Adam Back takes us down memory lane.
It's time to take a trip down (Adam Back's) Memory Lane and reminisce on the many iterations of digital cash that came before Bitcoin and the importance of Proof of Work. Fair warning, this is a long thread.
- From 1997 when hashcash was release almost immediately multiple people made the connection to digital gold, and became fascinated with the prospect of using proof-of-work towards achieving deployable electronic cash using it,
— Adam Back (@adam3us) January 23, 2019
- there were many previous ideas explored Chaum (centralised), and Brands (also centralised double spend DB but offline p2p respendable in a way that worked better with tamper resistant smart-cards), Sander & TaSchma (no bank key, bulletin board based on ZPK set membership),
— Adam Back (@adam3us) January 23, 2019
- with new discussion of decentralised mined coins, this being cypherpunks there was zero discussion of should we, but immediate lets try to make it work and deploy it.
— Adam Back (@adam3us) January 23, 2019
- but the stumbling block was how to control inflation which was presumed to inflate at the rate of Moore's law
- a decentralised recipient decides for stamps (me) as used in hashcash stamps.
— Adam Back (@adam3us) January 23, 2019
- the idea of decentralised p2p network broadcast, for the double spend database was there (anonymous post),
- the relevance of Lamport's Byzantine Generals Problem to broadcast consensus (@nszabo4)
- The feedback loop of Bitcoin's mining process simplifies and automates with similar but more direct effect the creation of coins as bundles of variable scarcity stamps, where @NickSzabo4 had proposed a collectible market.
— Adam Back (@adam3us) January 23, 2019
- I can guarantee you if this internal feedback loop & indirectly market set difficulty (price driving hashrate) idea had been hit on, it would have been implemented
— Adam Back (@adam3us) January 23, 2019
- there were multiple ecash things implemented in this period, anonymous discussion participants and code authors
As you can see, the problem that plagued previous digital cash solutions was the ability to control the rate of inflation without the need for a central authority to step in. The solution, Proof of Work with a difficulty adjustment that reacts to the inflow and outflow of energy being expended to secure the network. The act of automating the difficulty adjustment every 2016 blocks is the crux of the beautiful feedback loop that is Bitcoin's incentive system.
Beautiful feedback loop. Higher price > rise in hashrate > network more secure > network more desirable > higher price...
— Marty Bent (@MartyBent) June 1, 2017
Without the ability to adjust the difficulty, assuming that Bitcoin had value and miners were joining the network, blocks would come in way too fast, expediting the issuance to the point where Bitcoin wouldn't be good as a money. Satoshi discovered the magic ingredient needed for a truly sovereign, distributed digital gold that cypherpunks had been pursuing for a while. So when someone tries to tell you that Bitcoin is the "Myspace of crypto", first, tell them to kindly be better, try harder and think more critically. Then send them to this issue of this rag and the thread Uncle Marty expanded on today.
Final thought...
Sort of want to learn how to play the piano. Seems like a great party trick.
Enjoy your weekend, freaks.
