This article looks into brief history about Bitcoin, what problem(s) does it solves (the adoption and revolution so far) and the problem(s) Bitcoin brought?
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Brief introduction of Bitcoin
The idea about Bitcoin as a decentralized currency without the need for a centralized financial system was first introduced in 2008 (over a decade ago). The developer of Bitcoin still remain a mystery yet unraveled (till date).
An article titled Bitcoin: A Peer-to-Peer Electronic Cash System was posted on Oct. 31, 2008 to a cryptography mailing list with “Satoshi Nakamoto” as the author. Nakamoto has never revealed any personal information about himself and his identity has never been confirmed. This has led to many discussion and many concluded that the name “Nakamoto” is a false name or a nickname for one or more creators.
In 2009, Bitcoin also called BTC was first used after it was released as open-source software, when Nakamoto mined the starting block of the blockchain. This is referred to as the ”Genesis Block”, and it contained the first 50 Bitcoins ever created. Thereafter, Bitcoin continued to be mined by other early contributors until 2010.
That’s when a programmer with the name “Laszlo Hanyecz” perform the first known commercial transaction using the cryptocurrency through the purchase of two Papa John’s pizzas for 10,000 Bitcoins. (That amount of Bitcoin is worth over $170 million as of this writing).
The idea of creation of Bitcoin in 2008 was as a result of financial issues of the world relying on banks which serves as middlemen in all transactions. The founder wrote the paper and propose an idea of replacing banks with a peer-to-peer system that didn’t require third-party confirmation or authorization. This unique idea termed “proof of work” works on the principle of algorithms which verify transactions without a central authority.
However, it should be noted that the little concept Nakamoto proposed then is now enormous as people have fell all in with Bitcoin seeing it as a source of investment and a good source of making money. In addition, the concept of Bitcoin has brought in several cryptocurrencies assets like Ethereum, BNB, XRP, Dogecoin, Cardano, Polygon, dollar pegged token such as USDT, USC, BUSD etc and more are still being created.
Bitcoin as a problem solver (The revolution)
Bitcoin has been tested and validated for over a decade and the adoption of it is now on the rise across nations as a new form of money. In June 9, 2021, El Salvador made Bitcoin legal tender and became the first country to do so. The cryptocurrency can be used for any transaction. The country currently hold 2,381 Bitcoin which worth $41 million (as of this writing).
Safer Alternatives
Unlike any other method of sending money over the internet, Bitcoin does not require the trust of a third party such as a bank or a broker or a financial advisor. Bitcoin is a neutral digital payment infrastructure, this has enabled digital scarcity, which was previously unthinkable.
As a result, Bitcoin exemplifies the separation of money and government, users can send and receive any amount of money to or from anyone, anywhere, anytime. However, it is important to search online several times before investing in Bitcoin or cryptocurrency to avoid losing asset as asset gone are nonrefundable (no dispute or refund on transaction approved since no middleman or customer support).
During the COVID-19 pandemic crisis, Bitcoin really helps people with performing transactions smoothly as most banks and local financial organization were under lockdown and withdrawal of funds (via counter/teller) were restricted.
Ease of Access
Getting Bitcoin, investing in Bitcoin, holding the coin, checking of balance etc are easy to access and the same for all users no matter the amount you’re buying, no premium treatment for holding a large amount of Bitcoin. Users don’t need to sign any kind of agreement, contract, profile setup or meeting a financial institution before getting the coin.
Faster Transaction
Bitcoin transaction are fast with no delay, deposit and withdrawal are faster than the local banking system and other financial organization.
Affordability
Bitcoin is easy to afford and doesn’t require getting a premium account or paying for registration fee to join unlike other banking system.
Amazing returns
This is one of the best part and unique reason for the mass adoption of Bitcoin (crypto in general). Bitcoin is known as profitable securities system compared to other. For instance a deposit of $100 in Bitcoin as far back to 2015 would have a value of $10,316 currently while a deposit of $100 in a local banking system as far back to 2015 would have a value of < $100 (due to maintenance fee ).
The juicy offer listed above that Bitcoin have to offer has led to a great adoption and massive use of Bitcoin and cryptocurrency in general, the current market cap of Bitcoin alone is $335.03 Billion, the global crypto market cap is $850.23 Billion (as of this writing). The total number of owners having Bitcoin are 106 million and the general owners of a cryptocurrency assets are around 300 million globally with about 36.5 million as American crypto users (as of this writing). Remember from buying Pizza with 10,000 Bitcoin to having this huge figures as market cap. What a massive adoption and achievement in the last one decade.
Bitcoin as a problem creator (The rebellion)
The major idea as written by Nakamoto which leads to the birth of Bitcoin has seems compromised. Decentralization has given way to centralization. Bitcoin whales, or investors who have massive holdings of the cryptocurrency, are said to control its price in the markets.
Centralized exchange are on the rise which requires users to sign up and verify their identity (KYC). This has make most user worrisome as their identity will be seen by customer support which actually bring a middleman in between. Also democratization of printing money through mining has been sacrificed for the efficiency of massive mining farms. Investor now seek into buying mining rigs to improve their mining rate of Bitcoin in order to get extra earnings of BTC rather than promoting the local market rate in their respective society.
Unsurprisingly for a currency designed with anonymity and lack of control in mind, Bitcoin has proven to be an attractive and lucrative target for criminals. In January 2014, the world’s largest Bitcoin exchange Mt.Gox went offline, and the owners of 850,000 Bitcoins never saw them again. Investigations are still trying to get to the bottom of exactly what happened but whatever the story, someone dishonestly got their hands on a haul which at the time was valued at $450 million dollars. At today’s prices, those missing coins would be worth $4.4 billion.
Few month back, Terra network (LUNA & UST) headed by Do Kwon collapsed in which both cryptocurrencies lost $45 billion in value within 72 hour. Also a popular cryptocurrency exchange FTX (Founder: Sam Bankman-Fried) collapsed and users were unable to withdraw their crypto assets (Bitcoin inclusive). FTX filed for bankruptcy on November 11, 2022 after a surge of customer withdrawals.
Because of black market use of cryptocurrency, regulation emerged from several countries. The People’s Bank of China initiated the most impactful regulations with three separate actions:
- In December of 2013, the bank prohibited financial institutions from using Bitcoin.
- In September of 2017, it issued a complete ban on the use of Bitcoin
- In June of 2021, it implemented a crackdown on major cryptocurrency miners.
Also, in 2021, the Nigeria government and Central bank of Nigeria (CBN) imposed a ban on individual and business users of cryptocurrencies.
Conclusion
The world around Bitcoin keeps revolving day after day, the number of users adopting is also increasing. For the local banking system and other financial organization, they are also improving on processing transaction faster and even most now have an accounts plan that can generate user interest per annum (All thanks to Bitcoin that gives them competition).
Most financial organization even support the use of crypto, example is the current partnership enabling users of Paypal to buy and sell Bitcoin. While we await further revolution of Bitcoin in the aspect of lesser exploit of scammers using the system, it is a great thing to say that Bitcoin have been a great revolution in the past decade of it’s existence.
Author: Maggie
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