Image Source – Digitally re-mastered by the author
Today is 31st October. It is the 11th anniversary of Bitcoin White Paper. Satoshi Nakamoto published the paper titled Bitcoin: A Peer-to-Peer Electronic Cash System in a cryptography mailing list on this day of 2008. So this day is extremely significant in the pages of history.
Mystery of Satoshi Nakamoto
Satoshi Nakamoto is an unidentified person. It might be the name of a person or a group of persons who authored the paper. Satoshi might have hated the traditional financial and banking system. He wanted to create an electronic peer to peer payment system without any third party interference. Satoshi started to write the codes in 2007 and registered bitcoin.org domain name in 2008. He referred several other cryptography related research works in his paper. He was the first to solve the ‘double spending problem’ for a digital currency using p2p network. His vision was to develop a trustless payment system which would be able to handle huge transactions. Finally on 3rd January 2009, Bitcoin network saw the day of the light and Satoshi mined the genesis block of Bitcoin. The open source Bitcoin software was released on 9th January 2009. Satoshi was active in development of Bitcoin till the end of 2010. He transferred several domains and control to various Bitcoin community members and disappeared. It is widely believed that he was Japanese but everything around him is wrapped with mystery! Many people claimed to be Satoshi Nakamoto later on but nothing could be proved.
A diagram of Bitcoin transfer –Image Source
Adaption & Controvery
Since its inception, Bitcoin was in news. Some security flaws were found in its network in mid-2010 but those were fixed quickly. No other major security issues have been found till date. Many businesses started to accept Bitcoin as payment in 2010 and the numbers grew in 2011. Concept of Bitcoin caught the attention of common public. There was no central bank to regulate it and source codes were open. Transaction was fast. Investors jumped in. Trading of Bitcoin already started by that time. Many exchanges came into existence where people started to trade Bitcoin. Controversies rose and debates started. But Bitcoin gained legitimacy slowly. Many governments banned trading and use of Bitcoin citing various security issues, scams and criminal usage but it continued to grow at other parts of the world. Many other cryptocurrencies came into circulation after Bitcoin but none could replace it as Bitcoin was the first of its kind. Bitcoin prices has remained volatile often. Bitcoin reached its peak of 20,089.00 USD on 17th December 2017 and presently it is trading at 9300+ USD.
Bitcoin Price chart since inception – Image Source
Mining & Inflation
Bitcoin network works with ‘proof of work’ mechanism. Computers solve complex mathematical problems on the bitcoin network to mine Bitcoin. Miners get the reward in newly generated Bitcoin. Bitcoin mining consumes high electrical energy. That is why Bitcoin is difficult to be generated. Satoshi designed Bitcoin’s inflation rate to mimic gold’s stable inflation rate. As time passes, inflation rate of Bitcoin decreases to derive more price stability. Bitcoin algorithm was designed to make Bitcoin scarcer than gold. Maximum circulation of Bitcoin is 21 million Bitcoin which means that no coins can be minted once this limit is reached. Once all Bitcoin is mined and comes into circulation, miners will still get incentive to validate the blockchain because they will collect transaction fees from users. Really exciting! At the time of writing this article, Bitcoin’s inflation is hovering around 3.5% and almost 86% of total possible Bitcoin supply has been mined. You can check how many Bitcoin is left to be mined in this link.
Bitcoin inflation rate since inception -Image Source
Future of Bitcoin
Yes, Bitcoin is the perfect alternative to the centralized financial system. It snatches the power from the regulatory authority and creates true decentralization in the economy. Satoshi’s vision of a market currency has already been accepted in the whole world and its popularity is only growing day by day. Bitcoin has secured its place in the history. Future will shine for it.