Bitcoin was created by someone mysterious, going by the name of Satoshi Nakamoto. Nobody knows who’s behind Nakamoto. We don’t even know if it was one person or a group. We just know that they took ideas that were already developed and combined them in a new and innovative way.
The major ingredients Nakamoto combined were the following:
- The blockchain
- The SHA-256 hashing algorithm
- The proof of work concept
The blockchain
The blockchain was first developed by Stuart Haber and W. Scott Stornetta in 1991. The two mathematicians invented a scheme made of blocks linked together by cryptography, as an attempt to create digital stamps that nobody could tamper with.
The SHA-256 hashing algorithm
Nakamoto decided to secure the network through a hashing algorithm developed by the NSA back in 2001 and called “SHA-256”. This algorithm allows you to compress any kind of data into an alphanumerical 64-characters long string called “hash”.
A hash is like a unique fingerprint for data. Just like every person has a unique fingerprint, every piece of data has a unique hash.
The Proof of Work concept
The final major component that Nakamoto added to the Bitcoin project was the “Proof of work”. This concept was conceived by Moni Naor and Cynthia Dwork in 1993 to prevent email spam and denial-of-service attacks. In essence, any computer sending an email or calling a website is asked to solve a little mathematical problem. The single problem per se is not expensive in terms of computational power, but it becomes a bloodbath if we try to send millions of emails to the same address. This makes flooding spam de facto impossible, or so expensive that it wouldn’t be worth the effort anyway.
The same concept can be applied to Bitcoin in order to avoid network abuse and congestion, but mostly, to give Bitcoin an intrinsic value!
Conclusion
The rest history. Once Satoshi Nakamoto put these pieces together, a document named Bitcoin: A Peer-to-Peer Electronic Cash System appeared on Metzdowd, a mailing list discussing cryptography. This document explained the mechanics and objectives of a new digital currency named Bitcoin. It was 2008, the world was being shaken by the worst financial crisis since the Great Depression of 1929. Someone understood that the global financial system needed a new infrastructure that could be transparent and independent from centralized powers. That’s how Bitcoin was born!
