History of bitcoin: how it was born and what it has become today.

 History of bitcoin: how it was born and what it has become today.

Born in 2008, Bitcoin has now become a speculative instrument, even more than a paid one. Here is its genesis and its future.

In 2008, Satoshi Nakamoto, an inventor whose identity is still unknown, presented the project for the first cryptocurrency: bitcoin on a mailing list of cryptographic experts. A little over two months later the system was already operational. Bitcoin and the other hundreds of cryptocurrencies that have come to the fore in recent years have had a dizzying development: just think that 10 (Ten) years after the inauguration of the first cryptocurrency, the market was worth over 110 billion dollars. More or less the same as the GDP of Morocco. And already after the first 10 years, some critical issues emerged. But let's start the story from the creation.

 In 2008, Satoshi Nakamoto, an inventor whose identity is still unknown, presented the 

Environmental impacts

FINANCE

Bitcoin: the financial bubble is the minor problem

What are cryptocurrencies? 

Cryptocurrencies are tools that, based on the principles of cryptography, allow a network of people who do not know each other to generate money and circulate it, in the absence of a central authority to validate their transactions. 

To understand the extent of this innovation, it is useful to remember how digital currency transactions are currently carried out: when we pay 1 euro for a loaf of bread with our debit card, we simply send a message to our bank, giving the order to transfer a certain sum from our account to that of the baker. On the register link to our current account, it will be marked "-1 euro" while on that of the baker "+1 euro". In this type of transaction, the banks act as guarantors, since they check and update the databases where the current account balances of all citizens are recorded.

Bitcoin was invented to carry out this same type of transaction without needing the intermediation of banks. In cryptocurrency systems, the databases of individual banks are replaced by a single ledger, a record of all transactions, updated minute by minute by a network of thousands of anonymous contributors around the world. 

But how is it possible to coordinate the work of thousands of strangers? How to avoid mistakes and scams? How to get each contributor to record exactly the same transactions in the same order? 

What is the blockchain?

The technology that allows cryptocurrencies to circulate is called blockchain (chain of blocks). The digital ledger created by Satoshi Nakamoto is the result of the combination of the most advanced cryptographic studies, of P2P technology ( peer-to-peer, i.e. a network in which the connected computers are both client and server at the same time and so users can access each other's computers by sharing files), and an accurate system of incentives to action. This digital ledger is made up of transaction blocks validated by so-called miners. 

The miners are people who provide the hardware on their computers to perform complex mathematical calculations, in order to confirm transactions and ensure their safety. As a reward for their service, miners can collect transaction fees and grab newly created bitcoins. In fact, every time you move from one block of the blockchain to the next, bitcoins are issued and immediately distributed to the fastest miners to solve the mathematical calculations provided. 

A major limitation of the bitcoin mining system is its enormous environmental cost. The computers that process data to validate cryptocurrency transactions are so energy-intensive that they consume more energy than a nation like Chile in a year. A catastrophic environmental impact, aggravated by the fact that most of those who have launched into the mining race are residents in China, where a large part of the electricity is still produced thanks to coal. 

Is bitcoin a real decentralized monetary system? 

Not exactly. According to economic theory, money has three functions: it is at the same time a medium of exchange, a measure of value, a store of wealth.

In recent years, the exchange value of cryptocurrencies has experienced incredible and sudden fluctuations, in the order of thousands of euros. How would it be possible to use bitcoin at the bakery as a medium of exchange, if its value changes minute by minute? Furthermore, how can a digital object that has no intrinsic value be a measure of value? And that is not recognized, as a means of payment, by a central authority (for example a central bank )?

 It was probably not in the plans of the mysterious inventor Satoshi Nakamoto, but today bitcoin and other cryptocurrencies are not means of exchange but deregulated speculative instruments. Hundreds of thousands of people buy and sell cryptocurrencies every day with the sole aim of profiting from their growth in value; the speculative bubble of which they were the protagonists between the end of 2017 and the beginning of 2018 is clear proof of this. exchange value. 

That said, cryptocurrencies have shown some resilience, surviving the bubble burst. In any case, they are instruments that need further development, if they aspire to become real monetary systems. 

What is the potential of blockchain technology? 

The blockchain is the technology on which the functioning of bitcoins is based, but it could prove to be very useful in other contexts. In the case of cryptocurrencies, it has been used to track transactions in digital currencies. But it could also be used to register contracts or property rights, to independently generate and sell clean electricity, and in many other contexts. At the same time, however, we must be wary of those who say that the blockchain can solve any type of problem as if it were a universal panacea. 

Can cryptocurrencies play a role in the solidarity economy? 

At present, cryptocurrencies present themselves as speculative tools, but by perfecting their functioning and hybridizing them with other innovations in the field of alternative finance and the sharing economy, they could give life to systems with a strong social impact. The first issue to be addressed is the environmental one, we need to study solutions to reduce the environmental impact of blockchains by making mining less energy-intensive.

In 2008, Satoshi Nakamoto, an inventor whose identity is still unknown, presented the project for the first cryptocurrency: bitcoin on a mailing list of cryptographic experts. A little over two months later the system was already operational. Bitcoin and the other hundreds of cryptocurrencies that have come to the fore in recent years have had a dizzying development: just think that ten years after the launch of the first cryptocurrency, the market was worth over 110 billion dollars. More or less the same as the GDP of Morocco. And already after the first 10 years, some critical issues emerged. But let's start the story from the beginning.

 

Environmental impacts

FINANCE

Bitcoin: the financial bubble is the minor problem

 

Is bitcoin a real decentralized monetary system? 

Not exactly. According to economic theory, money has three functions: it is at the same time a medium of exchange, a measure of value, a store of wealth.

In recent years, the exchange value of cryptocurrencies has experienced incredible and sudden fluctuations, in the order of thousands of euros. How would it be possible to use bitcoin at the bakery as a medium of exchange, if its value changes minute by minute? Furthermore, how can a digital object that has no intrinsic value be a measure of value? And that is not recognized, as a means of payment, by a central authority (for example a central bank )?

 

It was probably not in the plans of the mysterious inventor Satoshi Nakamoto, but today bitcoin and other cryptocurrencies are not means of exchange but deregulated speculative instruments. Hundreds of thousands of people buy and sell cryptocurrencies every day with the sole aim of profiting from their growth in value; the speculative bubble of which they were the protagonists between the end of 2017 and the beginning of 2018 is clear proof of this. exchange value. 

That said, cryptocurrencies have shown some resilience, surviving the bubble burst. In any case, they are instruments that need further development, if they aspire to become real monetary systems. 

What is the potential of blockchain technology? 

The blockchain is the technology on which the functioning of bitcoins is based, but it could prove to be very useful in other contexts. In the case of cryptocurrencies, it has been used to track transactions in digital currencies. But it could also be used to register contracts or property rights, to independently generate and sell clean electricity, and in many other contexts. At the same time, however, we must be wary of those who say that the blockchain can solve any type of problem as if it were a universal panacea. 

Can cryptocurrencies play a role in the solidarity economy? 

At present, cryptocurrencies present themselves as speculative tools, but by perfecting their functioning and hybridizing them with other innovations in the field of alternative finance and the sharing economy, they could give life to systems with a strong social impact. The first issue to be addressed is the environmental one, we need to study solutions to reduce the environmental impact of blockchains by making mining less energy-intensive.

ETHICAL FINANCE.

Environment, use blockchain to reduce the impact of… blockchain

Once this obstacle has been overcome, a possible development line is the one that derives from the combination of blockchain technology and local and complementary currency systems, in order to generate large trust networks. Similarly, blockchain could be used to create decentralized cooperative networks of gig economy workers. In direct competition with large for-profit platforms such as Uber or Foodora.

What is Europe's position on cryptocurrencies?

The European Central Bank launched a study last October on the possibility of issuing a digital euro alongside the issuance of paper money. It is a direct response to the multiplication of private currencies and, in particular, to the Facebook project called Libra. The goal is to ensure that the euro is not overwhelmed by this sea of ​​unregulated cryptocurrencies. The digital euro would be based on blockchain technology that would allow accelerating exchanges while guaranteeing reliability. According to the ECB, however, the digital euro would remain a currency guaranteed and controlled by the central bank.