The History Of Bitcoin (so far)
Do you remember the world before the internet? If so, then you are among a rapidly dwindling group of human beings who are old enough to remember life before the World Wide Web. You are lucky – because your perspective and the experience of that paradigm shift will serve you well in recognizing the real effect of Bitcoin. But first, I would like to introduce a little perspective…
Do you remember when you sent your first email? I do, because it was 1997 and I was using one of those old “free” AOL dial up connection discs. I can still hear that sound- if you ever used AOL dial up before; you know exactly what I mean. You had to wait 5-10 minutes between clicking “connect” and hearing the words “You’ve got mail”.
That was over 22 years ago and that experience can be replicated by virtually anyone today by speaking into a phone and saying “send” – or with the swipe of a finger. Billions of people in the world now have access to E-mail.
However; if I asked you when E-mail was invented – and who invented it – what kind of answer would you give? Most people aren’t sure. Some will say it was “around the 90’s” when E-mail and the internet seemed to take on mass adoption rates around the planet.
Some people refer to events ( the first time they sent an E-mail, their first cell phone, the first time they logged onto the internet, etc. ) when they discuss the origins of today’s array of technologies that encapsulate the globe. They don’t know the dates – but they can see how it effects themselves and also in turn, the world.
The truth is that the story of E-mail ( and the internet and cell phones ) is a little more complex than that. There are entire books written on these things and the technology and events leading up to the existence of what we call “the internet” and “E-mail” today.
Sure, it was only utilized by a select few at first. In the late 1980’s, the concept of an “E-Mail” was hard to explain and difficult for the average person to understand. The general consensus at first was that the internet was was for tech geeks and computer nerds.
E-mail technologies user interface advanced to the stage of development where you didn’t have to know how it worked to use it. People who couldn’t care less about technology began to realize – “hey, I can send a message to anyone else instantly and that’s pretty cool” .
A global shift started to happen…
By the late 90’s the term “E-Mail” was known in every household – and a lot of people around the world began to use it in their everyday lives.
E-mail was such a great invention because it connected everyone to everyone else. You could ( for the first time in human history ) instantly send a message to another person on the other side of the planet.
Today; it is difficult to imagine what the world was like before the invention of the internet. Clearly it has changed and will continue to affect the entire planet in many ways.
Fast forward to 2009 – an anonymous person or group of people known only as “Satoshi Nakamoto” release a white paper outlining “Bitcoin” – a peer to peer money transaction protocol on the internet. It is quickly recognized as revolutionary. Why?
Because up until 2009 – there was no way to have a true cryptocurrency because as anyone who’s ever downloaded an mp3 illegally can tell you – things on the internet are usually very easy to copy. Money that can be copied = no good, right?
That’s right. If I can print as many twenty dollar bills as I want; eventually I’m going to print so many that they are no longer valuable to anyone – because they are everywhere. Sound familiar?
However, that description is more fitting of the current United States Dollar than it is of Bitcoin. The Federal Reserve prints as many US Dollars as it wants – which causes inflation and makes the value of the currency many American’s use every day become lower and lower as time goes on.
They even created 800 billion dollars out of thin air in 2008 to bail out the major banks after they went bankrupt and almost destroyed the global economy. The problem was never truly solved and persists to this day – but there are entire books on that subject.
The Dunbar level is the maximum number of transactions that can be performed on a trust bases in a tribe or community. So, third party risk has always been an accepted necessity to transacting on a scale that exceeds “the Dunbar level”.
When an economy exceeded this level, there was always a human beings or a centralized institution to act as a “middle man”. It was a necessary evil. Basic human nature dictates that if another person is holding your money – there is a good chance they are going to run away with it.
Banking institutions and third parties have monopolized global finance for hundreds of years. They use via centralized fractional reserve banking and paper fiat currencies backed by nothing to suck the wealth out of the poorest people on the planet. But their time is up.
Because banks are now obsolete.
That’s right – banks do not have a place in the future of the world. Why? Let’s put it like this: The reason banks do not want you to use Bitcoin is the same reason why the post office doesn’t want you to use E-mail. It means the end of their business. It means the beginning of a whole new world.
Think of all the people in the world who didn’t have a mail box – or a post office. Now realize that many of them now have access to E-mail and the internet via smart phones.
Imagine you could send money anywhere in the world ( instantly and for free ) the same way you can send an E-mail or a text.
In the late 80’s , only a select few elite well off people are able own cell phones because they were heavy, expensive and complicated to use. Lucky for the world, there were people like Steve Jobs who understood the real impact of the technology and brought it to the people who needed it the most – the masses.
The effects of this shift in the availability of access to real time information in your hand via technology have been shaping the planet for over two decades now. It echoes the adoption of electricity, radio and television sets & cell phones because it is in the same class – a technological breakthrough that revolutionizes some part of life for the entire globe and makes it better.
It is estimated by the United Nations that 6 billion people have access to cell phones. To understand how monumental that is – take this into consideration: The number of people in the world who do not have access to clean water is about 35% of the population.
Now realize that in a world where cell phones outnumber people; over two billion people in the world do not have access to a bank account. These are often the poorest people in the world who can’t get access to a form of ID, or are victims of oppressive or tyrannical governments.
Their banks often act indistinguishably from local mobs in the way they extort their people through financial control.
The technology of Bitcoin will change the world. Mass adoption hasn’t been reached yet – but it’s coming. Think Bitcoin and cryptocurrency is just for criminals and drug dealers? Think again – because that’s exactly what people thought the internet was about – and they were wrong then and today they are still wrong.
The more professional people who utilize Bitcoin in their lives and in their work –the better it is for mass adoption.
So what exactly IS Bitcoin? Bitcoin is simply a protocol.
Most people don’t know exactly what money is – let alone how money works. There is a lot of misinformation out there about the financial system.
So what is Money? The reason most people don’t really understand the technology of money is because it is so embedded into culture that most people take the concept of money for granted and do not think about it beyond the basic information required just to participate in the system.
Is money value? No – money itself is not value. Money is what you USE to get things that do have value.
Is money whatever authority figures say it is? No – money does not come from authority. Although; I wouldn’t blame anyone who hasn’t researched for themselves for thinking that- because of the “Dunbar Level” mentioned earlier – the “middle man” factor in money has been an accepted necessity for thousands of years.
Bitcoin doesn’t just ask the question “what if we could create money without a central authority controlling it…what if we could create a money that has value simply because…people use it”.
Bitcoin ANSWERS that question by making that amazing possibility a reality. Money is not paper- Money is a language. A language that human beings created in order to express value to each other. Money has been fundamental in the construction of civilization –because it made it possible for us to exceed the “Dunbar Level”.
Although this was amazing and helped push forward civilization – it has remained a controlled system that often serves the purpose of granting incredible power to those people who can control money, its production and distribution.
Governments and Kings have always held tight control over money the same way they used to hold control over religion- for exactly the same reasons. They want total control.
This was how the story went for a long time – and then on January 3rd 2009 ; the Bitcoin white paper was released and the world suddenly had a new, better tool than centralized banking that they could use to shape the future.
Bitcoin is a tool with peer to peer protocol with zero servers ( all clients ) and the ability to express money as a content type.
Bitcoin expressing money as a content type is a HUGE deal. This basically means for the first time in history, human beings can express money as pure data – you can transmit it by using ANY communication medium.
The world was introduced to Bitcoin – money that is open, neutral, border less and global. Anyone can access it; since it is not a product. Anyone can utilize it without any kind of registration because Bitcoin is not a company.
All an individual needs to do is download the bitcoin client- which is similar to a web browser. This bitcoin client speaks the same “protocol” language to all the other bitcoin clients. It exists as one simple application.
Bitcoin allows you to participate in the world’s first truly global economy and it is fundamentally blind to race, religion, creed or age.
Children who are born today will grow up into a world in which banks do not exist.
Children born today will grow up in a world where paper money doesn’t exist.
The leap to a truly “digital” global money system was long speculated upon – but thanks to Bitcoin and the technology behind it – it is now a reality and one that is currently shaping the globe right before our eyes.
Money is now an integral protocol of the internet. It is a content type- one that can be transmitted anywhere at any time – by anyone. For the entire span of human history – money needed human beings to manage the money and groups of wealthy people ( corporations ) who could maintain the control.
These money “middle men” have long been a necessary evil. Thanks to Bitcoin- they are no longer necessary.
We are alive at a time where human beings are successfully implementing the biggest technological revolution in the history of human civilization.
It will change the world more than the invention of television, radio, cell phones and “the internet” as we know it- combined.
What makes Bitcoin so special?
One of the big things that makes Bitcoin special is something called a “blockchain”.
A blockchain is a digital ledger that records transactions in real time & uses a decentralized protocol to verify transactions in “blocks” of encrypted code. This may sound technical; but it is really a new and (drastically) improved form of an old technology.
Let me explain it this way: Banking systems use ledgers to record transactions and keep track of money as it is spent and borrowed. Some Anthropologists even claim that the need for this “ledger” in the pursuit of economic growth and surpass the “Dunbar Level” was the very need that drove human beings to create the written word.
In today’s modern world, it is very common that Banking customers pay for this service and are at the mercy of the Banking system because they rely on the Bank to provide the “official” ledger.
The problem with this is that human beings are fallible. Like I said earlier; if you give someone your money to hold, there is a very good chance they will run away with it – because it is in human nature.
Therefore banking systems have always been and always will be not only fallible, but fundamentally flawed- as anyone who remembers the 2008 crash can tell you. Over 10 trillion dollars of wealth was wiped out, leaving only the raising of the “Debt Ceiling” as a temporary band-aid.
Therefore the existence of a technology that allows for a decentralized protocol to exist for the purpose of exchanging value is virtually a silver bullet the heart of the corrupt fractional reserve banking system.
Children born today will never drive a car.
That’s a bold statement to make, right? Well, not so much. It is a widely accepted inevitability that self driving cars would progress to the point where they become primary transportation for most of the planet.
When you factor in the dwindling oil supplies and pollution along with world population – autonomous cars are really the only option.
In the near future, autonomous agents will be owning and managing money – themselves. Companies will be run with zero directors, zero shareholders and zero employees. They will run completely on scripted machine learning.
These autonomous corporations will manage billion dollar budgets; and even be capable of self propagation.
They will be able to run self tests and hire programmers to fix what they find in need of fixing and even accept Cryptocurrency from human beings; with which they will pay for their gas and electricity.
Sound a little too futuristic for you? Well consider this – the possibility of a charity that is capable of detecting a disaster and instantly transferring funds directly to those who need them most.
This will be done without the participation of a third party; which prevents most modern charities from making a real difference when it matters.
Money as a content type is very powerful. It is fully programmable with finely tuned script-able abilities. This is truly the money of the future.
Autonomous decentralized computer networks transacting mathematically encrypted code back and forth are going to replace the old obsolete centralized banking system.
When Bitcoin hit the scene in 2009; the online cryptography community was obsessed with trying to “hack” the bitcoin protocol. They could not.
In fact, the Bitcoin protocol has been under constant attack since it was created – not one of those attacks succeeded.
There have been attacks on cryptocurrency exchanges, mainly the large “Mt.Gox” incident in 2004 – which resulted in a dramatic ( at the time ) drop in the price and public perception of Bitcoin.
The entire “Silk Road” fiasco also played a part in the negative image of Bitcoin. When people turned on the news and saw that a bunch of computer geeks were using magic internet money to buy illegal items on a website called “Silk Road”; many were not happy.
The fallacy in the public perception of the Silk Road and Mt.Gox incidents can be put into perspective like this: You can use a printing press to print bibles but you can also use it to print instructions on how to make weapons. You can’t destroy the existence of printing presses.
Likewise, people use cash for illegal activities every day. In fact, most black market or illegal activities that are carried out in person are funded with cash. One can’t remove the existence of Bitcoin any more than one could remove the invention of electricity or the internet.
The impact of Bitcoin and using money as a content type has already began to exponentially grow.
An entire new field called “Smart Contracts” has opened up – allowing valuable things other than money to be stored & used on their own respective blockchain.
Smart Contracts are basically rules for how money ( or something valuable that isn’t money ) can be used and utilized. It is a computer protocol that digitally facilitates, verifies or enforces the negotiation or performance of a contract.
They are revolutionary because they do not require a third party.
Famous brands will begin using Blockchains to issue things like subway tokens, airline miles, loyalty points, etc.
The entire stock market could be on a Blockchain five years from now.
This global decentralized economy allows for anyone to create a digital currency and – if enough people use it – allow it to succeed.
Since Bitcoin was invented in 2009; over 1,400 different cryptocurrencies have been created. Most of which you can buy, trade or sell on digital cryptocurrency exchanges.
In the future even more cryptocurrencies will be created and many will have different capabilities and variations – with their own features.
This will create new markets and help raise funds for thousands of start ups in the years to come…
So how are banks reacting to this?
You may not be surprised to hear that they do not approve –at all.
Bitcoin has made the entire industry virtually obsolete in the same manner digital media stole the show from traditional print.
For this reason; the banking industry has taken this wonderfully decentralized, border-less, resistant to censorship network and trying to use it to simply solidify their own same old out dated financial framework. But it will not be enough.
Along with traditional banking systems and fiat currency; SWIFT systems and many like it such as Western Union will be inevitably replaced and put out of business by blockchain and cryptocurrency.
The remittances market alone will function with a lot more fluidity and WAY LESS fees – giving people with fewer advantages the same equal access to banking tools as the rest of the world.
Although the attempts will be unsuccessful , corporations and banks will attempt to use this technology not to improve the lives of human beings all around the world – but to control them and profit off of them.
They will attempt to alter the most fundamentally revolutionary aspects of bitcoin and they will fail.
They are already failing…Social media use is down compared to previous years and the long standing policy of collecting data on individuals to be used against them or sold for profit is quickly becoming an out-dated concept.
Using a site like www.steemit.com; users can submit content of their own ( writing, video, art, music, etc )exactly as they would on a regular “traditional” social network like Facebook.
The major difference being users can actually earn cryptocurrency (which can be exchanged for traditional cash if the user wishes) simply by submitting content. When content is upvoted – users collect micro-earnings. Their data belongs to them.
More traditional networks and corporations seek to make closed off “warehouses” of boring, old content- without much security for the user. It will not add much real value and it will be isolated away from the global community.
Innovation will happen –but not on a centralized network or with a specific company at the helm. The true champions of this technological revolution will be decentralized, open, neutral and censorship resistant.
The most exciting thing about this new technology isn’t just blockchain – it is that for the first time in human history; we have the ability to reach distributed consensus with parties that do not know each other and do not trust each other, from anywhere on the planet TO anywhere on the planet.
To do this, you do not need any authority to give you permission. You do not need any central party to intermediate or authorize anything. You simply download the Bitcoin client and get started.
This may all seem a little complicated at first- but the internet also seemed complicated at first. Then; it wasn’t so complicated anymore. Luckily people saw the potential in the technology and it has since irreversibly changed the world.
However, in over 25 years of the internet it still takes 3-5 days to send money to another country. That’s not all, either – it will cost you up to 40 dollars just to send the money.
That amount goes up drastically if you are sending money to a country deemed “poor” by the corporation or bank you use as a third party to send it.
This is unacceptable in a true globally connected, instant transaction economy. Gone are the days where networks of centralized and corrupt systems can squeeze every last penny out of the poorest people in the world.
Not even counting how much the population will be growing in the next few decades; there are currently around 2.5 billion people on the planet who do not have access to banking. This IMF statistic only reflects heads of household- it doesn’t count spouses or children.
These people desperately needed something as revolutionary as Bitcoin.
The poorest people in the world are learning about the next technological revolution at a pace that rapidly outnumbers most Americans.
This is because of their necessity for a better deal with their finances. Most American’s have the luxury and privilege of not needing to know about Bitcoin.
Many of the world’s poorest people do not have that luxury and as a result many of them ( of the SMALL percentage who currently are aware of Bitcoin ) are extremely supportive of the technology – for good reason.
Because when a $10 dollar cell phone can be dropped into a small village in a remote part of the world – and instantly can be turned into its own bank .
This is not to be confused with a phone that can just act as a bank account. With the bitcoin client installed on the android phone; the phone becomes it’s own bank capable of receiving and wiring funds to and from anywhere in the world, do mortgage lending or receive lending, etc.
The world we live in will grow by leaps and bounds as a true global economy is created.
This is a MASSIVE shift that is taking place. The entire globe is now internationally connected – every person on the planet can participate – with no permission required.
With around 4 billion people who can access the internet today; only 1 billion of them have access to banking. This leaves 6 billion people…
The world is about to radically change and it will happen VERY fast. It is already happening. This change can happen within 5 years- although it could be a messy rise if the large governments, corporations and banks ramp up their campaigns to hinder and cage this revolutionary contribution to human society.
The transaction of money in a trust-less environment, the use of money as a content type that exists globally and can’t be controlled will usher in the next technological revolution along with the future of money.
The archaic uses of paper fiat currencies will cease to be practical as the wave of innovation washes over the globe.
In the past ( pre-internet ) those who were born without access to education or resources such as library’s were unable to learn. That changed with the rise of the internet.
Billions of people were given the opportunity to learn virtually anything for virtually free on the internet and the world has for decades been in the most technologically advanced age in recorded human history.
Now, the world is even MORE connected – because for the first time in human history- money is now a content type.