On the 31st October 2008, Satoshi Nakamoto released a white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System”. The Bitcoin software was released as open-source code, with the first block being mined on the 3rd of January 2009.
However, this was not the first time a similar project had been tried, and a lot of the principles behind Bitcoin come from the crypto-anarchism and cypherpunk movements. These were the principles of freedom of speech, freedom of trade and complete privacy through anonymity or pseudonymity. Cryptographic protocols and Peer-to-Peer sharing protocols laid the foundations for Bitcoin to be built.
In 1996 E-Gold was created which was a pseudonymous and borderless monetary system, backed by physical gold deposits. However, this was exploited by criminals and as the gold deposits had to be held by a centralised entity it was possible to shut down E-Gold and charge it’s founders of money laundering, whilst the unencrypted transactions allowed law enforcement officials to track down parties using E-Gold. These problems Bitcoin sought to solve.
DigiCash was created in 1990 by David Chaum and the blind signature protocol that he had created and utilised in DigiCash was eventually used for the Bitcoin encryption protocol. However, DigiCash was a closed system cryptocurrency to be used by banks and governments – the very organisations that the crypto-liberals sought to free themselves from. Therefore, Bitcoin had to be freely available to all.
The final piece was the 2008 Financial Crisis, which expertly demonstrated the flaws of the current financial system. This was immortalised by Satoshi embedding in the genesis (first) block, “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”.
Disclaimer: Nothing within this article should be misconstrued as financial advice. The financial techniques described herein are for educational purposes only. Any financial positions you take on the market are at your own risk and own reward. If you need financial advice or further advice in general, it is recommended that you identify a relevantly qualified individual in your Jurisdiction who can advise you accordingly.
