From Bartering To Bitcoin - Part 1
From Bartering to Bitcoin
Bitcoin, crypto-currency, and blockchain have all exploded into the public consciousness over the last few years. At the end of 2017 when Google revealed the most searched news stories globally only the devastating Hurricane Irma had more clicks than Bitcoin.
Within Bitcoin is an idea that could fundamentally change the way humans interact with each other: decentralisation.
At the age of 14, Shawn Fanning was posting on message boards under the anonymous handle Napster. In this period he met Sean Parker online, and within a few years, they created a music-sharing program, naming it Napster. It would go on to change the entire music industry.
Napster helped popularise peer-to-peer file sharing – specifically it allowed you to share your music library, and to find and download almost any song shared by the millions of other people using the service around the globe.
The music industry was slow to react, and when it did, it chose lawsuits, led by the Recording Industry Association of America (RIAA) and backed up by artists like Metallica and Dr Dre.
By this point, Napster was in the Guinness Book of World Records as the fasting-growing business of all time.
Industries are scared of change. In 1980 the British Phonographic Industry (BPI) launched the Home Taping Is Killing Music campaign concerned that allowing private citizens to record from radio onto cassette would lead to declining music sales.
The Home Taping logo would eventually be incorporated into The Pirate Bay logo when it arrived on the scene in 2003. More on that later…
The one fundamental flaw with Napster was that it was centralised. Whilst its users were distributed around the world, the website and servers that they relied upon were located in one place. An injunction was placed and Napster was shut down.
The BitTorrent protocol was developed by University of Buffalo student Bram Cohen in 2001, and as of 2016 had 45 million daily active users. It allowed for true peer-to-peer file sharing without a middleman.
To reduce server costs and speed up download times the BitTorrent system allowed files to be split into smaller pieces, which could be downloaded non-sequentially and pieced back together. This method gives it an inherent ability to reduce overheads.
As the popularity of torrenting exploded various websites sprang up offering directories of torrents where you could search the legal and illegal media available for download. The most famous of these was launched in 2003: The Pirate Bay.
Being a centralised website with servers located in Sweden that offered access to illegal content it was inevitably shut down. The BitTorrent protocol remained as popular as ever. Alternatives (and exact copies) of The Pirate Bay are also still prominent online.
Media packed into torrent files are used around the world today by everyone from gaming giants Blizzard (allowing direct distribution of games), to the UK Government (to distribute details on Tax spending).
As the debate raged over distribution of content online and how it should be policed a group was forming made up of activists who believed in privacy-enhancing technology. One of these was the unknown programmer (or perhaps group of programmers), Satoshi Nakamoto.
In 2009 Satoshi released his white paper Bitcoin: A Peer-to-Peer Electronic Cash system detailing a new form of money that could be transferred without banks or intermediaries and with absolute trust in-built in the system. Bitcoin has much more in common with BitTorrent than Napster.