Bitcoin is much older than ten years

In 2008, Satoshi Nakamoto published the Bitcoin Whitepaper and the network was launched a year later. Yet that was not actually the beginning of Bitcoin, but just the last dot on the i of a project - an idea - that is much older. Bitcoin is just the most recent step in the evolution of that idea.

In a sense, the 18th century French philosopher Voltaire was already talking about it a bit when he is said to have stated, "Paper money always returns to its intrinsic value - and that's zero." And Henry Ford, of the car brand of the same name, when he said at the beginning of the last century, "It's a good thing that people don't understand our banking and money system because if they did, there would be another revolution tomorrow morning."

The influential economist and political philosopher Friedrich A. Hayek also contributed in 1984: 'I don't think we'll ever have the right kind of money again until we take it out of the hands of the government. We can't take it out of their hands by force, so all we can do is some devious way to introduce something that they can't stop. '

Above: Milton Friedman

And Milton Friedman, another important 20th century economist, spoke about it in an interview in 1999: “The only thing that is missing, but will be developed soon, is a reliable kind of e-cash; a method whereby you can send funds from A to B via the Internet, without A having knowledge of B or B knowledge of A. '

The idea has also been around for many years among science fiction authors and filmmakers; They sometimes call it 'credits' or 'universal credits'. Sometimes there are counterparts in their stories that are not 'universal'; money from nation states or corporations. The predictive gifts of science fiction authors have of course been written before.

Cryptography

The idea has also been tried a few times in the real world. Pioneer in cryptography David Chaum was the first to come up with the idea in the 1980s that the idea might be possible through cryptography.

In 1989 he released his version of the idea and called it Digicash: digital 'cash' money with a degree of privacy. However, the idea was far ahead of its time; the internet was still in its infancy and there was hardly any e-commerce. The bankruptcy of the central organization behind DigiCash therefore meant the end of Digicash. But not like the idea.

Building on the innovations of David Chaum, the idea took shape again in 1996. This time it was called E-Gold, as its value was now linked to gold. E-gold enjoyed some popularity, but it also got on the radar of the government. This forced the company behind it through lawsuits to pull the plug. Again the idea seemed to fail.

Cypherpunks

But ideas are persistent and in an obscure corner of the internet, the Cypherpunks took it off. 'Cypherpunks' is of course a playful nod to the Cyberpunk science fiction subgenre; that's where the idea often occurs. It concerns a very small group of crypto-anarchists who were loosely connected to each other via a mailing list in the late 1980s and early 1990s. “Cypherpunks write code,” states the 1988 Crypto-Anarchist's Manifesto, and the goal is to bring about a social and economic revolution.

Just as the technology of printing altered and reduced the power of medieval guilds and the social power structure, so too will cryptologic methods fundamentally alter the nature of corporations and of government interference in economic transactions. Combined with emerging information Tumbler, crypto anarchy will create a liquid market for any and all material which can be put into words and pictures. And just as a seemingly minor invention like barbed wire made possible the fencing-off of vast ranches and farms, thus altering forever the concepts of land and property rights in the frontier West, so too will the seemingly minor discovery out of an arcane branch of mathematics come to be the wire clippers which dismantle the barbed wire around intellectual property. Arise, you have nothing to lose but your barbed wire fences! " - The Crypto Anarchist Manifesto

The idea took hold of the cypherpunk Wei Dai, who renamed it B-money in 1996. This time, the idea would be distributed and it had to be able to sustain itself. To accomplish that, network participants would be rewarded through a clever mechanism called Proof-of-Work, invented a little earlier by cryptographer Adam Back. However, B-money did not get off the ground for technical reasons; It did not work.

  • I am fascinated by Tim May's crypto-anarchy. Unlike the communities traditionally associated with the word anarchy", in a crypto-anarchy the government is not temporarily destroyed but permanently forbidden and permanently unnecessary. It's a community where the threat of violence is impotent because violence is impossible, and violence is impossible because its participants cannot be linked to their true names or physical locations. "- Wei Dai, B-money

At the other end of the spectrum, the US intelligence agency NSA also thought it was an interesting idea. They didn't have a name for it yet, but they described it in the 1996 report How to make a mint: the cryptography of anonymous electronic cash. They were not very enthusiastic about the idea. They ran into complicated problems and besides, it went a bit against other ideas they had. The idea ended up in the archive. Another cypherpunk, Nick Szabo, liked the idea and turned it into Bit gold in 2005. Digital gold, not because it is linked to physical gold, but because it is digital money with the same properties as gold. Bit gold went a little further than B-money, because instead of a distributed network, Bit gold had to be decentralized. Not only is the network distributed, but also the power and control over it is decentralized.

  • The problem, in a nutshell, is that our money currently depends on trust in a third party for its value. As many inflationary and hyperinflationary episodes during the 20th century demonstrated, this is not an ideal state of affairs." - Nick Szabo, Bit gold

Bitcoin

With Bit gold, Szabo went a long way in solving the problems and issues, but did not achieve a working implementation. Moreover, there seemed to be little interest in it; perhaps the time was not yet right. Yet even now the idea lived on. In 2008 it was revived by a cypherpunk. This time an unknown name within that world: Satoshi Nakamoto. Satoshi Nakamoto gave the idea its most recent name: Bitcoin. The main innovation of Bitcoin was that Satoshi Nakamoto had found an innovative solution for 'double spends'; a persistent problem that had hindered the success of previous attempts. "The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust." - Satoshi Nakamoto, Bitcoin open source implementation of P2P currency Satoshi Nakamoto called that solution the time chain, although nowadays we more often refer to it as the blockchain. This allowed the network to reach independent consensus about what 'the truth' is; a final piece of the puzzle that was still missing and a breakthrough in computer science. A year later the network went live and the first blocks were mined.

Evolution

Bitcoin is actually not that new at all; it is only the most recent step in the evolution of an idea that has been around for much longer. And that idea seems to have finally found a form in Bitcoin that is robust enough to survive. In the eleven years since its launch, Bitcoin has withstood countless setbacks and attacks and the network has grown into the most secure network in the world. The idea now fascinates millions of people worldwide and an entire industry has emerged around it. Bitcoin has become much more than just an idea.