The first to really capitalize on the market I would say. Since, eCash, although being very different from Bitcoin of today was a concept back in the 1980s, which I think was implemented into Digicash? As far as I know, this is the very foundations to what we now call cryptocurrencies, and its interesting to me that the concept was thought of many years ago. I'm not sure of the success of eCash, or Digicash, but I believe Bitcoin is the closest thing we've had that uses similar ish concepts that has garnered the interest of the mainstream media.
That's correct. Dr. David Chaum's (author od eCash) previous work was the one that inspired the Cypherpunks to try to implement a working
and decentralized form of digital, untraceable money.
Some of these cryptographers started working on this dream they had: electronic cash. And they had a role model: Dr. David Chaum's DigiCash. David Chaum's work represented an inspiration for the Cypherpunks group and he can be called the grandfather of Cypherpunks. His writings (such as "
Untraceable Electronic Mail, Return Addresses, and Digital Pseudonyms", "
Blind Signatures for Untraceable Payments" or "
Security without Identification Card Computers to make Big Brother Obsolete") proved he was thinking way ahead of his time. In 1989 he already managed to launch the electronic money company DigiCash Inc. The company offered to the public the eCash payment system and the CyberBucks coins, which were based on blind signatures. The proposal was actually applied in real world payments, being adopted by several banks, such as Mark Twain Bank from St. Louis, Deutsche Bank, Credit Suisse, Norske Bank and Bank Austria. Other big players became interested in Chaum's creation: Visa, Netscape, ABN Amro Bank, CitiBank and ING Bank. Even Bill Gates tried to embed DigiCash in Windows '95. Unfortunately, these last mentioned players never signed the contracts with Chaum. In the end, in 1998, DigiCash Inc. went bankrupt. People were not attracted to use the system. Chaum's proposal was also above of its times.
The Cypherpunks thought also that the failure of DigiCash Inc. was determined by the fact that it was based on a central authority.
The key to success was a totally decentralized form of money.What I'm trying to say is that eCash
was real. And it was used. But it was a centralized form of digital money and maybe that lead, in the end, to its failure. And also the fact that the invention was implemented in the real world ahead of its time. Even now, for example, Bitcoin is not used but too many people all over the world. It;s still hard for some to understand it. Now imagine how hard eCash was back then.
Because hashcash was before bitcoin it doesn't mean that bitcoin was bornt from hashcash. Bitcoin is a creation that took some important accomplishments back in the 90's and implement them to create a digital currency. Satoshi had referenced to
bmoney too. It doesn't make bmoney a cryptocurrency.
Bitcoin was something innovative.
It was, indeed. But both HashCash and b-money helped Satoshi to place all things together. But these two weren't the only proposals, there was also another one: Nick Szabo's Bit Gold, which also opened the idea of
smart contracts. However, all these 3 proposals of digital money, but also eCash, had various flaws: they were subject of sybil attacks, they were not decentralized or they were never coded.
Bitcoin took the best from all the previous proposals. With other words, we can say that Satoshi
learned from the mistakes made by his predecessors and made sure that he won't repeat them. He used HashCash, proof-of-work, 0 central authority, public/private keys and a distributed ledger - which came to be known as the Blockchain (although this term was never used in the Bitcoin white paper). But his innovation was that he used the chain of signatures which link with hash functions every coin (transaction) to its previous owner (author) in an unbroken chain which ends at the generation of the respective coin. Practically, nobody can falsely allege that he owns a coin, as the real owner can sign a message from the transaction which attributed the coin to him, proving that the other one is an imposter. And the importance of this invention can be seen now, many years after Bitcoin was launched, as you know: CSW is trying in vain to
steal Satoshi's identity and also to
convince people that he owns several of Bitcoin's first addresses -- addresses which are supposed to belong to Satoshi; actually no matter to whom they belong, it is certain they don't belong to CSW
as he is unable to sign a message from them. Furthermore, he was ridiculed by the real owner of such address, which signed a message from his address, saying "Craig Steven Wright is a liar and a fraud. He doesn't have the keys used to sign this message.". Furthermore, the recently moved 50 BTC from the address created in 2009 (
movement observed also by many forum users) were contained in an address previously mentioned by CSW as belonging to him. The movement of these coins by their real owner proved that he didn't control that address.
This concept, which proves 100% the real owner of a coin, was not present in the previous electronic money proposals.
Excepting all these, Bitcoin also managed to avoid the 51% attacks. As Satoshi had forseen the need for proving the ownership (described above) and many other technological (but also political and ideological issues) which could appear after offering his brilliant invention to the world. He also anticipated that Bitcoin could become the subject of various types of attacks, one of them being the so-called
51% attack.
For those which don't know, a 51% attack represents an attack to the network, the attack being performed by a miner (or a group) having more than 50% of the total hash power of the entire network. In such cases (which in Bitcoin network's case the chances are astronomically low of occurring), the respective miner would have absolute power over the protocol, including but not limited to: stopping other miners from finding new blocks, find all the blocks by himself and obtain all the mining rewards, rewriting the blockchain history, double-spending etc. (more details can be found on
Bitcoin Wiki).
Satoshi knew that such attack could occur and implemented two methods for mitigating the risk, as it follows:
1 He detailed an incentive in the
white paper meant to keep honesty among the network participants: "The incentive may help encourage nodes to stay honest. If a greedy attacker is able to assemble more CPU power than all the honest nodes, he would have to choose between using it to defraud people by stealing back his payments, or using it to generate new coins. He ought to find it more profitable to play by the rules, such rules that favour him with more new coins than everyone else combined, than to undermine the system and the validity of his own wealth.".
Besides, regarding double spending and attacks, the white paper also details the following: "We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU proof-of-worker. As long as a majority of CPU proof-of-worker is controlled by nodes that are not cooperating to attack the network, they'll generate the longest chain and outpace attackers. The network itself requires minimal structure."
2. The second measure was not based anymore on users' honesty, but rather on code: Bitcoin is programmed to make it more difficult the process of finding new blocks as more hash power is brought inside the network. Practically, the more the nodes are, the more difficult the mining process gets. And, as a consequence, as the network expands more and more, it would be way more difficult for an attacker to control more than 50% of the network's hash power
*.
Regarding this second solution,
laszlo (
the pizza guy) alleged in recent CoinTelegraph
article that Satoshi told him at some point that he has coded a mining software for GPUs and he was prepared to switch the actual (at that moment, of course) CPU miner to the GPU software, if he really had to defend the network. Of course, the defense would mean to raise exponentially the difficulty, as the GPUs have much more computing power than the CPUs. Laszlo, which according to his
topic from May 2010 might have been the first developer (excepting Satoshi) of such mining software for GPUs, could have said the truth or could have lied in the interview. But what's certain is that Satoshi had two ways for avoiding these attacks in Bitcoin network,
this being an aspect where Bit Gold and b-money were vulnerable.
