Bitcoin is breaking its own records of value almost every day. Only since the beginning of the year, its price has already doubled. Why bitcoin, because now there are about 6 thousand different cryptocurrencies and more and more are appearing? Yes, they are new, but they are essentially different versions of the same thing, the very first and outstanding digital currency – bitcoin, which is called the most important invention of mankind after the creation of the Internet.
What is bitcoin?
Bitcoin is the world’s first virtual currency or cryptocurrency. It is a digital medium of exchange that is created and used by individuals or groups. Most cryptocurrencies are not regulated by governments and exist outside of government monetary structures.
In creating bitcoin, developers use cryptographic protocols–extremely complex systems of codes based on advanced mathematics and computer engineering. These protocols protect the virtual currency from duplication and counterfeiting and mask the identity of the user.
Cryptocurrency is not backed by any assets and is not tied to any other currencies. Its rate depends only on supply and demand. Nevertheless, bitcoin is a recognized global payment system. What makes it different?
The main difference from traditional systems is decentralization: transactions are made directly between users, bypassing the stage of the control center, because there is none;
Bitcoin exchange rate does not depend on inflation;
cryptocurrency can be stored on your computer or smartphone and cannot be stolen;
virtual transfers cannot be blocked and funds cannot be “frozen;
each transaction is anonymous and not limited to a certain amount.
Where do bitcoins come from?
They don’t materialize out of thin air, do they? To get a cryptocurrency, you need to generate it, that is, to mine it (from the word “mine”). Bitcoins are mined by solving complex mathematical problems on a computer. For solving each one, the “miner” receives a certain amount of “satoshi”, the minimum bitcoin units.
Such problems can be solved on an ordinary home PC, but it will take a very long time and the yield will be negligible. The more powerful the computer, the faster the digital coins are mined. Mining as a way to earn money is very popular in countries with unstable economies and ever-increasing inflation, such as Venezuela.
The mined satoshi are recorded in a virtual ledger. It is called a blockchain and is not located in any particular place, but on the computers of all the miners at the same time. The record cannot be faked – others will immediately detect the fraud and refuse to accept it. To hack the system, you need to fill more than half of the computers of all users with fake entries, and that is physically impossible. Those who have tried, say a brilliant programmer and cryptographer or a group of talented programmers and cryptographers created it. Or maybe the CIA is behind it all, or is it a conspiracy of big corporations?
Who created bitcoin? This story is more mysterious than many detectives.
The Mysterious Genius.
“The main drawback of modern money is that it needs to be trusted. We are forced to trust central banks, but history knows hundreds of examples where they have undermined trust by completely devaluing their paper.” (c) Satoshi Nakamoto
The domain name bitcoin.org was registered on August 18, 2008. A few months later, members of the crypto and “crypto-punk” community began receiving letters signed by a certain Satoshi Nakamoto via a private e-mail list. In the message, he claimed that he was finishing work on a digital payment system, and provided a link to a text that later became historic – “Bitcoin: A Peer-to-Peer Electronic Monetary System”. This document described in detail, clearly and completely the concept of the new virtual currency.
On January 3, 2009, the mysterious author of the letter launched the bitcoin generating program and tested it personally. One week later, on the 9th of January, on bitcoin.org appeared the first ready version of Bitcoin Core version 0.1 with open source code for mining the cryptocurrency with the ability to transfer it between users. Two years later, on April 23, 2011, one of the developers received a short email: “I did other things. The future of bitcoin is in good hands.” Satoshi Nakamoto disappeared and has not appeared until now. There has been no movement on his e-wallet, and the addresses and accounts are no longer in use.
The debate about who he is has not subsided until now, and now it has flared up with renewed vigor. Versions abound. Experts in linguistics are studying his records, numerologists and astrologers are charting, and supporters of the conspiracy theory are speculating. What are the most popular assumptions?
One of the most famous theories is Satoshi Nakamoto, which stands for Samsung (Sa), Toshiba (toshi), Nakamichi (Naka), Motorola (moto). Large corporations with a mysterious purpose created cryptocurrency. The companies do not comment on this assumption.
The second version – under a pseudonym hides Nick Szabo – a brilliant scientist with encyclopedic knowledge in the field of computer science, cryptography, economics, law and the history of monetary relations. He created the concept of Bitcoin’s predecessor, the decentralized digital currency Bit Gold, back in 1998, and its architecture largely anticipates the architecture of Bitcoin. Some researchers have noted that the style of Sabo’s and Nakamoto’s texts is suspiciously similar. To some extent, he himself intrigues the public by refusing to answer questions and by withholding personal information.
Nick Szabo is one of the contenders for the role of Satoshi Nakamoto
Option three – Satoshi Nakamoto, or more precisely Dorian Prentice Satoshi Nakamoto, a California resident, an American of Japanese origin. An engineer-physicist who worked for the U.S. government in the past. It is his face that any search engine will give up when asked about the creator of bitcoin. The man himself categorically denies his involvement in cryptocurrency and claims that media interference is ruining his family’s life.
U.S. CIA and NSA. Many “experts” on Nakamoto, including those from Kaspersky Lab, are convinced that only these powerful organizations could assemble such a strong group of programmers and cryptographers to carry out such a project.
And then there are a few more minor versions: the early developers of Bitcoin Core, crooks of various levels, the mafia, a mysterious group of computer geniuses who are trying to take over the world. Until Satoshi himself appears or his identity is revealed with 100% proof, the mystery will stir society.
Dorian Prentice Satoshi Nakamoto
Nakamoto is believed to own at least BTC1 million. If true, his fortune at today’s bitcoin rate is approximately $60 billion and some experts don’t rule out that the mysterious and unpredictable cryptocurrency creator could simply crash the market if he wanted to.
“Every time I see a report in the news about bitcoin rising, I wonder if Satoshi sees it. Is he proud? Will he ever reveal himself?” (c) Joshua Davis, New Yorker investigative journalist
Bitcoin history – most important dates
Bitcoin history began with Satoshi Nakamoto and didn’t stop even after the creator left the project. What are the main events that happened to the cryptocurrency since the launch of the mining program on January 9, 2009?
On January 12, 2009, Nakamoto transferred 10 bitcoins to developer Hal Finney;
On October 5 of that year, bitcoins were exchanged for dollars for the first time. One of the programmers sent to New Liberty Standart website BTC5,05 thousand and received $5,2 on his PayPal wallet. At that time they were giving about BTC1 thousand for $1;
In December of 2009, Bitcoin 0.2 was released on Linus Torvalds’ Linux platform;
In May of 2010, for the first time bitcoins were used to buy physical goods – two Papa John’s pizzas were sold for BTC10 thousand, which is now more than $ 570 million. This was a major event, and since then, May 22, “Pizza Day” – favorite holiday of all cryptocurrency supporters;
Those famous sausage pizzas for $25 in 2010.
in February 2011, the price of BTC1 will catch up with the value of $1;
May of 2011: after the U.S. government blocked the accounts of Wikileaks, the organization began to accept payments in bitcoins. This proved once again that the cryptocurrency does not depend on government sanctions;
Destruction of Silk Road. In October 2013, American law enforcement officers shut down one of the largest sites for the sale of illegal substances. The organizers of the trade were arrested. Payments between buyers and sellers were made in bitcoin, in order to preserve anonymity. This dealt the cryptocurrency a serious reputational blow and affected its value, which fell by 50%;
In March 2016, bitcoin began to legally circulate in Japan along with the yen. This stimulated a new round of growth, in November 2017 the price of a bitcoin rose to $10 thousand, and then, in December, to $20 thousand. At that time it was a record, after the rate went up and down until March 2020.
Bitcoin – recognition and rise
“A huge new business industry has emerged. Many have made fortunes.” (c) Richard Branson, entrepreneur
The main catalyst for bitcoin’s rise in value since the spring of 2020, experts believe the open acceptance of the cryptocurrency by major financial institutions, investors and leading businessmen. They began investing in virtual coins to protect their assets from the inflation caused by central banks printing money and pumping it into the pandemic-hit economy.
Giant JPMorgan expects bitcoin’s price to rise to $146,000, and genius Katie Wood gives an even bolder prediction of $400,000 per unit, and the Guggenheim fund’s chief investment officer agrees with her. Jack Dorsey’s Square cash and PayPal are now redeeming almost 100% of all newly issued bitcoins at a 40:60% ratio. It has become known that Dorsey has set up his own mining farm, while PayPal has officially allowed its users to transact in the cryptocurrency since last November. Tesla representatives in early February announced that they would accept bitcoin for payment and invested $1.5 billion in it – the statement increased the value of one unit by another 23%. China has yet to say its word.
On Monday, the price of the cryptocurrency reached a record high of $58,000. But financial experts advise to keep a cool head. Bitcoin has had many ups and downs in its history and no one can now say with certainty what will happen to it in a month, a year or ten years. It can both grow more than the rosiest forecasts predict and collapse – and the collapse will be unexpected and terrible, as usual.
The important thing is that bitcoin is no longer considered a means of payment between all sorts of marginalists, leftist movements, and network anarchists. Mining has started to turn from something semi-legal to a perfectly legal business, and some bitcoin generating equipment companies are now preparing for an IPO. I wonder if we will ever find out what Satoshi Nakamoto thinks about this? If he actually exists…