Origins of Bitcoin
Privacy is necessary for an open society in the electronic age. — A Cypherpunk's Manifesto by Eric Hughes (1993)
Bitcoin is a cypherpunks' creation.
Cypherpunks: people who fight for privacy in communications through the use or development of encrypted systems.
Privacy is the power to selectively reveal oneself to the world.
Cypherpunk ideas started in the 1980s when the digitization made it easier for those in power to harvest data about citizens.
Cypherpunks decided to restore individuals power by applying computer science to minimize vulnerability to strangers through the design of crypto-anarchist systems.
Crypto-anarchist system: digital system that penalize or discriminate fraud making consensus possible without a central power.
The word "encrypt" has a Greek origin, it meant "to hide". "Cypher" is a synonym with a Latin origin.
Cryptography is the science that creates protocols to configure secrets that only the receiver of the message will be able to reveal.
The crypto-anarchist objectives were: to privatize money and to non-violently protect property and enforce contracts.
The first attempts to create private monetary systems failed due to lack of decentralization: Hashcash by Adam Back (1997), B-Money by Wei Dai (1998), Reusable Proof of Work by Hal Finney (2004) and Bit Gold by Nick Szabo (2005).
The idea of an unofficial and completely decentralized currency was very fringe both economically and scientifically, but a mysterious cypherpunk behind the pseudonym Satoshi Nakamoto figured it out. He published the Bitcoin White Paper titled Bitcoin: a Peer-to-Peer Electronic Cash System at bitcoin.org on October 31, 2008.
Satoshi sent the proposal to one of the main mailing lists focused on cryptography.
“I had to write all the code before I could convince myself that I could solve every problem, then I wrote the paper” wrote Satoshi 9 days later. The code was ready.
On January 3, 2009 the Bitcoin Network started operating. The software was announced and released as an open source project.
The headline for the same day's edition of The [London] Times was "Chancellor on brink of second bailout for banks", message that is included in block 0 of the Bitcoin transaction ledger.
Satoshi's breakthrough with money was to minimize the user vulnerability to third parties.
Nobody showed much interest except for Hal Finney, who was the first person to join the network.
He was also the first person to receive a transaction, Satoshi sent him 10₿.
Interest on the project grew very slowly.
Although "The nature of Bitcoin is such that once version 0.1 was released, the core design was set in stone for the rest of its lifetime" as Satoshi posted, new developers joined in and new contributions made possible for the software to improve in efficiency.
On May 22, 2010, the first commercial exchange of bitcoin occurred:
Laszlo Hanyecz, a Florida programmer posted a thread on Bitcointalk forum with the title "Pizza for bitcoins?" offering 10,000₿ for 2 pizzas. Another user agreed, and just after receiving the bitcoins, he ordered 2 pizzas by phone with charge to his own credit card and delivery to Laszlo home.
On April 23, 2011 shortly after a frequent contributor told Satoshi he was going to speak to the CIA, Satoshi stated in an email "I've moved on to other things"and he disappeared.
Appreciation for Bitcoin grew steadily.
Bitcoin had an immaculate conception.
Peer-to-Peer: with the ability for 2 people to interact directly with each other, without anyone in the middle.
Cash: bearer money, that is, not in the custody of a third party.