Eight Reasons Why Cryptocurrency Is So Revolutionary
Feb 8, 2021
Cryptocurrency is most certainly the future of finance. There is very little doubt about that.
But what exactly is it that makes it so special? Why is crypto such a revolutionary innovation?
In this overview of the Bitcoin whitepaper, we’ll highlight nine points that make crypto so groundbreaking. While these points were first raised in the Bitcoin whitepaper, they can be applied to most of the leading cryptocurrencies in the world like Ethereum (Ether/ETH), Litecoin, Monero, LINK, ADA, and a myriad of others.
On October 31st, 2008, a user utilising the pseudonym “Satoshi Nakamoto” posted to a cryptography emailing-list a link to his white paper, which outlined a project he had been working on for what was obviously quite some time: Bitcoin.
You can find the original emails from the cryptography mailing list in this tribute website here, and of course the original whitepaper still sits on Nakamoto’s original domain “Bitcoin.org” here. (Note: Not Bitcoin.com)
This was a project with a very real purpose. It is clear to anyone who does enough research that Bitcoin was not in any way a get-rich-quick scheme. This was purely a project to create an exchangeable digital asset that could be traded for value, just like you would trade your collectable sneakers for, say, baseball cards. What that value is exactly is determined entirely by the market. What are people willing to pay for a Bitcoin? It could be $100, it could be $40,000, it’s up to the market to decide. Just keep in mind: the more it can be used, the more people will want it. And the more people want it, the higher its value will be based on the economics of supply and demand.
If you’ve read the Bitcoin whitepaper, or become familiar with some of the other leading cryptocurrencies, here are some key aspects you would find that make Bitcoin and cryptocurrency so ingenious:
1. The currency is decentralised
And yes, these are indeed currencies. As much as we may prefer the term “cryptoasset”, technically it’s also a currency: Something you can trade in return for something else deemed valuable.
Bitcoin was the first decentralised currency since before governments, monarchies and central banks took control of the likes of gold, water and grain back in ancient Egypt.
Like the internet can never be shut down, decentralised cryptocurrencies like Bitcoin, Ethereum, and Litecoin can never be shut down. Like the internet is a data transmission protocol, decentralised cryptocurrency is a protocol. Every single computer on the network carries an exact copy of the entire protocol and its history, and there are hundreds of thousands of computers that are running the protocol. And even if all these computers (in remarkably varied locations across the globe) were compromised, you’d still be able to restart a new protocol based on the ideals in the various whitepapers.
No-one controls a decentralised protocol, except the community itself. In order to make changes to the protocol, the community need to be in consensus – ie. majority vote. If the minority doesn’t like the direction, they can fork the protocol and start their own project (like Roger Ver did when he and his supporters forked the Bitcoin blockchain to create Bitcoin Cash, or when Craig Wright forked the Bitcoin Cash blockchain to create Bitcoin SV). The majority of the community will carry on building the original project.
Anyone and everyone are free to join, participate and vote on the project.
2. Cryptocurrency protocols were designed for direct peer-to-peer, internet transactions
Before October 2008, there had never been a digital form of value you could trade directly with someone else over the internet. You could email directly, peer-to-peer. But then that email could be duplicated and copied to a million other users. It wasn’t value, it was communication.
Bitcoin solved the digital duplication problem by preventing replication of transactions, so when someone sends you Bitcoin, it stays with you until you decide to send it on.
And it was truly peer-to-peer. All you needed to receive Bitcoin was the Bitcoin protocol, or in simple terms: A bitcoin wallet. No-one and nothing else was required to transact digitally. No subscriptions, no sign up fees, no permission. Anyone could (and can) get the Bitcoin protocol on their computer, and begin transacting. No control by any third party.
3. Bitcoin is (and many other cryptocurrencies are) a deflationary currency
Nakamoto wrote into the protocol that there can only ever be 21 million Bitcoins. In his whitepaper he referred to the scarcity of gold, and just like the famous yellow commodity is a scarce resource, Bitcoin would be limited in supply too.
And just like gold gets more and more difficult to mine the more you dig up the ground in which you find it; using a “proof of work” algorithm, Bitcoin gets more difficult to mine the more computers try and plug into the network to try and mine it – thereby limiting the supply into the marketplace, and keeping the price in line with the number of users wanting to buy it. Genius economics.
This is revolutionary in its idea: Because every other currency in the world can be increased in supply by their respective governments. And not only “can be”, but have been! This is called “inflation”. If there used to be only 1 million US dollars in circulation, there are now trillions of dollars in circulation. And we wonder why 250 US dollars bought you a car 100 years ago, and today it doesn’t even buy you a remote controlled toy car!
4. Cryptocurrency is one giant ledger
All cryptocurrency is in essence one giant ledger of transactions. Like any bank’s accounting ledger that holds the record of where every customer’s money has come and gone, cryptocurrency is a gigantic ledger recording every single transaction that happens on its network. At the time of writing, Bitcoin’s transactions have created a ledger 326gbs big! That’s a lot of transactions.
5. The ledger is immutable
Here’s where things get different to a normal bank: you cannot change the ledger. Technically, a bank’s manager could adjust the Excel spreadsheet when sending it to the tax man for auditing purposes. And we know this has happened regularly, as banks attempted to hide corruption.
Decentralised cryptocurrency on the other hand solves the corruption problem by saying “no one can change it”. It’s immutable. Or “unchangeable”. Once a transaction happens on the network, the record of that transaction will remain forever. If a government official is trying to move stolen government funds to another country, best they don’t use a network like the Bitcoin network to do it, because the transaction will be there forever - waiting to be find by an intelligent investigator.
6. This ledger is open
Anyone can see Bitcoin’s ledger, at any moment. As long as it takes your computer to process a giant Microsoft Excel Sheet, and as fast as your internet speed is, you can run through the entire Bitcoin ledger and see where all the Bitcoin is. It is free for anyone to see.
And remember: This ledger is perfectly replicated on every single computer running the protocol, so you’re always guaranteed to get the right one. Every time a transaction takes place on the network, that transaction is broadcast to every computer running the protocol, who then record it in their ledger, in exactly the same way – these computers are then talking to each other to confirm they all have the same transactions and information.
Sure, this means the network can currently only process about 7 transactions per second in Bitcoin’s case, 30 in Ethereum’s case. But what you get in return (accountability, deflation, international transactions) far outweighs the inconvenience of absolute immediate payments! (And when I say “immediate”, remember: A Bitcoin transaction still only takes about 20 minutes to process – compare that to the two-day foreign exchange controls you have to get through when sending Pound Sterling to Australia!)
Nothing is hidden in this open society.
7. The author of the Bitcoin whitepaper remains anonymous
To this day, no one knows who Satoshi Nakamoto really is. Some speculate he’s actually a woman. Others speculate he’s a team of people. Still others speculate he’s a Japanese mathematical genius as his pseudonym (and he himself) implies. Whoever 'they' are, they have created one of the world’s greatest technologies in the blockchain (true distributed ledger technology aka blockchain has Nakamoto to thank for its utility existence).
Think about the anonymity for a second. If you were going to create the next “big thing”, wouldn’t you want everyone to know you were the one who came up with the idea? How many times have you said to a friend: “I heard about One Direction before they became famous!”
Us humans love recognition, even for the most menial things. And yet Satoshi wanted none. He realised how important an economical idea Bitcoin was, and realised it was best he didn’t reveal his true identity. Doing so could manipulate the price, the integrity of the protocol, people’s opinions of it based on their opinions of him or her. He realised it was bigger than him, and it was best no-one knew who he really was. Humility on every level.
On top of this: Did you know that Satoshi was the first person to mine Bitcoin? Well, it makes sense now, doesn’t it? When the protocol first went live in January 2009, he was the first person to mine it. His good friend and co genius Hal Finney then joined him a few weeks later. But do you know how much Bitcoin Satoshi mined in total? 980,000.
Now. Remember we told you the protocol is based on an “open, immutable ledger”? Well guess what? Satoshi hasn’t touched those 980,000.
Yep. Take that in.
Most people are desperate to get their hands on 1 Bitcoin. Satoshi has access to 980,000. And hasn’t touched ONE.
His Bitcoin wallet that he mined his original Bitcoin to still holds the full 980,000 he mined in the first 3 years, and he hasn’t touched any of it. 10 years later!
Satoshi went off the grid with a final post on 28 April 2011, but seems to have popped up using the same email and user accounts to ensure people understand he is not who others speculate he is (see screenshots below with links to original posts).
And then again in 2015:
8. The author of the Bitcoin whitepaper did not copyright the information
In a very similar vein as the above point, and in keeping with the ideals that he proposed, Satoshi not only didn’t copyright or patent his work, he didn’t even entertain the idea. Satoshi believed in an open future, a society whereby people could share ideas freely and live in honest trust of one another, instead of “limited supply thinking” and that ideas had to be protected at all costs.
Unlike mega corporations of today, Satoshi recognised that the best ideas are best when shared with the world, and built upon. And indeed his idea has been built upon! Currently at over 3000 other blockchain-based cryptocurrencies, Satoshi’s blockchain idea has become the most talked about thing on the internet since the internet itself. And he was never afraid someone might come up with a better idea. Many would argue there are already better blockchain ideas, like Monero, Ethereum or even Bitcoin Cash? But that’s the point: A free idea means progress: A true open society within which anything can be improved upon, and evolution can take its course.
So there you have it. 8 reasons why decentralised cryptocurrencies like Bitcoin are so groundbreaking. Let’s recap those quickly:
1- The currency is decentralised
2- Cryptocurrency protocols were designed for direct peer-to-peer, internet transactions
3- Bitcoin is (and most other cryptocurrencies are) a deflationary currency
4- Cryptocurrency is one giant ledger
5- The ledger is immutable
6- This ledger is open
7- The author of the Bitcoin whitepaper remains anonymous
8- The author of the Bitcoin whitepaper did not copyright the information
These aspects make decentralised cryptocurrencies the most powerful invention in finance since the Telegraph. And with regular updating and upgrading by some of the sharpest minds in the world, there is still so much more to come.
Make sure you’re on the right side of history and get your Bitcoin, Ethereum, Ripple or other cryptocurrencies here at mexbit.com.