Don’t miss WIRED’s quick and handy review of Bitcoin’s impact as it turns ten years old. Some highlights:
Today Bitcoin is a global phenomenon. Individual bitcoins sell for thousands of dollars. The price has dropped steeply from its peak of nearly $20,000 in December 2017, but recall that, at the beginning of 2017, one bitcoin sold for less than $1,000. Meanwhile, hordes of other cryptocurrencies have launched, though none has attracted quite as much interest from users or investors as bitcoin, and venture capitalists pour millions into startups looking to capitalize on the underlying technology.
It all started with the white paper. When Nakamoto published the paper, many of the underlying concepts of Bitcoin already existed, including the idea of issuing digital money to people who devoted computing resources to a problem. But Emin Gün Sirer, a computer science professor at Cornell University, credits Nakamoto with a major breakthrough: a way to ensure that users trust one another, and the network, without relying on gatekeepers.
Bitcoin relies on a ledger called the “blockchain.” Every transaction is cryptographically signed and recorded in the blockchain, which is distributed to every participant in the Bitcoin network, preventing anyone from double-spending their coins.
For all of Bitcoin’s success, it hasn’t lived up to Nakamoto’s dream of a currency for day-to-day transactions, remaining largely a medium for speculators. In part, that’s because transactions are incredibly slow. Sirer has estimated that Bitcoin processes around three transactions per second, a poor showing compared to Visa’s 3,674 transactions per second. Meanwhile, other problems have emerged, such as the Bitcoin network’s alarmingly huge carbon footprint, which one report suggests is already on par with that of a small country.
Nakamoto’s successors on the Bitcoin project, along with the developers of rival cryptocurrencies, are working to solve these problems, but in ways that sometimes radically diverge from the original white paper. The Bitcoin project is considering an innovation called the Lighting Network that would speed up transactions by moving most transactions outside of the blockchain. Sirer, meanwhile, is working on new protocols that address both speed and environmental impact. Others have created new cryptocurrencies that try to address a whole host of Bitcoin issues, from performance to privacy.
Asked during a panel at WIRED’s 25th anniversary event what what one book or paper on cryptocurrency she’d recommend everyone read, Narula picked the white paper. “It’s amazing how the white paper still holds up,” she says. “It’s still the best way to understand how bitcoin works.”
She also thinks that Nakamoto’s subsequent silence is a big part of the Bitcoin creator’s legacy. “One of the coolest things about Bitcoin is that the creator stepped away,” she says. “So many people feel like they have ownership over this thing. I think if the person who created it, who started it, was still around, people wouldn’t feel like they could have a piece of it too.”