Bitcoin was launched 14 years ago on this day, let’s remember why

The bitcoin (BTC) blockchain mined its first block on January 3, 2009 – exactly 14 years ago – but why?

when wondering why Bitcoin was created, a good sign is on the blockchain itself. More precisely, in the Coinbase parameter – the data entry name of a transaction generating new BTC as a block reward, which inspired the name coinbase Crypto exchange — of the so-called genesis block.

The genesis block is the first block in the bitcoin blockchain. It was mined by the creator of bitcoin, better known under the pseudonym Satoshi Nakamoto, on January 3, 2009. A block consists of a single transaction that is the first recorded on the bitcoin network and is known as a “Coinbase” transaction – the issuance of a block reward.

Coinbase parameters in the genesis block also include a message from Satoshi Nakamoto, which reads, “The Times 03/Jan/2009 Chancellor Banks on brink of second bailout.” This message is a reference to a headline in the British newspaper “The Times” and serves as the timestamp for the block.

Bitcoin was launched 14 years ago today, let's remember why
The January 3, 2009 issue of The Times. , Courtesy of the Rwandan seller paper tea

This title serves as proof that the data was generated no earlier than January 3, 2009 – but the choice of this particular title is also a clear statement.

Bitcoin was created to oppose the modern financial system and fractional reserve banking, and the included title also serves as a commentary on the financial crisis of 2007–2008 and the perceived need for a decentralized and trustless alternative to traditional financial systems.

Bitcoin is meant to circumvent capital controls, economic manipulation – commonly called monetary policy by proponents of the traditional financial system – and fiat money.

Fiat currencies such as the US dollar can be printed by central banks without any real limits, which causes hyperinflation in many places around the world. One particularly infamous case is that of Venezuela where people began weighing notes instead of counting them when buying groceries until new notes with extra zeros were issued.

A bakery manager weighs banknotes in Caracas, Venezuela | Courtesy of Bloomberg

While it is easy to dismiss such issues as problems that can only be found in third world or developing economies – especially those affected by sanctions as in the case of Venezuela – it would be wrong to think that this is not the case with developed economies. Does not occur in, which includes the United States. According to US inflation calculator, a dollar is worth 9% less in 2022 What was its value in 2021.

In other words, one dollar this year is worth $0.91 in 2021.

Things get even worse when we consider the turn that the world economy took after Nixon first broke the gold standard and made the United States dollar a fiat currency in 1971. Information A release by the Economic Policy Institute clearly shows that since 1971, net productivity growth in the United States stalled, causing hourly wages to rise as well.

Bitcoin was launched 14 years ago on this day, let's remember why
Net Productivity and Hourly Compensation Chart. , Courtesy of Statista

more data shows that real GDP, real wages and trade policies were almost as tightly intertwined in the United States until Nixon decided to wreck the economy and print dollars at will . Income concentration at the top increased significantly even after the abandonment of the dollar gold standard.

Fiat currency is accepted only because its acceptance is forced and because it is a social and economic norm to accept it. Still, fiat money is far from being the only problem with modern economics.

Famously, Henry Ford himself—who is believed by many to be most responsible for jump-starting the Industrial Revolution— suggested That if the general public understood how money works, it would revolt. The comment most likely dates back to the thirties when the dollar was still backed by gold, but a law made it illegal to possess physical gold. 1933,

The law requires that all gold and gold certificates held by the Federal Reserve be surrendered and vested in the sole title of the United States Department of the Treasury. These rules were in effect in one form or another until 1975, when gold was no longer backing the dollar.

Another aspect of traditional finance that is heavily criticized by bitcoin proponents is fractional reserve banking. When customers deposit fiat currency in a bank, traditionally the bank may lend approximately 90% of the deposit and lend the rest. So effectively the bank created about nine additional dollars for every dollar deposited into the account.

federal Reserve decision made To change it back in late 2020, in contrast to the economic instability caused by the COVID-19 pandemic.

Since then, the institution has set a new minimum bank reserve requirement of 0%, meaning that banks are no longer free to hold any reserves. a document published Reserve banking institutions with deposits up to $32.4 million are exempt from keeping in the federal register at the end of 2022, up from $21.2 million in 2021.

With inflation rising around the world and the financial system becoming more broken and unjust it is important to remember why bitcoin was created and it is more relevant than ever.

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