The research paper detailing the engineering and design requirements to bring the first distributed and uncensored electronic money system to life was published 13 years ago. The Bitcoin whitepaper made public the long-sought resolution to the double-spending problem of all previous attempts to create digital money.
However, contrary to popular belief, the invention of Bitcoin by Satoshi Nakamoto was not precisely an unprecedented construction. The quest for digital money began many years before the publication of the Bitcoin white paper, and Bitcoin is more accurately regarded as the culmination of decades of research and development. Satoshi brilliantly applied a few tweaks and baffled everything to design the Bitcoin network and its consensus protocol.
Bitcoin wonderfully come together digital signatures, proof of work, public key cryptography, hash functions, time stamps, block rewards, transaction fees, mining difficulty adjustment, Merkle Trees and the concept of a peer-to-peer network managed by independent nodes. This unique construction solved the problem of double spending and brought about the healthiest form of money ever created.
Each of these pieces was built on prior knowledge. The white paper cited eight of these earlier developments, alluding to how the pseudonymous inventor arrived at the demands of creating Bitcoin.
The pieces of the Bitcoin puzzle
The first reference is “b-money”, where Wei Dai explores how cooperation could be possible without governments and trusted entities.
“A community is defined by the cooperation of its participants, and effective cooperation requires a medium of exchange (money) and a means of enforcing contracts,” Dai wrote. “Traditionally, these services are provided by government or government sponsored institutions and only to legal persons. In this article, I describe a protocol by which these services can be provided to and by entities that cannot be found.
The next three references in the article all focus on time stamping, which is at the heart of how the Bitcoin network works and its orderly block history and essential to helping solve the problem of double spending. In addition, the timestamp proves the existence of data at a specific time.
The second benchmark is “Designing a secure time stamping service with minimum trust requirements” by H. Massias, XS Avila and J.-J. Quisquater. Again, an article that explores how to reduce trust requirements in systems.
“We define ‘digital timestamp’ as a digital certificate intended to ensure the existence of a generic digital document at a certain point in time,” the authors wrote. “There are two families of time stamping techniques: those that work with a trusted third party and those that rely on the concept of distributed trust. Relying party based techniques rely on the impartiality of the entity in charge of issuing time stamps. Distributed trust techniques consist of fabricating documents that are dated and signed by a large number of people in order to convince the auditors that we could not have corrupted them all.
“How to time stamp a digital document” is the third reference of the article, in which S. Haber and WS Stornetta propose a technique to make it impossible to backdate or anticipate a document. Bitcoin exploits the idea of linking hashed data to make it impossible to tamper with records without leaving telltale signs.
The two authors are again cited in the fourth reference, “Improving the Efficiency and Reliability of Digital Time Stamping”, in which they explore a way “to achieve an exponential increase in the advertising obtained for each time stamping event. , while reducing mandatory storage and computation. ” Merkle Trees is also at the heart of how Bitcoin stores transactional data in blocks and enables fast payment and block verification by validating nodes.
From the latest reference to Haber and Stornetta, Satoshi Nakamoto took advantage of “secure names for bit strings” to combine hash functions with Merkle Trees, allowing easier integrity checking.
Adam Back’s “Hashcash – Denial of Service Countermeasure” is cited by Satoshi and was used to implement Bitcoin’s Proof of Work (PoW) system – the heart of the Bitcoin consensus model and responsible for enabling BTC to be mined in a decentralized and free market manner. PoW also allows for the lack of human coordination for recording transactions and the lack of confidence to reach consensus. Simply put, without PoW there would be no Bitcoin.
RC Merkle’s “Protocols for Public Key Cryptosystems” explores public key distribution schemes and protocols for digital signatures, which he says are “an ideal method of delivering authenticated messages from a central source which must be confirmed by many different recipients “.
Digital signatures allow Bitcoin users to prove ownership of a transaction result and spend it under a pseudonym while allowing peers to quickly verify the validity of these claims. Bitcoin currently uses ECDSA and allows users to not reveal their identity (private keys) when interacting with the protocol. Bitcoin’s next major upgrade will add Schnorr signatures, further enhancing Bitcoin’s capabilities in this regard.
Last but not least, “An Introduction to Probability Theory and Its Applications” by William Feller was cited by Satoshi. Pseudonymous Bitcoin Creator Tapped On The Book Of Mathematics To Calculate The Likelihood An Attacker Could Successfully Compete With The Honest Chain – a central problem in the problem of double spending.