The First Bitcoin Transaction
How decentralized money brings new hope for democracy
In the light of recent events, the question of decentralization has never been more relevant. Centralized media, from television to Twitter, has drawn criticism from all sides, following certain platforms’ decisive — and unprecedented — moves to silence the sitting US President.
Controlling what people can say is one thing, raising big questions about free speech in the age of Technocracy, but restricting their ability to earn, spend or save money, is a much more significant, and complex, problem.
For that reason — and many others — decentralized money is here to stay. Being able to make transactions without submitting to state-mandated surveillance is a wonderful gift, one whose significance has been downplayed. Were it not for the actions of a few individuals over twelve years ago, there would be nowhere to turn when faced with blatant, unapologetic censorship.
The block that launched a thousand bits
Today marks 12 years since the very first Bitcoin network transaction was made. Thanks to the effort of individuals such as the late Hal Finney, to whom that first transaction was sent, millions of people have found a refuge from the often reckless fiscal policies and unwarranted intrusion of governments and central banks.
Bitcoin was created to challenge the financial system as we know it; the fact that we can retrieve all details of that transaction all these years later, completely unchanged, is testament to its power. While Mr. Finney did not live to see the dramatic advance of the project in recent years, his contributions to Bitcoin have secured his legacy, playing one of the most significant supporting roles of the 21st century.
On average, around three hundred thousand transactions take place on the network every day. Almost five hundred thousand were sent at the peak. While these numbers may seem paltry compared to centralized payment processors such as Visa and Mastercard, no other payment service would be capable of moving a billion dollars all at once, in minutes, and for less than 5 bucks. And no-one could stop it.
Decentralized money
That first transaction may seem a little underwhelming, given the millions that followed. But it was proof of the network’s function. Digital money was sent from Satoshi to Hal, handled entirely by the network with no middleman. This was the first time in history that a network had settled a transaction trustlessly and verifiably, with no way to spend the coins a second time.
Banks have offered digital services for decades, but they depend on a global network of people, not code. Clearing houses settle transfers between banks, bound by contracts and trust. Small transfers may be signed off automatically, but to send more than a few thousand dollars requires oversight of a real person. This makes banks very inefficient, and fallible. The cost of bitcoin mining is miniscule compared to the global infrastructure at the heart of banking.
By solving the double-spend problem, eliminating trust, Bitcoin makes the entire, expensive process of international settlements redundant. This means that Bitcoin threatens industries worth trillions of dollars, so it can be assumed that some of the attacks on Bitcoin come from a place of self-interest and a desperate attempt to preserve investments in a costly legacy system.
That first transaction at block 170, just a few days after the network was launched, was proof the system worked. The fact that we can still see that transaction, stored immutably, is just one of it’s invaluable properties. Looking back, it is fair to say it launched a global movement; looking ahead, it may come to be seen as the most significant invention of our lifetimes. Money is power, after all, and bitcoin puts that power in the hands of the individual.
Democracy and the Internet
The creation of a cryptocurrency was always going to happen, at one point or another. Many had attempted it before, and their failures were instrumental in creating Bitcoin. After so much progress in other areas, facilitated by the internet, it may seem that digital currency is a late bloomer. But it may have come at just the right time.
Democracy must be protected in the face of a wildfire of misinformation. The promises of connectivity, such as greater access to information and free education available to anyone in the world, fall short because no-one anticipated this assault on truth. An open internet looks less likely than ever before. It is not just the trolls and extremists that are dismantling this, it is also corporations who are funneling traffic through their services, collecting data and creating walled gardens where they can profit as much as possible from the consumer.
Had Bitcoin been a product of the dot com boom, it would have been wrenched from our hands. Technocrats have revealed their true intentions, and they do not favor the rights of the individual. If it were not for the last decade, support for an open-source, decentralized currency would not be the same as it is now. The democratic collapse of the West is the greatest fundamental driver for a censorship-resistant currency.
When Satoshi walked away from a million bitcoins, he laid the cornerstone of a new society. Bitcoin is self-governing and serves the people who use it. It is deaf to criticism, unlike any digital currency that came before or after. While many would compare Bitcoin’s significance to that of the internet, it is much more — it is a rebirth, an incorruptible protocol that can not be wielded by authoritarians.
Bitcoin is a reset, one which can overturn the poisonous power dynamics that cause so much suffering in society. Twelve years on, the loud angry men who denounce it have only gotten louder and angrier: this is the proof that they fear for the future of their ill-gotten wealth. Bitcoin came just in time to serve as a lifeboat for those who have been spurned by the corrupt financial system. The journey will be rough, so secure your keys and hold on with full conviction; the establishment will not quietly cede control.
