Satoshi Nakamoto - The Creation of Bitcoin
Within the world of cryptocurrencies, we always see one name recurring. That name is Satoshi Nakamoto. This is because he is said to be the creator and developer of Bitcoin and the first blockchain. However, no one knows who this man really is. This is because Satoshi Nakamoto is a pseudonym for his actual name. Nevertheless, in recent years there have been several people who were thought to be the real Satoshi Nakamoto.
Who is Satoshi Nakamoto?
Satoshi Nakamoto is a pseudonym for the anonymous and mysterious creator of Bitcoin. He headed the Bitcoin project since 2009, until 2011. In fact, in that year he disappeared from the face of the earth, and no one ever heard from him again.
Before he disappeared, he was very active in the Bitcoin community. For example, he was working with other developers to develop the Bitcoin blockchain and was further developing the idea.
Through an email list, he kept everyone informed about the status of the project. He also engaged in discussions with others, even when they were skeptical about the idea. For example, the Bitcoin Talk forum still features discussions between Satoshi Nakamoto and other forum members.
Why did Satoshi Nakamoto invent Bitcoin?
We are not entirely sure why Bitcoin was conceived. Nevertheless, there are several posts on the Bitcoin Talk forum from which we can think of why Bitcoin was conceived. For example, Satoshi Nakamoto wrote here:
"The core problem with monetary currency is all the trust that is involved to make it work. The central bank must be trusted not to devalue (depreciate) the currency, but the history of fiat currency is full of breaks in that trust."
Satoshi Nakamoto continued his explanation:
"Banks should be trusted to hold our money and send it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We should trust them with our privacy, trust that they will not allow identity thieves to loot our accounts. Their massive overhead makes micropayments impossible."
So, from this we can see that Bitcoin was probably conceived because of the distrust of central institutions that Satoshi Nakamoto had. This is also why more and more people currently prefer to switch to a digital currency that is not managed by a central institution.
Credit crunch in 2008
One of the reasons why Satoshi Nakamoto no longer trusted central banks could have been the credit crisis of 2008. This was a crisis that arose in the summer of 2007 due to problems in the U.S. housing market.
Traditionally, mortgages were issued by banks, which financed this with the savings people kept in the bank. These banks came up with more and more new innovations in the financial markets. For example, various mortgages were bundled into packages, which were then sold on to other parties.
Because the housing market had risen sharply in previous years, there was a lot of interest in these packages. Investors could earn a lot of money with this. However, many packages were sold with risky mortgages from people who could not actually pay their mortgage.
Then the housing market stagnated, and partly because the interest rate went up, homeowners could no longer pay their mortgage. They had to sell their houses, which led to a surplus of houses on the market. Because houses could not be sold anymore, banks got into trouble.
More and more people stopped trusting banks, which in turn led to a decrease in overall confidence in the financial system. This is exactly what Satoshi Nakamoto is talking about in the messages he posted on the Bitcoin Talks forum.
The birth of Bitcoin
Satoshi Nakamoto is thus the creator and designs of Bitcoin and blockchain technology. However, the idea of a digital currency was not new in 2009. In the 1990s, there were already several people who had the idea of designing a digital currency that is not managed by central institutions, such as banks or governments. One of the groups behind this idea was Cypherpunks.
On October 31, 2008, at ten past six, an email arrived at the Cryptography Mailing List. Someone indicated that they were developing a new electronic money system that would be completely peer-to-peer. This means that it works between users, and no influence can be exerted by governments or banks.
This email came from Satoshi Nakamoto, and there was also a link in this email that would lead to the first white paper. This eight-page document describes how Bitcoin and blockchain technology works.
The first block on the Bitcoin-blockchain
On January 3, 2009, the first block, also known as the genesis block, went live. When the next block was added after this, it officially marked the birth of the blockchain.
Since then, a new block has been added to the blockchain every 10 minutes. However, the blocks looked different then than they look now. For example, the first Bitcoin blocks did not yet contain any transactions. This, of course, is because at that time no one knew about Bitcoin.
Also, the rewards for adding blocks to the blockchain were much higher than they are today. A miner received 50 BTC per block added to the blockchain. If a miner had kept his reward of one block, he would now be a multimillionaire.
First purchase with Bitcoin
For the first year, Bitcoin was not yet used as digital money. It was not until May 22, 2010, that the first purchase with Bitcoin was made. Laszlo Hanyecz bought two pizzas for 10,000 BTC on that day. As such, these may have been the very most expensive pizzas ever made.
However, at the time this pizza was purchased, the value of Bitcoin was not high at all. Below is an overview of Bitcoin's price value over the last few years:
- $1 in April 2011
- $10 in June 2011
- $100 in April 2013
- $1,000 in November 2013
- $20,000 in December 2017
- $50,000 in February 2021
Does nobody know who Satoshi Nakamoto is?
To this day, it is still not clear who Satoshi Nakamoto really is. There are many rumors circulating on the internet about what may have happened to him, as well as who is behind this pseudonym.
Bitcoin was growing when WikiLeaks started accepting donations with Bitcoin in 2010. Also, one of the co-developers of Bitcoin, Gavin Andresen, had participated in a radio program where he was going to talk about Bitcoin, and announced that he had made an appointment at the CIA to give a presentation on Bitcoin.
So, all in all, Bitcoin was getting bigger and better known. This may have been reason for Satoshi Nakamoto to step out of the limelight. When he recognized that Bitcoin could play a big role within the world, he may have preferred not to be linked to it.
In addition, there are also rumors about Satoshi Nakamoto passing away. These rumors stem from the fact that the 1 million Bitcoins that Satoshi Nakamoto owned are no longer moving. At the same time, it could also be that Satoshi Nakamoto has no interest in this money or has simply lost access to his wallet.