What was the Bitcoin whitepaper?
UTXOHub · Bitcoin's history
It was a nine-page paper, “Bitcoin: A Peer-to-Peer Electronic Cash System”, that Satoshi Nakamoto shared on 31 October 2008. It described a way to send digital money straight from one person to another, with no bank or other trusted company in the middle.
“A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”
The problem it set out to solve
Digital money is only data, and data can be copied. So someone could try to spend the same coin twice, which is called double-spending. Online, the usual fix was a trusted middleman, such as a bank, that checks every payment. The paper says that system “works well enough for most transactions”, but it means payments can be reversed, disputes cost money and small payments aren't worth making. It offered “a solution to the double-spending problem using a peer-to-peer network”: ordinary computers, called nodesNodeA computer running Bitcoin software that checks every payment and block against the rules, and passes them on to others., that talk to each other directly.
How the paper said it would work
Each payment carries a digital signatureDigital signature (ECDSA, Schnorr)Proof, made with a private key, that the owner approved a payment. Anyone can check it; practical forgery is infeasible under current assumptions., a code that only the coin's owner can make. New payments are sent to every node. Nodes gather them into a blockBlockA batch of transactions added to Bitcoin's shared record, about every 10 minutes on average. and race to solve a puzzle called proof of work, which takes a lot of computing to solve but is quick to check. The winner shares its block, and each block includes a hash, a short fingerprint, of the block before it. To change an old payment, a cheat would have to redo that block and every block after it, faster than everyone else. Whoever makes a block, now called a minerMinerA computer, or a pool of them, that bundles waiting transactions into blocks and secures the network, paid in new bitcoin and fees., gets new coins, “since there is no central authority to issue them”. The paper never uses the word “blockchain”. It speaks of “the longest chain”.
Who read it first
Satoshi sent it at 18:10 UTC on 31 October 2008 to the Cryptography Mailing List, an email group about codes and computer security. The email began: “I've been working on a new electronic cash system that's fully peer-to-peer, with no trusted third party.” Most replies were doubtful. James A. Donald wrote that “it does not seem to scale to the required size”. John Levine said that “Bad guys routinely control zombie farms of 100,000 machines or more”, enough to outpace honest computers, and called this “the killer”. Ray Dillinger wrote: “People will not hold assets in this highly-inflationary currency if they can help it.” Hal Finney, who had worked on the encryption program PGP, replied: “Bitcoin seems to be a very promising idea.”
What happened next
Satoshi answered questions for weeks. In one reply he wrote: “The receiver of a payment must wait an hour or so before believing that it's valid.” On 8 January 2009 he announced the first release of the Bitcoin software on the same list. Finney wrote in 2013 that he “grabbed it right away” and “was the recipient of the first bitcoin transaction, when Satoshi sent ten coins to me as a test”. That payment of 10 BTC is in block 170, the first block to hold anything besides a miner's reward, timestamped 03:30:25 UTC on 12 January 2009.
Why it still matters
Bitcoin still works as the paper described. Each of the latest blocks names the one before it, and miners still compete with proof of work to add the next. Section 11 worked out why waiting helps: an attacker with a tenth of the network's computing power has less than a 0.1% chance of undoing a payment once five blocks have been added after it. WalletsWalletAn app or device that holds your keys and makes, signs and sends payments. The bitcoin itself stays on the blockchain. now count the block holding a payment, and each block after it, as a confirmationConfirmationA payment has one confirmation once it's in a block, and one more for each block after. The more it has, the harder it is to reverse.. The copy on bitcoin.org today was saved in March 2009, and its summary differs by a few words from the one in Satoshi's email.
References
- bitcoin.org, “Bitcoin: A Peer-to-Peer Electronic Cash System”, 31 October 2008.
- Satoshi Nakamoto Institute, “Bitcoin P2P e-cash paper (email to the Cryptography Mailing List)”, 31 October 2008.
- Satoshi Nakamoto Institute, “Bitcoin P2P e-cash paper: the full thread of replies”, 31 October 2008.
- Satoshi Nakamoto Institute, “Bitcoin v0.1 released”, 8 January 2009.
- Bitcoin Forum, “Bitcoin and me (Hal Finney)”, 19 March 2013.