Bitcoin: A 21st Century Currency Explained By a Wall Street Veteran

It has been described as a "techno tour de force" by Microsoft founder Bill Gates, and as a "remarkable cryptographic achievement…that has enormous value" by Google CEO, Eric Schmidt. It was even predicted by Nobel Prize-winning economist Milton Friedman in 1999 when he said, "The one thing that’s missing, but will soon be developed, is a reliable e-cash."

Read the full story here

Friedman was a visionary, and in this instance he was a decade ahead of the rest, foreseeing the advent of digital currency, and more specifically, bitcoin.

Bitcoin’s rise to prominence is causing a global rethink of the concept of money. For thousands of years, gold was the currency of the land, and many of gold's qualities have allowed it to stand the test of time. As civilization developed and industrialized, ruling bodies learned that printing a government’s own currency, called fiat, was a more convenient and easier method of distributing wealth in society.

However, government-backed money has not stood the test of time; the average life of fiat currency is only 27 years. History is littered with examples of the failure of money, such as the Mark in post-WWI Weimar Germany and the Greek drachma in 1944.

Fast forward to the 21st century, where there are more mobile phones than there are people on earth, and perhaps it makes sense for a more global form of money to exist. Bitcoin is exactly that: a universal, internet currency that can work on any computer or mobile phone.

It is the result of decades of work in computer technology by nearly anonymous researchers, as it elegantly solves a longstanding problem in computer science. Bitcoin allows for trust between two unrelated parties over an untrustworthy network like the Internet.

With just a mobile phone any two parties can now transact without a central authority, company or bank mediating the transaction and in such a way that is safe and secure, publicly known, and uncontestable.

The origin of bitcoin

Similar to the way e-mail is a messaging rail that exists freely on the Internet for anyone to use globally 24x7, bitcoin is a payments rail that also exists freely on the Internet for anyone to use globally 24x7. Bitcoin (a crypto-currency, abbreviated BTC) was released in January of 2009 as a first-of-its-kind free payments system.

It does not require a credit card, bank account or the divulging of any personal identification to use or acquire. The catch is that you’re not using any government-backed fiat currency in this system. It uses a new currency altogether: bitcoin.

Before bitcoin was released there was a white paper entitled “Bitcoin, a Peer-to-Peer Electronic Cash System”, that was published in November 2008 by Satoshi Nakamoto.

Read the full story here