The Bitcoin (BTC) white paper only has nine pages. But, it contained enough to change the entire world. Here is how it came to be 13 years ago. The 13th birthday of the Bitcoin whitepaper has now crept up just as the world continues to deal with a global pandemic, inflation fears, an astounding meme coin mania trend, and growing institutional adoption of the crypto space.
On October 31, 2008, Satoshi Nakamoto published the Bitcoin whitepaper to a cryptography mailing list that was hosted by Metzdow. This mailing list was managed and operated by a group of cypherpunks. Additionally, it was filled with ideas that were meant to create a type of digital currency: some of them have been cited in the Bitcoin white paper.
Satoshi’s white paper came up as a message with a title”Bitcoin P2P e-cash paper.” In that paper, Nakamoto explained that his virtual currency is entirely peer-to-peer (P2P) and needs no trusted third party for a transaction to happen.
By using the peer-to-peer network, bitcoin managed to solve the double-spending issue. Furthermore, the crypto also allowed network participants to remain anonymous and it was secured via a proof-of-work (PoW) consensus algorithm.
During the time, the BTC whitepaper has not received the way that people would expect it to be, especially after knowing what they know today. Just a few people saw Nakamoto’s email and then replied with their thoughts and worries surrounding bitcoin.
While speaking to reporters, the co-founder and CEO of Decentralized Pictures, which is a non-profit organization supporting independent filmmakers, Leo Matchett, stated that the BTC white paper:
“is the genesis of a new era in monetary sovereignty. Satoshi stood on the shoulders of giants and solved problems that those who came before could not.”
Matchett also said:
“The white paper was truly the beginning of a new era for monetary systems of the world because it brought forth the idea that decentralization has more value than centralization.”
This idea of bitcoin tried to solve many issues like steep on-ramps, counterfeiting, and counterparty risk.
Once the whitepaper got shared on the cryptography mailing list, gradually and constantly, the discussion surrounding this document started to grow. The Bitcoin network was then launched in early 2009. At the time, one cypherpunk that worked with the PGP Corporation creating leading encryption products, Hal Finney, was already involved in the nascent sector.
Hal Finney is a famous name in the crypto sector for being majorly involved in the first Bitcoin transaction and also being the first person after Nakamoto to run a copy of the network via a node. After he set it up, Finney tweeted that he was “running bitcoin.”
— halfin (@halfin) January 11, 2009
The cypherpunk tragically passed away in 2014 due to ALS complications. His body was then cryopreserved by the Alcor Life Extension Foundation. He had already described his work with Satoshi in a long forum post where he said that he started mining bitcoin on “block 70-something,” and that after some correspondence, Satoshi sent him 10 BTC to test whether the new network worked.
At that time, there was no demand for space on the blockchain. Hence, that transaction was successfully processed with a 0 BTC fee attached to it. Those 10 BTC were worthless at the time. However, the transaction helped fix some bugs in BTC’s early days.
This first bitcoin transaction made it clear that the network was functional. While there was still loads of work to be done to reach where the network is today, it was a first step in the right direction. One year later, in 2010, the first commercial Bitcoin transaction would happen.
$600 Million For Two Pizzas
On May 18, 2010 developer Laszlo Hanyecz created a post on the Bitcointalk forum offering 10,000 Bitcoin “for a couple of pizzas.” He offered to pay another forum member the coins in case they got him two large pizzas that could even be homemade.
This post was met with doubts, as 10,000 BTC at the time was not worth the cost of two pizzas, or even anywhere near it. After a follow-up on May 22, Hanyecz reported that he “successfully traded 10,000 bitcoins for pizza.”
Despite bitcoin’s low value and the community’s small size at the time, one user said that a “great milestone was reached.” This day is now known in the crypto sector as the “Bitcoin Pizza Day.”
The first commercial Bitcoin transaction resulted in the creation of an ecosystem that is now worth more than $2 trillion and proved that Bitcoin has many use cases that require extensive consideration. For the first time, BTC was used as a true means/medium of exchange.
Today, It Is A Multi-Trillion Dollar Industry
The crypto’s price would then rise over time, partially due to mass adoption and partially due to speculators aiming to profit off of its major volatility. Amid all these occurrences, the new businesses were created in what then ended up becoming a huge asset class.
While speaking to reporters, the head of global business development at crypto exchange Kraken, Miha Grčar, stated:
“no one could have predicted the tidal wave of change unleashed by the publication of a 9-page PDF.”
The BTC white paper, Grčar added, laid out a vision for a virtual currency that can be used as a store of value and a dependable medium of exchange independent of any centralized control. Based on his words, its potential has not been fully established:
“It turned out to be a breakthrough of such historical importance and magnitude that even thirteen years on, we’re barely scratching the surface.”
He said that Bitcoin:
“Instigated a paradigm shift that now underpins a multi-trillion dollar industry and showed the world there was a better way where sovereignty, finance, and individual freedoms all co-exist outside the clutches of corrupt outdated socio-economic systems ridden with insiders, cronies, and backroom deals.”
As it is understood from the first commercial bitcoin transaction, Bitcoin’s value has not always been clear. This crypto has endured several major crashes in its history and has been declared “dead” more than 400 times by popular media outlets and analysts.
BTC’s market cap is now above $1.16 trillion, based on CoinMarketCap data. While many people now wish that they could have heard about the crypto in its early days around 2010 to invest and build wealth via the investment, most of them might have failed to see how big Bitcoin would get.
Greg Schoen, an early bitcoin investor, published a now-famous tweet in May 2011, where he regrets selling 1,700 BTC for $0.30, after he bought them when the crypto was trading at around $0.06, as he could have even sold the BTCs at $8 per coin. Currently, one bitcoin is worth over $60,000. Hence, his 1,700 BTC would now be worth more than $104 million. That is a pity.
I wish I had kept my 1,700 BTC @ $0.06 instead of selling them at $0.30, now that they're $8.00! #bitcoin
— Greg Schoen (@GregSchoen) May 16, 2011
BTC’s explosive surge has been supported by a vibrant sector that is filled with innovation that has seen crypto exchanges begin trading on the Nasdaq exchange and by many institutional investors that recognize that the crypto can be used to diversify their hedge against inflation and portfolios.
Earlier in 2021, El Salvador became the first nation in the world to adopt Bitcoin as legal tender with the nation’s Bitcoin Law officially taking effect on September 7. The El Salvadorans can use the crypto via a wallet known as Chivo. Chivo was launched by Nayib Bukele’s government and it uses the Lightning Network, which is a layer-two scaling solution.
The chief product officer at Latin American crypto exchange Bitso, Javier Moro, said:
“El Salvador’s move is rooted in hope for a better future for El Salvadorans, and its success will depend on the spread of cryptocurrency-related knowledge in the country.”
More Is Yet To Come In The Future
Earlier in October, the first Bitcoin exchange-traded fund (ETF) was unveiled in the United States. Notably, the ProShares Bitcoin Strategy ETF started trading under the ticker BITO on the New York Stock Exchange (NYSE). In its debut, it became the second-most heavily traded fund on record.
In a statement sent to different reporters, the CEO and co-founder of blockchain consulting company The Crypto Company, Ron Levy, said that the Bitcoin white paper:
“laid the groundwork for what would become a decentralized industry beyond what anyone thought was possible.”
The next major leap in this space, he stated:
“Are clear laws and regulations around what can and can’t be done with cryptocurrency.”
However, it is not quite clear how all that might turn out since all new technological advancements and breakthroughs face considerable resistance from the already established mechanisms.
The executive director at the Stacks Foundation, Brittany Laughlin, said that BTC has come a long way from just being a store of value since it is:
“now possible to build smart contracts on Bitcoin, welcoming the millions of BTC holders to the world of DeFi, NFTs, and true ownership.”
Stacks is a platform that connects decentralized finance (DeFi) with the Bitcoin network.
Satoshi Nakamoto, allegedly projected that more blockchains could use tokens that they called “domain objects” at the time, used to represent ownership of assets. Satoshi’s example was that of a token representing the right to own a domain for up to one year.
Finney: "Satoshi, are you endorsing the idea that additional block chains would each create their own flavor of coins, which would trade with bitcoins on exchanges?"
Satoshi: "Right…domain objects (domaincoins?) could represent the right to own a domain for a year." pic.twitter.com/ZZBUwV65pS
— Balaji Srinivasan (@balajis) July 2, 2021
As Grčar said:
“humankind has only begun scratching the surface of what Bitcoin and blockchain technology are capable of. So much so, that the developments we have today were seemingly thought of by Bitcoin’s creator, Satoshi Nakamoto.”
The Bitcoin white paper has made the idea of a decentralized network quite viable and proved that even a small 9-page document could change the world in different ways so radical that they might be hard to understand even at this point in time.
While it is not yet clear where more nations will adopt bitcoin as legal tender in the future, or whether interest for Bitcoin ETFs will wane, it seems like BTC is here to stay and serve as a store of value and medium of exchange. That is just 13 years after the idea was first introduced.
What will happen in the next 13 years?