Bitcoin: today is the anniversary of the whitepaper

Today is an important date, not only because it is Halloween around the world, but it is also the anniversary of the whitepaper of Bitcoin, the famous paper that presented a revolutionary system for carrying out trustless and borderless transactions.

It all dates back to October 31st, 2008, 11 years ago, when Satoshi Nakamoto shared this paper in a cryptographic mailing list. 

But Bitcoin was certainly not invented overnight. 

Most of the aspects that led to the invention of Bitcoin are the result of technologies dating back as far as 50 years before the creation of the crypto itself, a fact that may surprise many.

One of the oldest contributions from which Satoshi Nakamoto (maybe Pakistani) took some elements to introduce into the BTC protocol is that of William Feller and his “An Introduction to Probability Theory and Its Applications”, which dates back even to the 50s.

As far as the technology for using public keys is concerned, Nakamoto took inspiration from what Ralph C. Merkle accomplished in the 80s in “Protocols for Public Key Cryptosystems“, where he explains the fundamental and necessary structure to ensure proper operation of the protocol and from which the famous Merkle Tree originates.

Mention must be made of the famous time-stamp introduced by Bitcoin, but which actually dates back to the early 1990s, with “Improving the efficiency and reliability of digital time-stamping” by Stuart Haber and Scott Stornetta. This study explained how to add time-stamping to the hash of a block, since time is a chronological and progressive parameter that allows to quickly trace when a block has been produced.

In the late 1990s, Wei Dai also contributed with his b-money system, anticipating what would later become the future nodes of the bitcoin blockchain.

The new millennium has brought what has perhaps contributed in a dramatic way to the future crypto: in fact, Adam Back‘s “Hashcash – A Denial of Service Counter-Measure” explains the operation of a PoW (Proof of Work) system designed to mitigate spam and DoS (Denial of Service) attacks. This has then been adapted to make Bitcoin mining complex but profitable at the same time, not to mention the security that this adds to the network, allowing it to be virtually non-attackable.

These technologies, which were already available, have not been able to change the financial world by themselves, but it was precisely the combination of all these elements, in the words of the saying “Divide et impera“, that allowed creating something that until that moment had been considered impossible to implement.

Before Bitcoin it was unthinkable to create digital data that could not be replicated and therefore be finite and unique: BTC, instead, has a maximum supply of 21 million; just recently the milestone of 18 million has been reached with only 3 million still available to be mined.

After 11 years it is possible to see how Bitcoin has influenced and revolutionised value transfers, making the concept of intermediary superfluous and replacing trust in a third party with “trust” in the algorithm that, being open to the public, removes the need to trust it blindly as its truthfulness can be verified anytime.

Associated to bitcoin’s technological aspects, one of the open questions that divides the community is that related to its nature, in other words, whether to consider it as a mere tool of exchange of value or as a store of value. Regardless of the answer, bitcoin still has a lot to say at the moment.