The concept of bitcoin was first proposed in 2008 by Satoshi Nakamoto as an electronic payment system based on mathematical proof. The intention behind this was to form a new medium of exchange which is independent of any central authority like banks. The most bizarre part is that we still don’t know who Satoshi Nakamoto is! The domain name, Bitcoin.org was originally created in 2008 in Helsinki.
One common theory is that three programmers skilled in cryptography—none of them Japanese—developed the system. The men behind one of the relevant patents are Neal King, Vladimir Oksman, and Charles Bry. All three of them have filed several related patents in the encryption, and network management area.
Unsurprisingly, all three potential inventors strongly deny they are involved at all. The Atlantic Wire has tagged a British coder named Michael Clear as the brain behind Bitcoin. He too denies it. Without knowing the real founder(s) of Bitcoin, Bitcoin has enhanced anonymity.
A financial system that is regulated and controlled by a central authority has numerous challenges. Governments, banks, hackers or general criminals can all attack and often destroy that central authority. Bitcoins are generated from a distributed network of nodes running what are considered Bitcoin miners.
Several ideas for currencies like Bitcoin have come and gone. Governments do not encourage alternative currencies. A successful precious metal backed electronic currency called e-gold didn’t go well with the government. The founder and head, Dr. Douglas Jackson, was sent to prison for 20+ years. In 1994, Digicash was an early attempt at an online, digital currency using code-breaking mathematics. Peppercoin was another code-based version of digital currency, but it also failed.
What these early attempts lacked was a way of spreading out the ability to generate the currency. As in the real world, we could all choose to go search for gold or silver. Some of us may even find a few precious metals. A few of us will find a mother lode. That describes what Bitcoin has offered.
Satoshi Nakamoto discovered the secret to getting his idea adopted widely and this led to the growth of Bitcoin. Some of Satoshi’s intention included:
Giving everyone a piece of the pie by giving away the software to create more Bitcoins. The concept of Bitcoin mining;
Having no central authority that controls the currency;
Making Bitcoin operate like cash with irreversible transactions; and
Keeping the entire Bitcoin financial system honest and transparent where everyone has a record of all the Bitcoins.
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