TECHNOLOGY – Bitcoin’s Origin Story: A Glimpse into the Birth of Blockchain

Introduction

I wrote this article in the summer of 2018 to introduce the concept of Web 3, which is now evolving to Web 4 and even 5. Technology is moving that fast! I have made a few changes to the original article, so please treat it as a historical journey. We're in 2023 and in the early stages of AI technology use.

l aim to break down what is happening around emerging technologies and how they  impact  our lives.  

The Beginning

Welcome to Satoshi Nakamoto’s world. You can read through this article or scroll down to the bottom and read the summary.

The Creator of Bitcoin

On the 3 of January 2009, Satoshi Nakamoto – rumour has it that Satoshi is not even a person but a group of people – created an electronic form of currency called Bitcoin.

Fiat Currency

Satoshi said our money, or Fiat goes through third parties and incurs fees because of regulations.

He felt it would be cheaper and more straightforward if people could transact their currencies through a peer-to-peer or person-to-person electronic cash system. His examples of institutions are banks, credit card companies, payment platforms, etc.

Satoshi wrote that exchanging physical cash might be acceptable, like taking coins and paper money to a shop. Still, when it comes to electronic money, the 3rd parties have to trust you and require a lot of your personal data to do this.

Because of the prevalence of fraud, the 3rd party demands even more in-depth knowledge of you. It could be your mother’s maiden name, grandmother’s first name, etc. It will surprise you to learn about the extent of the information held out there.

Satoshi calls this a trust issue. Merchants need to trust you to act on your behalf. Some international payments through the banks come with hefty charges. Transactions are also vulnerable to fraud.

Satoshi felt banks and governments controlled Fiat centrally, which did not give citizens enough to say. He believed transactions should be possible without banks, governments, or other financial institutions.

This world seemed almost impossible in 2009, but it excited many people in technology who avidly followed his plans. To them, it was not about anarchy or bringing down governments. It was about people controlling their own money. And carrying out financial transactions worldwide with no intermediary.

The Unbanked and Unknown

For example, this kind of decentralisation can help billions of unbanked and unknown people in Africa and other developing nations. Without identity, most do not have a bank account, although mobile banking in many parts has done a lot to rectify this.

Introducing Blockchain technology and cryptocurrency will make a difference in this space. There are significant developments currently going on in Africa that I will cover in depth.

What is Bitcoin?

This digital money lets you pay family and friends or conduct business transactions securely and instantly.

It sits on the blockchain – an electronic spreadsheet that resides identically on many computers worldwide.

All transactions on this ledger can be viewed by anyone as long as they have public keys (more on this later) to view the transactions and a private key to access their own trade.

We can also divide Bitcoin into 8 decimal places! It means that you can buy a fraction of a bitcoin. Therefore, a transaction can handle the smallest amount of 0.00000001 BTC. The last bitcoin is likely to be generated in the year 2140. The market value of bitcoin fluctuates; at the time of writing this, a bitcoin is; $8,256. When it began in 2009, it was about $0! In 2010, it was worth $0.39. Many people who bought it then are now wealthy. The name digital gold is also a popular way to refer to

What are the uses of Bitcoin?

• It can be used as payment for goods or services.
• You can buy bitcoins from Exchanges (Like an online currency exchange).
• You can trade bitcoin on trading platforms and exchanges.
• You can also buy bitcoins from Bitcoin ATMs, although the high transaction fee.
• You can invest in bitcoin, but the cryptocurrency market is very volatile and not for the faint-hearted. If you want to invest, it has to be money that you can afford to lose.
• A few’ evangelists’ have predicted that bitcoin could get to 1 million dollars per coin in years to come. It fell from its all-time high of close to $20,000 around December 2017.

SUMMARY

So, let us recap the above;

About Bitcoin

• Bitcoin was created in 2009 by a man or a group called Satoshi Nakamoto.
• Electronic money can be processed and viewed simultaneously on many computers worldwide by specialists called Miners with powerful computers that can solve mathematical problems required to find a bitcoin.
• It is an electronic payment that allows transactions between people as long as they have a private key and public key (more explanation of this later)
• It is being used worldwide, but it might take many years before broader adoption around the globe happens.

Good things about Bitcoin

• In the future, the need for banks or financial institutions might become minimal due to the disruption of this technology. Think of how email disrupted the postal system.
• Many startups in developing countries use it to pay local people who do not have banks or easy access to banks.
• The birth of bitcoin allowed us to discover the value of its underlying technology – The Blockchain. It has also allowed the creation of hundreds of other digital currencies.
• Bitcoin is also called digital gold and, in time, might become a store of value, just like paintings by the old Masters.
• Due to the birth of bitcoin, we now have the Internet Of Money( A book title by Andreas Antonopoulos). It means the internet will become a means of banking our own money.

The Not so good Things

• It requires considerable computation power to mine, so a bitcoin transaction takes a long, and charges could be expensive. 
• Its value fluctuates, and it is still very volatile.
• Cybercriminals have used it for fraud, but it is rising above this.
• The market is currently unregulated and subject to market manipulation.

Do you know….

There is a traditional currency system in places like the middle east and Afghanistan known as the Hawala, where people exchange currency based on trust. The only difference between it and Bitcoin is the mode of transfer. There are no computers. Do google it. It makes an exciting read.

Please note that I am not a financial adviser. If you want to make a financial decision, please seek advice from a professional.

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