“To the moon!” The phrase is the battle cry of true believers in cryptocurrency bitcoin—and charts of its price in recent weeks point directly heavenward. Yet beyond a batch of newly minted crypto-millionaires, the digital asset’s recent bull run has also exposed long-standing weakness in the underlying technology that could crimp bitcoin’s long-term viability.
Bitcoin was a gift to the world from Satoshi Nakamoto, a pseudonymous person or persons who laid out the design in a 2008 white paper. The paper complained that conventional financial institutions create unnecessary friction: banks and other mediators pass on costs as transaction fees that make “small casual transactions” impractical. Nakamoto said bitcoin would change that, by employing a peer-to-peer network backed by unbreakable math to verify transactions, removing the need for centralized institutions. The paper doesn’t use the term, but it’s a clear reference to the concept of micropayments—the idea that very small digital payments could change the economics of the internet, or help people in the developing world.
Tom Simonite | Wired