Bitcoin, the emergence of technology to save the economy

In his bestselling book, The Power of Habit, Duhigg has a very impressive sentence: Every change in the world comes about to meet a need. Humans have learned for centuries that in order to satisfy their needs and eliminate problems, they must change, or more precisely, evolve. The question that arises here for the reader of this article is, what does this philosophy of "need to change" have to do with the first article, and how is this introduction supposed to answer the remaining 3 questions from the article "Redefining Wealth and Technology: The Shift from Google to Bitcoin" who made our world"?

It is better to first have a very short review of the teachings of the previous article. In the previous article, we reviewed the most important technologies and products of the new century and said that the main criterion for our selection was their impact on human society. From Google to YouTube and Twitter, and finally Bitcoin Genesis Block, they are all invented to solve a need in society and eliminate a problem. Let's start with an example.

The idea that turned into a fortune: Airbnb

In 2007, in the city of San Francisco, Brian Chesky, and Joe Gebbia came to San Francisco from New York after several bankruptcies in previous start-ups and heavy debts. In the first days, they realized that all the hotels in the city were full due to the industrial design conference, and due to the influx of participants, San Francisco was temporarily faced with a severe problem of accommodating passengers. Sensing an opportunity, Brian and Joe purchased several air beds in installments and created a website called Air Bed and Breakfast.

The working procedure was like this, travelers without accommodation in the city, through the designed website, would book one or more nights of air beds with breakfast. The cost of this bed was 80 dollars per night, which was booked on the first day by an Indian man, an American man, and a woman.

More than 15 years after Airbnb's first day of business, the company now has more than 2 million properties from 190 countries and 34,000 cities on its website, and its hosts have welcomed more than 40 million guests.

Now let's go back to the topic at the beginning of the article. In this example, the community needs a smart platform to better manage travelers’ accommodations and provide conditions where every person in the community can rent their own room or house for a short period of time for travelers to stay.

The creators of Airbnb, who realized this need in society, were able to make a big contribution to the future of the tourism industry in addition to making millions of dollars in profits with their idea. Now it's time to ask ourselves: What effect does Bitcoin have on society, or what need does Bitcoin solve?

Bitcoin, the emergence of technology to save the economy

The financial crisis of 2008, which continued until 2012, was caused by the collapse of the housing market in the United States. The problem started when American banks created a price bubble in the American housing market by providing so-called risky banks.

Risky loans, also known as predatory loans, refer to lending practices characterized by high-interest rates, hidden fees, and special marketing tactics, generally to the borrower's detriment, to individuals with poor credit (low income). and often puts them in a worse financial situation. Lenders offered borrowers with poor credit short-term loans at high-interest rates, often without checking the borrowers' economic background or even their employment status. These loans often had high interest rates, which were adjusted over several years with a variable and generally increasing rate, making it difficult for the borrowers to pay them back.

On the other hand, the investors of many of these loans were investors who unknowingly bought the securities of American banks. More interestingly, to encourage investors, the mentioned securities were presented as safe and profitable investments in banks.

When housing prices began to decline in 2007, many borrowers were unable to pay their mortgages, leading to high delinquency rates on mortgage loans. This created a ripple effect throughout the financial system, as the value of mortgage-backed securities plummeted and many financial institutions were saddled with large amounts of debt, ultimately triggering the 2008 global financial crisis.

January 3, 2009, the birth of Bitcoin

It was precise during the world economic crisis that Satoshi Nakamoto launched the Bitcoin network for the first time. Let us once again return to the topic presented in the introduction of the article: every invention is to solve a need in society. In 2009, Bitcoin was invented as an answer to all the failures, massive financial corruption in banks, and lack of financial transparency that had led to the collapse of the world economy for 5 years.

Satoshi Nakamoto also shared the idea of Bitcoin with the world in October 2008 (3 months before the birth of Bitcoin) in an article titled Peer to Peer Network. The mysterious creator of Bitcoin announced a new type of digital money called Bitcoin in 2008 with the publication of this article. He introduces Bitcoin as follows: Bitcoin is a version of electronic money that allows people to pay online completely peer-to-peer without any financial intermediaries.

In the traditional financial system, banks are involved in all financial transactions as an intermediary. For example, suppose you want to transfer money from your account to your friend's account. This simple transfer consists of several steps in which the approval of the bank as an intermediary institution is required at each step. The first stage of the bank allows you to withdraw money from your personal account. In the second step, the bank transfers the money, and in the last step, the bank deposits the money into your friend's account. The bank's mediation in all transactions gives a lot of power and credit to banks around the world, which resulted in the 2008 financial crisis and corruption on a global scale.

Bitcoin, on the other hand, is a value or an asset that can be transferred from one account to another without the intervention of banks or any other institution. Another unique feature of Bitcoin is that you can transfer a large amount of Bitcoin to another point from anywhere in the world at the lowest cost and in a fraction of the time. To understand the value of this matter, it is enough to assume that in this transfer, instead of Bitcoin, you want to move a large amount of gold. In this case, you probably need a great security team and a lot of approval from legal institutions, and you probably have to wait a few days for the transfer to be done.

Who Runs Bitcoin?

One of Google's most frequently asked questions in 2019 was, who runs Bitcoin?

Nobody!

Yes, Bitcoin does not need a manager, boss, or any person who owns and decides alone. But how? We will explain more and prove this claim in the third article, where we are going to check how Bitcoin has been able to continue its activity for 13 years without a single day of rest and without any mistakes, more accurate than the clock.