Bitcoin’s History
Blockchain begins with the cryptocurrency Bitcoin. How did Bitcoin come about? The first notion of Bitcoin was a paper published in November 2008 on a cryptography mailing list. The paper authored by Satoshi Nakamoto was titled A Peer-to-Peer Electronic Cash System. “Satoshi” may be a pseudonym for a group of people. It is believed that the paper and its proposal was a response to the financial crisis of the late 2000s, exceptionally bad loan practices, dubious financial schemes, and a brittle banking system created enormous havoc across national economies.
Confidence was shattered. Bitcoin offered the opportunity to have a trustless monetary system and one in which banks and other financial intermediaries became unnecessary. After all, the status quo had failed so many and it was believed an alternative would be welcomed.
The term trustless can seem a little confusing because it suggests that we can’t trust it. But let’s explain: The existing financial markets rely heavily on a system of trust. For example, you deposit money in a bank and you expect and trust the bank to manage it for you. That reliance on trust has inherent risk. We saw that in the late 2000s during the Great Recession banking crisis. Therefore, if we build a system that does not rely on trust, which we’ll call trustless, then we can reduce the risk. Instead, the system should function on a set of unalterable digital rules.
In January 2009, only a few months after the paper was published, a first release of the proposed Bitcoin open source software appeared. Instead of software owned by someone, being open source allowed anyone to inspect, modify and enhance the software. From day one, the software enabled a creation of a digital currency absent of any intermediaries or governing authority and with no physical coins or notes. Fundamentally, it enabled anyone to send and receive money directly with anyone else. This notion is profoundly disruptive because it counters every contemporary concept we have of how money works. For one thing, how can a digital unit created from nothing possibly have value? For something to have value as payment, typically, it must be scarce and it must be accepted by others for payment. Gold, silver, diamonds, and oil for example all derive their value from being both scarce and expensive to mine. Most modern money originally derived value from being underpinned by the price of gold.
In the 20th century with popular currencies well established such as the dollar and pound, the gold connection was abandoned and they became fiat currencies. Those enforced and supported by governments. A digital currency cannot be born as a fiat currency because there is no supporting organization. It must be initially underpinned by some scarce resource. That scarce resource for Bitcoin is the process of running a hash algorithm to arrive at a predetermined data output as discussed previously. This requires increasing amount of processing power and electricity. After that, the currency can be freely exchanged and its value can fluctuate based on supply and demand just like regular currencies.
At UC, it is a priority that students are provided with strong educational programs and courses that allow them to be servant-leaders in their disciplines and communities, linking research with practice and knowledge with ethical decision-making. This assignment is a written assignment where students will demonstrate how this course research has connected and put into practice within their own career.
Assignment:
Provide a reflection of at least 800 words (or 3 pages double spaced) of how the knowledge, skills, or theories of this course have been applied, or could be applied, in a practical manner to your current work environment. If you are not currently working, share times when you have or could observe these theories and knowledge could be applied to an employment opportunity in your field of study.
Requirements:
- Read the required resource
- Review the PPT
- Complete the Research Paper and submit by the due date
- Provide a 800 word (or 3 pages double spaced) minimum reflection.
- Use of proper APA formatting and citations. If supporting evidence from outside resources is used those must be properly cited.
- Share a personal connection that identifies specific knowledge and theories from this course.
- Demonstrate a connection to your current work environment. If you are not employed, demonstrate a connection to your desired work environment.
- You should NOT, provide an overview of the assignments assigned in the course. The assignment asks that you reflect how the knowledge and skills obtained through meeting course objectives were applied or could be applied in the workplace.
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