Today, 3rd of January 2022, marks the 13th anniversary of the Bitcoin Genesis block.
On the 3rd of January 2009, at 20:15 UTC, the pseudonymous creator of Bitcoin, Satoshi Nakamoto, mined the first Bitcoin block, presumably using the CPU on his own personal computer.
There are many things that make this momentous occassion significant.
Mining of the genesis block created the first ever Bitcoin, 50 BTC to be exact. It was created with the first ever block subsidy, an amount which today equals 6.25 BTC per block, due the halving programmed to happen every 210 000 blocks.
That first 50 Bitcoin will however forever remain un-spendable, as it cannot be cryptographically linked to any previous block. And it is this very mechanism which ensures the integrity of the Bitcoin blockchain.
All transactions are cryptographically locked into blocks. (With max ~4,000 transactions / block; and ~144 blocks / day; at a ~10 min block interval) And all blocks are cryptographically linked to the previous block, all the way back to the genesis block.
Not even a single digit, in a single transaction (of all the millions of transactions ever recorded on the blockchain) can be changed without corrupting the entire chain.
Thus the integrity of each individual transaction, in every single block, is an assurace of the integrity of the entire 13-year chain. In essence, this is what ensures the incorruptibility of the blockchain and helps provide Bitcoin with its single most important monetary property:
Known, predicatble and publicly auditable supply.
Satoshi made his reasoning for inventing Bitcoin very clear, by including a message in the genesis block, the headline from The Times of London on that day:
“Chancellor on brink of second bailout for banks”
This was in reference to the practice euphemistically dubbed Quantitative Easing (QE) introduced in the wake of the 2007 – 2009 Great Financial Crisis. The world’s largest banks were going bankrupt as a result of subprime (greedy and risky) lending.
Central banks then intervened and bailed-out these ‘too-large-to-fail’ banks by essentially switching on the money printer, creating trillions of new currency units practically overnight, punishing cash savers and rewarding large borrowers. Further eroding the value of currencies and forcing governments to pile on massive amounts of debt, which the public ultimately stands accountable for through taxation.
And today, 13 years later, the situation has only further deteriorated. Central / reserve and comercial bank balance sheets have never been more precarious, governments around the world are more indebted than ever before and inflation in most countries are higher than ever.
We stand on the precipice of a global monetary crisis.
In a nutshell, this comes down to currency debasement, or inflation of the money supply. And it has been the inevitable end result of all fiat currencies (money created through government decree) throughout history.
Whenever money is backed by nothing other than the ‘good faith and credit’ of its issuig authority, and / or when a small group of people reserve the power to issue money and create new monetary units as they see fit, this has been the inevitable end result, time and time again.
Satoshi’s solution was to create a form of money that was inherently finite in its supply, like gold, the only form of money to have retained its purchasing power over centuries, and even millennia.
Measured in gold, and taking factors like increased production efficiency into account, you’d pay roughly the same for a loaf of bread in ancient Rome, as you would today.
But instead of being limited by the physical properties of gold atoms spread throughout the earth’s crust, Bitcoin’s supply is constrained by cryptographic hash functions, and recorded in a publicly auditable ledger, whereby every transaction, every block, and thus the creation of every single Bitcoin in circulation, can (easily) be accounted for and traced back to the genesis block.
This ensures a fairer system whereby the consequences of responsible (vs. irresponsible) financial behaviour applies accros a level playing field. Regardless of whether you’re a labourer saving $50 a week to pay for your child’s future education, a behemoth corporation, a finance minister, or a reserve bank tasked with the stability of your nation’s currency.
Bitcoin ensures that the same monetary rules apply to everyone. No one can be favored by the arbitrary creation and distribution of new currency. No one, no bank, no corporation and no government, can risk stability by borrowing excessively, knowing that they’d be bailed out again.
And, most importantly, ordinary people now have a way of protecting themselves against the ever increasing likelihood of a monetary crisis.
Which hopefully will not come to pass.
But if it does, will come as a result of our poorly designed systems of currency creation and distribution. And will likely lead to the destruction of those over-burdened legacy systems, creating untold suffering for those still tied into it.