Bitcoin turns 10 — what are the odds of it reaching 20?
A mysterious, anonymous entity known as “Satoshi Nakamoto” posted a white paper on October 31 2008 entitled “Bitcoin: A Peer-to-Peer Electronic Cash System”. It was the first time that the concept of Bitcoin entered the world. But outside of the cypherpunk mailing lists — those promoting the use of privacy-enhancing technology — this event was hardly noticed. Ten years on, who hasn’t at least heard of the cryptocurrency?
In just nine pages, the white paper explained how the Bitcoin system would work. Many attempts at electronic cash had already been made, going right back to computer scientist David Chaum’s “Digicash” developed in the 1980s. Using an intricate dance of cryptography, Digicash enabled people to pay each other online anonymously, yet prevented users from sending the same money to two different people at the same time (the so-called “double spending problem”).
For a while, Digicash caught on. Even the likes of Deutsche Bank adopted it, and a growing list of merchants started accepting it. Compared to the credit-based systems of Visa, Mastercard and later Paypal, at least some people could see the benefits of a currency that allowed micropayments with extremely low transactions fees. Anyone with libertarian tendencies loved the idea of using a currency outside the control of any authority. But Visa and Mastercard upped their game and won the battle for payment dominance. It seemed the struggle was over, but some cypherpunks refused to give up. Adam Back created “Hashcash” in 1997, which together with Wei Dai’s “b-money” (both cited in Nakamoto’s white paper) and Nick Szabo’s “Bitgold” were the last significant efforts to create an online cash system before Bitcoin. The idea fizzled out following the dotcom bust of 2000-02. It was only brought back to life by Nakamoto in 2008. Nakamoto’s vision Previous attempts came close to creating secur...