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Bitcoin White Paper At 10: Looking Back

No one knows for sure where Bitcoin is going, but we do know where it’s been.

Ten years ago today – on Halloween 2008 – Satoshi Nakamoto submitted an email on a cypherpunk email chain. The email starts: “I’ve been working on a new electronic cash system that’s fully peer-to-peer, with no trusted third party.”

No one knew who Satoshi Nakamoto was before that email. No one knows who he/she/they are today (or, at least, no one is publicly admitting to knowing), although at least one person has claimed to be Satoshi. But in that email, Nakamoto shared the short white paper “Bitcoin: A Peer-to-Peer Electronic Cash System” and in doing so, became one of the most influential voices of this generation.

This act not only gave birth to the first, most famous and – just maybe – the most controversial cryptocurrency, but it also created an industry whose world-redefining effects are only starting to be appreciated. To date, there are over 2,000 cryptocurrencies, with another 1,000 dead, constituting a market with a current capitalization in excess of $200 billion.

Let’s look at how we got here.

Simple Beginnings

It is unclear what the significance of releasing the Bitcoin white paper on Halloween was. Maybe, the timing was meant as a joke. However, the simple concept Nakamoto put forth – that one party could send a transaction to another party without the need for an intermediary – raised the imagination of many, especially those that have been working on the idea of digital money for some time before Bitcoin.

One of these was fellow cypherpunk Hal Finney, who was the recipient of the first Bitcoin transaction. In 2004, Finney created the first reusable proof-of-work system, which became a key component of Bitcoin’s consensus protocol. Bitcoin is largely the result of years of research into digital money and trustless consensus-building, including contributions from Wei Dai, the creator of b-money; Nick Szabo, the creator of bit gold; and Adam Back, whose Hashcash is the spiritual father of Nakamoto’s blockchain.

That enthusiasm led to the first Bitcoin block being mined by Nakamoto on January 2009. It would be poetic to say that it was immediately embraced and a runaway success from the start, but that would not be true. Though Bitcoin has gradually invaded the public consciousness, there’s a lingering sense that it still hasn’t actually broken through, with the media declaring Bitcoin dead a remarkable 315 times by one count.

The Incredible, Unsinkable Bitcoin

To be fair, Bitcoin in the early days seemed more like an experiment off the rails than an actual alternative to money.

The first commercial transaction happened on May 22, 2010, when programmer Laszlo Hanyecz bought two pepperoni pizzas from Jeremy Sturdivant for 10,000 BTC – valued at $25 total at the time. In the time between that sale and today, BTC became the go-to currency for money laundering and the purchase of illicit merchandise; avoided collapse following the 2014 hack of its largest exchange, MtGox; was rocked by the 2016 Bitfinex hack; rose to unprecedented heights in 2017; and then bled off nearly two-thirds of the coin’s peak value over the course of 2018. Disagreements about needed changes led to the numerous forking of Bitcoin clones, and to this day, Bitcoin is still embroiled in a debate (internally and externally) about how to resolve its scalability problems.

Yet Bitcoin’s contributions may be enough to overcome the awkwardness of its payment network and the warring factions within its community. Bitcoin inspired many to look at the power of computing to change the world. Bitcoin’s finest feature is that it was and is open source, meaning that the software was free for anyone to copy, dissect, examine, reassemble, and change to whatever their minds could imagine.

One such mind was Vitalik Buterin, who – frustrated with the difficulty in proposing changes to Bitcoin – decided to launch an initial coin offering. The product he ultimately proposed – Ethereum – was a scriptable blockchain solution. Suddenly, there was a trustless platform to do work, taking Nakamoto’s concept past finances toward directions yet to be imagined.

No one really knows where Bitcoin is going or if it will even get to see 20 years. Regardless of this, its place in history is secured. As financial giants like Fidelity move to open cryptocurrency trading services and as retail giants like Walmart embrace blockchain to solve their supply chain problems, one can only wonder how much that email 10 years ago will advance humanity.

Frederick Reese is a politics and cryptocurrency reporter based in New York. He is also a former teacher, an early adopter of bitcoin and Litecoin, and an enthusiast of all things geeky and nerdy.

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