The Bitcoin White Paper Turns 12 Today
Today marks the Bitcoin white paper's 12th birthday: on October 31st of 2008, Satoshi Nakamoto published to the Cryptography Mailing List the nine pages that made history. Since then, the world’s first peer-to-peer electronic cash system has come a long way.
Since Satoshi sent the first 50 Bitcoin transaction to Hal Finney in 2009, the network has grown exponentially, counting approximately 800,000 daily active addresses today. Bitcoin has demonstrated incredible resilience in regards to its network security: on October 10th, Bitcoin’s hash rate reached an all-time high of 157 exahashes per second.
During the last decade, a steadily expanding financial ecosystem has developed around Bitcoin, and especially in the last couple of years, legacy finance took notice of the pioneering cryptocurrency: institutional interest in Bitcoin has seen a spike this year as publicly traded companies have begun adopting Bitcoin as a reserve asset.
To celebrate the incredible growth of the Bitcoin ecosystem over the past twelve years, we have compiled a few facts surrounding the release of the Bitcoin white paper.
Bitcoin.org Was Registered a Month in Advance
Satoshi Nakamoto registered the bitcoin.org domain on August 18th, 2008, more than a month before the white paper was released. Satoshi used the domain to host the PDF version of the white paper, which he then shared to the Cryptography Mailing List.
The White Paper Release Saw Mixed Reactions
The white paper announcement itself was not a big deal - the audience on the Cryptography Mailing List was limited, and as such, it took two days before pseudonymous cryptographer James A. Donald became the first to react to Satoshi's post. Said comment was much less enthusiastic than what we're used to today:
We very, very much need such a system, but the way I understand your proposal, it does not seem to scale to the required size.
In his response, Donald pointed out that in order to reject double spending attacks, each peer would need to have a database of most past transactions, and expressed doubt with regards to the execution of such a system in respect of bandwidth limitations.
Another early response came from Ray Dillinger, who stated his wariness of Bitcoin's inflation rate and, consequently, doubt over a potential market for the cryptocurrency, pointing to inherent annual inflation for Proof-of-Work assets due to the advancement of technology:
[...] in the case of bitcoins the inflation rate of 35% is almost guaranteed by the technology, there are no supporting mechanisms for taxation, and no legal-tender laws. People will not hold assets in this highly-inflationary currency if they can help it.
In fact, however, Satoshi added a line related to the progress of technology to the white paper, describing the reasoning behind Bitcoin's mining difficulty, which addresses this exact inflation rate:
To compensate for increasing hardware speed and varying interest in running nodes over time, the proof-of-work difficulty is determined by a moving average targeting an average number of blocks per hour. If they're generated too fast, the difficulty increases.
No Money Politics, Please
In a November 6th post to the Cryptography Mailing List, Satoshi responded to a message that he had mostly retracted, leaving only a single sentence: "You will not find a solution to political problems in cryptography."
The original author of the message as well as its full content are not known; it is believed that Satoshi may have copied the statement from a private conversation. This indicates, however, that it was of reasonable importance to Satoshi to share his response:
Yes, but we can win a major battle in the arms race and gain a new territory of freedom for several years. Governments are good at cutting off the heads of a centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own.
Following the post, an admin message was sent to the mailing list, titled "ADMIN: no money politics, please."
"A bunch of people seem anxious to branch the discussion of cryptographic cash protocols off into a discussion of the politics of money," the message read, then asking mailing list participants to refrain from "rabid libertarian" discussion.
Hal Finney Was Bitcoin's First Supporter
After Satoshi received several comments questioning the viability of the Bitcoin concept, the late Hal Finney was the first to express a vote of confidence in Bitcoin, a week after Satoshi published the white paper:
Bitcoin seems to be a very promising idea. I like the idea of basing security on the assumption that the CPU power of honest participants outweighs that of the attacker. It is a very modern notion that exploits the power of the long tail. When Wikipedia started I never thought it would work, but it has proven to be a great success for some of the same reasons.
Hal Finney later became a significant contributor to Bitcoin. One of his primary projects was bcflick, which used Trusted Computing in order to strengthen Bitcoin wallets. Finney further proposed the use of GLV endomorphism to increase the efficiency of Bitcoin signatures. As the BTC Times reported, the expiry of a patent related to the technology recently paved the way for the upgrade to be enabled in Bitcoin Core.
Satoshi Wrote the Code Before the Paper
While white papers have achieved some unfortunate notoriety following a flood of overpromising and underdelivering papers throughout 2017, in the case of Bitcoin, that wasn't nearly the case. When Hal Finney encouraged Satoshi to share a "more formal, text description of the system" as a "helpful next step," the Bitcoin creator revealed that he had, in fact, written the code prior to authoring the white paper:
I appreciate your questions. I actually did this kind of backwards. I had to write all the code before I could convince myself that I could solve every problem, then I wrote the paper. I think I will be able to release the code sooner than I could write a detailed spec. You're already right about most of your assumptions where you filled in the blanks.
12 years later, Bitcoin has far transcended the confinements of the Cryptography Mailing List and made its way into social media, mainstream news organizations, and the world's boardrooms. We can't wait to see where Bitcoin stands another 12 years from now.