Bitcoin is the cutting edge of the financial evolution of money. But Bitcoin wasn’t just conjured up out of the blue. Bitcoin is the product of decades of thought, discussion and experimentation.

The Punks from the Bay Area Battle for Privacy 

In 1992 three computer scientists started a mailing list to discuss cryptography, politics, mathematics and philosophy that would end up changing the world. This group of like-minded netizens gave themselves a name that would reflect their harrowingly accurate prediction of the future: the Cypherpunks.

Cypherpunk is a portmanteau of cyberpunk, a genre typified by oppressive worlds ruled by computer technology, and ciphers, a secret way of writing code in cryptography. The Cypherpunks understood nearly three decades ago what only recently became clear to most web users: The internet would become the forefront in the battle for freedom.

The Cypherpunks realised that the internet would be the single most transformative development in modern history. They also knew that governments around the world would do everything in their power to restrict it. The cypherpunks didn’t trust governments and they certainly didn’t trust the way they managed their money.

The cypherpunks knew that for the internet to reach its true potential, it would need a form of money that didn’t rely on government support. In fact, it would need money that would keep out the government altogether.

The cypherpunks racked their brains about how to implement the perfect digital currency. They tried many experiments, such as B-money and BitGold, but both were only theoretical and had vulnerabilities. While some were promising, none could solve what is known as the double-spend problem: How to prevent the same digital currency token being used more than twice.

Although these forerunners did not themselves succeed, they laid the foundations for a financial innovation that would go on to shake the world as we know it: Bitcoin.

Satoshi Nakamoto and the birthing ground for Bitcoin

In the past, revolutionary ideas were shouted from the back of a cart to a crowd of enraptured people or enforced at the business end of a bayonet. But Bitcoin came in a form fitting for its then-limited audience: A humble white paper shared in 2008 to the cypherpunk’s mailing list.

The paper was published by a mysterious individual known only via the online world as Satoshi Nakamoto. No one knows whether Nakamoto is indeed one person or a group of people. The only information published about Nakamoto’s identity comes from a P2P foundation profile and states that he is 45 years old, male and from Japan. But that too could be misleading. For over ten years people have scoured the dark places of the internet for clues about Nakamoto’s true identity, but, as of 2021, he remains undiscovered.

Nakamoto’s whitepaper is called Bitcoin: A Peer-to-Peer Electronic Cash System. It is an unremarkable name for a remarkable idea that would go on to shake the financial world to its core. Within the paper lay the framework for a financial system that no one individual or organisation could own or control, no bank was needed to approve transactions, no borders could contain it, no one could tamper with its underlying technology and, most importantly, no one could spend the same digital token twice.

But that’s not all. Bitcoin also solved what the cypherpunks saw as one of the greatest threats to the world economy: the ability to endlessly print fiat currency. Bitcoin is created as a reward for when powerful computers crack complex cryptographic problems in real time. This is known as bitcoin mining. But only 21 million can ever exist. Nakamoto made sure that this limit was hard-wired into the Bitcoin’s DNA.

What happened next?

In January 2009, Nakamoto released the software to create the currency and mined the first block mined on the network. Like all milestones in the cryptocurrency world it has been given a suitably dramatic name: the Genesis block.

The first recipient of Bitcoin was prominent programmer Hal Finney, who, on 12 January 2009, downloaded the software and received 10 bitcoins from Nakamoto in the world’s first Bitcoin transaction.

Only a year later, Bitcoin was used to purchase something for the first time: Two Papa John’s pizzas. The pizzas were exchanged for 10,000 BTC. If this transaction took place at today’s prices, the two pizzas would cost nearly half a billion Euros. Consequently, May 22 is celebrated as Bitcoin Pizza Day by the cryptocurrency community. To some that might seem like a bit of a disappointment. But what it actually shows is that Bitcoin, from its very first use, is a way for people to finally use money how they want, on their own terms. Besides, who doesn’t like pizza?

In the early days of the cryptocurrency, Nakamoto is estimated to have mined around 1 million tokens. But then, he did something that millions of people around the world have been trying to understand ever since: He disappeared.

The last time he was known to have made contact with anyone was on April 23, 2011, in which he announced “I’ve moved on to other things.” Nakamoto said Bitcoin was in the care of core developer Gavin Andresen and the wider community. He never elaborated on his true reason to leave Bitcoin behind.

The idea that someone so influential could simply disappear from an entire financial ecosystem of his own creation is baffling to some people. What’s more, thanks to the transparent nature of Bitcoin and Blockchain, we know that Satoshi’s addresses own up to 700,000 BTC. At today’s prices, if Nakamoto is indeed one individual, by some estimates he would be the 34th richest person on the planet.

Yet his addresses remain untouched to this day. Whether Nakamoto is bound by an almost superhuman moral code or simply spends his days soaked in a cold sweat staring at a screen that says “incorrect password: One attempt remaining,” we will likely never know. But what we do know is that an idea that started with a largely ignored contribution to a niche mailing list has gone on to shake the foundations of the financial world.

Bitcoin is truly revolutionary. Until now, people were born into a postcode lottery, where their fate was tied to their country of birth and the health of the financial system operating within it. With Bitcoin, it became possible for people to free themselves from the restraints of their circumstances and access a global financial system that finally puts them in control.