Cryptocurrencies and Blockchains

Jean-Paul Delahaye in Inference Review:

ScreenHunter_2525 Jan. 22 19.35In November 2008, a paper entitled “Bitcoin: A Peer-to-Peer Electronic Cash System” was published online.1 The system described in the paper, including a monetary unit termed “bitcoins,” embodied the world’s first cryptocurrency. The most striking characteristic of the bitcoin system is the complete absence of any form of centralized control. There is no role for governments, financial institutions, or regulatory bodies. The system is completely autonomous. Peer-to-peer networking technology and mathematical encryption form the basis for the system. A distributed ledger, known as the blockchain, maintains a public record of all transactions. In the absence of trusted third parties, the security and maintenance of the system is a shared responsibility.

On January 3, 2009, with access limited to a select few cryptologists, the bitcoin software was released and the first bitcoins issued. Bitcoin was not, it must be noted, an overnight success. In fact, it wasn’t until 2013 that the system really began to take off. That year saw a fifty-fold increase in valuation, so that by January 2014, a bitcoin was worth around nine hundred euros. A series of advances and declines since then has seen the value of bitcoins fluctuate. Against the expectations of some observers, the currency has recovered and a bitcoin is again worth around six hundred euros.2 There are now more than seven hundred cryptocurrencies competing with bitcoin.3 Their success to date has been limited, with a cumulative capitalization of only around twenty percent that of bitcoin. The total capitalization of the bitcoins issued thus far amounts to more than fifteen billion euros.

Although credited to Satoshi Nakamoto, the true identity of the person, or people, responsible for the bitcoin paper remains unknown.

More here.