In this article I will talk about the most important facts related to Bitcoin, the current state of the protocol and possible future developments. If you want to learn more about these topics, you can listen to the podcast Il Priorato del Bitcoin, with Giacomo Zucco as host.
The priory is benevolent.
<aside> ⚠️ Achtung 1: the first part is about the prehistory and includes many articles, papers, books and interviews recounting the origins of the protocol. Although it may seem boring, it is important to understand the context and the reasons why Bitcoin was born. Personally, I find this part very fascinating and I encourage you not to skip it.
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<aside> ⚠️ Achtung 2: to make the explanation easier, I will treat some passages in a ‘simple’ way. If I had to explain every little detail (such as elliptic curves over finite fields), it would take too long and the focus would be lost. Keep in mind that you will have to take some statements as assumptions, which you can of course verify yourself if you wish.
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<aside> ⚠️ Achtung 3: the last part, dealing with future developments of LNP/BP is complete and self-consistent but, given the amount of material published in recent months, I plan to update it heavily.
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Bitcoin was not born in 2008. In fact, it is the result of decades of study and research in the field of computing. To best understand the origins of Bitcoin, we have to go back in time to 1933. Its prehistory is full of important events and to understand where we are today, we have to take a not inconsiderable time plunge.
In 1933, Franklin Delano Roosevelt signed Executive Order 6102 that prohibited the private use of money in direct form, such as doubloons and coins, or in indirect form, such as banknotes representing collateral, such as gold. At the time, inflation in America was heavy, the federal public coffers were collapsing, and the economic situation was difficult. Consequently, the government confiscated all the gold of private citizens. This event is important to understand the history of bitcoin, as we are talking about the land of the free, the home of constitutional liberal democracy, not North Korea.
<aside> ℹ️ A curious fact is that Satoshi Nakamoto recorded his birthday on April 5, 1975: April 5 is the date Roosevelt signed Executive Order 6102, while the year 1975 coincides with the year President Gerard Ford removed this executive order.
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<aside> ℹ️ Bitcoin’s difficulty adjustment (discussed below) occurs after 2016 blocks, a number that is obtained by reversing the number of Executive Order 6102.
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Jumping forward in time, in 1936, a young Alan Turing published a paper entitled On Computable Numbers, with an Application to the Entscheidungsproblem, which formed the theoretical basis for the practical digital revolution and of course Bitcoin could never have come into being without the digital revolution. Shortly afterwards, in 1938, the first computer working with electromagnetic pulses, called torpedo data computer, was built on top of a submarine. Although it could only perform trigonometric calculations, it was not a all-purpose computer like the ones we are used to today. In 1939, the first digital computer was born, called Z2, built by a German engineer, although there is some controversy as to the actual authorship of this calculator.
In 1971 a very serious event happened, known as the Nixon Shock. Because of the war in Vietnam and the general recession, the US federal government needed money and President Richard Nixon decided to suspend the convertibility of the dollar into gold.
Until then, the entire world economic system was based on the following scheme: all official state currencies were convertible into US dollars and each country’s central bank promised the convertibility of its local currency into US dollars, while the US central bank promised the convertibility of these dollars into gold.
Nixon, claiming to want to protect the dollar from speculators, announced on live television that the convertibility of the dollar into gold would be temporarily suspended. It is now 2022 but Nixon’s suspension is still in full force.