fairer society globally, then read on.
- You can drop all those expensive middlemen.
- Because of the ledger of all financial transactions, there is more transparency, and it stays on the internet forever.
- It separates the money from the state.
- People who don’t have access to bank accounts in the world can finally access a system that they can use.
- It is super quick compared to traditional banking methods.
These are only a few of the benefits, and there are so many more. I will cover them all in separate articles. It’s only fair that each advantage is looked at, dissected, and explained as simply as possible.
My mission is to explain Bitcoin and cryptocurrency simply so more people can understand and make informed choices in their lives.
Bitcoin Proof of Work And Energy Consumption
You might have heard the term “Proof of Work” (PoW) but wondered what it was all about. It describes a system that requires effort to deter malicious use of computer power.
A couple of examples of PoW could be sending spam emails or launching DOS attacks. Hal Finney further adapted the whole concept in 2004 with securing digital money.
Hal Finney’s idea of “reusable proof of work” used the SHA-256 hashing algorithm.
Bitcoin became the first cryptocurrency to adopt Finney’s PoW idea. PoW is a decentralised mechanism that requires people in a network to solve a mathematical puzzle. Some regard it as mathematical purity at its finest.
PoW helps Bitcoin and other cryptocurrencies process transactions peer-to-peer without needing a third party.
It helps to prevent people from “gaming” the system. It is already widespread. Cryptocurrency mining already uses PoW for mining new tokens and validating transactions.
There is a downside to PoW, as it requires vast amounts of energy when used on a large scale. Sadly, consumption continues to increase as more miners join. Bitcoin mining consumes 91 terawatt-hours of electricity annually.
Proof of Stake As An Alternative
Ethereum, Cardano, and Ripple are already pushing an alternative called “Proof of Stake” (PoS), which consumes less energy. PoS states you can mine or validate block transactions depending on how many coins you hold.
The Negative View On Bitcoin And Cryptocurrency
Bitcoin and Cryptocurrency also have negative aspects. Is it rotten to the core and covered in greedy ants sucking your blood? Can it be a tool for criminal activity? Some illegal activity does still occur. But nothing is 100% foolproof.
Don’t forget; there have been thousands of incidents of criminal activity with “normal” money.
Notably, there is more transparency in decentralised finance. This accountability is essential, and the industry knows that. Many crypto exchanges battle every day to offer the best services and security.
Regulation of Cryptocurrency
Cryptocurrency will become regulated at some point, and probably sooner than most people think. It is a monetary beast that is growing exponentially every day.
The crypto industry is entering a new phase of its existence.
Recent debates in America on regulations have given mixed messages about crypto. There is an understanding that it has to be regulated, but countries also don’t want to miss out.
Whatever you think about cryptocurrency, the sensible choice is to keep your mind open to the positive possibilities. If you live in a country where access to a bank account is near impossible, this system can change your life.
If you want to invest but are nervous, keep researching and learn more. Start small and give it a go. It’s not as hard as you might think. This time next year, you can look back on your efforts and be pleasantly surprised!
Please note that this article is my subjective opinion and is not in any way financial advice.