Bitcoin Wasn't Built in a Day

Paying Homage to the Innovators Behind Bitcoin

This letter is inspired by a podcast episode that I listened to this week. It was actually a pretty emotional podcast because it overlapped between three heavy topics.

  1. The identity of Satoshi Nakamoto

  2. The contributions to cryptography, P2P Networking and Economics that led to the invention of Bitcoin

  3. The mental health of those within the Cypherpunk community

The episode told the story of Len Sassaman, an integral, yet lesser mentioned name in the narrative of Bitcoin. You see, most people think that Bitcoin was spontaneously invented in 2009. The real story is that Bitcoin is a technology that was 3 decades in the making. Dozens of intelligent individuals dedicated their intellectual careers to developing the components that made up Bitcoin, not realizing that they would be combined in a genuinely creative and novel way.

I chose to write this letter because it is important to give credit to the figures outside of the name Satoshi Nakamoto.

The Three Parts of Bitcoin

Bitcoin is the product of combining three, previously unrelated fields of study. Economics, P2P Networking, and Cryptography. These three fields were combined in a way that produced a balanced set of incentives and rewards for all whom are involved. To build Bitcoin, Specific Knowledge1 was required in each of the domains.

The Economics

Satoshi learned through the failures of others. Most notably, a precursor to Bitcoin, MojoNation and MojoTokens2. These tokens were traded amongst the peers of MojoNation and were exchangeable for US Dollars. Not far into the life of MojoNation, the tokens became hyper-inflated. This is a detail that Satoshi no doubt paid attention to when designing the “tokenomics” of Bitcoin. The monetary policy of Bitcoin is to strictly print a finite amount of tokens (21 million over the course of 130 years) in order to prevent hyperinflation from ever being a possibility. This was not a sub-feature of Bitcoin, but rather an intentional and essential part of what makes Bitcoin what it is; Uninflateable and Totally Scarce.

The Cryptography

Bitcoin combines two aspects of cryptography. The first is (elliptic) public key cryptography3, and the other is a reusable proof of work (PoW)4 hashing algorithm.

Public Key Cryptography

The kind of public key cryptography that Bitcoin is based on was discovered in 1985 by Victor Miller5 and Neal Koblitz6. While elliptic curve cryptography provided the encryption strength, its application in distributed systems, and cryptocurrency was provided by David Chaum7. In Chaum’s 1983 paper titled Blind Signatures for Digital Payments8, he laid the groundwork for designing systems that allowed for participants to pass around digital tokens, or “cryptocurrencies”.

Proof of Work

Proof of Work is perhaps the most commonly misunderstood aspect of Bitcoin, and arguably the most important. It is because of Proof of Work that Bitcoin is tolerant of bad actors within the system, as well as consistently on schedule with minting Bitcoin into circulation. Proof of Work was initially proposed, and later implemented by Adam Back5 in 1996. It was used in Adam’s own digital currency project Hashcash6. Hashcash was a precursor to Bitcoin in many ways as it demonstrated in a real-world application how a novel digital currency would behave in the public. Satoshi fine-tuned Adam’s Proof of Work, and used it as a core ingredient of Bitcoin.

P2P Networking

The last ingredient of Bitcoin is the ability for a fully decentralized network of computers to seamlessly communicate with one another, without trust.

A lot of people automatically dismiss e-currency as a lost cause because of all the companies that failed since the 1990s. I hope it's obvious it was only the centrally controlled nature of those systems that doomed them. I think this is the first time we're trying a decentralized, non-trust-based system.

— Satoshi Nakamoto, 2009

There are a number of precursor technologies that Bitcoin borrowed its P2P design from. A Remailer Network called Mixmaster9 allowed for the anonymous transfer of information. Many of the same concepts that went into remailers were incorporated directly into the design of Bitcoin. However, there was one aspect of remailers that created inherent flaws within the system. Remailers needed to be run altruistically, and thus, needed to be run out-of-pocket, and without a profit incentive. This would ultimately create the demand for a cryptocurrency that would allow for incentivized distributed security infrastructure.

The network ultimately communicates in the language of mathematical cryptographic proofs rather than english; a language that is subject to the manipulation of the user. If anyone wishes to participate in Bitcoin, they must speak in Bitcoin’s own terms. This is instrumental in understanding that trust is not required in order to run the network. It is infeasible to lie to the network, due to the strength of the computers securing the network through proof of work mining.

Len Sassaman, The Unsung Contributor to Bitcoin

Nearly all of the domains of knowledge that were incorporated into Bitcoin, were contributed to by Len Sassaman.

  • Len helped build TCP/IP, a foundational Internet Protocol essential to the modern internet, and thus Bitcoin

  • Len was an early contributor to PGP (Pretty Good Privacy), again, foundational to Bitcoin

  • Len worked alongside David Chaum developing applicable peer to peer networks

  • Len was present for the launch of BitTorrent in 2001, and recognized BitTorrent as a significant achievement in the cypherpunk movement

  • Len collaborated with Adam Back, Bram Cohen10, Hal Finney11, and David Chaum on various cryptographic, networking, and privacy related technologies

Regardless of whether or not Len is Satoshi, his contributions are directly related to the technologies that went into creating Bitcoin.

It All Came Together in 2009

All of the aforementioned ingredients came together in 2009 to form what we now know as Bitcoin. While some are adamant that Satoshi Nakamoto was more than one individual, there is ample evidence that Len Sassaman was Satoshi Nakamoto. There are few individuals on this planet that possessed the necessary background, motivation, professional experience, and skillsets required to build Bitcoin.

Len Sassaman died in 2011 after taking his own life. He struggled with physical, and mental illness which ultimately led him to end his own suffering. If nothing else, this post is to recognize the significant contributions of this computer scientist and cryptographer. While listening to the episode of this blogpost, I must admit that I had a strong emotional reaction to the story of Len. It was overwhelming to discover the vast contributions that Len made to the field of cryptography, privacy, and computer networks.

All The Best,

Keegan Francis