What the hell is Bitcoin??
Bitcoin was created by an anonymous person (or group) in 2009. The creator(s) went by the name Satoshi Nakamoto.
2009 was near the peak of the housing crisis, and at no coincidence, Satoshi was not happy with bailouts and the state of financial systems. So, being an excellent coder, he came up with a bold plan to change things with open source (free) software. Thus, bitcoin was born.
Nakamoto summed up the why of bitcoin in his launch announcement to a cryptography discussion group: "The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.
Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible."
Satoshi created bitcoin to be a game-changer. An alternative to the current monetary system.
The system is elegant. Satoshi knew he needed an incentive for people to adopt his technology. So he built a system with rewards for both miners (who secure the network and process transactions) and users (who hold and spend the coins).
Bitcoin gets harder to mine over time, as the difficulty increases automatically. It also gets harder due to increased competition from new miners.
Early adopters are richly rewarded, and they help spread the word. They have an incentive to hold long term, because if it catches on in the mainstream, they know the price will be higher.
Satoshi was active on message boards until December 2010, when he disappeared without a trace.
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