1. Bitcoin History
The idea of Bitcoin first appeared in 2008 in the form of a White Paper published by its creator, the enigmatic Satoshi Nakamoto. The White Paper is an information document detailing how the Bitcoin protocol works. The identity of its creator is still unknown, which goes hand in hand with the primary objective that Bitcoin was created for. The cryptocurrency was designed by individuals including Satoshi belonging to the Cypherpunks stream. The ideology is that individuals must protect their privacy from state espionage and private companies. Bitcoin was the embodiment of this ideology. At the time, the idea was to design a currency that did not depend on a centralized system as central banks do. And therefore to return monetary sovereignty to the people by preventing the currency from being controlled by a third party.
The fundamental characteristic of Bitcoin is that it is decentralized. It is not an entity that controls the monetary issue of cryptocurrency but a network of independent individuals (called miners). Its operation is governed by an open-source computer code and is based on a tamper-proof and immutable transfer system called “Blockchain”.
Although the beginnings of Bitcoin are outlined in this white paper, in 2009 the first Bitcoin is mined. That’s right “mined”, contrary to paper money, a Bitcoin or btc is not printed or created by writing on a computer for accounting purposes. It is mined or rather created digitally. Coming back to the particular notion of “mining” it is actually an analogy to gold mining.
It is common to compare Bitcoin to gold because they have common characteristics. Indeed, when Satoshi designed this digital currency it included a model of monetary issuance that is substantially similar to that of gold. The latter consists of issuing a decreasing number of Bitcoins over time, down to the last unit. The total number of bitcoins that will be mined is estimated at 21 million, with the last unit likely to be mined in 2140.
Today the creator of Bitcoin is still unknown, but it is the exact opposite of its digital currency. Notably in 2018 during the bubble, when its price was close to $20,000. This is the first time Bitcoin has had such a media impact, although the beginnings began with the publication of The Economist’s 2015 article entitled “The Trust Machine”. And it is estimated that by early 2019, 70 million people were using Bitcoin. With a market capitalization of $280 billion. This recent euphoria has put the spotlight on Bitcoin. Soon the rhetoric of the largest European, American and Asian countries was rather critical. However, the advent of libra (Facebook’s cryptomoney project) and Chinese crypto-yuan have called into question the positions previously adopted. The time has now come for regulation and innovation rather than repression and censorship.
2. 2spendure -> digital scarcity -> NFT
This part will allow us to deal with a fundamental subject related to Bitcoin and cryptomoney, which is scarcity.
a. Double spending
Let us first introduce the problem of value transfer on the Internet, before dealing with what is known as double spending, which is a similar concept. For a long time we were unable to transfer value over the internet. And for good reason, in order to be able to transfer value today we have to resort to trusted third parties. These are notaries, insurers, bankers and all the parties involved in making sure that the value is transferred correctly in an exchange.
In other words, for banks, they make sure that when person A makes a transfer to person B, person A has his account debited in favour of B. In addition, the bank makes sure that the value is transferred from one person to another and not duplicated. However, the opposite happens on the internet. Let’s imagine that I want to acquire a photo, a copy of a photo taken by a photographer at a carnival. The latter then offers to send it to me by e-mail. I receive it a few seconds after sending it. However, in reality what I received is not the original photo, but a copy. Indeed, the photographer still has the photo, even though he sent it to me. This is the limit of value transfer on the internet. And the blockchain, which is the underlying technology of the cryptosystems, has solved this problem.
For example on Bitcoin, when btc’s are sent from one wallet to another, the (minor) network players make sure that the transfer is carried out correctly, as is the case with the banking system. The blockchain technology is the intermediary that replaces the trusted third party in the operation of the digital currency. To do this, it prevents the copying of money on the network through the validation system allowed by minors. Similarly, this is not the only problem that minors solve. In this case, they play a leading role in the fight against double spending.
Double spending is very similar to the problem of value transfer on the Internet, a situation where the same currency is used twice or more. With cash this situation is theoretically impossible, it would mean that I use the same €10 note to pay the butcher and the baker. With a virtual money system the situation is different. Indeed, before Bitcoin came into being, there was what is considered its major source of inspiration, Bitgold, conceived in 2005 by Nick Szabo. However, the major difference between the two was their ability to solve the problem of double spending. Bitgold was faced with the major problem of not being able to prevent or even encourage the network not to resort to such a practice.
This is what Bitcoin allowed a few years later. Satoshi and all the people who worked on Bitcoin implemented a signature system. This involves cryptographically signing every transaction that is carried out. Once this marking is done, you can be sure of the person who initiated the transaction. Therefore, there cannot be two signatures on the same Bitcoins to use them twice. Minors and nodes in the Bitcoin network are responsible for ensuring the authenticity of the transactions. As for the blockchain, it is the evidential record that demonstrates the authenticity of the transactions.
Guided tour into the digital world of Bitcoin & crypto-assets.
(include crypto memes)
It is true that this technology can be scary. It is new, it is complicated, and you hear a lot about it so who can you trust and why would you even listen? In this sequence of articles, we will dive deep into why we believe blockchain technology open many interesting doors that artists from anywhere in the world can explore.
Street-art and blockchain-based digital assets are both similar and complementary in many ways. In fact, some could argue that these two undergrounds fields fit each other perfectly. From the way they spread in a public yet censorship-resistant manner to their philosophical controversy and moral values, it seems to be a match in many ways.
While always more popular, there are very limited way for street-artist to live from their craft without compromising their creative freedom. Upgrading the street art game with new technologies would provide valuable and direct way of supporting street artist to spread their talent and their messages. But to really understand what is now possible in the near future, we need to go back to the origin story.
The Genesis story: Bitcoin
The story of Bitcoin is one fascinating that every artist should know about. Bitcoin is born from the ashes of the 2008 financial crisis where enormous amount of money was printed to rebuy toxic assets. An enigmatic anonymous cypherpunks named Satoshi Nakamoto publicly release on a simple forum, The Bitcoin White Paper the October 31st of 2008.
(including white paper here)
In only 9 pages that many would consider piece of art, this mysterious cypherpunk contributor gave to the world one of its greatest contribution: A world where value can be exchange from anywhere in the world without any intermediate such as banks, eroding the value and the transparency in between.
The idea behind Bitcoin is to provide a new kind of self-sovereign currency, entirely transparent and completely open-source. One that cannot be control nor inflated by any financial institution or government.
Two month later the 3rd of January, the Bitcoin network was set up and started to operate. Today, we still don’t know who Satoshi Nakamoto is but thanks to him, Billions of dollars are being exchanged everyday in a truly P2P manner.
Today Bitcoin is considered more as a “digital gold” because of its fix supply but it was the first “out of the system” (working) native digital currency ever created and with it, a brand-new technology.
What is Blockchain?
When Satoshi invented Bitcoin, he created a new technology based on existing research on different fields including cryptography, software engineering and economic theory.
The blockchain as its name implies, is a chain of block containing all the information of the network. Just like having a book that keeps track of everything that is happening and shared by all participants.
The blockchain by its capacity to store information in an immutable and forgery-proof way is convenient to build self-sovereign currencies own by the people using it. But it can be so much more than that. While its first use case is so far digital value transfer over the internet, the real revolution is that this transfer of value is carried out without any intermediaries.
Blockchain offer a common working ground where everyone agrees of certain rules by allowing the network to reach consensus of a common reality, removing the needs of independent third parties.
To learn more about how the blockchain works you can read this article (put a medium or other link).
If you want to see what blockchain enable you can check our next article. But if you want to go hardcore into the root of the added-value of blockchain for Street-Art, the next chapters are for you.
When Satoshi invented Blockchain, he solved two major issue that were impossible to solve before on the World Wide Web.
Bizantines paradox bring Decentralization
The Byzantine problem has its origins in computers engineering and is quite relevant in the digital age we live in.
Let’s imagine you are a general who want to take over a city. You are surrounding the city by your admirals; The only way you can win is if you synchronize your attack. The question is: How do you make sure that your message spread correctly to all your admirals knowing that some of them, including the messengers that carry the information could potentially be corrupted?
This simple analogy emphasizes that if a consensus cannot be reached among participants, the success of an event will collapse. That is why it is necessary to put in place a system to guarantee the positive behavior of every economic agent.
Until Bitcoin it was very hard to reach consensus online without designing a third part such as a bank or Paypal to verify a transaction has well occurred. The root of the solution that offer Bitcoin comes from its working algorithm called Proof of Work (PoW).
The idea is simple: It is a constant competition that reward validators for solving algorithmic problem the fastest. That way, no one is incentivizes to lie or to cheat as they will ends up wasting resources (electricity) to find completely different results from the rest of the network.
This way of functioning is defining one fundamental characteristic of Bitcoin and blockchain technology: Decentralisation. The idea that this common set of rules are spread and shared across the network, making it anti-fragile & resilient to attacks. If you are a government or a bank, you can try to shut down some validators (called miners) but you can’t shut down the entire network. It is beyond any institutional resources.
As such it is considered a “trustless” technology. You don’t have to trust anyone but the way the technology is built to be sure that value will be sent from A to B. For the first time in history we are now able to transfer value over the internet without any intermediary thanks to an open-source code, publicly available. But here come the best.
Double Spending brings Digital Scarcity
Internet has been game changing in term of digital scarcity propelling us from infinity to absolute 0. One image on the Internet for instance can easily be copy and past an infinite amount of time, making it impossible to retain any value.
On one hand this is a tremendous catalyst of positivity as it helps spread information, ideas and knowledge. On the other hand it has been a conflictual and dangerous paradigm shift to any creatives for which the work can now easily be appropriated and replicated.
So how can nowadays, 1 Bitcoin, only 1 unit of this purely digital currency is worth approximatively 10000$?
Thanks to the trustless nature of Blockchain and as a shared ledger, the mineurs verifying the transaction keeps track of everything that is happening on the network and therefore prevent someone to use one bitcoin twice.
So far we still have banks, notaries, and plenty of other intermediaries that are sucking and eroding part of the value transferred in exchange of ensuring a safe transaction.
That is because we were not able to prevent this issue of “double spending” or copy/paste of the system. Satoshi innovation by solving the Bizantin general paradox allow us to create shared database that contain and retain concrete digital scarcity.
We can use it to generate programmable money but you can imagine we can also program much more interesting stuff as well.
What does it means for the street-artist
Today the creator of Bitcoin is still unknown, But thanks to his technology we are now able to transfer value in a real P2P scheme, without any intermediary from anywhere in the world. There is no banks in between only few cents of transaction to secure the network. Your fans and followers are now able to support you without knowing your real identity or bank account, all of this in a censorship resistant way thanks to the powerful properties of decentralization.
But as we tried to emphasize it, it’s not only about money. It’s also about value. We can digitally scarce asset that could represent the digital identity & soul of your urban piece of art. While that might not sound as exciting as it really is, regaining ownership over the digital representation of your urban art comes with great benefits that we are exploring in the next chapter