Today’s question, an excellent by the way, was submitted by John of San Diego. John ask: is Bitcoin the Original Digital Money?
Namaste Yogis! Welcome to the Blockchain & AI Forum, where your blockchain and artificial intelligence technology questions are answered, mostly correct! Here no question is too mundane. As needed I answer your questions concerning important government regulations of blockchain, crypto, and AI. And, if that were not enough, as a bonus, occasionally a proverb or yoga fun fact is included at the conclusion of the article. All this for the low, low, low price of free!
John, you came to the right place. Sorry you Bitcoin maxis, Bitcoin is not the first digital money. Bitcoin is not the “OG” of digital money as they might say in the blockchain ‘hood’. In fact, Bitcoin wasn’t even the second, third, or fourth digital money. John, come with me and I’ll give you the rundown.
In the beginning (oh wait, that opening has been taken). Let’s start again. First, there was DigiCash. DigiCash was founded by David Chaum in 1989, a full 20 years before Bitcoin. DigiCash money was known as cyberbucks. (I like the name!) A hand full of banks tried Digicash, including Deutsche Bank (the largest German bank) but Digicash crashed. Perhaps Chaum was too far ahead of his time. Onto attempt number two.
E-Gold came into existence in 1996. E-Gold was backed by real units of precious metal. With E-Gold users could conduct instant transfers over the internet. Everything in E-Gold was denominated in gold, like the dollar was before President Nixon delinked the dollar from the gold standard in 1971. Why did he do that? Because the US didn’t have sufficient gold to back the dollar but thats a different story. E-Gold’s introduced micro-payments as its chief innovation. Unfortunately, underground types were using the system and the government shut down E-Gold in 2008. Ugh.
HashCash. We can thank Adam Back for creating HashCash in 1997. Mr. Back introduced the proof-of-work idea to HashCash. Bitcoin is based on proof-of-work. Back also proposed adding a fee or “postage” to emails to reduce spam. Terrific idea. Why it didn’t catch on is for a future post.
B-Money. In 1998 Wei Dai introduced B-Money. The consensus protocol was proof-of-work. Mr. Dai linked the creation of money with the computing power used to create it. B-Money push us forward by creating the notion of broadcasting transactions on the network to resolve disputes. On to Bit Gold.
Bit Gold. In 2005 Mr. Nick Szabo moved us closer to Bitcoin with the creation of Bit Gold. Mr. Szabo’s idea was to bring the scarcity of precious metals into the digital realm. Now that’s interesting. Szabo’s thesis was as follows: gold is difficult to mine and even more difficult to counterfeit; hence, why not take the value of gold and make it digital? Szabo did not follow-up and Bit Gold slowly died. Nick, why did you stop?
On Halloween, 2008 an anonymous person(s) name Satoshi Nakamoto published a whitepaper titled, “Bitcoin: A Peer-to-Peer Electronic Cash System” and on that day Bitcoin was born! No one knows Satoshi’s identify. We don’t know if Satoshi was one person or many. We don’t know if Satoshi is male or female. Satoshi clearly had supreme computer programming skills. Nakamoto also had strong opinions regarding economics and finance. Satoshi’s identify remains a mystery. Let’s not stir the pot by guessing the identity. As they say in Bolivia, “A quarrel is like buttermilk, the more you stir it, the sourer it grows.”
Until next time.
Yogi Nelson
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