Bitcoin Was Not a Response to the Financial Crisis of 2008

Maybe it’s just that winter is dragging on, but I find myself getting increasingly irritated with mainstream reports about Bitcoin that say it was a result of the financial crisis.

It wasn’t, and that matters.

First, let’s look at why it wasn’t, and then I’ll explain why this misunderstanding bothers me.

Bitcoin’s pseudonymous creator Satoshi Nakamoto started working on the Bitcoin white paper in early 2007, over a year before the financial crisis hit mainstream markets.

In early 2007, the subprime mortgage industry was collapsing, but even lifelong finance insiders didn’t foresee the scale of what was to unfold. As Satoshi worked, bankruptcies and bank tremors would have been making the headlines, but there is no indication this added to his* urgency.

(*We don’t know that Satoshi was a “he,” but to avoid linguistic clutter I’ll use that pronoun throughout.)

By the time Satoshi uploaded the white paper to a cryptography mailing list in October 2008, the markets were in full meltdown, the U.S. government was taking over parts of the financial ecosystem, and central banks around the world were dropping interest rates and printing money.

The genesis block, mined by Satoshi in early January 2009, included the text of a headline from that day: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”

Many have taken this as proof that Bitcoin was created in reaction to the crisis. This reveals a lack of understanding of how much work went into the design of Bitcoin, as well as the long history behind the idea of peer-to-peer finance.

History matters

The confusion is also potentially damaging to the Bitcoin narrative.

Why? Because it misrepresents the intentions of the army of cryptographers that had been working on a decentralized electronic cash solution for decades. It diminishes the bigger picture.

Satoshi was not reacting to an event, just as those on whose shoulders he stood weren’t planning for a specific circumstance. They…

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