This is one article in a collection of 52 articles published weekly throughout 2023 on the basics of Bitcoin. The series is intended for people unfamiliar with Bitcoin or people wishing to enhance their understanding of the fundamentals that underpin the technology. Please contact us, if you have any questions or comments.
Up to this point in the series we have explored the technical components that allow Bitcoin to operate without a trusted third party. It is not debatable that the technology works. As a result of Bitcoin’s proof of work system and extraordinary hash rate, the Bitcoin network has never been hacked! However, one potential shortfall for Bitcoin is it can easily be replicated. As a result of Bitcoin’s code being open source, it can easily be reproduced with the slightest tweaks to make something very similar to Bitcoin. This has in fact been done by many individuals. Many people new to the space are drawn to these projects frequently due to the lower price of entry. A lot of these people are still surprised to learn an individual can purchase part of a bitcoin in the form of a satoshi. Remember, one bitcoin is broken into 100,000,000 satoshis. Today, those entering the crypto ecosystem can choose to put money in thousands of cryptocurrencies. During the next phase of this series, we will explore what makes Bitcoin truly unique compared to the other cryptocurrency projects. As Michael Saylor is famous for saying “There is no second best.”
One thing that makes Bitcoin stand-alone compared to other cryptocurrencies is its inception story. Bitcoin was created by the pseudonymous person or persons Satoshi Nakamoto. Satoshi was involved in the development of Bitcoin in the early days and was responsible for mining many of the initial blocks. It is hard to extract the exact number of bitcoin Satoshi accumulated from early Bitcoin mining. However, a thorough analysis performed by Sergio Lerner, a cryptocurrency researcher, reviewed the first 36,200 blocks mined during the Bitcoin protocols first 13 months of existence. Using data from the genesis block (the first block in the Bitcoin blockchain which the research presumes was mined by Satoshi), Lerner discovered that 1,125,150 bitcoins were mined from a single mining setup. These bitcoins are scattered across thousands of wallets. At the current price of roughly $28,000 per bitcoin, Satoshi’s bitcoin is worth $31.5 billion based on Lerner’s research.
While Satoshi’s wealth accumulated through bitcoin is staggering, the more interesting thing is Satoshi’s coins have never moved for a profit motive! Additionally, in April 2011 Satoshi disappeared and has not been heard from since, after stating he was moving on to other projects. While Satoshi was involved in the early days of Bitcoin, since its inception the Bitcoin protocol has been run by the nodes that verify the network. Satoshi’s disappearance and apparent unwillingness to cash in the staggering wealth he earned from his innovation is one of the items that makes bitcoin distinct from all other crypto projects.
Many journalists have tried to solve the mystery of who is Satoshi or what agency may have been behind Satoshi. However, to date, all attempts have been unsuccessful. Satoshi left very few clues in terms of digital footprints which has made it clear that Satoshi had a deep understanding of how the plumbing of the internet operated. It appears as though Satoshi dropped off the face of the planet and won’t be heard from again!
Bitcoin is truly decentralized and has no employees or known founder. Bitcoin is solely operated under a set of rules administered by the nodes instead of the whims of a founder or those who hold a large amount of that particular cryptocurrency. Bitcoin was not created to benefit its founder or the insiders, unlike the majority of the thousands of cryptocurrency projects that have launched since Bitcoin. Rather, Bitcoin was launched for the altruistic reason of improving upon the world’s monetary system for the good of the human population by creating an electronic cash system that could operate without a trusted third party. It is hard to fathom another project having a fairer start than the launch of Bitcoin because of the greed pervasive in today’s society.
