Mike Belshe is the co-founder and CEO of BitGo.
This exclusive opinion piece is part of CoinDesk’s “Bitcoin at 10: The Satoshi White Paper” series.
In the 10 years since the bitcoin white paper was released, our understanding of the world around us has changed.
The introduction of a global, digital currency that can exist without a central authority opened our eyes to the possibilities of money – that it can be different from what we’ve known. As a community, we’re now wiser to the opportunities for a digital economy and discovered what it means to act as your own bank – and it’s incredibly liberating.
It’s also remarkable that this shift has occurred in just a decade.
I’ll admit that the first time I read the white paper I was skeptical. Some of the issues mentioned, like double spending, hadn’t registered as problems that needed solving before. The complicated labyrinth of miners, nodes, block rewards, and proof-of-work made the network seem implausible.
The second time I read it I was intrigued; could this complex network really process the world’s transactions?
By the third time, I knew bitcoin was worth pursuing, and here are the reasons why:
1. Bitcoin opened our eyes to the fact that we can change money
Most people never think, “what is money?” or “what makes good money?” We’re taught in school that monetary systems evolved from some sort of rudimentary barter, but why? How? Can a digital form of money be better?
Like many others, I first explored these questions after reading about bitcoin, and the answer is absolutely yes – we can create a better form of money.
2. The first significant digital cash
The white paper marked the introduction of autonomy and freedom of control over your own assets. With bitcoin, your money truly is your money.
3. Time-stamping digital data
Bitcoin’s solution to the double-spend problem went beyond its network; it solves a virtual world problem by guaranteeing unique ownership of any piece of data. Publishing verified transaction timestamps to a public ledger makes it so that money can’t be copied. The same technology has promise in many other applications.
4. Superior keys and locks
The use of cryptographic keys and locks gives us the best personal security measures for digital assets that we’ve ever had – they’re unbreakable.
A 256-bit random number (aka a “private key”) is superior to any physical key. In fact, these keys are so good that we no longer need stronger keys or locks – the problem is how to provide users with good enough interfaces so that they can easily and securely manage their keys?
Thoughtful UI/UX will be incredibly important in moving this forward, while multisignature keys, introduced by BitGo, help to address the problem.
5. PKI 2.0
Bitcoin demonstrated one of the first significant, widespread, public applications for public key infrastructure (PKI), leveraging it for verification of user identities and facilitation of transactions. PKI has been around since the 1970s, but prior to bitcoin, perhaps the only notable application was securing domain names with HTTPS (aka SSL or TLS).
6. No requirement for third parties
History shows us that third-party systems often fail.
Satoshi recognized this, developing a consensus protocol that rid the digital money system of problematic and costly third parties. So-called trusted intermediaries create counterparty risk for users; they’re relied upon for completion of transactions but provide the possibility for failure.
Credit cards are an example of this: they expose us to risk and then charge transaction fees to cover that risk. Bitcoin removed the need for these organizations.
7. Removing man-made inflation
Inflation is primarily caused by the overprinting of money. Bitcoin’s fixed supply eliminates central authority printing power and gives it to the metronome-like hands of the computer – your money can no longer be controlled or diluted.
Humans have historically broken every economy we’ve ever devised, but can giving a good ruleset to computers prevent this? I think so.
8. Money for a global economy
Cryptocurrency is a new type of commerce; we’ve never had a form of money that can be effortlessly moved between borders.
Bitcoin gives us a new way to connect across jurisdictions, opening up new economies. This is significant at BitGo where we serve clients in over 50 countries with many settling in Bitcoin.
9. Power to the individual
Bitcoin gives complete freedom of choice of money. Access and use are democratized so that anyone anywhere can participate.
In introducing a better money system, bitcoin highlighted what was wrong with our existing banking system. Global movement, verification of identity, and fungibility of money are now problems of the past.
10. Computers follow rules
The white paper laid out bitcoin’s long-term ability to save us from ourselves. Humans make mistakes and while that’s a constant, it’s not something we can prepare for. We’re also consistently poor at following rules, while computers excel at this. An open set of rules managed by computers makes for a stable economic system that isn’t vulnerable to human error.
With this transformative new money came a need for safe and secure storage. That’s how BitGo came to be; I was storing Bitcoin for my friends on an air-gapped laptop stored beneath my living room couch. But the more Bitcoin I held, the more I realized that a sophisticated solution would be required to keep it secure. This led to the development of BitGo’s multi-signature protocols, and later to advanced multi-user protocols, followed by advanced security policies and more.
If you had told me in 2012, when I first read the white paper, that I’d end up holding millions of dollars of bitcoin on a laptop that would lead to a security solution for billions of dollars worth of digital assets around the world, I don’t know if I could have imagined it.
In the 10 years since the release of the bitcoin white paper, our world has been changed indelibly – but this is just the beginning.
Sunrise image via Shutterstock