\n
![](\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjItMTEvZmE5NTdiMDEtMDIyNC00MDhkLWJjMzAtNGFkNWI0M2JmNzkyLmpwZw==.jpg\")
<\/p>\n
\n<\/p>\n
This year, Oct. 31 marked the 14th anniversary of the issuance of one of this century\u2019s most consequential white papers \u2014 Satoshi Nakamoto\u2019s \u201cBitcoin: A Peer-to-Peer Electronic Cash System.\u201d Its 2008 publication set off<\/a> a \u201crevolution in finance\u201d and \u201cheralded a new era for money, one that did not derive its value from governmental edict but rather from technological proficiency and ingenuity,\u201d as NYDIG celebrated in its Nov. 4 newsletter.<\/p>\n Many aren\u2019t aware, though, that Satoshi\u2019s 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 \u2014 David Chaum\u2019s Digicash effort in the 1990s, for example \u2014 nor at first glance did it appear that Satoshi was bringing anything new to the table in terms of technology. <\/p>\n \u201cIt was technically possible to develop Bitcoin in 1994,\u201d Jan Lansky, head of the department of computer science and mathematics at the Czech Republic\u2019s 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).<\/p>\n Peter Vessenes, co-founder and chief cryptographer at Lamina1 \u2014 a layer-1 blockchain \u2014 basically agreed: \u201cWe definitely could have been mining Bitcoin\u201d in the early 1990s, at least from a technical perspective, he told Cointelegraph. The necessary cryptography was in hand:<\/p>\n \u201cBitcoin\u2019s elliptic curve technology is mid-1980s technology. Bitcoin doesn\u2019t need any in-band encryption like SSL; the data is unencrypted and easy to transfer.\u201d\u00a0<\/p><\/blockquote>\n Satoshi sometimes gets credit for establishing the proof-of-work (PoW)<\/a> protocol used by Bitcoin and other blockchain networks (though no longer Ethereum ) to secure digital ledgers, but here too, he had antecedents. \u201cCynthia Dwork and Moni Naor suggested the idea of proof-of-work to combat spam in 1992,\u201d added Vessenes.<\/p>\n PoW, which is also effective in thwarting Sybil attacks, establishes a high economic price for making any changes to the digital ledger. As explained<\/a> in a 2017 paper on Bitcoin\u2019s origins by Arvind Narayanan and Jeremy Clark, \u201cIn Dwork and Naor\u2019s design, email recipients would process only those emails that were accompanied by proof that the sender had performed a moderate amount of computational work \u2014 hence, \u2018proof of work.\u2019\u201d As the researchers further noted:<\/p>\n \u201cComputing 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.\u201d<\/p><\/blockquote>\n Elsewhere, \u201cRalph Merkle invented Merkle trees in the late 1980s \u2014 so we had hashing functions that were secure for the times,\u201d Vessenes added. <\/p>\n Recent:\u00a0Tokenization at the crossroads of the trucking industry to ensure efficient payments<\/a><\/em><\/strong><\/p>\n 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\u2019s true constituency hadn\u2019t yet come of age \u2014 a new generation distrustful of centralized authority, especially in light of the Great Recession of 2008?<\/p>\n David Chaum has been called<\/a> \u201cperhaps the most influential person in the cryptocurrency space.\u201d His 1982 doctoral dissertation, Computer Systems Established, Maintained, and Trusted by Mutually Suspicious Groups, anticipated<\/a> 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:<\/p>\n \u201cThe problem of establishing and maintaining computer systems that can be trusted by those who don’t necessarily trust one another.\u201d<\/p><\/blockquote>\n Indeed, an academic exploration of blockchain technologies\u2019 origins by four University of Maryland researchers lauded \u201cthe 1979 work of David Chaum, whose vault system embodies many of the elements of blockchains.\u201d<\/p>\n 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 University of Maryland researchers that all the key blockchain elements were already present in his 1982 dissertation \u2014 with one key exception: Satoshi\u2019s consensus mechanism:<\/p>\n \u00a0\u201cThe specifics of the [Satoshi\u2019s] consensus algorithm is unlike, as far as I know, those in the literature on consensus algorithms.\u201d<\/p><\/blockquote>\n When pressed for specifics, Chaum was reluctant to say much more other than that the 2008 white paper described a \u201csomewhat ad hoc\u2026 crude mechanism\u201d that actually \u201ccould be made to work \u2014 more or less.\u201d<\/p>\n In a recently published book, University of Oxford social scientist Vili Lehdonvirta also focuses on the uniqueness of that consensus mechanism. Satoshi rotated the cryptocurrency\u2019s record-keepers\/validators \u2014 better known today as \u201cminers\u201d \u2014 roughly every 10 minutes. <\/p>\n Then \u201cthe next randomly appointed administrator would take over, double check the previous block of records, and append their own block to it, forming a chain of blocks,\u201d Lehdonvirta writes in Cloud Empires<\/em><\/a>. <\/p>\n The reason for rotating miners, in Lehdonvirta\u2019s telling, was to prevent the system\u2019s administrators from becoming too entrenched and, thus, to avoid the corruption that inevitably comes with a concentration of power. <\/p>\n Even though PoW protocols were well known at this point, the specifics of Satoshi\u2019s algorithm \u201creally came out of nowhere\u2026 it wasn\u2019t anticipated,\u201d Chaum told Cointelegraph. <\/p>\n Vinay Gupta, founder and CEO of startup Mattereum, who also helped to launch Ethereum in 2015 as its release coordinator, agreed that most of Bitcoin\u2019s key components were available for the taking when Satoshi came along, though he differs on some of the chronology. \u201cThe parts themselves were simply not ready until at least 2001,\u201d he told Cointelegraph.<\/p>\n \u201cBitcoin is a combination of three fundamental breakthroughs on top of public key cryptography \u2014 Merkle trees, proof-of-work and distributed hash tables,\u201d all developed before Satoshi, said Gupta. There were no problems with network hardware and computer power in the 1990s either. \u201cIt\u2019s the core algorithms that were the slow part [\u2026]. We just didn\u2019t have all the core building blocks for Bitcoin until 2001. The cryptography was first, and the extremely clever networking layer was last.\u201d <\/p>\n Garrick Hileman, a visiting fellow at the London School of Economics, also cited a later date for Bitcoin\u2019s technical feasibility:<\/p>\n \u201cI\u2019m not sure the early 1990s is a strong claim as some of the prior work referenced in Satoshi\u2019s white paper \u2014 e.g. Adam Back\u2019s hashcash\/proof-of-work algorithm \u2014 were developed and\/or published in the late 1990s or thereafter.\u201d\u00a0<\/p><\/blockquote>\n What about non-technical factors? Maybe Bitcoin was waiting for a demographic cohort that had grown up with computers\/cell phones and distrusted banks and centralized finance generally? Did BTC require a new social-economic consciousness to flourish?<\/p>\n Alex Tapscott, a member of the Millennial generation, writes<\/a> in his book Financial Services Revolution<\/em>:<\/p>\n \u201cFor many of my generation, 2008 began a lost decade of structural unemployment, sluggish growth, political instability and a corrosion of trust and confidence in many of our institutions. The financial crisis exposed the avarice, malfeasance and plain incompetence that had driven the economy to the brink of collapse and had some asking, \u2018How deep did the rot go?\u2019\u201d<\/p><\/blockquote>\n In a 2020 interview with Cointelegraph, Tapscott was asked if Bitcoin could have happened without the financial upheaval of 2008. Given the \u201chistorically high unemployment rates in countries like Spain, Greece and Italy, there\u2019s not much question that the ensuing lack of trust in institutions led many to view decentralized systems like blockchain more favorably,\u201d he answered.<\/p>\n Lansky seemed to agree. There was no social need or demand for a decentralized payments solution in the 1990s \u201cbecause we did not have enough experience with the fact that centralized solutions do not work,\u201d he told Cointelegraph. <\/p>\n \u201cBitcoin was undeniably a cultural product of its times,\u201d added Vessenes. \u201cWe wouldn\u2019t have a decentralized push without this DNA of mistrust of central government technology controls.\u201d<\/p>\n Overall, one can go back and forth arguing about who contributed what and when. Most agree, though, that most of the pieces were in place by 2008, and Satoshi\u2019s real gift may have been how he was able to pull it all together \u2014 in just nine pages. \u201cNo single part of Bitcoin\u2019s fundamental mechanics is new,\u201d Gupta reiterated. \u201cThe genius is in the combination of these existing three components \u2014 Merkle trees, hash cash and distributed hash tables for the networking into a fundamentally new whole.\u201d<\/p>\n But sometimes, the historical environment has to be propitious too. Chaum\u2019s project failed \u201cbecause there was not enough interest in this service\u201d at the time, among other reasons, according to Lansky. Satoshi Nakamoto, by comparison, had perfect timing. \u201cHe came up with Bitcoin in 2008, when the classical financial system was failing,\u201d and the founder\u2019s vanishing from the scene in 2010 \u201conly strengthened Bitcoin, because the development was taken over by its community.\u201d <\/p>\nEstablishing \u2018trustless\u2019 systems<\/h2>\n
\u2018Three fundamental breakthroughs\u2019<\/h2>\n
Awaiting a favorable social climate<\/h2>\n
Pulling it all together<\/h2>\n