In the Bitcoin white paper, peer-to-peer electronic cash systemThe book, published by the mysterious pseudonym Satoshi Nakamoto, turned 17 yesterday.
A nine-page document released on October 31, 2008, in the midst of the global financial crisis, laid the foundation for what would become the world’s first cryptocurrency.
The white paper outlined a vision for a decentralized peer-to-peer financial system built on cryptographic proofs rather than trust in third-party intermediaries. Its goal was to eliminate the problem of double spending and enable online transactions without relying on banks or other trusted third parties. “We have proposed a system of electronic transactions that does not rely on trust,” Satoshi wrote.
Seventeen years later, Bitcoin’s influence has spread far beyond the cypherpunk forums where it began. The anniversary comes as the U.S. Spot Bitcoin ETF, less than two years old, has enjoyed unprecedented success, with total net inflows exceeding $62 billion and total net assets exceeding $150 billion, according to SoSoValue data.
But mainstream acceptance of Bitcoin extends beyond Wall Street. It has now entered the highest levels of government, including the White House under the current US administration.
Some of Bitcoin’s most outspoken critics have become its biggest supporters. In 2021, former President Donald Trump dismissed Bitcoin as a “fraud on the dollar.” However, in the lead up to the 2024 presidential election, he continued to call on his supporters to “never sell Bitcoin” and sign executive orders establishing strategic reserves for Bitcoin.
Larry Fink, CEO of BlackRock, the world’s largest asset manager, once called Bitcoin a “beacon of money laundering.” He now defends it as one of his company’s most successful ETF products, seeing it as a hedge against the volatility of sovereign debt.
Similarly, Strategy’s outspoken CEO Michael Saylor has become one of Bitcoin’s most ardent evangelists, continuing to accumulate Bitcoin through the issuance of stocks and bonds. Thaler himself was initially skeptical, once declaring, “Bitcoin has no end in sight. It seems like it’s only a matter of time before it meets the same fate as online gambling.”
The last major holdout from a prominent financial figure is JPMorgan CEO Jamie Dimon, who continues to express doubts about Bitcoin’s value and sustainability. But his bank has recently been active in this area, including allowing customers to pledge Bitcoin as collateral.
The financialization of Bitcoin with the introduction of ETFs and corporate treasuries has drawn comparisons to the mortgage securitization boom of the 1970s, when asset prices soared to new heights.
However, not everyone is happy with this evolution. Many early Bitcoin believers argue that the very spirit of Bitcoin, as a form of money outside of state control, has been diluted by the introduction of the system.
For the cypherpunk movement that created Bitcoin, the system’s acceptance by Wall Street and Washington feels like a paradox. The rebellion has been absorbed into the system it once sought to destroy.
What exactly is Bitcoin and can it survive?
On an annual basis, the average transaction fee per Bitcoin block has fallen to its lowest level since 2010, raising concerns about the long-term sustainability of the network. While low fees are attractive to users, they reduce the incentive for miners to secure the network, especially as block rewards continue to be halved every four years.
Bitcoin was originally conceived as a peer-to-peer electronic cash system, but it has been increasingly overshadowed by the “store of value” narrative. “Never sell your Bitcoin” are the words Michael Saylor often says to the Trump family, and many have said so.
At the same time, there is an ongoing debate within the developer community, particularly between Bitcoin Core and Bitcoin Knot, over whether networks should allow non-monetary data like ordinal numbers, or apply stricter rules to block it. While some believe such restrictions are necessary to maintain the integrity of the network, others believe they are a form of censorship that alters Bitcoin’s open and permissionless nature.
Beyond internal debates, the pressing issues of quantum computing also pose unresolved risks. Future quantum machines could break existing cryptographic standards, potentially threatening the security of Bitcoin, but there is no definitive solution yet.
“There is no question that Bitcoin was introduced and accepted by Wall Street, and the sustained period above $100,000 confirms that,” Bitcoin OG Nicholas Gregory said recently. “The transition from peer-to-peer cash to stores of value is clear,” he continued. “What it will do in the long term remains to be seen. I think its story as a medium of exchange, along with solutions to quantum threats, is key to its enduring status.”