The original paper posted in 2008 is the earliest form of the paper that Satoshi Nakamoto wrote that introduced the concept of cryptocurrency to the world. The concept that the design and eventual use of the technology could be beyond that of just monetary based transactions appealed to Satoshi’s interests. Satoshi’s plan was to create a system where he could trust the system as much as he could trust his own contributions to it.
Satoshi’s paper laid the foundations for the distributed ledger technology that would be used in Bitcoin. Distributed ledgers rely on a peer to peer network to distribute data and control over what data is saved. The transactions can be viewed as encoded blocks of data distributed to everyone on the network. The truth behind the system is embodied in the code, and this truth cannot be altered or forged. Because of this, it is considered public and immutable.
In the system created by Satoshi, it is difficult to track any money entering or leaving a particular account. Anyone could have contributed as little as 1/10 of a single bitcoin to the network. It does not require anyone’s involvement or need for approval. This concept appealed greatly to Satoshi. The system appealed to his interests in trust, anonymity, and decentralization as a result.
How Bitcoin is created
Satoshi released the open source source of Bitcoin in 2009. This release allowed anyone to access the source code that would be used to build the distributed ledger. Those who read the source code found there are four components to a Bitcoin transaction. Bitcoin is a decentralized currency and each component has a function.
1. The transaction algorithm – The transaction algorithm determines the creation and verification of a transaction. This is the core of the concept behind Bitcoin.
2. The script – The script produces scripts to validate the transaction. These scripts are necessary to determine if the transaction is valid and whether it will be accepted.
3. The encryption algorithm – The encryption algorithm determines the encryption of the transactions to be transferred. This transaction would be broadcast to the network and cannot be changed or forged.
4. The validation algorithm – The validation algorithm verifies the transaction in a method that cannot be seen or modified by others.
The earliest block creation by Satoshi Nakamoto is of Sept. 18, 2009.
How Bitcoin is used
Bitcoin functions best in an environment of decentralization. The concept of creating a transaction algorithm that uses a peer to peer network to broadcast the transaction prevents any one central