Opinion | Bitcoin turns 10: An idea that shook the world monetary order

In the last 10 years, we have seen several kinds of bitcoins being launched. Not surprisingly, it has divided the monetary economics community.

On October 31, 2008, Satoshi Nakamoto published a paper ‘Bitcoin: A Peer-to-Peer Electronic Cash System’ that started the cryptocurrency revolution. A decade later, bitcoin and Nakomoto’s paper deserve attention for at least two reasons.

One, the idea of bitcoin followed a more communitarian approach to human inventions (or ideas). Unlike most other inventions which are accredited to one or two humans, we do not know who Nakamoto is – the name is a pseudonym. The spirit of bitcoin is not just one person but several others who have contributed towards the idea. Perhaps, this is the way forward on how we should accredit inventions/ideas so that cutting edge innovation happens.

Two, bitcoin made the world think about taking a free-spirited approach to money. A world in which the authority to govern money does not rest with one central authority but rests on each of us. While bitcoin is about two aspects — technology and monetary economics — this article focuses on the latter.

The history of monetary economics is primarily divided into two halves. The first is the pre-gold standard era where currencies were backed by gold. Then, money supply could be expanded only if gold reserves were added or if there were new gold discoveries. This was abandoned in 1930s during the Great Depression as economies needed a monetary stimulus and the gold standard acted as a constraint.

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