Bitcoin : The Basics
In October 2008, a mysterious whitepaper touting a potentially revolutionary monetary concept made its way to a cryptography mailing list. In a tidy nine pages, Satoshi Nakamoto, a pseudonym for an individual or perhaps a group of individuals, introduced the world’s first decentralized peer-to-peer money system. The paper claimed that participants in this fully open system, available to anyone with an internet connection, would be able to exchange value globally at any time without the need for a trusted intermediary.
Several months later, in January 2009, the first version of Bitcoin software formally marked the creation of the Bitcoin network, referenced in this report with an uppercase “B.” The network was the first application of blockchain technology, a fully transparent, shared, and continually reconciled distributed ledger that records transactions and tracks assets. The network’s launch also marked the creation of bitcoin. Referenced in this report with a lowercase “b,” bitcoin is a digital currency that’s divisible, fungible, and easily transferable with a programmatically defined monetary policy that ensures its scarcity.
Bitcoin’s Maturation: From Niche to Mainstream
Bitcoin arrived at an opportune time. Its launch coincided with the peak of the Global Financial Crisis (GFC), when many individuals lost trust in the large banks that held their money and the governments that set monetary policy. Bitcoin represented a new form of “hard money” that could not be adjusted or controlled by any centralized entity. This feature, and bitcoin’s scarcity, resonated in the aftermath of the financial crisis as governments around the world implemented large quantitative easing programs that increased the supply of fiat currencies.
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