In the aftermath of the bankruptcy of Lehman Brothers, which accelerated a global financial crisis, the cryptocurrency bitcoin was born, and an entirely new financial ecosystem was devised.
However, at least one expert is challenging the conventional wisdom that bitcoin and decentralized technology were the result of evangelists pushing back against the fallout from an economic crisis that brought the financial system to the brink, resulting in a wave of easy-money policies advocated by global central banks.
“Bitcoin happened to be launched in 2009, but it was the culmination of decades of attempts to create a digital currency on a peer-to-peer basis,” said David Yermack, a professor of finance and business transformation at New York University.
, the digital currency that runs on a decentralized ledger, or blockchain, not controlled by a single entity, possessed all the hallmarks of an antiestablishment revolt in the aftermath of that 2008-09 financial crisis.
“Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions,” as the bitcoin developer (or, perhaps, developers) Satoshi Nakamoto posited in a famous white paper on Oct. 31, 2008, “it still suffers from the inherent weaknesses of the trust based model.”
Still, Yermack said, even if bitcoin wasn’t inspired by the financial crisis, in his view, the “timing of its launch could only have helped attract users.”
Fellow NYU professor and famed bitcoin skeptic Nouriel Roubini is firmly in Yermack’s camp. “They stumbled upon something — an experiment, you could say,” said Roubini, a professor of economics often identified as “Dr. Doom.” “They pretend to be libertarian, but they are a new generation of self-serving gold bugs. They only care about their money, not the protocol or the technology.”
Still, some evidence suggests it was more than just good timing. As Maria Bustillos, a New Yorker writer, argued in an article headlined “The Bitcoin Boom”: “Nakamoto was very clearly motivated in this effort by the fallout from the 2008 financial crisis,” adding the now-famous and not-so-cryptic message left on the genesis block on Jan. 3, 2009, after the first 50 bitcoins were mined.
‘The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.’
Good timing or not, bitcoin proponents have, over the last decade, sought to challenge conventional thinking, arguing that a digital asset could operate as the new gold and Ethereum is the blockchain that supply-chains ledger will be recorded atop. The emergence of bitcoin led to a further 2,000 cryptocurrencies that at one point were worth more than Apple Inc.
and Amazon.com Inc.
. In 10 years, the cryptocurrency boom has made many people rich and many others poor — or even incarcerated.
Yet the person — or persons — behind bitcoin has remained a mystery, as has, as a result, the intent. Was the idea to disrupt the guardians of the global economy, as some assert, or was bitcoin originated for the anonymous exchange of funds in illicit commercial activities?
Or maybe a bit of both, according to Sarit Markovich, clinical associate professor of strategy at the Kellogg School of Management at Northwestern University. “The quest to be decentralized can be tied to a financial crisis, but if we didn’t have bitcoin it’s likely something else to challenge centralized payment systems would have emerged.”
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