From Aug. 18, 2008, to Oct. 31 of the same year, Satoshi Nakamoto must have had a hectic few months. That summer day, Nakamoto had registered the bitcoin.org domain name, indicating perhaps the first time the pseudonymous cryptography expert realized he may be onto something. By Halloween Day, the day the Bitcoin white paper was first sent out to a cryptography mailing list, announcing the project to the world, Nakamoto had hard-coded the entire project.
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“I actually did this kind of backwards. I had to write all the code before I could convince myself that I could solve every problem, then I wrote the paper,” Nakamoto wrote on Nov. 11, 2008. He was responding to cryptography mailing list subscriber Hal Finney, the receiver of the first bitcoin transaction, who in 2004 had built a reusable proof-of-work system that inspired Bitcoin.
Of course, there’s evidence suggesting that Nakamoto had had the idea far earlier than 2008. For instance, in an early 2010 email to Jon Matonis, a former VISA executive, congratulating him on a blog post Matonis wrote about the long development of electronic money, Nakamoto said he wished “there was something like that when I originally researched this three years ago.”
“Bitcoin would be right up your alley,” Nakamoto said. Matonis would go on to become a founding director of the Bitcoin Foundation.
At the time, Nakamoto discussed Bitcoin in a few narrow ways. Although he often responded to interested potential users, or did outreach himself trying to bring the revolutionary technology in front of cryptography fans, hardcore coders and libertarians Nakamoto presented Bitcoin as a fairly utilitarian and spartan project. When someone created the first Wikipedia page for Bitcoin in July 2010, Nakamoto said it was too “promotional” for his taste.
“Just letting people know what it is, where it fits into the electronic money space, not trying to convince them that it’s good,” Nakamoto added.
Bitcoin is, as Nakamoto described it, an electronic, peer-to-peer currency-like system. It could “become” a currency so long as people ascribe value to it, and that could happen for any number of reasons like wanting to collect interesting things or needing an alternative to using credit cards online, he had suggested. “Bitcoins have no dividend or potential future dividend, therefore not like a stock,” he wrote.” “More like a collectible or commodity.”
But the chief innovation Nakamoto knew from the beginning was that Bitcoin has no central issuer, or “mint,” as he sometimes called it. “There isn’t a central mint or company running it. As long as there are users, it survives,” he wrote in that 2010 email to Matonis. Someone so deeply involved in the digital currency space of the ’90s knew that experiments like DigiCash and LibertyReserve failed because there was a person or company in the middle to become compromised.
This is a revolutionary idea, of course, and the first of many cryptocurrency experiments to follow that replaced “trust intermediaries” with certain cryptographic guarantees and the collective empowerment of users. Users gave bitcoin its value, and they are incentivized to see the network grow. At the time, Nakamoto thought Bitcoin might be useful for small transactions like micropayments, which “massive overhead costs” at banks make impossible, as well as international transfers or private payments.
Not all of Nakamoto’s early ideas panned out. Micropayments have failed to materialize, and today it’s painfully obvious how unfit a fully-public network like Bitcoin is for privacy. But he was right that Bitcoin would grow to become a real alternative to trust-based finance. Today, the total value of bitcoin in circulation is worth over $672 billion and financial institutions from BlackRock to VanEck want in.
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Bitcoin abstracted away the trust that is inherent in the modern money system, where banks and other financial institutions keep track of all the transactions that flow through and ultimately decide which were valid and who could use the system. Bitcoin is as much a public broadcast system as it is a currency network, which allows anyone, anywhere to validate and verify the blockchain on their own.
Or, as Nakamoto told Wei Dei, the inventor of another Bitcoin progenitor, b-cash, it solves the “double-spend” problem and other issues of trust in money by using a “peer-to-peer network” that “timestamps transactions” and “hashes them into an ongoing” chain “that cannot be changed without redoing the proof-of-work.” Nakamoto had reached out on Friday, Aug. 22, 2008, to ask Dei how he should be cited in the Bitcoin white paper.
CORRECTION (Oct. 31, 2023, 15:38 UTC): Fixes spelling of Wei Dei’s name.