Why Was Bitcoin Invented?

Bitcoin is currently the most valuable cryptocurrency in the world. It was the first cryptocurrency that was launched, way back in 2009. But almost a decade later, many people are still trying to understand what Bitcoin is, why it was created and how it works. This article was created to help answer these questions.

The Need for Bitcoin

After decline of monarchy in the world, banks took on a prominent role in managing monies of people and the state, liberating people from economic slavery. Over time, the power within banks eventually led to corruption and fraud. The problem was further compounded by the corrupt regimes, making central banks even more powerful and repressive by imposing hyperinflation on the masses. There are instances were banks went completely belly up and were unable to issue money owed to the people, like in Venezuela, Japan, Greece, etc. A vast majority of the world still lives without any banking services even to this day.

Money in the form of currency is inexorably linked to a nation and limited by its geography, making it susceptible to the struggles for domination in a world of geopolitics. Individuals have little say in the value of their currency and are left at the mercy of oppressive governments.

As the banking system becomes more and more shrouded in corruption and frauds, people are left with a system that is far from liberating. Disruption was inevitable as the need for a new global, transparent and efficient monetary system became more and more apparent with each failing of existing system.

Bitcoin As The Solution

Bitcoin was the answer. Invented in 2009 by an unknown person or group of people with the pseudonym Satoshi Nakamoto. A white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash”, contained the designs for a decentralized, democratic monetary system that could leverage the internet for making payments. This new system, could work without any central clearing agency like traditional banks and governments. Bitcoin essentially cut out the middleman in a transaction.

Bitcoin is built on blockchain technology which creates a distributed public ledger that resides in the cloud and stores information in a permanent, verifiable and secure manner. Because of its design and isolation from governing roadblocks and checks, blockchain technology is able to carry out transactions extremely fast. On the Bitcoin network, it takes about 10 minutes for each transaction to be verified. This is unlike the traditional banking system that often takes up to 3 days.

The Bitcoin network also ensures that transactions carried out cheap, as well as fast. Unlike the traditional banking system that charges about 5% to 15% of every transaction amount, Bitcoin charges a meager 0.1% to 1%.

The most exciting feature of Bitcoin is, it is a decentralized currency with no central agency or a third party to verify transactions. However, Bitcoin has a mechanism wherein each transaction is verified in order to prevent double spending. The peer-to-peer transactions on the distributed public ledger cannot be altered or erased.

Conclusion

Bitcoin was created to replace/counter/supersede an age old exchange system that over centuries has become inefficient, opaque and riddled with bureaucracy and corruption. In contrast, built using modern technology, Bitcoin is decentralized, community driven and owned by everyone. It is a revolutionary system that has the potential to change the way the world works. It is up to us to adopt, propagate and make this new way of money work for us.