Bitcoin and other cryptocurrencies are on the cutting edge of innovation, technology, cybersecurity, and e-commerce. It seems like every day these digital and cryptocurrencies are hitting higher levels than the previous day. What many people don’t realize, is that Bitcoin itself has been around for over 10 years now!
Yet, if you look back in history, you’ll find many parallels between Bitcoin’s story, as conveniently assembled through the infographic below, and how digital money first arose.
No one really knows who first made the transition from a barter economy to the use of an object which represented a certain value – a currency. Groups of shells, called “cowries,” were used in China and parts of the Pacific Rim as early as 1200 B.C.E. Before long, imitation shells of pressed copper were being traded. The Mediterranean world started minting what we recognize as “coins” around 500 B.C.E.
Bitcoin’s origins are similarly shrouded in mystery. The “person” credited with creating the code for Bitcoin is Satoshi Nakamoto, a fictitious name which represents either one person or a group of developers. While many claim to have uncovered the secret – or have presented themselves as Nakamoto himself – the identity of this person or group has never been proven.
Why did people invent money at all?
Imagine you are a cloth merchant in a small city 2,500 years ago. You sell rolls of linen to provide for your family. However, an interested buyer only has cheese to trade with you – and you are lactose intolerant.
What will you do?
Suddenly, you remember those new-fangled chunks of copper with the king’s imprint on them. You ask the buyer if he has any of those “coins.” He does! You agree on a price and sell him the cloth.
Later, you can use those coins to buy some tofu instead.
Bitcoin attempts to bring a similar simplicity to digital transactions. Rather than requiring third-party authentication, Bitcoin allows person-to-person transactions by exchanging a purely digital currency which is authenticated through its blockchain technology.
In fact, Bitcoin goes even further than those early money systems: It is valued and verified independent of government control or influence. This attribute attracts many of its adopters and investors – and worries some government authorities.
Go back to your cloth shop from 500 B.C.E., and imagine you went ahead and accepted the cheese-for-linen offer – your wife was making pizza that night. As she was shredding the cheese block, she discovered the center had been hollowed out and filled with dirt to make it heavier.
You’ve been had!
Of course, the cheese-cheater was long gone by now. If only you had required payment in coins. The king’s stamp meant those copper pieces all had the same worth. You could look at each one, see the king’s face staring back at you, and know you were being paid with something of universal value.
The use of blockchain ledgers for Bitcoin transactions digitally expands the security concept which originated with those first metal coins. Not only is each Bitcoin of equal value; each Bitcoin is traced through its transactions on the blockchain. There have been a few attempts at counterfeiting, but so far, the blockchain technology has exposed them each time.
Considering what money has accomplished in the last 2,500 years, we can only imagine what amazing changes the cryptocurrency revolution holds.