What is Bitcoin? Part 1: Origins

Bitcoin has come a long way in a very short amount of time. In this essay we’ll dive into the inspirations, pre-Bitcoin innovations, and origins of Bitcoin.

The Bitcoin whitepaper (https://bitcoin.org/bitcoin.pdf) was published October 31st, 2008 under the pseudonym Satoshi Nakamoto to gauge interest and request feedback in an experimental digital currency. Even those who didn’t understand it’s vision were amazed by the technological innovation required to make it work. On January 9th, 2009 the Bitcoin Network launched, and has been growing and evolving ever since.

So Bitcoin was created in 2009, right? Nope! The spirit and pre-technology of Bitcoin began decades before the whitepaper was published. 

Cypherpunks

In the 1990s and 2000s there was a small email list consisting of coders who recognized that the internet had an untapped and unique ability to send and receive information, for the masses, while simultaneously offering privacy and pseudonymity to individuals. The “Cypherpunk” movement, as it was later defined, aimed to limit the ability of governments to collect data on their citizens, and increase personal privacy and pseudonymity on the internet. 

The cypherpunks recognized how powerful the internet would become and realized that someday it would become a key battleground for human freedom. These revolutionaries believed encryption to be a powerful and necessary tool to accomplish this goal.

Encryption is defined as the conversion of something to code or symbols so that its contents cannot be understood if intercepted. Only the sender and receiver can read the message - even if it is hacked or stolen.

Encryption + Internet = scaled dissemination of information while maintaining privacy of the senders and receivers. This confluence of values had never been seen before, or even thought possible. 

Below is a monetary encryption example in practice:

Here are a select few Cypherpunks and their projects / contributions - many of which used some form of encryption:

  • Jacob Appelbaum: Tor
  • David Chaum: DigiCash
  • Julian Assange: WikiLeaks
  • Adam Back: Hashcash and Blockstream
  • Bram Cohen: BitTorrent
  • Hal Finney: PGP 2.0 and Reusable Proof of Work
  • Zooko Wilcox-O’Hearn: DigiCash
  • Philip Zimmermann: PGP 1.0
  • Tim Hudson: SSLeay (precursor to OpenSSL)
  • Paul Kocher: SSL 3.0

Precursors to Bitcoin

Some will assert that Bitcoin is a flawed and outdated technology, or that it is only a V1 cryptocurrency. This can’t be further from the truth. Bitcoin is the product of dozens of papers, many failed projects, and countless hours of research into everything from encryption to game theory - all from some of the greatest privacy and programming philosophers...ever. The creator(s) didn’t get lucky - they coded into existence an alien technology by standing on the shoulders of those who came before them.

Here are just a few (out of many) of their projects and contributions:

Hashcash (1997) - Dr. Adam Back

  • Proof of Work system to limit email spam
  • SHA-I hash of the header

B-Money (1998) - Wei Dai

  • Public keys identify pseudonyms
  • Broadcast solution to computational problem
  • Arbitrator and fine schedule
  • Broadcasted subset account servers with bail

BitGold (2001-2005) - Nick Szabo

  • Public challenge string of bits
  • Client puzzle functions
  • Securely timestamped
  • Distributed property title registry

Satoshi Nakamoto

Who is Satoshi Nakamoto?! That might be the question of the century when it’s all said and done. Satoshi Nakamoto is the pseudonym used by the author and creator of Bitcoin. He/She/They didn’t want to be known for a few reasons, and it might be the greatest strategic gift they gave to Bitcoin.

Satoshi appeared on a Cypherpunk forum and sent the group a message about a project he was working on. 

Satoshi published this document on Bitcoin.org on October 31st, 2008. The timing was intentional, but had nothing to do with Halloween. It was the anniversary of Martin Luther nailing his 95 Theses on the church door, and a message of revolution to the strongest institution of that time - the Catholic Church. Martin Luther did not like that the church was profiting off the selling of eternal salvation (in the form of ‘indulgences’) - something that poor people could not afford. Satoshi considered the corruption of government and Wall Street to be a modern day retelling of this story with the Bitcoin whitepaper serving as his 95 Theses.

Hal Finney - a brilliant coder in his own right - responded saying that he was very interested and would like to help. The rest, as they say, is history.

So, why is it important that Satoshi Nakamoto operated under a pseudonym?

  1. Satoshi wrote the Bitcoin Constitution (code and whitepaper), but what is built on top of it and how Bitcoin is used, is up to the people.
  2. All humans will eventually disappoint you. Satoshi removed that inevitability by remaining pseudonymous. 
  • “If you make yourself more than just a man... if you devote yourself to an ideal, and if they can't stop you, then you become something else entirely.” – RA's al-Ghul. (Yes, I just used a quote from Batman)
  1. Governments have no one to prosecute, harass, or subpoena.
  2. There is no leader or strongest voice. Changes and direction are decided by consensus of nodes, developers, and miners - not by one person. This adds to the decentralization nature of Bitcoin.
  3. It protects them from violence, threats, and theft.

Several people have come forward claiming to be Satoshi Nakamoto (which is the least Cypherpunk thing...ever), but they have all been found to be imposters chasing money and fame. Many find it unlikely the real person(s) behind the pseudonym of Satoshi Nakamoto will ever come forward...expecting the myth to live on and continue to be one of the greatest modern day mysteries.

There is a man named Dorian Satoshi Nakamoto, but he has denied vociferously that he authored the whitepaper or created Bitcoin, and there is significant evidence that he is telling the truth. The interesting part of this story? Dorian Satoshi Nakamoto lived only a few blocks away from notorious Cypherpunk and early Bitcoin adopter Hal Finney…

The real takeaway is that WHO created Bitcoin isn’t as important as WHAT created Bitcoin. The conditions of governance and surveillance inspired the Cypherpunk movement. Central money printing, market manipulation, and crony capitalism made obvious the need for re-envisioned hard assets that would thrive in a modern world. Innovative technology and the advent of the internet made it possible to solve all these problems simultaneously, and spark a revolution that seeks to alter how we view privacy, technology, and freedom - all from the comfort of your home.

Bitcoin has grown and evolved to be so much greater than any one person’s goals, abilities, or vision - even the mythical Satoshi. In other words: we are all Satoshi Nakamoto, and that was always the plan.