Eleven years ago today, Satoshi Nakamoto — the person, or persons, responsible for creating Bitcoin — unleashed the cryptocurrency’s white paper into the wild.
Published on October 31, 2008, the white paper, officially titled, ‘Bitcoin: A Peer-to-Peer Electronic Cash System,’ described a novel, immutable, decentralized peer-to-peer network that could track and verify transactions while also preventing double-spending and producing a transparent record for anyone to verify in almost real-time.
Nakamoto began by outlining how e-commerce relied almost exclusively on financial institutions acting as trusted third parties to process payments.
Although the system worked well enough for most transactions, it still suffered from the inherent weaknesses of this trust-based model, the white paper says.
“What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party,” it reads, adding, “Transactions that are computationally impractical to reverse would protect sellers from fraud, and routine escrow mechanisms could easily be implemented to protect buyers.”
Ultimately, Nakamoto wanted to bypass the mainstream financial system, removing the need for intermediaries and wholly counteract the centralization of financial power.