Latest news about Bitcoin and all cryptocurrencies. Your daily crypto news habit.
About 10 years ago the majority of the world was getting butchered by the wealthy’s financial interests, so a group of individuals set out to change the way we view currencies and the way the financial markets operate. They were looking for a way to create a digital currency. There were several initiatives, and each of them laying down some crucial groundwork for what we now consider cryptocurrencies. But really none of them seemed to be capable of solving the issues that people were dealing with at the time.
On 31 October, everything changed. Satoshi Nakamoto released the whitepaper which was to become the foundation of Bitcoin. “A Peer-to-Peer Electronic Cash System” was the title of the whitepaper. The paper proposed a digital currency based on a distributed network and cryptographic proof, with the purpose of enabling peer-to-peer transaction. The system in Satoshi’s whitepaper was, and still is, revolutionary because it proposed a way of transacting wealth without having to rely on a trusted third party.
“What is needed is an electronic payment system based on cryptographic proof instead of trust, Allowing any two willing parties to transact directly with each other without the need for a trusted third-party.” (Satoshi Nakamoto, 2008)
As the Bitcoin network was launched in January 2009 Satoshi’s idea was met with mixed criticism . Some early adopters were inspired by this new system while the majority were more critical. The new “Internet money” was named things like a scam, or a way new way of paying for criminal activity. In hindsight we can all agree that Satoshi Nakamoto was a visionary, and that his solution for peer-to-peer transactions worked.
A key ingredient needed in order for this trustless system to work was the “proof-of-work” algorithm. Satoshi proposed the “proof-of-work” algorithm should be used as a way of confirming transactions. The thought was that as long the work (Mining) that was done in order to confirm the state of the network came from a distributed system where each player in the network had to perform a certain (more or less equal) amount of work, the integrity of the system would be maintained. However, if, for some reason the majority of the network worked together to attack the network, the trust-less aspect of the system could be compromised.
“As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they’ll generate the longest chain and outpace attackers.” (Satoshi nakamoto, 2008)
The gold rush
The decentralized way of confirming the state of the network was key to the trust-less system. As transactions happened, confirmations were done by numerous separate entities, effectively creating a consensus on reality. This is why Bitcoin worked. People trusted the trust-less system because they knew there was no way the system would be compromised. For once, people felt like they actually were in charge of their wealth. Unfortunately, that great idea didn’t go as planned.
As Bitcoin grew in popularity, the mining incentive certainly was very attractive to many people. In the early days, you could mine Bitcoin from your computer at home. Not only did you earn some Bitcoin, you also helped secure the network. However, it wasn’t long till big companies discovered the digital goldmine. ASIC (Application-specific integrated circuit) miners were developed by companies with the desire to get the most out of this modern-day gold rush. ASIC miners are devices manufactured for the purpose of mining a specific proof-of-work algorithm extremely efficiently, effectively cheating the idea behind “proof-of-work”. The mining centralization by big companies undermined the idea of the decentralized peer-to-peer model in order to make a quick buck. And what a quick buck they made.
The power of the corporate miners increased. ASIC miners turned into ASIC farms, with hundreds of ASIC miners in big warehouses. The times of mining at home were done for. Sadly, the time of a trustless peer-to-peer Bitcoin came to an end. At the same time slow transactions times and high fees plagued the network and its users. The corporate mining interests soon decided they didn’t agree with the way Bitcoin worked. The epitome of their disagreements was the birth of Bitcoin Cash. The quick buck mentality really was affecting the network and the money-grabbers are still the biggest danger to its success.
The new generation
Fortunately, Bitcoin isn’t the only cryptocurrency in existence by now. Thousands of alternatives appeared in the years following the creation of Bitcoin. Some good ones, and some not so good ones. There were a couple of initiatives that tried to deal with some of Bitcoin’s problems, Vertcoin is one of them. We quickly realized that the only way for the Bitcoin concept to work, was if we ensured that the network was and stayed decentralized. We had to make sure that the power in the network was distributed as fairly as possible if we wanted to create the true peer-to-peer currency.
And it was good
The solution to the centralization of mining power we saw in Bitcoin wasn’t necessarily just a software solution. We realized that there will always be people trying to undermine the system in order to chase profits. Even if we look 10 years into the future, when ASICs are potentially a thing of the past, something else will come along to endanger the network. The real solution to the Bitcoin problem is an attitude. We pledged to protect Vertcoin from centralized mining by monitoring the network, and changing the algorithm if we ever detected that people developed ways to undermine the system. We further protect that vision by decoupling the network from the means of securing the network, meaning that the people who make the hardware are not the ones exclusively mining with said hardware. This is no easy task. This solution requires time and dedication. It is the only and ultimate solution and we are adamant to provide it.
Links and Resources
- Twitter: https://twitter.com/Vertcoin
- Donations: vertcoin.org/donate
- Roadmap: https://trello.com/b/RbsKPeGw/vertcoin-roadmap
- Join our Discord: https://discord.gg/vertcoin
- Official Website: https://vertcoin.org/
- Facebook: https://www.facebook.com/vertcoin
- Instagram: https://www.instagram.com/vertcoin/
Credits: Thatmanontheright-Author; Eric Kubik editor
In the beginning, Satoshi created Bitcoin was originally published in Vertcoin Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.