Bitcoin is the first cryptocurrency ever created. A cryptocurrency is a digital asset built on a blockchain that uses cryptography to control its creation and management, rather than relying on some centralized entity, such as a national government.

Without a national economy to evaluate the currency, or a national reserve to supply it, how *is* a currency such as Bitcoin created? This article covers the topic of Bitcoin creation, as well as an overview of its systematic introduction into the global economy.

Digital Assets Before Bitcoin was Created

Prior to the release of Bitcoin, there were a few underdeveloped attempts at developing digital monetary technologies. Most were issued based on ecashhttps://en.wikipedia.org/wiki/Ecash protocols, developed by David Chaum and Stefan Brands. The idea didn’t catch on, due to systematic networking incapabilities.

The idea of utilizing the solution of computational puzzles to represent value was proposed in 1992 by cryptographers Cynthia Dwork and Moni Naor. Building on this idea, Adam Back developed hashcashhttps://en.wikipedia.org/wiki/Hashcash, a proof-of-work scheme for spam control, in 1997.

Building further on the hashcash model, b-money and bit gold were the first proposals for digital scarcity-based cryptocurrencies. These early implementations had flaws, but the most fatal flaw was related to the Byzantine generals problem.https://en.wikipedia.org/wiki/Byzantine_fault. This is a condition of a distributed computing system where components may fail, but broadcast imperfect information on the verity of failure. The result is that a failed component may simultaneously appear both failed and functioning to internal failure-detection systems. These flaws obviously prevented bit gold and others from becoming a globally distributed financial system. 

Satoshi Nakamoto Created Bitcoin

On August 18th, 2008, the website domain bitcoin.org was registered. On Halloween 2008, a link to a paper authored by one Satoshi Nakomoto titled Bitcoin: a Peer-to-Peer Electronic Cash System was posted to a popular cryptography mailing list. The Bitcoin whitepaper described using a peer-to-peer network to generate a “system for electronic transactions without relying on trust”. Two months later, Bitcoin was born.

The Bitcoin network was created on January 3rd, 2009 when Satoshi Nakamoto mined the genesis block (block 0) of the blockchain and received the first 50 Bitcoin to enter circulating supply. Embedded on the coinbase (the transaction containing block mining rewards) was the current headline of the New York Times, “The Times Jan/03/2009 Chancellor on brink of second bailout for banks.” This legendary memo is simultaneously a timestamp and a visionary slight targeting the shortcomings of fractional-reserve banking.

The first open source Bitcoin client, hosted on SourceForge, was released on January 9th, 2009. Hal Finney, a programmer who downloaded the client on its first day, was the recipient of the first Bitcoin transaction: Satoshi Nakamoto sent him 10 Bitcoin on January 12, 2010. Wei Dai and Nick Szabo, creators of b-money and bit gold, were also early supporters of the Bitcoin network.

It is rumoured that, in these early days, creator Satoshi Nakamoto mined up to 1M Bitcoin in block rewards. Thereafter, he pulled a Krakauer, and seemingly vanished into thin air. Satoshi effectively handed over Bitcoin’s reins to Gavin Andersen, who became the lead developer at the Bitcoin Foundation. The Bitcoin Foundation, an anarchic online community, is the closest thing to a public face that Bitcoin has.

Who is Satoshi Nakamoto, Creator of Bitcoin?

The identity of the creator of Bitcoin remains unknown. “Satoshi Nakamoto” is presumed to be a pseudonym, either for an individual or, possibly, an organization.

What Do We Know?

Satoshi Nakamoto is responsible for creating the original official Bitcoin software. Immediately following the launch of the Bitcoin network, an online persona by the name of Satoshi Nakamoto was active in modifying network software and posting technical info in early Bitcoin forums (mostly on bitcoin.org). Otherwise, it is hard to trace any actions of the infamous enigma.

Identity

The obvious initial suspects for the identity of Satoshi Nakamoto were Wei Dai, Nick Szabo, and Hal Finney. All of them have refuted repeated accusations with reasonable evidence. Some evidence seems to suggest the possibility that Satoshi Nakamoto is the name of a computer collective operating within the European financial sector.

Investigation

Myriad organizations have launched investigations about the creator of Bitcoin’s identity. All investigations thus far have been fruitless. In 2012, The New Yorker* launched an investigation that pointed to two possible candidates: Michael Clear and Vili Lehdonvirta. Later, a Fast Company* investigation brought circumstantial evidence against Neal King, Vladimir Oksman, and Charles Bry. The evidence linked a four-word-phrase, “computationally impractical to reverse” from the triumvirate’s patent (#20100042841) to the Bitcoin whitepaper. All investigations were dead ends.

Reporters have pointed fingers, researchers have pursued network transactions to build accusations, and laymen have made claims, but no evidence has ever stuck. It seems that the identity of Satoshi Nakamoto will forever remain a mystery. For all intents and purposes, the creator’s involvement with Bitcoin doesn’t exist past 2010. If Satoshi Nakamoto has moved on, perhaps we should too.

Bitcoin Growth After Creation

Now we have a clear picture of the creation phase of Bitcoin. But how did it grow from one pseudonymous developer’s cryptography pet-project to the awesome decentralized financial institution that it is today? Like many great calls to adventure, our Hero’s Journey began with pizza.

The first transaction involving physical goods in exchange for Bitcoin was paid on the 22nd of May, 2010. Two bitcoin.org forum users negotiated a transaction ahead of time. Two pizzas, delivered by Papa John’s, were exchanged for 10,000 Bitcoin. Word to the wise - don’t try to do the math on how many pizzas 10,000 Bitcoin could buy today. It’s staggering. Regardless, this event solidified the financial viability of transacting using Bitcoin.

Its continuing adoption did not go off without a hitch. On August 6th, 2010, a major vulnerability was identified in the Bitcoin protocol. This allowed exploiters to bypass economic restrictions and create over 184 *billion Bitcoin in one transaction. The erroneous transaction was spotted and corrected in logs, and the network forked to an updated protocol - crisis avoided. Remarkably, this is the *only major security flaw found and exploited in Bitcoin’s history.

More organizations worldwide began to accept bitcoin. In 2011, the Electronic Frontier Foundation began accepting Bitcoin donations, as did WikiLeaks. Bitcoin made its television debut in 2012 on the CBS legal drama The Good Wife*. In September 2012, the Bitcoin Foundation, headed by Gavin Andersen, was launched to accelerate the growth of Bitcoin. Also in 2012, BitPay reported over 1,000 merchants accepting Bitcoin as payment.

In February 2013, the popular onramp Coinbase reported selling $1M worth of Bitcoin. Afterwards, a continual stream of markets and exchanges opened and began trading, resulting in the ecosystem with which cryptocurrency traders are familiar today.

Conclusion - Bitcoin Created Decentralized Finance

Since Bitcoin’s creation, powerful entities have tried to erase it from existence. Countries have outlawed Bitcoin. Banks have demonized all cryptocurrency. Centralized media tells you alternately that Bitcoin is a scam or that it will make you rich. 

Bitcoin is not going away. The network is decentralized - there is no way to destroy it. Over-regulation in one area of the world is usually met by overwhelming acceptance elsewhere. Supply and demand, as we know, make the world go round.

Bitcoin was the first cryptocurrency ever created, but it is not, as maximalists will tell you, the only cryptocurrency worth anything. Bitcoin has created the stage for a financial revolution. Decentralized finance, a system that enables trustless peer-to-peer payments, will revolutionize finance as we know it, and it will do it in a way that allows various cryptocurrencies to hold unique value.

Thousands of new cryptocurrencies are created yearly. Some introduce important new ideas, like Ethereum or Terra. But Bitcoin will always be the first, the OG, and the gold standard of cryptocurrency.

In a decade or more, the term “gold standard” may leave our language entirely. Maybe money will be compared to the “Bitcoin standard”.

Locke

If you learned something today, please consider collecting.

This article was originally published my previous alias, Demosthenes, as proven by this Tweet