Since then Bitcoin’s use cases have morphed and multiplied. Some say that subsequent forks and BIPs allowed Bitcoin to deviate from its initial purpose.
But without getting into the political debate (about what Bitcoin is, what it should be and what it was intended to be) let’s take a look at the most important points that Satoshi highlighted in his white paper.
These are the pillars of the cryptocurrency revolution.
Bitcoin is a “purely peer-to-peer version of electronic cash” that aims to enable direct payments between parties without the need for financial institutions. Or at least that is what Satoshi Nakamoto intended it to be when he published the Bitcoin white paper on October 31st, 2008.
Let’s Not Get Technical Here!
Let’s highlight the crucial aspects of the white paper without getting technical. The key aspects are:
- Double spending – an electronic form of cash that addresses the problem of issuing fake money, otherwise known as the double spending.
- Proof of work (PoW) – how the network transfers money from person to person safely.
- Decentralization – a system that cannot be censored or stopped.
- Monetary Policy – money supply within the system.
- Nodes and miners – the peer-to-peer aspect without intermediaries on a democratized system.
The biggest challenge to an electronic form of P2P cash is that anyone can copy a coin, or spend the same coin multiple times. This is the first challenge that Satoshi solved by allowing the system to record transaction in a public ledger, which needs a consensus mechanism to make a change. Time stamping the transactions allows everyone to understand when the money was spent, who had it and whom it went to.
The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work that stores transactions in blocks. Each subsequent block has a reference to the previous one and so forth. This forms a record that cannot be changed without redoing the proof-of-work.