What Motivated Satoshi to Invent Bitcoin

In 2008, the world was mired in a global credit crisis. Mortgage lenders had provided loans to millions of homeowners who couldn’t repay them – and when those homeowners defaulted, the lenders lost all the money they’d lent. 

The country’s biggest lender, Countrywide Financial, collapsed. So did IndyMac Federal Bank and Washington Mutual Bank. To prevent further collapse, the federal government nationalized Fannie Mae and Freddie Mac. Bear Stearns folded, then Lehman Brothers. The government rescued Citigroup, then arranged for Bank of America to buy Merrill Lynch, which was facing bankruptcy. Meanwhile, Wells Fargo bought Wachovia as Goldman Sachs and Morgan Stanley became bank holding companies subject to the Federal Reserve. The Reserve Primary Fund, the nation’s oldest money market fund with $60 billion in assets, became the first such fund to lose money – leading to a “run” on Wall Street. All this caused Congress to pass the $700 billion Troubled Asset Relief Program (TARP), and that money was used to bail out Ford, GM and Chrysler, along with AIG, the biggest insurance company in the world.

All these events were shocking and unprecedented, and they occurred with astonishing speed. And while TARP helped the U.S. avoid economic collapse, a new fear arose: that dumping $700 billion of newly printed money into the economy would cause runaway global inflation.

Satoshi was fed up. There must be a better way for our global financial system to operate, no? So, in December 2008, during the depths of the financial crisis, Satoshi released a 9‑page white paper, “Bitcoin, a Peer-to-Peer Electronic Cash System.”  In it, Satoshi described the problem: