The Origins and Purpose of Bitcoin

The concept behind Bitcoin began to take shape in 1998

The concept behind Bitcoin began to take shape in 1998, when computer scientist and cryptographer Nicholas Szabo proposed a theoretical digital currency called "Bit Gold." Bit Gold, which would be secured by a decentralized network, incorporated many of the ideas that later became central to Bitcoin. The digital currency would function similarly to gold, acting as a store of value, but in a decentralized, immutable format.

Key elements from Bit Gold would later shape Bitcoin’s development:

• Decentralization: A network of computers (or nodes) where each participant verifies transactions.

• Proof of Work: Miners would use computational power to solve complex cryptographic puzzles, validating transactions in the process.

• Public Ledger: All transactions would be recorded in a public database, called a blockchain, ensuring transparency and security.

• Byzantine Fault Tolerance (BFT): This concept allows the network to function even when some nodes are corrupted, making the system resistant to attacks.

The ideas behind Bit Gold were put into practice when Bitcoin was launched in 2009 by Satoshi Nakamoto, who created a system where digital currency could be transferred directly between parties without any central authority.

The timing of Bitcoin’s release during the Global Financial Crisis was no accident. Nakamoto’s creation sought to provide an alternative to the traditional banking system, aiming to prevent future financial crises that stemmed from central banks' control over money.