Why Was Bitcoin Created?

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 that is no coincidence. Satoshi was obviously 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.

Reading Satoshi’s posts is the best way to understand why bitcoin was created. Let’s look at another example of his early writing:

As a thought experiment, imagine there was a base metal as scarce as gold but with the following properties:
– boring grey in color
– not a good conductor of electricity
– not particularly strong, but not ductile or easily malleable either
– not useful for any practical or ornamental purpose

and one special, magical property:
– can be transported over a communications channel.

If it somehow acquired any value at all for whatever reason, then anyone wanting to transfer wealth over a long distance could buy some, transmit it and have the recipient sell it.

Maybe it could get an initial value circularly as you’ve suggested, by people foreseeing its potential usefulness for exchange. (I would definitely want some.) Maybe collectors, any random reason could spark it.