Genesis Archives: Wei Dai, B-Money and the first Bitcoin draft

Genesis Archives: Wei Dai, B-Money and the first Bitcoin draft

They say that the great physicist Isaac Newton discovered the law of universal gravitation thanks to the apple that fell on his head. They also argue that the periodic table of chemical elements appeared to Dmitry Mendeleev in a dream. True, this is or beautiful legends – no longer important, since these discoveries have forever changed the world.

However, it is unlikely that anyone else, without appropriate knowledge and the necessary inductive abilities, could see in the fall of a simple apple the existence of a certain gravitational force that fundamentally changed the science and understanding of many processes.

The idea of ​​a decentralized electronic monetary system was born in the head of Satoshi Nakamoto. It is likely that the creation of a banking transfer of a bank transfer on weekends prompted him to create something similar, as Newton’s idea of ​​the world order changed the so-falling apple.

Nevertheless, it would be very stupid to assume that Bitcoin just dreamed of him. Nakamoto, as a person or group of people with deep knowledge of C ++ and cryptographic algorithms, mentioned in White Paper the projects of Dr. Adam Back Hashcash and B-Money Wei giving.

In the first, the Proof-OF-Work algorithm, originally created to combat spam in emails, and in the second, the nodal model of the network for distributed storage of transactions data and the use of cryptographic signatures for sending money.

So, Satoshi used existing concepts to realize his vision, eliminating some weaknesses that the creators could not make them.

It is unlikely that anyone else, without aspiration and necessary knowledge, would have seen a kind of embryo of the evolution of money in these failed projects. It was Satoshi who became those who made the correct conclusions from the fall of the “cryptographic apple”.

FORKLOG offers to your attention the translation of the article by Aaron Van Virdum, published in Bitcoin Magazine and dedicated to how cryptographer Wei Dai created the first prototype of bitcoin.

All cipher-pants are valued by privacy: this is the fundamental principle of the movement of cryptographers, academicians, developers and activists who became participants in the electronic mailing of the same name in the 1990s. But, unlike Wei giving, few have embodied this ideal in life. Once the New York Times called him “focused on privacy by a computer developer”. However, about a man who, 20 years ago, created an electronic monetary system that was surprisingly similar to Bitcoin, is still known very little.

The absence of any information about the vei-giving person is due to his work and ideas that he promoted. Give is a talented cryptographer who created and still controls the library of cryptographic algorithms Crypto ++ based++. He is also an active participant in discussions about artificial intelligence, ethics, epistemology and other philosophical things at the Less Wrong forum. His beliefs were highly appreciated by the famous researcher in the field of artificial intelligence, Elizer Yudkovsky, co -founder of Machine Intelligence Research Institute (Miri), previously known as the Institute of Singolarity.

Interest in philosophy and politics is quite understandable. Back in the 1990s, the young bachelor of computer sciences from the University of Washington was carried away by the works of Timothy Mai, one of the founding fathers of the movement of ciphyron. Let it be inspired by the cryptoanarchist ideas that May preached; This new ideology, popular in the ranks of cipher enctities, was based on the conviction that cryptography and program code can ensure the safety of economic and political freedoms much better than any state system.

“I am just fascinated by the cryptoanarchy of Timothy May, – wrote in 1998 – Unlike targeted attitudes of traditional anarchist communities, the government is not temporarily destroyed in cryptoanarchy, but is prohibited forever, since it becomes absolutely unnecessary. This is a community where the threat of violence is reduced, because violence is simply impossible – participants cannot be tied to real names or geographical location ”.

By the mid-1990s, let me discuss many topics within the framework of the electronic newsletter of ciphylards, including digital reputation systems, games theory, privacy and anonymity of electronic monetary systems. Moreover, let me make several proposals for consideration: trusted temporary seals, encrypted TCP tunneling, a safe file exchange system and others. Cipher -Panny admitted that let me make a significant contribution to the common cause, but then they did not even know, he or a woman, since they did not know anything about his personality.

But I give real fame the idea, which he stated in November 1998, immediately after graduating from the university.

“Effective cooperation needs a means of exchanging [money] and the method of ensuring the execution of contracts, – then explained then. – The protocol I proposed will allow anonymous entities to cooperate more efficiently without a threat of tracking, by providing the very means of exchange and method to ensure the execution of contracts. I hope this is an important step for the implementation of the ideas of cryptoanarchy in practice “.

The protocol was called “B-Money”.


Traditional digital monetary systems use a centralized register to track existing balances. Central Bank, commercial banks, VISA and other suppliers of payment services control the database in which property rights are entered.

According to giving and cryptoanarchists, the problem in this context is the state control over financial flows through regulation, and the system participants should almost always disclose personal information.

“The purpose of creating B-Money was the introduction of online economics working exclusively on voluntary conditions … who cannot be taxed or regulated through the threat of force of force”, He explained.

For this reason, let me have developed an alternative solution, or rather, as many as two solutions.

The mechanism of the first decision suggested that all participants should store copies of the register of transactions instead of a single centralized organization. As soon as the next transaction would be made, the participants had to update their registers. Moreover, instead of real names, Dai suggested using open keys. With the help of such a decentralized approach, the likelihood was excluded that any unified organization could block transactions. In this case, users received a sufficient level of anonymity.

I propose to consider the system on a simple example-imagine that Bob and Alice are b-money users. Each of them has been assigned an open key – Alice – “a”, Bob – “B”. Each of them has a private key. As indicated in the registers stored by all participants in the network, both Alice and Bob have three units of B-Money.

If Bob sells Alice goods for two units of B-Money, then he must send her his open key. Suppose Alice really wants to buy a product and creates a transaction in the form of a message: “2 b-money from a to b”. By signing this message using her private key, Alice sends him and a cryptographic signature to all network participants.

The signed message proves to all users that the legal owner of the open key “A” wants to send 2 units of the B-Money owner “B”. Thus, the network participants update their registers, assigning Alice 1 unit B-Money, and Bob-5. At the same time, they do not know whether Alice and Bob are really controlling their keys.

If the decision seems familiar, then this is not surprising: 10 years later, Satoshi Nakamoto uses this concept in Bitcoin.

B-Money 2.0

Let me consider the first version of his proposal impractical, since it suggested the “simultaneous and synchronous use of the message transmission channel”.

In other words, he did not solve the problem of re -expenditure. Alice could simultaneously send 2 units of B-Money Bob (“B”) and Victoria (“C”), transmitting a message about the transaction to different parts of the network. Both Bob and Victoria will sell the goods to Alice, but only after they learn that only half of the participants were verified by their balance sheet.

Therefore, let me immediately proposed the second version.

In this version, not every network participant was stored with a copy of the registry. Instead, new concepts were introduced: regular users and servers. Moreover, only the servers, which are the nodes of the network, kept copies of the register. To check whether a transaction was successfully carried out, Bob and Victoria would have to turn to an accidental sequence of servers. In case of conflict, sellers would simply refuse to transfer to Alice the goods.

Let me not specify whether everyone can launch the server, but added that “each server is obliged to make a standard deposit to a special account that would be used for fines or rewards in case of proof of unfair behavior”. Servers were also required to periodically publish and cryptographically certify databases on the balance of participants.

“Each user must make sure that his balance sheet is displayed correctly and that the total amount of all balance sheets does not exceed the existing amount of money. This will not allow servers, even in case of conspiracy of all nodes, constantly and without costs increase emission. “, – wrote give.

If this seems familiar, then this is also not surprising: the second version of B-Money is somewhat reminiscent of what today we know how the Proof-Of-Stake algorithm.

At the same time, let me introduce the early concept of smart contracts. This type of contract was combined by Proof-OF-Stake and the arbitration system, within the framework of which the parties to the contract and the referee were to make deposits to a special account. It is noteworthy, however, these contracts did not provide for a dispute resolution system, in the case of which the server could make different changes to their registers, without reaching a consensus on the network.

(It was assumed that potential fines for unfair behavior will exceed the possible benefit of network sabotage).

Monetary policy

The most significant difference between B-Money and Bitcoin was a monetary policy.

The process of emission of bitcoins is extremely simple, at first the network produced 50 BTC for each unit, now this amount has decreased to 12.5 BTC and will continue to decline until the emission of bitcoins will approach 21 million after several hundred years. Is such a monetary policy of ideal – a subject of fierce disputes, but one thing is clear: at the moment it does not provide a stable cost of a coin.

Give Wei believed that it was stable cost that is the most important factor. So, the cost of B-Money was attached to the theoretical consumer basket. For example, 100 b-money is the price of a basket. Thus, let me seek to ensure the stable cost of B-Money, at least in relation to the basket, the price of which would remain unchanged-100 b-money.

For the issue of new coins in the B-Money network, users had to determine the cost of the consumer basket regarding the cost of computer calculations (Proof-OF-WORK). If the cost of the basket is $ 80 in a specific period of time, then this price should correspond to the cost of calculations for generating coins. If in 10 years the basket will cost $ 120, then the cost of calculations will increase to $ 120, and the number of coins will remain unchanged.

Using this indicator, the first user who demonstrated the correct computing combination would receive 100 B-Money units in servers registers. But only the desire to use B-Money could be a sufficient motive for computer calculations, which tied inflation to the growth of the economy B-Money.

In the additional application, Wei Dai also emphasized that the emission of coins can occur through auction. All users (first version) or server (second version) should determine the optimal increase in emission. Suppose everyone agreed on 500 units of B-Money, after which an auction would be carried out to determine who will perform enough computing operations to create the specified number of coins.


B-Money concept has never been implemented. It could not be implemented, since the “B-Money mechanism was not entirely practical,” admitted on the Lesswrong forum several years ago. Moreover, he did not expect a widespread adoption of the concept even in the case of implementation.

“I think that B-Money can act as a mechanism for ensuring money transfers or fulfilling contracts for those who cannot or do not want to use the alternatives that the state offers”, – He wrote to the participants in the newsletter.

It is noteworthy that some problems of B-Money are still not resolved or not accurately indicated. Probably the most important problem was the proposed consensus algorithm. Now we know that the concept of Proof-Of-Stake has some weaknesses that let me not have foreseen: for example, it is not entirely clear how to establish the fact of unfair behavior. And this is not given the smaller nuances-a lack of confidentiality due to monitoring of funds and potential centralization of emission/mining. Some of these problems have not been resolved on the Bitcoin network to this day.

Give, who worked in Terrasciences and Microsoft after the B-Money proposal, did not work on solving these problems.

“I did not continue to work on the mechanism, because by the time I finished writing the concept of B-Money, I was a little disappointed in the cryptoanarchy. I did not foresee that such a system can attract so much attention outside the circle of avid cipher -players “, – He wrote on Lesswrong.

Nevertheless, the proposal of giving did not sink into oblivion: B-Money documentation was the first link to the White Paper Satoshi Nakamoto. It is worth noting that, despite the obvious similarity of the mechanisms of B-Money and Bitcoin, it is far from the fact that it was Wei dai who inspired Satoshi to create a digital currency. Let me be convinced that the creator of Bitcoin did not borrow the idea, but realized everything completely independently.

Shortly before the publication of White Paper Bitcoin, Dr. Adam Back introduced Satoshi with the works of Wei Daya; The latter later became one of the few with whom the creator of Bitcoin personally contacted the publication. But then let me not answer the email, although he regrets it now. He called into question the mechanism of the emission of coins in the Bitcoin network.

“I would say that Bitcoin failed in the context of monetary policy, since it caused a high volatility of value, which has entrusted users too much risks or forcing them to resort to expensive hedge. Due to monetary policy and volatility, the price of Bitcoin cannot be scaled. Having captured a niche of cryptocurrencies, Bitcoin can destroy the concept of cryptocurrencies of the future that can grow to any scale “, – emphasized give to Lesswrong.

He added that this is probably his fault, since he ignored Satoshi’s message.

“Maybe then I could convince him to abandon the idea of ​​a limited emission”, He suggested.

Recall that earlier Forklog published a translation of the article by Aaron Van Virdum about the project of Adam Back Hashcash.

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