Another drop from co-founder and CEO, Jimmie Steinbeck, reminiscing to The Pen Team about the rise of Bitcoin. Bitcoin has for some been a meteoric rise to riches, and for others high-powered mechanism for yield, and few a means of payment. Bitcoin was the initial use case for the blockchain technology and has since its inception in 2008 changed the world economy forever. The recent market sentiments show divided attention to what some call a digital asset, others a payment currency and few a decentralized catalyst for a new economy. Read on, to understand what it is, what it means and how it works.
During the financial crisis in 2008, “Satoshi Nakamoto” published this 9-page white paper: “Bitcoin a peer-to-peer electronic cash system”.
What is bitcoin? Bitcoin is the world's first cryptocurrency, and it works because of the world's first public blockchain network. What does bitcoin do, it's simple it lets you send and receive value to and from anyone in the world using nothing more than a computer and an internet connection
Digitally bitcoin is the world's first globally accessible public money. Is it perfect? nope, neither was email when it was invented in 1972. Bitcoin's not the best money on every margin it's yet accepted everywhere it's not used often to quote prices and it's not always a stable store of value, but it is working and the mere fact that it works without trusted intermediaries is impressive it's a computer science breakthrough, and it will be as significant for freedom prosperity and human flourishing as the birth of the internet and bitcoin is just the beginning.
If we can replace private payments infrastructure then we can replace other private choke points to human interaction as well now why should we want to build more public infrastructure why should we embrace blockchains over corporate intermediaries why should we tolerate their inefficiencies and work to make them better.
BACK TO 2010
Before I knew all that, we have to go back, all the way back to 2010 when I was introduced to Bitcoin for the first time and tried to get as much information about it as possible. There was not much help to get true the internet and Google. I had to go to “the dark web” and as told earlier, I was not a computer nerd, so it wasn’t easy to get the information I was looking for.
I had so many questions, how does it work, what is a wallet, an address, private and public key, what is the blockchain and where can I get Bitcoins from? After spending months in fora, setting up computers to “mine” bitcoin and just spending every free second I had talking and thinking about this new space, Friends started asking about it and I tried to explain it as well as I could.
Each one is a virtual safety deposit box that only you can open with your key. That’s your PRIVATE KEY, you never give it to anyone, ever.
And there are more addresses in this virtual vault than stars in all the universes. The doors to these boxes are transparent. everyone can see inside them but no one knows the owner.
Then I showed them my wallet and make a transaction.
Here's one with digital assets, “1 Bitcoins”. Sending them from one box to another is what's called a Bitcoin transaction, these digital coins can only exist inside these transparent address boxes, can't be copied, and can't ever leave the vault.
And this vault is owned by no single entity. You don't need permission from a government, a bank, or a corporation to use it. For early adopters of Bitcoin, it was all about global peer-to-peer electronic cash.
I then helped set up a wallet and send some bitcoin to them, so they could see it in their own wallet and “play” with it, sending it and receiving it.
Today I don´t believe that bitcoin became the peer-to-peer electronic cash system that it was initially supposed to be, it has changed, and there are many reasons why. A dear friend Jack, the CEO of ARYZE once said as we as so many times before discovered the development of Bitcoin and its useability in an everyday payment scenario. Transaction cost for users, but also the cost of running the blockchain and validating transactions.
I think the ASIC miners played a huge influence. I think that was kind of the beginning of the end of what bitcoin was initially supposed to be, but that does not mean that bitcoin is worthless, it’s just in my view something else than a peer-to-peer digital version of cash. In my view today it is more of an energy harvesting coin used to monetize excess electricity that we cannot yield today so at night when the volcanoes are still hot, or the geo earth systems are still active or the windmills are still spinning the wind turbines let's capture that energy and use that to mine because it's wasted energy anyway.” - Jack Nikogosian, CEO & Co-founder of Aryze.io
I couldn’t agree more with him. I believe that running the bitcoin blockchain and validating the transactions shut as it was from the beginning, had stayed with the users. The users that all have a synchronized wallet to send and receive bitcoins are also the validators of the network. Not as it is today with the big “farms” of specialized computers, whit only one goal, “profit”. Getting as many bitcoins as they can sell on exchanges to pay the running costs and make a profit. I still think the technology behind bitcoin and how it has been running seamlessly for the past 14 years is impressive. but as Jack said, today it´s something different than it was back then. So to wrap it up I think this Reddit user nailed: it.
“r/Bitcoin u/sleepapneainvestor 37dS3 2 93 93 1 1
I think I finally understand bitcoin. It’s a silent project that operates in the background. There’s no face to it. The founders created it and walked away. It’s like an elegant clock set into motion that continues to tick. There’s no promise of some complex protocol to come 3, 5, or 10 years down the road. It does what it’s supposed to now without self-promotion from the founders. Since it doesn’t need self-promotion to thrive, it doesn’t fall victim to the vices of marketing from greedy, charismatic leaders, with overly complex projects. Sure, there’s Saylor and Novogratz that sometimes fall into that role. But bitcoin doesn’t need them to survive and won’t need them when they die. The project works now. It does what it’s supposed to and it’ll continue to do what it’s supposed to. It’s the money of the future of our science fiction novels. There are no Krypto Kris marketing shitty debit cards. There’s no charismatic Do Kwon doing a Forbes, Steve Jobs photo shoot with a black t-shirt and a white background. There’s no J Powell magically expanding the money supply with a Cobol-fueled wand, creating a 9 trillion USD balance sheet out of thin air. BTC takes out the corruption of humans because the humans that created it stepped away. Sure, people will build corrupt systems around it, but BTC itself is a simple, pure, and elegant vehicle silently ticking away in the background until the ticking becomes so loud that no one can ignore it.” - Reddit user
The next article will be about the Blockchain and why it’s “more” important than Bitcoin. And even how they are equally important, for the “Bitcoin a peer-to-peer electronic cash system” Bitcoin isn’t that important for blockchain itself, or is it?
Penning for your thoughts is a series compiled by the CEO and Co-Founder of Penning, Jimmie Hansen Steinbeck. A compilation of his vast experience, knowledge, failures, successes, know-how & ideas. Jimmie has spent the last decade (almost since the birth of bitcoin), working in the crypto, blockchain (now known as Web3) space, as an investor, entrepreneur, and expert advisor to numerous crypto companies.