“I’ve been working on a new electronic cash system that’s fully peer-to-peer, with no trusted third party. The paper is available at http://www.bitcoin.org/bitcoin.pdf”
– Satoshi Nakamoto, 2008
The Bitcoin white paper, to this day, stands as one of the most (if not the most) significant piece of literature in the cryptocurrency space. Providing a high-level overview – and something of a blueprint – for Bitcoin and its numerous forks, Satoshi’s 2008 document has undoubtedly cemented its place in history.
Just nine pages long and made up of 12 short sections, the white paper delivers a concise summary of the Bitcoin protocol, albeit in broad strokes: you won’t find any actual Bitcoin code or implementation details, but rather an introduction to various concepts – transactions, proof-of-work, incentives, etc.
In the following piece, we’ll take a dive into some of the things you may not know about the seminal paper.
1# Blockchain? What’s a Blockchain?
It’s strange that the word ‘blockchain’ is not mentioned once, considering that Bitcoin spawned a billion-dollar industry revolving around the technology. Whilst the data structure is one that we recognize as central to Bitcoin (i.e. a distributed, append-only ledger, using proof-of-work to extend the chain), Satoshi has never referenced it as such – not in the paper, and not in any of his posts over the next few years.
As can be seen in the above chart, ‘block’ and ‘chain’ are some of the most-used words. Their amalgamation in the form of the mighty ‘blockchain’ buzzword that dominates the space, however, is nowhere to be seen.
Also conspicuously absent is your top leader’s second favourite word: decentralization.
2# Digital Cash, or Digital Gold?
The title of the white paper – Bitcoin: A Peer-to-Peer Electronic Cash System – has been at the heart of Bitcoin’s most divisive schism. It was clear from the whitepaper that Satoshi had initially set out to create precisely that: a cheap, trust-minimised money that could easily be transmitted digitally. Whether his stance would have changed as it grew in popularity over the past decade, we’ll likely never know.
Those around in 2017 will no doubt remember the vociferous arguments around scalability (i.e. whether it should be done on chain, by increasing the block size, or off-chain, with payment channels). The ensuing split led to the creation of Bitcoin Cash, which, as the name may indicate, aims to remain true to the peer-to-peer cash vision. As regards Bitcoin, it is increasingly being understood not as a medium of exchange, but rather as a settlement layer for high-value transactions, and as a scarce asset akin to gold that should be held, rather than spent.
3# The Precursors
Bitcoin combines ideas and technologies that long precede it, many of which have emerged from cryptography or cypherpunk circles. Key figures that have influenced the design of the protocol are:
- Renowned computer engineer Wei Dai (who proposed a predecessor to Bitcoin in the form of b-money)
- Founder and CEO of Blockstream Adam Back (the creator of Hashcash, an early proof-of-work algorithm for combating spam)
- Legendary cryptographer Ralph Merkle (father of the Merkle tree)
- Physicists Scott Stornetta and Stuart Haber (pioneers of the idea of a distributed database of ‘linked timestamps’)
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Bitcoin is the undisputed king of cryptocurrencies, and hasn’t yet seen any real competition. While many subsequent white papers for other projects comprise of 50+ pages packed with marketing jargon, Satoshi’s stands out in its simple and compact presentation of a system that has the potential to radically disrupt the foundations of money.