Bitcoin white paper turns 15 years old
The Bitcoin white paper was released on Oct. 31, 2008, and the cryptocurrency’s first block was mined on Jan. 3, 2009
WHYFRAME/Shutterstock modified by Blockworks
Fifteen years ago today, Satoshi Nakamoto — whose true identity remains a mystery — published their seminal white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System.”
Spanning just nine pages, this document offered up a blueprint that reimagined the way we perceive and transfer value in a digital age. It delved into the intricacies of cryptographic hashing, the architecture of blocks and the timing mechanisms that would be used to sustain them.
One of the white paper’s main innovations was its proposed proof-of-work system. While not Satoshi’s invention, its application in the context of a decentralized cryptocurrency was novel. Building upon ideas like Adam Back’s “Hashcash,” the author adapted the preexisting proof-of-work concept in order to address the double-spending problem. This ensured that every transaction on the network was verified through consensus, without relying on a central authority.
“Once the CPU effort has been expended to make it satisfy the proof-of-work, the block cannot be changed without redoing the work. As later blocks are chained after it, the work to change the block would include redoing all the blocks after it,” Nakamoto wrote in the whitepaper.
The CEO of Luxor, a firm that provides firmware for bitcoin mining machines and a hashrate derivatives trading platform, called what Nakamoto envisioned “magical.”
“The Bitcoin blockchain is somewhat magical in that it grows stronger as time goes on…which is somewhat against the laws of the universe. As things get older, generally they degrade and break down,” Nick Hansen told Blockworks.
“I think Satoshi probably envisioned that,” Hansen added.
At present, the bitcoin blockchain has surpassed 522 GB in size, essentially making any attempt at tampering with the distributed ledger a fool’s errand.
Hansen said he thinks Nakamoto likely also saw a future where institutions and large companies would be the ones dominating the effort to mine bitcoin, especially as the network grew larger and the computational need grew with it.
“Since Satoshi early on did design this to be a global payment rail, I think it would be foolish to assume that the mining portion of that ecosystem [wouldn’t] probably need to be done by massive institutional grade companies,” Hansen said. “I would say that yes, he probably figured that bitcoin mining would become a massive commodity business.”
Nakamoto drew a parallel to gold mining in the “incentive” section of the whitepaper, which detailed how bitcoins would initially circulate. Essentially, “mining” refers to the process of verifying transactions on the network.
“The steady addition of a constant of [sic] amount of new coins is analogous to gold miners expending resources to add gold to circulation. In our case, it is CPU time and electricity that is expended,” Nakamoto wrote.
What Nakamoto may or may not have envisioned was how bitcoin could be used to aid those suffering under the reign of dictators.
The Human Rights Foundation (HRF), a nonprofit championing human rights, views bitcoin as a pivotal weapon against despotism. Its decentralized nature allows those under autocratic regimes to transact outside the confines of government-controlled fiat currency.
Further championing this cause, the HRF’s Bitcoin Development Fund extends grants to innovators working to improve the bitcoin network. One notable beneficiary was the developer behind lnp2pBot, an initiative that bolsters privacy by enabling users to exchange dollars for bitcoin without the need for KYC (know your customer) identification.
The HRF’s chief strategy officer Alex Gladstein told Blockworks he’s “much more bullish” on bitcoin these days because of how much easier it is to use it since 2013, when the HRF first started working with bitcoin.
“The apps are better, they have better UX,” Gladstein said. “We have the Lightning Network, which we didn’t have then, so we don’t have to wait around 10 minutes for confirmation and you can send bitcoin (BTC) instantly. We have much better privacy tools than we used to have back then, which is really important for activists.”
Gladstein also noted Nakamoto’s curious choice to release the bitcoin whitepaper on Oct. 31. That was the same date Martin Luther nailed his revolutionary 95 theses to a church’s door in protest of Catholicism over 500 years ago.
Luther’s arguments against the church had the first whisperings of the concept of separating religion from the state, whereas the bitcoin white paper argued for the separation of money from the state, Gladstein said.
Another explanation for the publication date could be that Halloween is quite befitting for someone who later became the most famous masked anonymous figure in all of crypto.
Or, the specific date of Oct. 31 may not have been chosen for any particular reason other than perhaps being timed right around some of the worst declines in the traditional stock market in history.
Either way, Nakamoto’s thoughts, motives and intentions will likely be fertile ground for speculation for years to come.
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