The Story Of The Most Powerful and Strangest Currency in history, Bitcoin
The Start Of Bitcoin
In the nineties of the last century, with the beginning of the Internet revolution and the breaking of the centralization of information, some programmers interested in the process of electronic encryption saw that this revolution carried with it a threat to the privacy of individuals in favor of the authority of the state and financial institutions1. Early on, they initiated a movement called Cypherpunk. The movement's vision was beyond cyberspace beyond social networks influenced by any connection between them.
Therefore, their dream was to create an open society, in which a central authority has no role in managing it in any way.
Accordingly, the cypherpunk movement set four main goals to build an invisibility system that would allow the movement to achieve an open society away from state control. The objectives were as follows:
Protect privacy with encryption An encrypted email system Create digital signatures A Cryptocurrency that is anonymous using electronic encryption
This was mentioned by Eric Hughes, founder of the cypherpunk movement, in the movement's manifesto in March 1993, Since then, this group has made several attempts to achieve these goals, but the most challenging and difficult of these goals was creating a digital currency. There have been many attempts to create digital currencies, including
Hal Finney's creation of RPOW Coin And Nick Szabo's creation of the (Bit Gold) coin And the creation of (Adam Back) for the currency (HashCash) And the creation of (Wei Dai) for the currency (b-money)
But there was an attempt that was different in terms of the application or its application in reality, which is the currency (DigiCash) made by the scientist David Shaum8, nicknamed the father of anonymity technology over the Internet. who was also a member of the cypherpunk movement. The difference between this attempt lies in its departure from the principles of the movement; Shaim realized that he needed existing institutions to help him issue his cryptocurrency9. He started talking to the government and banks at the end of the nineties to issue it, but he did not find any response, and five years after the opening of his company, it was declared bankrupt and closed10.
The global financial crisis of 2008 caused an earthquake in the bastion of modernity and in the structure of the state when it blatantly sided with the collapsed financial institutions and left the affected society to pay the price of this collapse. Jobs, homes, and other damages to the core of people's lives have been lost. This massive earthquake has brought life again not only to thinking of an alternative but to try to implement it more creatively and to gain confidence and spread.
In October 2008, on one of the largest platforms interested in networking and facilitating the work of organized social networks called the (P2P Foundation), an anonymous person who identified himself as (Satoshi Nakamoto) announced that he is working on an automated exchange system that works entirely between two parties only with no third party intermediary11.
What Nakamoto did was not only that he took advantage of all previous attempts; But he also created a new technology (protocol) he called Blockchain to be used as an automated banking system for his nascent electronic currency, through which money could be transferred between two people without a third party like a bank in the normal case.
Bitcoin Currency
Currency is a code, and this code is made up of letters and numbers, The important thing here is how can this coin be acquired? How can it be transmitted between individuals in safety without any mediation? How can all this happen without the two parties to the transaction knowing each other (sender and receiver)? What is the available quantity, is it limited or not?
Bitcoin
Gold was originally inspired by Satoshi Nakamoto as a currency with a value in itself. A limited quantity even if it is large, an effort is made to reach it, and its price rises and falls according to supply and demand. Therefore, Nakamoto produced 21 million units of this currency and called it “Bitcoin” and designed a system that subtracts a certain number per day and reduces the subtraction by half every 4 years so that scarcity occurs over time. After a specific time, specifically in the year 2140 AD, all Bitcoin units will be released. But that is not all. Who has the right to obtain these coins after they are put out? To complement the idea of gold as currency, Nakamoto invented something called mining12.
Mining is a complex mathematical process that a specialized computer program solves to obtain one unit of bitcoin. With time, the complexity of the computational process increases so that individuals with their personal devices cannot solve it, which requires the purchase of devices that are more capable of solving it. This means more cost for equipment and also for electricity consumption. A higher stage of complexity after time calls for the participation of many individuals to use their specialized equipment to solve calculations. In the end, they all share the number of bitcoins they have earned, each according to their participation in the process.
How is Bitcoin Traded?
This is based on the blockchain above technology, Crypto Invest, which is the banking system in the case of currencies. In the case of Bitcoin, it is simply a single record on which all Bitcoin movements are recorded, starting with obtaining them through mining. Suppose that Ahmed performed the mining process and obtained a bitcoin with the code “X”, it will be recorded in the register that Mic owns “X”, and if Joe wanted to buy this coin from Mic, and Mic agreed to that and the sale was done, the coin will move from Mic’s wallet to the wallet Joe, and thus a line will be added in the record saying that unit “X” became the property of Joe, and so on.
This record is made in duplicate and distributed to everyone in the Bitcoin network, and when any currency transfer takes place; The registry is updated and all copies in the entire network are updated simultaneously, making it impossible to tamper. If one of the copies of the records is hacked and modified, the network will reject this modification because it is not compatible with the rest of the copies. So you need to modify more than 51% of the copies at the same time for the “consensus” to occur and the hack to be successful, which is practically impossible.
Now we already have a currency that works in a tight system. How did it spread? How did the state deal with it?
The Story of the Rise of the Bitcoin Currency
It was the first Bitcoin purchase made by someone who wanted to buy a pizza for 10,000 bitcoins, which equates to about $340 million at the time of this writing. Later, I started my first company called “MT. GOX” based in Japan by converting regular currency into Bitcoin and vice versa, which contributed to the beginning of the spread of the fledgling currency. In late 2010, donations to WikiLeaks via wire transfer or regular transfer companies were prohibited, which made Bitcoin the only way to donate to the site, and thus Bitcoin began its second stage of spreading.
Two months later, Bitcoin was on the cusp of its third stage of expansion. But this time of a different kind, the site (Silk Road) was created, which is a black market for buying and selling drugs, heroin, guns, fake passports, and other illegal items. The difference this time is that the site was based exclusively on the bitcoin currency, which gave a wider spread but was also accompanied by a bad reputation that did not leave bitcoin for a long time. This was followed by the adoption of many sites, Bitcoin, as a currency that can be traded, such as Word Press, Microsoft, PayPal, and Dell.
On March 18, 2013, the US Financial Crimes Control Network “FinCEN” adopted “virtual currency” as a currency that can be exchanged with the US dollar. But she stressed that the currency does not have legal legitimacy in the country. This was a soft victory for this currency over the central state, which culminated on the first of April of the same year by breaking the $100 barrier after it was $52 on the day of adoption. To this day, the price of Bitcoin is fluctuating, but in the course of its life, it is rising. It has reached $34,000 as of this writing.
Generally, anyone can create their own currency and put it into circulation, only, their ability to gain the trust of dealers is what gives their currency value and ability to survive. There are currently more than 8000 projects built on bitcoin and blockchain technology. At the time of this writing, 80 projects have crossed the $1 billion mark in market capitalization for trading their digital assets.
How did countries deal with the experience?
A currency coming from outside the traditional context of the concept of the state and its context, piercing all those veils in record time and with the acceptance and confidence of individuals. At first, the states, using their tools, could not but clash with this intruder without permission. The three largest companies that were based on the conversion process from regular currency to Bitcoin and vice versa were closed.
The charges against two US companies were: facilitating the purchase of illegal items and the companies' failure to comply with money transfer laws and to deal in currency without a bank account. GOX, which is owned by a French engineer who was its CEO, the company's online transfer system has been hacked. This was the result of its CEO's complacency in canceling the confirmation step from the rest of the chain on the transfer before completing the transaction, as is customary in the blockchain protocol. This led to a loss of about 850,000 bitcoins, which is equivalent to 7% of all bitcoins at the time.
Contrary to what was expected, the collapse of the three largest companies amid the rise of the nascent currency was a catalyst for its spread. The basic philosophy of people's trust and acceptance of this currency is that there is no centralization, or a third party providing the service. With the fall of these companies, more dependence on the network itself has become. Also, any company that wants to enter this world and is destined to continue must work according to the rules of the currency that are the core of success, spread, and people's trust.
After that, countries and financial institutions resorted to adaptation instead of clashing. On the digital currency front, one of the banks has launched the service of converting Bitcoin into a fiat currency that can be withdrawn from the automated teller machine (ATM) whenever you want, in exchange for a commission on each withdrawal, but you must first create an account in this bank, and after completing the procedures for making the account electronically, the bank will By sending the card for withdrawal from automated teller machines by mail, so that your identity is known during the transaction on one hand, and on the other hand it has become one of the sources of income for this bank.
Even now, people's knowledge of Bitcoin and other digital currencies is increasing daily, and this expansion is increasing more in areas experiencing economic turmoil, or problems in the local currency, such as Venezuela, Argentina, Turkey, and Egypt.
There is no doubt that the four goals of the Cyberbanks movement have seen the light in one way or another as encrypted emails such as ProtonMail, electronic signature, or the use of encryption to preserve privacy such as the VPN protocol, as well as the Tor browser. But the last goal was much later than the others. But it also came to bring about a revolution in the world of finance, which began with the launch of Bitcoin and will take its course according to people's awareness and ability to use this technology to create their own spaces away from the central authority of the state or capital.
This Is A History Of Bitcoin
Finally, other currencies such as Bitcoin Cash, Litecoin, and Bitcoin Gold have appeared
This is the story of Bitcoin, the currency that broke all Cryptocurrency and is the most powerful digital currency. You can find more articles Here