The Genesis Block of Bitcoin

Bitcoin Logo | Courtesy of Wikipedia
Bitcoin Logo | Courtesy of Wikipedia

Do you know what happens with your money once you deposit it into the bank? Banks take the money you deposit and loan it out to others. If you ever wanted to withdraw all the money you deposited, you can, because banks are responsible for keeping a fraction of customer deposits on hand at the bank, which is known as the reserve requirement.1 There is one issue with this system — what if one day every customer wanted to withdraw their deposits at the same time? Typically, this would never happen, but when there is uncertainty in a bank‘s financial stability, everything can go wrong.


It was 2007 and the financial crisis was about to begin. Banks were using money deposited to them for high risk investments in subprime mortgages. Homeowners were being approved for mortgages on homes they could not afford. Inflation from the housing market bubble was leaving banks holding assets for a lot less than what they were worth. In late 2007, the Housing Market bubble officially popped causing many homeowners to lose thousands of dollars on their home. Mortgages were defaulted on, leaving banks with a lot less money then what they had lent out.2 This crash led to banks going bankrupt, putting the US economy into a full-blown international banking crisis.

A year after the housing market crash, in October 2008, an unknown figure named Satoshi Nakamoto, published an article, “Bitcoin: A Peer-to-Peer Electronic Cash System, which revolutionized the way we view centralized fiat currencies in our global economy. Fiat money is government issued currency that is not backed by a commodity.3 In this article, Nakamoto identified a solution to prevent any future recessions or banking crises. Nakamoto explained, “What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.” This removes the need for a banking system and protecting the individuals from future recessions.4

Satoshi Nakamoto Alias Symbol | Courtesy of Wikipedia

This article laid the ground work for the development of Bitcoin. Nakamoto spent about a year corresponding with other experts in the technology community, explaining his philosophical reasons for wanting to create a kind of digital gold standard. Nakamoto used an untraceable email address and website to give instructions to Gavin Andresen and Jeff Garzik. These coders and software engineers only spoke about business and never received any person information of who Satoshi Nakamoto actually was. Nakamoto published hundreds of online posts in perfect English but only about his new technology. Nakamoto’s location, race, photograph or even gender was never reveled to Andresen or Garzik, but nonetheless, they still worked together to create and finish Nakamoto’s vision.5

After a year of constant correspondence and tweaks, Nakamoto was finally ready to release Bitcoin to the public. All of Nakamoto’s work led up to one push of a button. Nakamoto created the genesis block of Bitcoin on January 3, 2009 at 18:15 pm. The genesis block is the first block of a block chain.6 In other words, this genesis block was the beginning of all crypto-currency and the mother of all block chains. A block chain is a growing list of records, called blocks, that are linked using cryptography or in other words it is the public record of each transaction for a crypto-currency.7 A revolution in currency had begun. Users’ identities would be protected. Records would be completely decentralized. And no one would be in charge — not governments, not banks, not even Nakamoto. At first the currency had no popularity except between a handful of programmers but as word spread it quickly gained traction. At the beginning, a Bitcoin was worth pennies per coin but gained enough belief and support to reach its high of a single coin being worth 19 thousand dollars each.8

Bitcoin price chart from 2009 to 2018 | Courtesy of Wikipedia

After launching and creating Bitcoin, Nakamoto disappeared. In April 2011, Nakamoto sent a note to one of his developers saying that he had “moved on to other things.” He has not been heard from since. Many wonder who this person or group is and have tried to build conspiracies on who it is. Nonetheless, Nakamoto’s creation had started a revolution against central banks and fiat currencies. After the Bitcoin genesis there have been around 2000 other crypto-currencies created for an assortment of different reasons.  With Bitcoin being accepted by businesses through out the US, the United States Department of the Treasury classified Bitcoin as a virtual currency, the first of its kind. This growing trend is something that is not going to go away but something that will likely only gain support and could possibly become our accepted norm for all transactions in the future.9

  1. Wikipedia, 2019, s.v. “Monetary Policy of the United States,” https://en.wikipedia.org/wiki/Monetary_policy_of_the_United_States.
  2. Eamonn Moran, “Wall Street Meets Main Street: Understanding the Financial Crisis,” UNC School of Law, Vol. 13, no. 1 (2009): 40-60.
  3. Wikipedia, 2019, s.v. “Fiat money,” https://en.wikipedia.org/wiki/Fiat_money.
  4. Satoshi Nakamoto,  “Bitcoin: A Peer-to-Peer Electronic Cash System,” October 31, 2008, https://bitcoin.org/en/bitcoin-paper.
  5. Wikipedia, 2019, s.v. “Satoshi Nakamoto,” https://en.wikipedia.org/wiki/Satoshi_Nakamoto
  6. Wikipedia, 2019, s.v. “Genesis Block,” https://en.bitcoin.it/wiki/Genesis_block.
  7. Wikipedia, 2019, s.v. “Blockchain,” https://en.wikipedia.org/wiki/Blockchain.
  8. Wikipedia, 2019 s.v. “History of Bitcoin,” https://en.wikipedia.org/wiki/History_of_bitcoin.
  9. Wikipedia, 2019, s.v. “History of bitcoin,” https://en.wikipedia.org/wiki/History_of_bitcoin.

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This Post Has 15 Comments

  1. Avatar

    This article brought to light the mysterious story of Satoshi Nakamoto, I have never heard of this person before. This story behind Nakamoto is very interesting and it has sparked an interest as to who he is and where he is now. I never really understood Bitcoin, but this article helped me to realize just how expensive it can be, with one being worth nineteen thousand dollars. Overall, this article has portrayed the anonymity of this story of Bitcoin and was very interesting to read!

  2. Avatar

    I think on what were the reactions that the banking system had, the way the great financial institutions of the twentieth and twenty-first centuries replied to such an event as the creation of a crypto-currency, one that was said to exist just to oppose a system to one that seemed immutable. I remember the debates that crowded the internet, the challenging opinions many had in regard to allowing for an ‘utopian’ democracy when making financial transactions, the comments on returning to a system that could base itself in something different from vague trust. I do not know about the financial market functioning, but I do know that there will always be resistance to the challenges to the status quo, and that the oligopolization of wealth is an ever-lasting topic of discussion that remains in the minds of the youth, dismissed, like an irony

  3. Lesley Martinez

    I remember hearing about bitcoin and that it was thought to be the next big thing. It’s so interesting to think of a world without the banking system that is considered as the trusted party into Bitcoin – a system where no one is in charge. I was unaware of Satoshi Nakamoto and his mysterious virtual being throughout this whole process; I would have imagined this would have set off some alarms. I enjoyed reading about this type of crypto-currency, great article!

  4. Avatar

    I had never hear of Bitcoin before reading this article. I think it was extremely interesting to read about Nakamoto and how after creation it, he disappeared and wrote a note simply saying “he had moved on to other things.” And that no one ever saw or heard from him again. It’s interesting to read how bitcoin bypasses banks and is simply a user to user type of program.

  5. Avatar

    I knew of mining in the bitcoin world, just from the type of school I went to, being more tech-driven and savvy. I didn’t understand the principles of investing or converting to cryptocurrency, instead of a more practical money services (such as banking institutions). While reading the article, I do see the viewpoint of a very unstable economic market, as well as the concern of a collapsed markets as in (1929, 2007). I find it odd for the application could be used as possible as a pyramid scheme.

  6. Avatar

    This was such a short article. It definitely made me wonder more about what bitcoin is and who Nakamoto is. Some banks have definitely figured out how to cheat people out of their money. It’s interesting that bitcoin bypasses banks directly and uses user to user funds. This article, although fairly short, definitely made me more curious about bitcoin and what exactly bitcoin is.

  7. Avatar

    I have done a good amount of research on Bitcoin. I also bought bitcoin and made a considerable amount of money. The good thing about making money on Bitcoin is that it is still largely unregulated so I did not have to pay taxes on the profit which is quite a game changer. However it is extremely volatile and unpredictable, I just happened to get lucky. Governments have tried to figure out a way to regulate it, but it is very difficult. Bitcoin allows easy transactions for international money transfers for businesses or families. However it also allows people to buy many illegal things such as drugs, guns, child pornography, credit card info, the list goes on. The FBI does a considerable amount of work to shut down the illegal parts of it. A big accomplishment for them was shutting down the silk road, a marketplace for everything from drugs to hitmen. Cryptocurrencies give the people ultimate freedom with little regulation, so I wonder if this will be the future of currency. I would not be totally against it because majority of the power in this system belongs to the people, and they choose how to use it

  8. Avatar

    I didn’t really know anything about Bitcoin before this article, all I knew was that it was a virtual currency that was worth a lot of money. But, looking at the history of Bitcoin makes the entire concept more interesting. I had no idea that Bitcoin was created as an alternative to using the bank and instead leaving all of the interactions dealing with money between the users. To me, that’s what makes Bitcoin interesting and makes me wonder how many other systems there are that work on Nakamoto’s concept and how successful there are. However, now I’m interested in what Nakamoto is doing now since his concept is worth so much money and he found “more interesting things.”

  9. Avatar

    I found it interesting how a virtual currency rise could potentially affect or change the banking system we have been familiar with for years. Banking companies started virtual currency with credit cards, so it would be ironic for another system of money to take over. I am convinced that a new money system would be the start of a new era. Perhaps, our society is past over due for one.

  10. Avatar

    I never knew that Bitcoin had such an interesting origin story, the fact that the creator is a total enigma is quite fitting to the anonymous nature of the cryptocurrency. I also had no idea about the genesis block and block chains until now, and I find the concept of a genesis block to be very interesting. However I’m more curios as to what Nakamoto is currently working on.

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