Before starting with today’s topic of Bitcoin Predecessors, we take a look back on the last session where we discussed about the Bitcoin ecosystem and how the bookkeeping nodes work in tandem in the background.
Today’s topic in Bitcoin Predecessors include
- Digicash
- b-money
- Hashcash
Bitcoin Predecessors- Digicash
It is hard to overstate the impact that David Chaum had on the movement towards electronic cash, by which he meant a privacy-preserving digital asset that could settle financial obligations. Cyberpersons described this concept in 1983 in a paper entitled ‘Blind signatures for untraceable payments’ in the journal Advances in Cryptology Proceedings as a part of the Bitcoin Predecessors. He wanted a bank to be able to create digitally signed digital lumps of cash for their customers. The customers could spend the digital cash at shops, who would then redeem the digital cash with the bank.
When the merchant redeemed the digital cash, the bank would see that the digital cash was good, but it did not know which of its customers the digital cash had originally been assigned to. The individual transactions were therefore anonymous as far as the bank was concerned. Digicash was an Amsterdam-based company incorporated to commercialize this technology. As a Bitcoin Predecessors, Digicash filed for bankruptcy in 1998, unable to secure a deal to keep it afloat.
Bitcoin Predecessors- b-money
b-money as a part of the Bitcoin Predecessors would operate on an untraceable network where senders and receivers would be identified only by digital pseudonyms (i.e., public keys). Every message would be signed by its sender and encrypted to its receiver. Transactions would be broadcast to a network of servers that would keep track of account balances and update them when they received signed transaction messages. Money creation would be agreed by the participants in a periodic auction.
Bitcoin Predecessors- Hashcash
In 1992, Cynthia Dwork and Moni Naor described a technique for reducing spam (junk email) in their paper on Bitcoin Predecessors naming it, ‘Pricing via Processing or Combatting Junk Mail,’ by creating a hoop that email senders would have to jump through before sending emails. Email senders would have to attach a kind of proof or receipt to their outbound emails demonstrating that they had incurred a very small ‘cost’. Recipients would reject inbound emails without these receipts. The ‘cost’ wasn’t a payment to a third party, but it would be incurred as ‘work’ in the form of repeated calculations that had to be made, to ensure an email would be accepted.
So the receipt would be a ‘proof’ that repeated calculations or ‘work’ had been done, leading to the phrase ‘proof-of-work’. In 1997, Adam Back proposed a similar idea 113 and described a ‘partial hash collision-based postage scheme’ which he named ‘Hashcash’. Bitcoin mining uses this concept of forcing someone to do some work and proving they have done it, before allowing them access to a resource.
In our next tutorial session on Bitcoin Predecessors, we look further into the other types of digital currency that were in effect apart from the ones discussed above.
Suggested Topic
Bitcoin Ecosystem and its various components that plays its parts
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