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October 31, 2023
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Today marks 15 years since the pseudonymous creator of Bitcoin, Satoshi Nakamoto, shared the Bitcoin (BTC) whitepaper to a mailing list of crypto professionals on October 31, 2008 – a date that is also celebrated annually as Halloween.

“I have been working on a new electronic cash system that is completely peer-to-peer, with no trusted third party,” Satoshi said in his famous opening sentence before linking to the titled document. monetary system.”

Satoshi’s email informs other crypto hackers about his release of the Bitcoin whitepaper. Source: Satoshi Nakamoto Institute

The white paper proposed a decentralized system that could facilitate peer-to-peer transactions that could solve the “double spending” problem often associated with digital currency.

It proposed achieving this via a network of nodes to validate and record transactions through a proof-of-work consensus mechanism, which was launched just two months later on January 3, 2009.

How Bitcoin was brought to life

Satoshi’s advances in computer science came on the back of other impressive developments in cryptography and electronic money.

The first reference cited in the Bitcoin white paper is Wei Dai’s invention of b-money, a peer-to-peer electronic cash system that was never launched but nonetheless played a major role in Satoshi’s plans for Bitcoin.

Like Bitcoin, b-money proposed that participants in the system maintain a database of account balances, which tracks ownership of funds. Transactions will be initiated and completed by a radio message to all participants, which will update the account balances of participants in a particular transaction.

In many ways, it can be considered a precursor to the Bitcoin protocol nodes that keep a record of the ever-growing blockchain.

This process requires proof of work – a form of cryptographic proof in which one party proves to others that a certain amount of specified computational effort has been expended.

Satoshi implemented this in Bitcoin, citing Adam Back’s invention of Hashcash in 1997 which included proof of work to reduce spam and denial of service attacks.

Timestamps are another essential feature of Bitcoin that was successfully implemented by Satoshi.

Bitcoin’s timestamp server works by taking a hash — similar to a unique serial number — of a block of transactions and stamping it with a timestamp when the block is added to Bitcoin’s blockchain.

A hash cryptographically links one block to another, ensuring the integrity of Bitcoin data. Timestamps also prevent double spending on Bitcoin, making the network tamper-resistant and immutable.

Satoshi cited the work of Henry Macias, Scott Stornetta, Stuart Haber, and Dave Baer in implementing timestamps in the Bitcoin protocol.

Meanwhile, Merkel trees have been implemented in Bitcoin to verify transaction data through digital signatures. Satoshi cited Ralph Merkel’s work in developing public-key encryption systems.

Bitcoin and cyberfunk advocate Jameson Loeb previously told Cointelegraph that credit should be given to the initial projects that paved the way for Bitcoin.

However, the genius in Satoshi was to puzzle all these pieces into a fully functioning system, Loeb said:

“There is no single piece of the puzzle that I think is more important than the others. Nakamoto’s genius was not any of Bitcoin’s individual components, but rather the intricate way they fit together to breathe life into the system.

What Bitcoin did

Bitcoin at the time was one of the first inventions to use cryptography to successfully separate money from the state. Satoshi’s invention enabled users to effectively bypass banks and financial institutions to transact with others around the world.

The first real transaction paid in Bitcoin came from Laszlo Hanec in May 2010, who bought two pizzas for 10,000 Bitcoin.

Mainstream media highlighted the increasing use of Bitcoin by criminals to launder money, among other things in the early days, but this narrative has continued to change.

It is becoming increasingly adopted around the world. It was put out to legal tender in El Salvador in September 2021.

Financial institutions have also recently applied to offer Bitcoin exchange-traded funds (ETFs) in the US, while other institutions have launched their own Bitcoin ETFs in Europe.

Many developments have been implemented to help Bitcoin scale and bring more use cases to the network.

The Lightning Network was launched in 2018 to increase the speed of Bitcoin transactions by performing off-chain calculations.

Related: BlackRock’s Bitcoin ETF: How it works, benefits and opportunities

The non-fungible token-like Ordinals launched on Bitcoin in January, made possible by the Taproot soft fork in November 2021.

The price of Bitcoin has also been taken on a wild ride.

Starting out as cheap as a penny in 2009, Bitcoin has endured numerous bull and bust cycles with its price fluctuating by up to 88% in some cases.

Bitcoin price since April 2013. Source: Queen Gekko.

BTC is currently priced at $34,350, down 50% from its all-time high of $69,000 on November 10, 2021.

magazine: Gary Gensler’s Job Is At Risk, BlackRock’s First Bitcoin ETF and Other News: Hodler’s Digest, June 11-17