In this section, we look at the elusive founder of Bitcoin and the early stages of this phenomenon as well as the key people in its development.
- Bitcoin was created by Satoshi Nakamoto.
- From his P2P Foundation online profile, Satoshi Nakamoto is assumed to be a man born on 5th April 1975The listed birth date of 5th April points to the date of President Franklin D. Roosevelt’s enactment of Executive Order 6102 which forbade U.S. citizens from hoarding gold, and the year 1975 when they could legally own gold again. Some point to the fact that this date coincides with the UK fiscal year for personal tax. As such, this listed birth date is believed to be symbolic rather than factual. and living in Japan.
- The true identity of Satoshi Nakamoto is unknown – it could be a man, a woman or a collective group of programmers – no one really knows.
- Some speculations describe Nakamoto as a person of Caucasian descent living in the United States and a number of European countries.
- On 18 August 2008, the domain name bitcoin.org was registered.
- On 31 October 2008, Satoshi Nakamoto published a whitepaper titled Bitcoin: A Peer-to-Peer Electronic Cash System on the cryptography mailing list at metzdowd.com, with the following remark:
I’ve been working on a new electronic cash system that’s fully peer-to-peer, with no trusted third party.
The paper is available at: http://www.bitcoin.org/bitcoin.pdf.
The main properties are:
- Double-spending is prevented with a peer-to-peer network.
- No mint or other trusted parties.
- Participants can be anonymous.
- New coins are made from Hashcash style proof-of-work.
- The proof-of-work for new coin generation also powers the network to prevent double spending.
(original abstract notes here removed from brevity)
– Satoshi Nakamoto
- On 3 January 2009, the first bitcoin block, also known as the genesis block or block number 0, was mined by Nakamoto.
- The first block carried a reward of 50 bitcoin. More about mining and block rewards later.
- Interesting to note, embedded in the transaction detail of the genesis block, was the text: The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.
- This text was a headline published by The Times and has been interpreted as both a timestamp and a comment on the instability caused by fractional-reserve banking – perhaps an allusion to the problem that bitcoin was created to solve.
- On 12 January 2009, the first bitcoin transaction took place on the Bitcoin network. Hal FinneyHal Finney is a developer known for his work at PGP Corporation, and is best known as the creator of Pretty Good Privacy (PGP) – the most widely used email encryption software in the world. He was an early bitcoin adopter and user. In October 2009, Finney was diagnosed with ALS, which had eventually affected his mobility. Prior to his illness, Finney had been an active runner, and in November 2009, he and his wife ran the Santa Barbara International Marathon to raise money for ALS research. During the last year of his life before he passed away in August of 2014, Finney and his family became victims of swatting and started receiving anonymous calls demanding for an extortion of 1,000 bitcoin. His body is now cryopreserved by the Alcor Life Extension Foundation. was the first recipient, receiving 10 bitcoin from Nakamoto.
- In early 2011, Gavin AndresenGavin Andresen is a computer science degree graduate from Princeton, and is credited as the core developer who took over the lead role in maintaining Bitcoin over from creator Satoshi Nakamoto, leading to the development of the client software now known as Bitcoin Core. Andresen recognised the brilliant design of bitcoin when he first discovered it in 2010, and remarked that “bitcoin is designed to bring us back to the decentralised currency of the people”. In September 2012, he co-founded the Bitcoin Foundation as an American non-profit corporation to standardise, protect and promote the use of bitcoin cryptographic money for the benefit of users worldwide. took over the role as lead maintainer of Bitcoin CoreThe free and open-source software that serves as a bitcoin node and provides a bitcoin wallet which fully verifies payments. It is considered to be bitcoin’s reference implementation and is the most used implementation by a large margin. when Satoshi Nakamoto vanished from the scene.
- Before disappearing, Nakamoto handed over the network alert key and control of the code repository to Andresen.
- Nakamoto is believed to have left the scene after learning that Andresen had accepted an invitation from the CIA to speak about Bitcoin at a science convention at their headquarters on 27 April 2011[a], amidst other speculations.
- It is likely that Nakamoto understood the potential and power of his technological brainchild and how it could possibly disrupt the banking and finance industry, and he didn’t want the unnecessary attention and be the point of failure for this project.
- While Andresen was a known figure within the bitcoin community space, Nakamoto’s identity remains unknown even to Andresen.
- In September 2012, the Bitcoin FoundationThe Bitcoin Foundation is an American nonprofit corporation founded in September 2012 in a bid to restore the reputation of bitcoin after a number of scandals, as well as to promote its development and adoption. The organisation was modelled on the Linux Foundation and is funded mainly through grants made by for-profit companies that depend on the Bitcoin technology. The board of directors and other information may be found at their website at https://bitcoinfoundation.org. was founded by Gavin Andresen, Patrick MurckPatrick Murck is a co-founder of the Bitcoin Foundation where he served as General Counsel and Executive Director. With a deep understanding of the fintech industry, he has engaged regulators and policymakers in the US and Europe on bitcoin and the emerging digital economy, and was named America’s 50 Outstanding General Counsel for 2014 by the National Law Journal. He also serves as President Board member for the BitGive Foundation, a non-profit organisation focused on charitable giving and social impact using bitcoin., Mark KarpelèsMark Karpelès was the CEO of Mt. Gox when he acquired 88% of the company from Jed McCaleb in 2011. Mt. Gox was at one time the world’s biggest bitcoin exchange handling over 70% of all bitcoin transactions, until it filed for bankruptcy protection in early 2014 when it was found that 850,000 of its bitcoin holdings belonging to the company and its customers were found missing, a value of about $470 million at that time., Charlie ShremCharlie Shrem is an American entrepreneur and bitcoin advocate, and co-founded the investment company Intellisys Capital, as well as the bitcoin startup BitInstant. In 2011, Shrem started investing in bitcoin whilst he was still in college. Together with a friend, he started BitInstant, an exchange that charged a fee for users to purchase bitcoin at 700,000 locations, and providing temporary credit to expedite transactions. By 2013, BitInstant was processing 30% of all bitcoin transactions. BitInstant ceased operation in July 2013., Roger VerRoger Ver is an early Bitcoin adopter and investor in Bitcoin-related startup ventures. Ver became a millionaire by the time he was 25, a success attributed to his computer parts business MemoryDealers.com where he was CEO from 1999 to 2012. MemoryDealers.com was eventually to be the first company to accept bitcoin as payment, in 2011. Ver has invested over a million dollars into other new Bitcoin-related startup ventures such as Blockchain, BitPay, Kraken and Ripple. In June 2016, Ver was appointed the chairman of the Cryptocurrency Advisory Board for MGT Capital Investments which aims to improve cybersecurity. Ver’s strong passion, deep involvement and philanthropy within the Bitcoin community has earned him the title Bitcoin Jesus at one time, but he is now known more for his strong advocacy for Bitcoin Cash. and Peter VessenesPeter Vessenes is a co-founder of the Bitcoin Foundation and served as its first Executive Director and Chairman. In 2011, he launched CoinLab, Inc, the first venture-backed bitcoin company. He has served as consultant and advised many groups and institutions about Bitcoin and its technology, such as the Department of Treasury, FinCEN, and the US Senate GAO. He has helped to build Bitcoin practices at major law firms like Perkins Cole, and is a trusted advisor to big accounting firms like Deloitte Touche Tohmatsu and Price Waterhouse Coopers, as well as to major venture capital firms like Lightspeed Venture Partners, Ribbit Capital, Pandera Capital, Cedar Hill Capital, DFJ and others. Vessenes graduated from Brown University with an Sc.B in Mathematics and an emphasis in cryptography, and is an internationally known speaker and expert in his field..
- The success of the Bitcoin project does not require Satoshi Nakamoto to be on board. After all, Nakamoto had already relinquished his involvement in Bitcoin since late 2010.
- Bitcoin is open-source – its design is public and not owned or control by any single party, so just about anyone can participate and be part of the network.
- While developers may contribute and make changes to the software, they can’t force a change in the Bitcoin protocol. Users are free to choose what software version to use, and they all need to use the software which complies with the same set of rules in order to stay compatible with one another.
- Bitcoin can only work correctly with a complete consensus among all users. Thus, all users and developers have a strong incentive to protect this consensus.
- Any changes that Nakamoto made and the influence it had on the software during the period of his involvement would have been limited by how widely it was adopted by other users around the world. As such, Nakamoto had no control over Bitcoin – in the past or present.
- To this day, the identity of Satoshi Nakamoto remains a mystery[b]. It doesn’t matter who Satoshi Nakamoto is, because the Bitcoin network runs on a system regulated by the universal laws of Mathematics.
In a similar fashion, we do not need to know who Isaac Newton was to fully appreciate the laws of gravity – gravity happens whether you have heard of Isaac Newton or not.
- The Next Web: Satoshi Nakamoto left Bitcoin because of the CIA, a theory 19th July 2019
- Newsweek: The Face Behind Bitcoin 6th March 2014
We’ll proceed to the next section 1.4 How Bitcoin Works to look at some of the most important parameters governing Bitcoin.