This year, Oct. 31 marked the 14th anniversary of the issuance of one of this century’s most consequential white papers — Satoshi Nakamoto’s “Bitcoin:
This year, Oct. 31 marked the 14th anniversary of the issuance of one of this century’s most consequential white papers — Satoshi Nakamoto’s “Bitcoin: A Peer-to-Peer Electronic Cash System.” Its 2008 publication set off a “revolution in finance” and “heralded a new era for money, one that did not derive its value from governmental edict but rather from technological proficiency and ingenuity,” as NYDIG celebrated in its Nov. 4 newsletter.
Many aren’t aware, though, that Satoshi’s nine-page white paper was met with some skepticism initially, even among the cypherpunk community where it first surfaced. This reluctance may be understandable since earlier attempts to create a cryptocurrency failed — David Chaum’s Digicash effort in the 1990s, for example — nor at first glance did it appear that Satoshi was bringing anything new to the table in terms of technology.
“It was technically possible to develop Bitcoin in 1994,” Jan Lansky, head of the department of computer science and mathematics at the Czech Republic’s University of Finance and Administration, told Cointelegraph, explaining that Bitcoin is based on three technical improvements that were available at that time: Merkle trees (1979), blockchain data structure (Haber and Stornetta, 1991) and proof of work (1993).
Peter Vessenes, co-founder and chief cryptographer at Lamina1 — a layer-1 blockchain — basically agreed: “We definitely could have been mining Bitcoin” in the early 1990s, at least from a technical perspective, he told Cointelegraph. The necessary cryptography was in hand:
“Bitcoin’s elliptic curve technology is mid-1980s technology. Bitcoin doesn’t need any in-band encryption like SSL; the data is unencrypted and easy to transfer.”
Satoshi sometimes gets credit for establishing the proof-of-work (PoW) protocol used by Bitcoin and other blockchain networks (though no longer Ethereum ) to secure digital ledgers, but here too, he had antecedents. “Cynthia Dwork and Moni Naor suggested the idea of proof of work to combat spam in 1992,” added Vessenes.
PoW, which is also effective in thwarting Sybil attacks, establishes a high economic price for making any changes to the digital ledger. As explained in a 2017 paper on Bitcoin’s origins by Arvind Narayanan and Jeremy Clark, “In Dwork and Naor’s design, email recipients would process only those emails that were accompanied by proof that the sender had performed a moderate amount of computational work — hence, ‘proof of work.’” As the researchers further noted:
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“Computing the proof would take perhaps a few seconds on a regular computer. Thus, it would pose no difficulty for regular users, but a spammer wishing to send a million emails would require several weeks, using equivalent hardware.”
Elsewhere, “Ralph Merkle invented Merkle trees in the late 1980s — so we had hashing functions that were secure for the times,” Vessenes added.
So, why then did Satoshi succeed while others foundered? Was the world simply not ready for a decentralized digital currency earlier? Were there still technical limitations, like accessible computer power? Or maybe Bitcoin’s true constituency hadn’t yet come of age — a new generation distrustful of centralized authority, especially in light of the Great Recession of 2008?
Establishing ‘trustless’ systems
David Chaum has been called “perhaps the most influential person in the cryptocurrency space.” His 1982 doctoral dissertation, Computer Systems Established, Maintained, and Trusted by Mutually Suspicious Groups, anticipated many of the elements that were to eventually find their way into the Bitcoin network. It also presented the key challenge to be solved, that is:
“The problem of establishing and maintaining computer systems that can be trusted by those who don’t necessarily trust one another.”
Indeed, an academic exploration of blockchain technologies’s origins by four University of Maryland researchers lauded “the 1979 work of David Chaum, whose vault system embodies many of the elements of blockchains.”
In an interview with Cointelegraph last week, Chaum was asked if Bitcoin really could have been launched 15 years earlier, as some contend. He agreed with the U. of Maryland researchers that all the key blockchain elements were already present in his 1982 dissertation — with one key exception: Satoshi’s consensus mechanism:
“The specifics of the [i.e., Satoshi’s] consensus algorithm is unlike, as far as I know, those in the literature on consensus algorithms.”
When pressed for specifics, Chaum was reluctant to say much more other than that the 2008 white paper described a “somewhat ad hoc… crude mechanism” that actually “could be made to work — more or less.”
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cointelegraph.com