Saturday, 16 November 2013

Could we have had Bitcoin 20 years ago?

I remarked the other day on #bitcoin that on a technical level there isn't really anything new about the parts which constitute Bitcoin. I think people misunderstood me a little, and thought I had made a straw man version of what I was trying to express. Maybe they read, "Bitcoin is totally lame and not new at all and Satoshi Nakamoto is just a Johnny-come-lately!" That was definitely not my intent.

What's truly new about Bitcoin is the synthesis of several technologies into a coherent whole. It reminds me of an episode of The Outer Limits, "Final Exam". The story alludes to how, sometimes, the world is just not ready for an idea, despite the availability of all the parts needed to make it happen. And then when it is time, suddenly the idea spontaneously realizes in multiple places independently. Perhaps 2009 was ripe for Bitcoin, while 1992 wasn't.

In 1992 we knew about hash-based proof-of-work systems. We'd considered using them to make email spam uneconomic. In the 1980s we had some ideas about how to achieve Byzantine fault tolerance. We knew of ways to do public-key cryptography well before then, with hints appearing as early as 1974. Elliptic curve cryptography was perhaps still a bit "too new" until fairly recently, but having short keys is a practical matter, and 512-bit RSA keys don't seem like they would've made a cryptocurrency impossible in 1992.

Someone on #bitcoin remarked that peer-to-peer networks are quite new, and in any case their application to payment systems. That's true, but I don't consider that truly central to making Bitcoin Bitcoin. Also, the Internet itself was a peer-to-peer system when it started (now maybe less so, being more heavily concentrated in big subnetworks). We also had Usenet, with news servers exchanging posts using a peer-to-peer protocol.

So yes, I'm still convinced that we could have had Bitcoin up to maybe 20 years ago, if Satoshi Nakamoto had happened to apply his/her/their mind to the problem of creating a decentralized cryptocurrency. The constituent technologies were available, if maybe a bit primitive, even awkward and inconvenient. But back then we were probably still happier with fiat currencies. We hadn't yet lost confidence in the concept as a whole, even if some local currencies did suffer a dramatic loss of confidence. We didn't have "too big to fail" yet, and we didn't have the US trying to print itself out of economic stagnation in the de-facto world currency, the US dollar.