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Presently, financial operations to pay for services and products are noticeably easier. In comparison with the beginning of societies, when the trades were made by barter, credit cards, checks, and fiat money are incontestably practical ways of getting what we need to survive. However, this new monetary system, based in fiat money, requires the existence of a Central Bank and regulatory authorities, in other words, there is a great dependence in state institutions and, consequently, there are a lot of restrictions.
The economist Fernando Ulrich wrote in his book “Bitcoin: money in the digital era” about the situation of submission of money to the State:
“This is the paradigm of the present millennium: an increasingly lost of financial privacy, oppressive and centralized monetary authorities that abuse of the money, free of responsibility and banks that are accomplices and coadjuvant in the monetary folly.” (ULRICH, 2014, p. 37).
Even though cryptocurrencies have been created before this thought was written, we can establish a parallel between this and the reasons that led the Cypherpunk community to create the concept of cryptocurrencies in 2008, and afterward the Bitcoin. It’s worth emphasizing that those facts occurred in the context of the 2008 economic crisis that started in the USA and caused huge economic impacts all around the world, making people become more cautious about government economy.
For this web community, cryptocurrencies should be based in cryptography and have as their main goal freeing people from state dependence when it comes to finances. One member of this community, called Wei Dai published a manifest that idealized a decentralized payments network. Right after this, a platform called BitGold was created, it was quite similar to Bitcoin and was responsible for starting the use of the proof-of-work system to validate trades.
Using the proof-of-work system, cryptography, Blockchain technology and an open-source platform based on a peer-to-peer architecture, Satoshi Nakamoto created Bitcoin in 2009. According to him, the reason for Bitcoin’s creation was the thought that the root cause of the problem with traditional money is that it needs to much trust in third parties to work properly and it would be unnecessary and limiting. For this reason, Bitcoin emerges as a new democratic and decentralized monetary system in which all users can provide and receive cryptocurrencies and are responsible for validating trades and generate new Bitcoins. Bitcoin’s most innovative feature that makes it so different and famous is the elimination of double-spend without the intervention of centralized authorities. Among with the use of Blockchain technology and proof-of-work system, the platform also innovates in limiting the generation of Bitcoins. This means that for every 210.000 blocks, 50 BTC are created, however, this prize’s value is diminished to its half every 4 years until 21 million in Bitcoins are generated when the platform will stop to generate BTC.
In conclusion, the complex economic and social context of 2008 boosted the creation of a democratic and decentralized monetary system that is increasing and improving exponentially each day.
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