The development of key industries has been driven in the past by pioneering technological innovations that characterize the society today.
The printing press led to the scientific Revolution, the discovery of electricity brought light into the world, radio waves changed the way information to the masses were transmitted, and the Internet gave us a new way to communicate and to interact.
Bitcoin has had in the last ten years, similar to disruptive and innovative in the financial world. The technology behind crypto-currencies, has since influenced a number of sectors of the world economy.
On 31. October is celebrated the 10-year anniversary of the publication of the Bitcoin Whitepaper, in which the functioning of the Bitcoin Protocol is described.
Bitcoin: An electronic Peer-to-Peer cash System, was published in November 2008 on a cryptography mailing list shortly after the work was published for the first time ever. It was written by Satoshi Nakamoto, the anonymous Creator of Bitcoin, could be either a single Person or a group of people.
The white paper presented a System, the power of Central authorities, such as banks and financial institutions, is superfluous and, therefore, transactions easier:
„What we need is an electronic payment system based on cryptographic Evidence instead of trust. This allows any two parties to trade directly with each other without using a trusted third party is needed.“
The Bitcoin Protocol could not have been developed without the foundations of the previous electronic systems. Because these have done pioneering work in decentralized Peer-to-Peer networks that work with cryptography.
One need look only to the reference list in the Bitcoin white paper, in order to identify the main influences that led to the development of the Protocol.
influences on the Bitcoin Protocol
The B-Money by Wei Dai, a Hashcash of Dr. Adam Back and work on cryptographic Hashing by Dr. Ralph Merkle has Long been seen as important influences on the Bitcoin Protocol.
You have to say, that these three influences are only a part of the extensive work on cryptography, time stamp, and consensus protocols, which have influenced the Bitcoin Protocol and its functioning.
timestamp
Arvind Narayanan, an assistant Professor of computer science at Princeton University, and Jeremy Clark have written an insightful summary of the various influences on Satoshi’s Bitcoin white paper.
Bitcoin is acting primarily as an electronic Ledger and transactions are chronologically recorded in blocks with digital time-stamping. The work of Stuart Haber and Scott Stornetta digital time stamp with the title „How to be a digital document marked with a time stamp“ of 1991 is mentioned in the Bitcoin white paper directly as the source.
The work of Haber, Stornetta, and Dave Bayer with the title „The efficiency and reliability of digital time stamping to improve“ was published two years later and is listed by Satoshi also as a source. Both Works focus mainly on the creation of time stamps for electronic documents with the help of cryptographic Hashes.
Satoshi took advantage of the data structure from the original work of Haber and Stornetta, so that the timestamp server Bitcoin uses the Hash of a transaction and the time stamp blocks. Then this is sent to the network.
The time stamp is a crucial aspect. This provides proof that the data before the Hash can be created. The time stamp of each block includes the previous timestamp in its Hash, in order to form a temporally linear chain of blocks.
B-Money
The B-Money by Wei Dai described a Protocol that allows the participants, contracts in an electronic System, to conclude and enforce, without tracing.
In the first Protocol of B-Money was provided, the participants in the system maintain a database of Account balances, providing an Overview of the owner of the money. The transactions are initiated by a public message to all participants and completed. Here, the respective account balances of the Participants are updated in a given transaction.
The second Protocol provided for a specific group of participants for the update of the account balances of all participants responsible.
it is Very simplified to consider the publication of transactions and update account balances by users of the network as a precursor of the nodes in the Bitcoin could be considered Protocol. This fact book about the ever-growing Blockchain.
Hashcash
Hashcash had a much stronger influence on the Bitcoin Protocol, because the crypto-currency forms the basis for the working of detection algorithm (PoW algorithm).
The famous cryptographer Dr. Adam Back, who now lives in Malta, has invented Hashcash in the year 1997. The PoW algorithm is used primarily as a tool for the prevention of Spam E-Mails, and Denial-of-Service attacks. The algorithm requires that a selected amount of work is computed before a Hash is created stamp. This evidence can then be used by the information receiver quickly checked.
Simply put, you must provide a sender a certain amount of computational work before it can send any message via a network. Spam E-Mails, and Denial-of-Service attacks are prevented by the fact that the sender would have to provide an enormous computing power to send a large number of messages to flood the resources of the recipient.
In the Bitcoin white paper refers to Satoshi directly to the Hashcash System of Baking as a source for the Bitcoin-PoW-algorithm.
„a distributed timestamp Server on a Peer-to-Peer Basis to implement, we need to have a PoW-System, similar to the Hashcash System by Adam Back, instead of a newspaper or Usenet Posts.“
Regardless of whether it was intended or not, created by Nakamoto developed PoW-System of a Mining economy, which is extremely competitive. The reward for the solution of the PoW algorithm and the activation of a new block is a certain amount of newly created BTC.
The work is evidence not only creates a system of incentives to keep the network Running, but also protects the network from attackers.
When a group of attackers would previously want to previous transactions in the Bitcoin Blockchain, or undo the change, she would have to perform the PoW of this specific unit again, and the same in all the blocks in the chain then do it. Even with current Hardware, the performance is theoretically impossible, unless the attacker is in control of enough computing power to have the honest nodes in the network to oversteer.
Merkle-trees
another important part of the Bitcoin Protocol was directly influenced by the work of Dr. Ralph Merkle, the Miterfindung of cryptography is attributed to public keys.
Merkle-signatures-and -trees were invented by Merkle and also named after him. Merkle-trees, pictogram trees containing leaves and with Hash signatures are provided, the transaction will contain data.
In its simplest Form, Merkle uses trees to organize your saved data, which were transmitted in a network, and to confirm.
As the following chart shows, the Merkle root is a Hash of all the Hashes of the transactions in a particular Block in the Blockchain. This Merkle root is included in the Block Header so that the node can check whether a particular transaction was accepted by the network, by downloading a Block Header and a Merkle tree.
put simply, the Merkle root is a single Hash that verifies the integrity of all transactions under it. This also means that a single transaction can be verified within this Merkle tree is also from the network, since the Merkle root contains the data from that particular Hash.
Satoshi’s genius – a combination of major components
With so many major influences, which play different roles in the creation of the Bitcoin whitepaper, it is difficult, the most important component of the Protocol to be filtered out.
Satoshi’s brilliance is that he used these different methods and technologies in order to create a functioning electronic payment system.
Cointelegraph spoke with a number of respected figures within the crypto – currency and Blockchain-Community, in order to make an impression of how the Bitcoin white paper in the area, as we know it today, has shaped.
Cypher punk and a software engineer, Jameson Lopp recalls his first encounter with Satoshi’s white paper, which had spoken to him on a practical level.
„It was about 6 years ago. I heard on various technical news sites of Bitcoin and thought to myself that it might not be a reason why he disappeared into the woodwork. As I read the white paper, it became clear to me that he has actually solved a fundamental computer science Problem. My interest in this project awakened.“
Lopp is also of the opinion, that one can view any particular previous project as the biggest influence on the functioning of the Bitcoin Protocol. It is the combination of these different methods that make Bitcoin so successful:
„There is, in my opinion, no particular part in this Puzzle, which is more important than the other. Nakamoto genius was not one of the individual components of Bitcoin, but the complex way they fit together, and the System thereby breathe life into.“
Emin Gün Sirer, assistant Professor of computer science at Cornell University, recalls his first encounter with the Bitcoin Whitepaper:
„I have read the white paper, for example in the year 2010 or so. This is not like the first kiss, the you forget. This clear Vision and this aggressive dream, to replace the Dollar, have fired at me.“
Similar to other important personalities Gün believes Sirer, that Satoshi’s ability to combine these various influences in a well-functioning electronic payment system, is what differentiates the Bitcoin white paper of previous projects:
„are The only sources. They played in the Definition of the Protocol, a role, but the most important contribution is the consensus Protocol, which is the longest/hardest Chain. While Satoshi’s was a standout, unique contribution.“
The Bitcoin white paper can be seen as an excellent Plan for today’s crypto-currencies, but the most influential predecessors have tried to fix certain defects, related to Bitcoin.
On the question of whether the white paper of Bitcoin is the most comprehensive, „fools first“ methodology for a Blockchain payment system, reflected Gün Sirer language. The Professor explained that projects such as Ethereum, technical innovation, want to offer in comparison to Satoshi’s original work:
„no way. Satoshi has been exceeded in every way. Ethereum has developed the Vision and smart contracts are developed.“
Vinny Lingham, Blockchain-entrepreneur and industry consultant, has commented on Bitcoin’s legacy to Cointelegraph.
Lingham, founder of the Bitcoin-based digital gift card platform Gyft, said he was initially skeptical of the cryptocurrency in its infancy, and I can hardly imagine that she would become a global currency.
That changed when he realized that Bitcoin was able to solve the problems they had with the company. These problems were related to fraud and chargebacks.
„The initial rise and fall of Bitcoin has reminded me directly of it, as the Internet died in the year 2000″“. Through the use of our infrastructure at Gyft, we were able to Bitcoin-users Bitcoin at over 50,000 physical locations with gift vouchers excerpt enable. You can’t say it in a different way: The results were extremely impressive. Gyft eventually sold to First Data for over $ 50 million (approximately 44 million euros). This exit has changed my life. I believe, indeed, that I owe all this Bitcoin triple.“
Lingham spoke about the various projects and technologies that have shaped the Bitcoin Whitepaper, and in the view of Lopp and Gün Sirer, Satoshi attribute the creation of a fully functioning digital money system:
„The Innovation of Satoshi Nakamoto was the fact that he thought all the non-thought-out projects that were about to end. Because they could not solve the Problem of digital money created. The preceding Works were at best and burgeoning thoughts and, independently, in error. Satoshi brought together in a brilliant way, everything. Ironically, the mindset that was in previous projects, prevalent seems, now, since Satoshi is gone, again, in the case of Bitcoin creep in. Whether this is good or bad remains to be seen.“
What to expect in the next 10 years in the case of Bitcoin?
We celebrate a decade since the Bitcoin idea in Satoshi Nakamoto Whitepaper arose. There is much we have to note, however, is now. As the history of Bitcoin shows that it was certainly not easy, to become what he is today. Also, the challenges that the crypto-currency has faced have shaped you in this regard.
The original Protocol, as it is in Nakamoto white paper set out, largely remained the same. But the technological progress, the emergence of Bitcoin are likely to specify the direction in which he will develop in the next ten years.
How Lopp to Cointelegraph declared, should Bitcoin be in the next decade, even more accessible and user-friendly. Developers and software engineers to develop various applications that improve the way we use Bitcoin and the Blockchain interact:
„I’m going to assume that the basic aspects of the Protocol will remain the same, but that the newly-developed implementations will look very different and the System is becoming technically more and more complex. But I also expect that the use will be less complicated, since we can now take the aspects of Bitcoin, which require expert knowledge. Just as the Internet has improved technology over the years, Mainstream Bitcoin knowledge-users, only little is known about how the underlying protocols work. You will simply follow the instructions in the applications that you use on your devices.“
Gün Sirer looks similar and thinks that it will give in the next decade, a series of innovations that will overtake the systems that we use today:
„In the next 10 years there will be Bitcoin is still around in its current Form, but this Form will only play a minor role. The actual systems that are using people to trade values and carry out contracts, to be quite different than today’s systems.“
Lingham has issued a slightly more cautious forecast for the future of Bitcoin. The fact that the focus is on ideological opinions about the technological solutions seem to bother him. He hope that the Community finds ways to make Bitcoin in the coming years.
„It is clear that decentralisation will play a role in the future. But the question is, how decentralized it all is then. It is clear that ideology has become more important as the technology itself when it comes to Bitcoin. I have my doubts as to how this ends. But I let myself be happy to disabuse.“
In terms of financial stability and future market prospects for the crypto-currency, it seems to go uphill. As Cointelegraph reported at the beginning of October 2018, the price volatility of Bitcoin, the lowest level in 17 months.
Apart from market speculation paved Satoshi Nakamoto Bitcoin Whitepaper, the way for crypto-currencies, the conventional financial systems and banks in question. For this reason, the 10. Birthday is a special one. And, no doubt, Bitcoin will be forever as the original crypto-currency is celebrated.