All About Bitcoin Predecessors

Bitcoin didn't came from nowhere, neither it was first trying at digital money creating.

As any succeed try, it hold a whole history of failed attempts by predecessors. It is so unlikely that Bitcoin could have succeed at first place without those attempts, without accumulating of diverse lessons and ideas those who tried to bring digital money to world learned.

Image source Freepik

Beginnings of ideas and solutions that formed base of Bitcoin are lost in fog of 80s last century, when group of technologists called Cypherpunks was forming. It was more than group, it was movement. These techies were dedicated to promote privacy through encryption and electronic money, and often communicated through email list on topics like cryptography, economics, and censorship. In 1993, representative document of these movements appeared, A Cypherpunk's Manifesto. You can watch video on our YouTube channel to learn more about this manifesto: Video Link

What were predecessors of Bitcoin?

1. Bit Gold

Nick Szabo, computer scientist and member of group Cypherpunks proposed Bit Gold in 1998. This project was attempt in digital environment to mimic way gold is mined in real world, using Proof-of-Work (PoW) algorithm.

Idea of building cost (or digital rarity) into proof-of-work system was first conceptualized by Cynthia Dwork and Moni Naor in 1993 as way to protect services of Internet abuses such as spam. Idea was later picked by Nick Szabo for Bit Gold.

Big contribution of Bit Gold was that it solved problem of double spending. However, "Achilles' heel" was consensus mechanism, which could be easily taken advantage by malicious actor, through "Sybil attack". In this attack type, malicious actor creates large number of nodes (called 'sybills') and alters digital ledger. Solution was for Bit Gold to limit number of participating nodes, but this would lead to high centralization and disproportionately increase node power. Therefore, project ultimately failed, not before making some very important contributions to field.

2. B-Money

It appeared about same time as Bit Gold and proposed by Wei Dai, computer engineer who was also member of group Cypherpunk. Dai is referenced in Bitcoin Whitepaper.

Although B-Money was only in Whitepaper stage, he conceptualized "an anonymous and electronic distributed cash system" and also terms like "distributed ledger," "digital signature of transactions," and "money creation with PoW."

3. Hashcash

Adam Back implemented concept of 'digital rarity' in 1997 at Hashcash, service that aimed to reduce spam and DDOS attacks.

He inspired both Nick Szabo and Wei Dai to apply concept of digital rarity to process of creating digital money. How? PoW puzzle represents energy, which if consumed to issue coins, will give value of that energy to issued coins.

4. RPoW

Hal Finney, another cypherpunk, tried in 2004 to improve on original idea of Bit Gold and created system called RpoW (Reusable Proof of Work). It reduced complexity of Bit Gold and used Hashcash's PoW proposition to issue new tokens. To solve problem of double spending, system was centralized.

In conclusion, we can say without any doubt that Bitcoin took all this immense research work done by its predecessors and created mix of these solutions developed by cypherpunks, which surpassed all their attempts, both in elegance and through robustness of architecture. I don't think we are wrong if we say that Bitcoin is gift that Cypherpunks gave to world.