The history of Bitcoin is the history of the invention. Admittedly enough mysterious, but all the more intriguing. In this series, we will try to take a closer look at the history of the main cryptocurrency and predict its future.
Who is Mr. Nakamoto?
At the beginning, the figure of the technology maker Blockchain and Bitcoin should be outlined. Nobody, however, still knows who Satoshi Nakamoto is. We know so much that we know almost nothing. It is not even known whether there was only one person or the entire team behind the block network, and only one person (someone like the press spokesman) wrote Nakamoto’s texts known to us. We are also not sure if this person (people?) is still alive. Why did he/she create Bitcoin? Was this a genius who was disappointed of 2008 subprime crisis ? We leave the answers to these questions to screenwriters of sensational films or criminal books.
However, let’s analyze the history of Bitcoin itself (of course in a huge glance).
Phase 1: Precursors.
At this stage, we are not allowed to talk about Bitcoin or cryptocurrencies yet. From where is coming this very idea of a currency that is just a digital being? It is not as new as anyone can think. For example, computer players can know Linden Dollars from Second Life or World of Warcraft Gold from the World of Warcraft universe. Few today remember about Facebook Credits, which was issued by Facebook. Considering the reach of the social networking site of Marek Zuckerberg, these “tokens” could become a global digital currency. According to the plan of the creators of the “Faces and Books” community, its role has been limited only to being the currency inside Facebook.
a. David Chaum
These are only more well-known examples. Do you remember David Chaum today? Some insiders call him “the father of digital money” today. Others go even further and continue to define “father” but “anonymity on the Internet.” Sounds intriguing? When we add that this gentleman proposed in 1982, creating an anonymous electronic payment system is almost like being at home! Almost because the system he designed – with a very sexy name DigiCash – was centralized.
Chauma was not satisfied that the existing forms of payment could have been too much to interfere with the privacy of those who entered into transactions. He even claimed that this could violate civil rights in the long term. However, he also had doubts. He thought that excessive anonymity would lead to the development of unethical and criminal behavior. The panacea for this was supposed to be the so-called “Blind signature.” In practice, he introduced quite an asymmetrical solution. The payer in the system was anonymous, but the person collecting the payment was traceable. The project was so interesting that the author wanted to monetize it and offer it to such companies as: Visa, Microsoft or Deutsche Bank. Unfortunately, no luck. What is worth noting, DigiCash was not protected by double spending (double-spending), thus losing its attractiveness.
b. Adam Back
Let’s go further. In the colorful 1990s. In 1997, when the Oscar winners were celebrated by the “English Patient” and the Prodigy and Puff Daddy & Faith Evan charts, in the dark recesses of the Adam Back network, he presented the hashcash system. The goal of the project was to limit the mass mailing of e-mails. Something salutary for spam enemies! What did this have to do with Bitcoin? Well, Back used the function calculating the proof of work. The system marked each email by adding a special token to it, which was then verified before sending the message. This was at the expense of the sender’s computing work. In the case of one email it was not a problem. In the case of thousands, it meant the enormity of the device’s work, and thus the increase in the costs of the entire process. If this solution came into mass use, this morning immediately after opening the mailbox, you would not have to wade through several offers of travel agencies, twice as many credit proposals and many other unwanted information … Well, we were dreamily but time to get back to reality.
The CyberPunk movement was created at the beginning of the 1990s. It unified cryptologists with liberal views. Their ideas fixe? Fight against the US government to increase privacy. Members of the movement did not believe that in the era of digitization privacy will be provided by governments or corporations. That’s why their community wanted to take care of it alone. How? By creating encryption tools and decentralized communication systems.
One CypherPunk member, Wei Dai, presented the vision of an anonymous currency. Before we give you its name and technological details, sit down comfortably in the armchairs, drink cold water, because now it will be really sensational …
Are you already?
Well, the currency of Wei Deia was to be called b-money and be based on a system of recording transactions between its participants in the register, where everyone would have to posses such register’s data !!! If you did not fall off the chairs, it’s good, because the project had significant disadvantages. According to the opinions of specialists, he was not well adapted to rejecting false transactions and in practice he was difficult to create something in the shape of a central issuer and patron.
Nick Szabo was apparently close to becoming Satoshi Nakamoto. A year after Daiu offered a bitgold. This digital currency has already benefited from proof of work and a decentralized register of ownership titles for individual units. Why, then, did not it become Bitcoin? Szabo did not completely think about the vision of emitting a bitgold, so that the project would soon drown in the sea of hyperinflation. At this point, we are reaching the climax – only a step away from IT specialists and cryptographers from the creation of Bitcoin. As in a good TV series, we will talk about it in the next installment of the series.