Cryptoassets: Season 3 – Episode 2 – Satoshi Nakamoto & 2008 Financial Crisis

Welcome back to another Crypto blog and I first want to talk about this financial crisis on a scale you’ve never heard.  The amount of collapses that happened through banks and private companies in 2008 is UNHEARD of.

Let’s kick this off with Satoshi, Satoshi Nakamoto.  No on ein the world knows who he is.  He/they have remained anonymous…and still to this day, no one knows anything.  Apparently he’s living in Japan, there are stories of him being an Australian chap — which was later debunked — and the mystery goes on.

Why do I mention such a man? Well he’s the one that published a paper that founded Bitcoin and the basis of blockchain technology.  He’s the one that has showcased an array of different topics including cryptography, computer science, economics and others.  Nonetheless, he was completely away of Wall Street (a company that hasn’t been audited in 60 years)’s growing instability and was putting the final touches on the concept of Bitcoin.  In August of 2008, bitcoin.org, the home website for information on Bitcoin, was registered.

On Halloween day of 2008, Satoshi then released the Bitcoin white paper, which served as the genesis for every single blockchain implementation.

“We have proposed a system for electronic transactions without relying on trust.” – Satoshi

Notable 2008 Debacles

Bear Stearns got slammed by the house market’s downward-spiral, ultimately getting bought out for $2 a share by JP Morgan, just 1% of the value from a year before. 

Much of the crisis was born on the irresponsibility lending, known as subprime loans. 

Historically, when a bank issued a loan, the bank was on the hook for ensuring that the borrower repaid the funds.  However, in the case of many subprime loans, one these loans issued to borrowers, they were packaged, or securitized into complex CMO’s (collateralized mortgage obligations).

So basically this risk was passed on like a hot potato through the financial markets.  People didn’t know about the instability of CMO’s, but let’s just say they were outdated financial architecture.  What happened in 2008 was global investors, too, being involved with these garbage CMO’s.

Toxic assets plagued Fuld and other groups, significant losses occurred in the billions, and then CEO’s of the biggest investment banking groups had meetings at the Federal Reserve on what to do with the Lehman Brothers, a company that has been long standing for 164 years at the time.  Well, if Lehman filed for bankruptcy, financial firms that did business with Lehman would also lose billions, triggers financial armageddon.  And so it happened, Merrill Lynch was bought by Bank of America and Lehman filed for Chapter 11.

To sum this up, it got ugly real quick on wall street with global investors getting thrown into pure pandemonium.

However, The Birth of Bitcoin happened.

Listen to “Cryptoassets: Season 3 – Episode 2 – Satoshi Nakamoto & 2008” on Spreaker.

 

 

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