Financial Recession of 2008 And The Introduction of Bitcoins

  • August 19, 2022
  • Admin_Blockchain
Financial Recession of 2008 And The Introduction of Bitcoins

After the great depression of 1930, the global recession of 2008 is considered the worst economic disaster. The downfall of the US subprime mortgage was the epicenter of the disaster followed by the International banking crisis that led to the destruction of Lehman brothers, a significant investment bank in 2008. 

The downfall of Lehman Brothers shook the faith of people in banks, so much so, that a new asset with no backing from formal banks came into existence. Only two months after Lehman Crisis, bitcoin was first mentioned in 2008. Today, cryptocurrencies are the most debated topic worldwide, due to their market volatility. The first recognized value of bitcoin was $1. After facing harsh ‘crypto winter, the present value stands at $23,000, a 59% fall from its all-time high of November 2021. 

Bitcoins Birth in 2008

On 1st November 2008, an anonymous techie under the name ‘Satoshi Nakamoto’ send an email to the cryptography mailing list stating he has been working on an electronic cash system that specializes in smart contracts, peer to peer transactions with no intermediaries involved between them.

The basic property of the system is that it does not require any middle-man or financial institutions to conduct transactions between accounts. The decentralized technology will eliminate the need to trust traditional financial institutions or banks. He also suggested, that the system,  instead of trust, is entirely based on ‘crypto proof’. 

Satoshi Nakamoto has also expressed his concern with the traditional banking system and his dissatisfaction with them for breaching public trust. Satoshi expressed in the mail that the major problem with traditional currency is that it is entirely based on ‘trust’. The central bank is expected to keep the currency stable, while the history of fiat currency is filled with breaches.  

Also Read: How to Track Stolen Cryptocurrencies?

3rd January 2009: First Transaction of Bitcoin

A few months after introducing the idea of bitcoins, the first transaction was made on the blockchain architecture to create the first fifty bitcoins. At 18:15:05 hours on 3rd January made their first transaction was made to create fifty bitcoins that were not for use or sale. 

The transaction was made with a cryptic message stating “The Times 03/Jan/2009 Chancellor on the brink of second bailout for banks”. 

Also Read: How Blockchain Technology Can Improve Supply Chain Management?

The Beginning of Bitcoin’s journey 

By 2011, bitcoin and the concept of cryptocurrency started getting popular in the market, along with several other digital currencies coming up in the market. 

One such after bitcoin, that gained popularity in the market was ‘Litecoin’. Ethereum is another popular cryptocurrency that came in 2015. Today, there are thousands of cryptocurrencies circulating the worldwide market, making headlines every day. 

The idea of cryptocurrency probably came into benign only after the dissatisfaction of Satoshi and the worldwide public with the traditional banking system. Satoshi wanted to introduce the concept of a decentralized ledger network that will be transparent to the members of the network, eliminating the change of data tampering and fraud. Over the years, bitcoins ad some other popular currencies have turned out to be an ‘asset’ more, and currency less. 

In Conclusion

Bitcoin is a popular cryptocurrency today and was also considered a ‘hedge against inflation for some period. Due to macroeconomic conditions, the crypto market is highly volatile. However, over the years various countries have adopted and accepted the currency. Brands like Gucci, Starbucks, and Tesla accept payments in bitcoins. Today, even in the bearish market, bitcoin maximalists support the currency stating that “it will never die”.

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