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Review to Bitcoin: A Peer-To-Peer Electronic Cash System by Satoshi Nakamoto

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In 2008, Satoshi Nakamoto published a paper titled Bitcoin: A Peer-to-Peer Electronic Cash System, which outlined the conceptual and technical details of a payment system that would allow individuals to send and receive payments without involving any intermediary financial institutions. This was the birth of bitcoin.

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The very first sentence of the Abstract declares more than just the premise. It sets the stage: the objective is disintermediation; the agents of action are peers on a payments network; the source of the problem — the systemic deficiency — are financial institutions. The ambition for the proposed solution is the epitome of audacity: making the role of a trusted third-party obsolete. If I were a smarter man, I would have promptly fallen off my chair in shock at this juncture. But the nonchalance with which this subversive intention is stated required a few readings to make its import more fully apparent to me. This delayed reaction is perhaps testament to the degree of embeddedness in our lives of the status quo that features financial intermediation by a vast complex of institutions

After all, the most potent of status quo biases that a system creates is one that results in the victims themselves engaging in system justification. The most elegant part of the solution, even as it reads in the abstract, has a simplicity that is best compared with Darwinian theory. The impacts of cumulative action over a geologic time scale are beyond the grasp of even the sharpest of human minds. Darwin needed 500 pages and 30 years of observations and experimentation to formulate his phenomenal and seismically significant idea.

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Bitcoin is considered very controversial; there is the believe that bitcoin is the future of money and that it has the likelihood of relegating dollars, euros and major world currencies. There are those who are skeptical and that bitcoin is nerd delusion that only elevates just new software a non-time tested economic. The significance of bitcoin supplants cash and it is about a revolution and a breakthrough in the field of computer science and with a great potential to upend other established industries (Andreesen, Marc., 2014)

The key part of bitcoin is that it permits verified transaction,and it does not need any centralized third party to verify the transactions. It is argued that bitcoin presents a major challenge to the existing players in the payments industry; it is a threat to financial intermediaries such as banks, wire transfer and credit card companies. The advantage of bitcoin is that it offers low fees in the receiving and making of payments. Bitcoin also eliminates all forms of consumer fraud and any form of information theft. Various venture capitalists have placed a lot of attention on bitcoin as their major form of accomplishing their financial transaction. This transaction only exists in the confines of large and complex institution, though in a centralized manner. Angela and Liana explain the complexity and the interdependence of global economies and various geographical entities are linked by one generic binder: Money (Rogojanu, Angela and Badea Liana, 2014).

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Altogether, in order to make this possible, the person (or people, or thing) under the name Satoshi Nakamoto presents an electronic payment system that uses cryptographic proof that allows its members to reach an agreement (consensus) without the need for a third-party intermediary.

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Andreesen, Marc. Why Bitcoin matters. 2014. Web. March 23, 2014.

Bershidsky, Leonid. The Glitch That Will Help Kill Bitcoin.2014. Web. 23rd March 23, 2014.

Nakamoto, Sotashi. Bitcoin: A Peer-to-Peer Electronic Cash System.n.d. Web. 23rd March, 2014.

Primack, Dan. Why Venture Capitalists Are Right to Be Crazy About Bitcoin. 2014. Web. March 23, 2014.

Rogojanu, Angela and Badea Liana. ”The issue of competing currencies. Case study – Bitcoin”. 2014. Theoretical and Applied Economics, 1(590), pp. 103-114.2014. Print.

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