LeoGlossary: Bitcoin White Paper
The Bitcoin White Paper was released on October 31, 2008. It was put out under MIT License by Satosi Nakamoto to a group of cryptographers.
This introduced the idea of Bitcoin as a "peer-to-peer (P2P) electronic cash system".
Satoshi's vision was an online payment system that utilized peer-to-peer technology, enabling payments between parties without the use of a financial institution.
Bitcoin would eventually become the world's first truly decentralized, digital form of money.
The breakthrough came in solving the double-spend problem by creating distributed ledger technology which decentralized the ledger process over many different miners.
Over the ensuring years, many other blockchains were unleashed, including Bitshares, Ethereum, and Hive. We also saw the innovation of Proof-of-Stake (PoS) along with Delegated Proof-of-Stake (DPoS) to join the Proof-of-Work (PoW) consensus mechanism Satoshi laid out.
Bitcoin was following on the backs of Nick Szabo and David Chaum. Both developed peer-to-peer payment systems that pre-dated Bitcoin. Szabo brought out Bit-Gold while Chaum pushed forward with eCash. Both failed to take off for a variety of reasons. Nevertheless, they are viewed as being instrumental in the formation of Bitcoin.
This has also led to speculation that one of them, especially Szabo, might be Satoshi. To this day, the identity still remains a mystery.
However, privacy is a major tenet of the Cypherpunk pioneers so the anonymity is in keeping with what they believed. So is the idea of offering open source software to the world.
The financial system is full of intermediaries who provide a variety financial services. Payments are just one of aspect to an integrated system.
Our monetary system is made up of layers of networks that effectively run ledgers. From this, services are performed by financial institutions that operate under regulation as set down by government entities. Repeatedly, we see how this led to failure. Even regulated entities end up in bankruptcy, costing people billions of dollars.
The Great Financial Crisis was thought to be inspiration for Satoshi's systems although the timing does not really align. Lehman Brothers collapsed only a month before the release of the white paper. To solve the double spend problem took years, at least in the manner that Bitcoin eventually did.
Since the introduction of this network, others formed to branch out beyond payments. Bitcoin still operates as a system to send, receive, and store money in a decentralized manner. While the Taproot upgrade offers some promise, the network is still limited in number of transactions, scaling, and what can be built on it.
Smart contracts, which Ethereum brought to the forefront, have provided a foundation for decentralized finance (DeFi). This is something that Bitcoin has not participated in other than as a currency used for its monetary value. The infrastructure, at this time, is not being built on the Bitcoin network.
Money, finance, and even the economy is based, in large part, on trust. Financial intermediaries that are regulated are designed to provide trust to the public. When confidence goes out of the system, things collapse.
The Bitcoin White Paper spelled out a trustless system for electronic payments. The trust was in the code and the network, not a company, foundation, or government. It was something the early Cypherpunks were working upon but Satoshi brought it to the forefront.
An account requires trust. It also denotes a lack of ownership. Whomever issues it, whether it is a financial institution like a bank or brokerage firm or social media related, the account is in the control of the entity (company) that issues it. That means whatever is in it, money or data, is also theirs.
A Bitcoin wallet changed the game because only the person with the private key can access it. Nobody can stop one utilizing the network since it is permissionless.
All of this was spelled out in the 9 page White Paper that was released in the Fall of 2008.
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