Let’s say we are sitting on the bench and I have an apple with me. And I give it to you. I remain with nothing. That’s very simple, but let’s look at it a bit closer. The apple was physically put into your hand, I was left with none. And how do we know this? I was there, and so were you, we didn’t need a third party to help us transfer or to confirm I handed it to you.
That’s what an in-person exchange looks like. Works the same if the apple would be a banana or a book or anything else of value.
Now, what if the apple was digital? How do you know that the apple that used to be mine is now yours? I mean, how do you know that I didn’t send Uncle Tommy the apple as an email attachment? Maybe I made copies of the same digital apple. Or put it over the internet for hundreds of people to download. This can be a problem, right?
It was before, and now it’s no longer a problem, why?
Distributed Ledgers Technology
You see, the digital apples need to be tracked in an accounting book. But this ledger needs to be independent, free of alterations that could interfere with the transactions. And how do we do this?
We give the ledger to everybody. When everybody has it, we can compare records, it would be a tough system to beat.
You could participate in the network by updating the ledger and making sure it checks out. And for your trouble, you get 25 apples as a reward.
The system exists, it’s called the bitcoin protocol, and the apples are bitcoin.
Who Came Up With This Smart Method?
Since its creation over 10 years ago. There are plenty of mysteries surrounding the cryptocurrency.
When it comes to the origins of the currency, questions like who created Bitcoin? Was it created by one person or a team? And who is Satoshi Nakamoto? Do not have definitive answers.
But here’s what we know:
2008; First Hints Bitcoin Begin To Circulate
August 2008, A domain name-bitcoin.org gets quietly registered on the web. 2 months after, a paper entitled Bitcoin, an in-person e-cash system passes around a cryptography posting list.
Alongside the paper is the name Satoshi Nakamoto which appears for the first time on the web. The name is permanently linked to the cryptocurrency. A few months later, over 30,000 lines of code signify the beginning of bitcoin.
Bitcoin is anything but prominent at this point. However, it sure attracts some enthusiasts though. Among them is Hal Finney, a console developer and a member of the Cypherpunk Movement. He discovers Nakamoto’s proposal through bitcoin’s mailing list.
Finney offers to mine 10 original bitcoins when Satoshi sends them over as a test. He is literally the first miner.
So, if there’s was a person who would shed light on the identity of Nakamoto, it would be Finney, right? However, Finney says he never met Nakamoto. According to him, he was dealing with a smart and sincere young man with Japanese ancestry.
At some point, rumours had it that Finney was the mysterious figure behind the name Satoshi Nakamoto but he came out and flatly denied the rumours and maintained that his involvement was only secondary.
Prior to his death, Finney left a cache of bitcoins as part of inheritance for his family stored in an offline wallet.