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Hashcash And The Origins Of Bitcoin

Adam Back Hashcash

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In this article, we explore hashcash and the origins of bitcoin and follow the history of peer to peer cash.

As Bitcoiners, we understand the transformative effects of new technologies. Implicitly, we regard Bitcoin as a single technology, unleashed upon the world bringing individual sovereignty to billions; a truly sound money kick-starting societal thriving.

In truth, Satoshi’s innovation was to combine different existing technologies and in doing so, solve the inherent double-spend challenge of a decentralized network.

Some of these technologies were relatively new and some had been in existence for many years. In particular, Satoshi took the Proof of Work framework Adam Back had developed and saw how it could be applied in a different use case; a truly decentralized medium of exchange.

In 1997, Adam Back created HashCash to prevent email spam, an increasing problem even in these early Internet years. Back realized the core of the issue; emailing only required minimal packets being sent to a server, whether an innocent or a spammer/remailer, it was essentially free. So why not increase the cost of entry to dis-incentivize spammers? The system needed evidence of effort expended in the digital context of sending an email. The solution was Proof of Work, a concept now integral to Bitcoin.

Proof of Work

Although the notion of Proof of Work was first defined by cryptographers Moni Naor and Cynthia Dwork, it appears Adam Back developed the idea independently for HashCash. The concept, as described, requires some evidence that work has been performed; a cost incurred. In information technology, this is done via a difficult computational task or puzzle. Necessarily the puzzle needs to be:

  •         Easy to define (find me one thing amongst many others)
  •         Difficult or time-consuming to solve (there are many other things to eliminate)
  •         Easy/Fast to verify (I can verify quickly this is the correct one)

The applications for Proof of Work were varied in these early days. At the simplest level, Hashcash turns email metadata into random numbers. Adam Back proposed a simple implementation that would use a hashing algorithm (SHA-1), to generate a defined output, (easily verifiable), using an input that would require several attempts, (difficulty). This concept of multiple attempts at hashing to generate a set output, was ultimately adapted by Satoshi when designing Bitcoin.

The Bitcoin Whitepaper only cites two individuals. The first was Scott Stornetta, a physicist and early blockchain developer. The second was Adam Back for HashCash. Although Back was not involved in the development of Bitcoin, it is believed Satoshi emailed him in 2009 asking if the PoW function of HashCash could be scaled. Clearly Bitcoin was less a bolt from the blue than laterally thinking producing a different use case for an existing innovation.

If I have seen further, it is by standing on the shoulders of giants

Isaac Newton

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