The History of Cryptocurrency: Who Invented Bitcoin and Why?

Cryptocurrency golden bitcoin coin. Conceptual image for crypto currency, toned

Satoshi Nakamoto is an alias used by the inventor of bitcoin. Why did “he or they” do it, and what does it have to do with the magic money machine?

  • We are currently unsure if Satoshi Nakamoto is a man, woman, or group.
  • Dark web sites like silk road acted as proof of concept for bitcoin.
  • Bitcoin is in beta, meaning it is evolving because of efforts made by independent coders.
  • Governments and banks have no control over bitcoin.
  • In 2011, the price of bitcoin was $0.30.

The need for bitcoin and the fed’s Magic Money Machine

At one point in America’s financial history, every dollar you owned was backed by gold in the federal reserve. In the 30s, the great depression happened. That resulted in vast amounts of people cashing in deposits and almost depleting the country’s gold supply. Franklin Roosevelt reacted to this by cutting the dollar’s tie with gold and replacing it with the “Magic Money Machine.”

What is the magic money machine?

Today, banks create money out of debt.

 What happens is, when you deposit money in your account, the bank lends that money to another person and keeps some as fees, interest, and other charges. In your account, it says that the money is still there, but it is not there, it is numbers on a computer screen backed by trust. Not gold. Simplified, your money is always moving. That system is known as Fractional Reserve Banking.

In short, what you need to remember is that the banking system creates virtual money, lends it to you, then profits from fees and interest rates. This parasitic nature of the banking industry is why, according to many sources, exists the need for a financial system that is not regulated by banks or governments.

June 6, 2009: federal authorities arrest Bernard Von NotHaus for creating the liberty dollar

Under the US constitution, it is unlawful to print or mint currency because it threatens the value of the dollar. But that is exactly what Bernard von Not Haus did when he created the National Organization for the Repeal of the Federal Reserve and Internal Revenue Code or NORFED. The government reacted by charging Not Haus with federal crimes including fraud, counterfeiting, and conspiracy, crimes punishable by up to twenty years in prison.

 Bitcoin historians believe that Satoshi Nakamoto got the idea to create bitcoin from NotHaus, and recognizing the threat his invention posed to the dollar – they chose an alias so that what happened to NotHaus would not happen to them – Satoshi Nakomoto chose to stay anonymous.

Note – we are using him loosely because we are unsure if Satoshi Nakamoto is a man, woman, or group.

What is bitcoin, and how did it begin?

On Oct 31. 2008, Satoshi released bitcoin’s white paper, see the snippet below

Download the full white paper here.

If you scroll down to the last page of the white paper, you will notice this.

What does it mean?

  • Unlike the banking system, bitcoin does not rely on trust. Instead, it relies on numbers or math.
  • Anyone can use the protocol; thus, banks cannot control the trade because you are your own bank.
  • Every change is public, meaning there is no room for government or bank manipulation.
  • You are free to use whichever version of bitcoin you want.
  • Bitcoin cannot be debased.

Satoshi invented the first code, and many others soon followed. Therefore, bitcoin’s uprising is creditable to independent coders. Meaning, no single person or institution owns the technology behind bitcoin. Instead, indipendent individuals around the world all control bitcoin.

How does bitcoin retain its value if it can be copied countless times?

If you go through the white paper, you will notice an explanation on page 5. Translated what the document says is, if you own bitcoin, it is not a file on your computer that you can duplicate, share, or pirate. Instead, every bitcoin is an entry in a publicly distributed database known as a blockchain. The benefit of it is, it cuts out the middleman, meaning no banks, no interests, and no fees.

You control your account through a digital wallet, meaning you are the bank.

The blockchain acts as a bitcoin ledger. The ledger keeps track of all bitcoin transactions.

How much was one bitcoin in 2009?

In 2009, the price of one bitcoin was zero dollars. Forward to early 2012, the price was still zero.

Enter the black-market trade

Like all forces that challenge the establishment, the rise of bitcoin began in markets outside the mainstream. Silk Road, a website that facilitated the selling and buying of services including assassinations, crack cocaine, heroin, and all other commercial products you cannot sell on Google, was one of bitcoin’s earliest adopters. The website lasted for about thirty months before this:

 And was BITCOIN’S proof of concept.

How much bitcoin was traded on silk road?

The details are sketchy, but according to reliable sources, bitcoin transactions on silk road added up to about 9.9 million bitcoins or $214 million.

2012: The rise of bitcoin

Bitcoin’s success in the underworld economy saw the value of the coin rise from $0.30 in the early months of 2011 to $5.27 (see the chart below).

Bitcoin, price history 2009 to today

YearBitcoin pricechangeYear over year percentage
2009 -20125.274.971655.90

We update the table yearly.

Notable events in bitcoin history

  • May 2010: Laszlo Hanyecz makes the first real-world bitcoin transaction. Bought two pizzas for about $600 million in today’s money.
  • Feb 2011 to April 2011: one bitcoin held the same value as $1.
  • November 2013: the price of bitcoin rose to $1242.
  • April 2014: the price of bitcoin dropped to $340
  • March 2017: the value of bitcoin rose to $1290, higher than November 2013.
  • September 2017: bitcoin value broke the $5000 mark.
  • November 2017: bitcoin reached a new high, $13500.
  • December: Bitcoin reached $17900.
  • February 2021: Tesla announces investments into bitcoin and accepts bitcoin as payment.
  • February 2021: bitcoin reached $50000

Bitcoin is still evolving

According to bitcoin, the term “cryptocurrency” was first described by Wei Dai in 1998 on Cypherpunks mailing list. Wei suggested the idea of a new form of money that used cryptography to control transactions.  This new system would be free of a central authority or government.

What many do not understand is that bitcoin is an open-source protocol. Because of that, Satoshi is not the owner of bitcoin. Therefore, what you need to remember is:

  • Anyone can review and modify bitcoin software.
  • Satoshi does not control bitcoin.
  • Bitcoin is controlled by all bitcoin users, not governments or banks.
  • Bitcoin is currently in Beta, meaning many features are in active development.

Why should you invest in bitcoin in 2021?

As mentioned, many features of bitcoin are still in early development. Consequently, bitcoin is still in its infancy. Furthermore, the system limits the number of bitcoins that exist to create scarcity. That means just like money. bitcoin is scarce, divisible (Satoshis), fungible, and it is easily recognizable. Currently, few businesses and financial institutions have accepted bitcoin as a currency or payment. Consequently, bitcoin’s user base needs to grow so that everyone can benefit from it.

The low degree of adoption is what causes bitcoin’s volatility. But as more businesses adopt it, the more stable bitcoin will become.

Is bitcoin a good investment in 2021?

We cannot tell you for sure what will happen with bitcoin, but what we do know is bitcoin is the largest cryptocurrency by market cap, meaning, it sets the trends and is thus a good indicator of where the cryptocurrency market is headed to.

Also, to protect their currencies and control over financial institutions. Governments will introduce regulations, some of them positive and some negative. But what will remain are the advantages bitcoin and other cryptocurrencies offer.

Why invest in bitcoin in 2021?

Bitcoin is still in its infancy, which makes now a good time to educate yourself on how it works, how to invest, and when to do it.

The advantages of investing in bitcoin are:

No intermediaries or central control

The government, banks, and even bitcoin’s creator have no control over the currency and you can use it anywhere in the world. That means no fees, no currency exchanges, no borders, and no bureaucracy. In other words, you are your own bank and have full control of your money.

You do not have to share sensitive or personal information

Banks require a lot of sensitive information and every time you transact through a bank, you risk identity theft, fraud, and your finances are at the mercy of government and bank policies or regulations.

Bitcoin transactions, on the other hand, are more secure, do not require sensitive information, and the transactions are irreversible. For merchants. These advantages make it safer to operate even in markets that have high fraud rates.

Transparent and neutral

As mentioned, bitcoin software is open to all, which means bitcoin money is readily available on the blockchain. That is advantageous in that the government or banks cannot manipulate its value.