Who Created Bitcoin? Bitcoin History


May 31, 2018

who created bitcoin

Why The Person Who Created Bitcoin Remains a Mystery

Bitcoin was the first cryptocurrency created in 2009, but its origins can be actually traced all the way to 1980s when the Proof of Work algorithm invented by cryptographer David Chaum was first used to contain email spammers. The principle required solving a puzzle for each email to be sent out and the puzzle became more complicated with each email sent off the list. Proof of Work is now used in blockchain. The computer must solve this complicated equation in order to prove the authenticity of the transaction and make it verified.

Before Bitcoin there was a number of cryptocurrencies that reached some level of popularity over the years. David Chaum later invited DigiCash that has a brief success history and was even going to be adopted by a large bank. Unlike cryptocurrencies today it had unlimited supply and a centralised owner.

The early experiments with decentralised transactions and electronic cash exploration paved the way for the creator of Bitcoin, the mysterious Satoshi Nakamoto. His famous white paper “Bitcoin: A Peer to Peer Electronic Cash System” in October 2008 became the first ever knowledge of blockchain. The paper outlined uses for cryptocash, detailed the principle of blockchain and how the coin can be mined using computing power to solve puzzles and confirming transactions.

The revolutionary white paper claimed that Bitcoin could be an example of a deflationary currency which could not be affected by governments or other central authorities to artificially increase the supply of the currency and as a result devalue its value. The white paper explained how banks stifle the development of the financial system, why the trustless economy is the future, and how blockchain with its irreversible transaction principle could benefits merchants and businesses in general.

Just two months before the publication, in August 2008, Neal Kin, Vladimir Oksman and Charles Bri filed a patent application for the encryption technology. Someone also registered the domain name bitcoin.org same month using anonymousspeech.com which allowed anonymous domain registrations. All people associated with the white paper denied being the first cryptocoin creator or of being behind the white paper ideation.

From 2009 activists began mining and first blocks were created. The first crypto transaction was also made in 2009 to the computer programmer Hal Finney who received 10 BTC. Another programmer named Nick Szabo made himself famous for buying two pizzas for 20 BTC.

Nakamoto and other cryptography enthusiasts began exchanging coins for services and soon the first official exchange rate of $1 = 1,309.03 BTC was established. The rate was derived from calculations on how much electricity it would cost to mine 1 Bitcoin.

Very little is known of the inventor of the first cryptocoin. Even the Nakamoto name is a mystery. Is he actually a person, and if so, a man or a woman? Is this an alias of a group of technology experts – maybe the group who holds the patent for encryption technology? No one knows for sure, and if anyone does, they are not willing to say.

All we know for sure that Nakamoto invented the principle behind Bitcoin, made sure that the first ever cryptocurrency is becoming widely adopted, and then disappeared from the public eye, never to be heard again. The rumor has it that Nakamoto had an unclaimed Bitcoin wallet address which remained out there, containing enough Bitcoins to make someone lucky a billionaire. The fruitless search for that wallet continues, as more and more promising programmers have been suspected to be the brain behind the first crypto coin.

We can only speculate that the possible disappearance of Bitcoin creator from public scene could be linked to the early days’ somewhat tarnished reputation of the first crypto coin. At that time it was mainly used by darknet operations or to buy illegal substances at infamous Silk Road marketplace. This continued until 2010 when cryptocurrencies came under tighter scrutiny from the U.S. federal government which looked into it and decided that it can be used for money laundering and other illegal activities. In 2013 the U.S.Financial Crimes Enforcement Network made its first ruling on the first crypto coin declaring cryptocurrency exchanges falling under the same level of scrutiny as other financial services businesses. Shortly the Department of Homeland Security froze the accounts of Mt. Gox, at that time the largest bitcoin exchange.

Despite the setbacks, Bitcoin continued to grow and develop its blockchain, as well as widening its adoption. Even though too much of investor’s attention created a danger of turning Bitcoin into a bubble, nothing at the time of writing predicts the end of the world’s most popular cryptocurrency.