The one crypto to rule them all, Bitcoin, is celebrating a birthday. The creation of Satoshi Nakamoto (whomever he or she really is), Bitcoin has become an iconic concept in global Fintech and the emerging world of digital assets.
Starting as a novelty in 2008, the nine page white paper that announced Bitcoin simply stated:
“A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they’ll generate the longest chain and outpace attackers. The network itself requires minimal structure. Messages are broadcast on a best effort basis, and nodes can leave and rejoin the network at will, accepting the longest proof-of-work chain as proof of what happened while they were gone.”
You have to wonder if Satoshi had any idea what they had just created.
In the ensuing years, and the loss of confidence in more traditional financial intermediaries, crypto entrepreneurs have built upon the Satoshi legacy. Bitcoin, and the concept of blockchain, is foundational to the multi billion dollar cryptocurrency industry.
The advent of Ethereum created by Vitalik Buterin, and the ability to create smart contracts, was and is, transformational.
The idea that you could code all sorts of processes into a digital asset clearly has value. Starting as a trickle, ERC20 initial coin offerings (ICOs) soon became an avalanche of crypto assets. This avalanche rattled international regulators who were blindsided by the speed and global reach of these ostensible security offerings that too frequently were scams.
Some regulators simply hit the ban button in a feeble attempt to gain control of crypto. Others saw opportunity and some attempted to apply established securities regulations to these crypto assets as the market evolved and expanded attacking traditional financial services processes.
The real concerns of fraud, and need for consumer protection, frequently swamped the reality that distributed ledger technology may be a transformational to finance and many other industries. It just needs some time. With traditional financial service firms joining the scrum of crypto entrepreneurs it is becoming more and more evident that digital assets are here to stay.
The Bitcoin market cap stands at about $100 billion today. Not too long ago, Bitcoin was 3X that amount as extreme volatility hit the broader digital asset marketplace.
Today, some people are saying Bitcoin is a safe haven of sorts in a market roiled by geopolitical strife, trade “skirmishes,” and rising interest rates designed to stave off another looming recession. The decentralized Bitcoin is currently differentiating itself in a centralized financial world.
Bitcoin is elegant in its simplicity.
Fiat currency has value because governments say it is so. Bitcoin has value due to the exact opposite as no government controls the currency.
While many questions remain regarding Bitcoin and its offspring, it is a truism that crypto entrepreneurs will continue to experiment and find new ways to innovative and disrupt. The best predictions of the future of crypto will most likely be wrong. But it is obvious that Bitcoin has spawned an entire industry, with far reaching implications, that few could have ever predicted.
Happy birthday Bitcoin. Cheers to Satoshi – wherever you are.