History of Bitcoin

Bitcoin was invented in 2008 by Satoshi Nakamoto with the publication of a paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System”. Satoshi Nakamoto combined several prior inventions such as b-money and HashCash to create a completely de-centralized electronic cash system that does not rely on a central authority for currency issuance or settlement and validation of transactions. The key innovation was to use a distributed computation system (called a “Proof-Of-Work” algorithm) to conduct a global “election” every 10 minutes, allowing the de-centralized network to arrive at consensus about the state of transactions. This elegantly solves the issue of double-spend where a single currency unit can be spent twice. Previously, the double-spend problem was a weakness of digital currency and was addressed by clearing all transactions through a central clearinghouse

The bitcoin network started in 2009, based on a reference implementation published by Nakamoto and since revised by many other programmers. The distributed computation that provides security and resilience for bitcoin has increased exponentially and now exceeds that combined processing capacity of the world’s top super-computers. Bitcoin’s total market value is estimated at between 5 and 10 billion US dollars, de‐ pending on the dollar/bitcoin exchange rate. The largest transaction processed so far by the network was $150 million US dollars, transmitted instantly and processed without any fees.

Satoshi Nakamoto withdrew from the public in April of 2011, leaving the responsibility of developing the code and network to a thriving group of volunteers. The name Satoshi Nakamoto is an alias and the identity of the person or people behind this invention is currently unknown. However, neither Satoshi Nakamoto nor anyone else exerts control over the bitcoin system, which operates based on fully transparent mathematical principles. The invention itself is groundbreaking and has already spawned new science in the fields of distributed computing, economics and econometrics

A Solution To a Distributed Computing Problem

Satoshi Nakamoto’s invention is also a practical solution to a previously unsolved problem in distributed computing, known as the Byzantine Generals’ Problem. Briefly, the problem consists of trying to agree on a course of action by exchanging information over an unreliable and potentially compromised network. Satoshi Nakamoto’s solution, which uses the concept of Proof-of-Work to achieve consensus without a central trusted authority represents a breakthrough in distributed computing science and has wide applicability beyond currency. It can be used to achieve consensus on decentralized networks for provably-fair elections, lotteries, asset registries, digital notarization and more

Leave a Comment