To carry on the story of early cryptocurrencies, another, very intresting example of cryptocurrency prototype is Bit Gold created by a an with a hungarian sounding name Nicholas Szabo, a computer scientist, legal scholar and cryptographer ( He graduated with Juris Doctor degree from George Washington University Law School. He also holds an honorary professorship at the Universidad Francisco Marroquín).
His concept of digital money has a lot of common with the most famous cryptocurrency, namely – Bitcoin.
It was based on the decentralized network, and to proces and secure transactions Bit Gold (found in 1998 – a decade before Bitcoin) combined elements of cryptography and mining to accomplish decentralization, including time-stamped blocks that are stored in a title registry and are generated using proof-of-work (PoW) strings - a user must solve a cryptographic puzzle using computing power, and then all solved puzzles are sent through a Byzantine Fault Tolerant peer-to-peer network and finally assigned to the public key of the puzzle solver.
And alike Bitcoin Blockchain, all details relating to the transaction were stored in a title registry, a chain that links the most recent puzzle’s solution to the outcome of the following one, thereby validating blocks of transactions.
However, there are some diffrences between that two cryptocurrencies , for example mining difficulty approach: unlike the rising over time difficulty in Bitcoin case, the Bit Gold difficulty would be varrying all the time (fluctuate between easier and harder).
Another difference (what actually appears to be similiartity) is that Bit Gold was designed as rather a reserve currency to back another form of digital currency, not as a mean of payment – wchich Bitcoin was supposed to be…. but, in my opinion Bitcoin becames kind of reserve for other cryptos, and their prices are stritcly depended on BTC capitalization.
Szabo’s concept was to avoid reliance on centralized currency distributors and authorities, and Bit Gold was invented to reflect the properties of real gold, thereby enabling users to eliminate the middleman.Unfortunatelly, like other early cryptcurrency attempts, was ultimately unsuccessful.
B-Money
From the same University background (George Washington University) comes another coputer scientist - Wei Dai.
elaborated an "anonymous, distributed electronic cash system" called B-money (also in 1998).
It was based on two different protocols, including one which required a broadcast channel that was both synchronous and unjammable (not comparable).
In payment system, digital pseudonyms would be used to transfer currency through a decentralized network, and it included a means for contract enforcement in-network without using a third party.
In this case, the project also didn’t gained enough attention to archieve success, however many of its solutions appeard in Bitcoins whitepaper a decade later.
During searching sources for theese articles, I found out an intresting, common factor, wchich connects most of early cryptocurrency invertors … most of them were associated with Extropians and Cypherpunks movements, and I think it will be fine source of the future articles.
Anyway, I hope you enjoyed this one,
Have a good day, bye.
