This is the second blog post of Financial February, a month dedicated to spreading financial literacy. If you haven’t read the first one click here to read Part 1: An Insight Into the World of Cryptocurrencies
So today we are going to talk about the history and the origins of Bitcoins.
Satoshi Nakamoto, a name well-known name in the cryptocurrency market and is usually tagged as the “Creator of Bitcoin”. But only a few people know that Satoshi Nakamoto never intended to create the world’s first cryptocurrency.
His goal was to create a peer to peer electronic cash system that would overcome the limitations of a digital cash system, the primary one being the limitation of having centralized authorities.
In the white paper published by Mr. Nakamoto, he states that:
“Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers the inherent weaknesses of the trust-based model.”
“What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transfer directly with each other without the need for a trusted third party.”
The decision of Satoshi to create a digital cash system without a central entity gave birth to Bitcoin the world’s first cryptocurrency. When Satoshi created Bitcoin it’s value was a little over a single cent. With the passage of time, it’s value skyrocketed. The current price of Bitcoin as on 13 February 2018 is $8583.04 with a gigantic market capitalization of $144,733,331,604 as per coinmarketcap.com, Pretty insane right?
One another interesting aspect of the Bitcoin history is that the name Satoshi Nakamoto is a pseudonym. Thus, it isn’t confirmed as to whether Satoshi Nakamoto is a “he” or a “she” or even a “they”. Some even say that the name could be actually a group of four Asian Technology Companies. Samsung, Toshiba, Nakamichi, and Motorola. The name can be created by taking the “sa” from Samsung, “toshi” from Toshiba, “naka” from Nakamichi, and “moto” from Motorola.
The current status of Satoshi Nakamoto says that he is the owner of a million bitcoins. Implying that he has a net worth of approximately $8.5 billion (based on 13 Feb 2018 exchange rate).
Ever wondered what would happen if Satoshi Nakamoto decided to sell a million bitcoins?
Bitcoin has a finite supply of 21 million which is expected to be reached by 2140.
Nakamoto’s 1 million bitcoins amounts to approximately five percent of the entire cryptocurrency.
In case Mr. Nakamoto decides to sell his entire share of bitcoins in the market. The most likely immediate effect will be the prices of cryptocurrency plunging down but only for a short period of time.
In the long term, the market might stabilize on its own because of sufficient liquidity, hence preventing any financial crisis or market crash for that matter.
That’s it guys! I hoped you liked it and gained something out of it.
In the next blog post of An Insight into the world of cryptocurrencies series, we’ll be looking into cryptocurrencies as a potential investment and will figure out whether one should invest in them or not.
For a more detailed study, I’ve put the links below of some really amazing websites I referred to, do visit them once.
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Read Satoshi Nakamoto’s White Paper by clicking on the link: https://bitcoin.org/bitcoin.pdf