Bitsaga · Bitcoin history

Bitcoin's graveyard

The famous 40-year prehistory chart. Black branches are the ideas that survived. The red ones tried to become money, and died. Tap a red branch to read its death certificate.

survived died
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chart style after @danheld · Bitsaga
  1. 1974 TCP/IP
  2. 1976 New Directions in Cryptography
  3. 1978 RSA
  4. 1980 Merkle protocols
  5. 1983 Blind signatures
  6. 1985 Elliptic-curve cryptography
  7. 1988 Crypto-Anarchist Manifesto
  8. 1989 DigiCash (died 1998)
  9. 1991 PGP
  10. 1992 Cypherpunks founded
  11. 1993 A Cypherpunk's Manifesto
  12. 1996 e-gold (died 2008)
  13. 1996 NSA "How To Make a Mint"
  14. 1997 Hashcash
  15. 1997 Szabo: securing relationships
  16. 1998 b-money
  17. 1998 bit-gold
  18. 1998–2001 Beenz & Flooz (died 2001)
  19. 2001 BitTorrent
  20. 2001 Distributed hash tables
  21. 2004 Reusable Proof-of-Work
  22. 2006 Liberty Reserve (died 2013)
  23. 2008 Bitcoin

The morgue

Four death certificates

Certificate of deathReg. 01

DigiCash

David Chaum's ecash · blind signatures · the original

Bankrupt
Born1989
Died1998

The first digital cash to actually ship: mathematically private, untraceable for the person paying, and years ahead of anyone else.

Cause of death

Centralization

DigiCash was one company. Its cash only worked if banks and shops chose to run Chaum's software, and enough of them never did. The math was flawless; the single point of failure was the company holding it. In 1998 it filed for bankruptcy.

Why Bitcoin can't die this way

Bitcoin has no company to go bankrupt and asks no bank for permission. It runs on thousands of independent computers that never had to sign a single deal.

Certified by: DigiCash Chapter 11 filing, November 1998 [1]

Certificate of deathReg. 02

e-gold

Digital currency backed by real, allocated gold

Seized
Born1996
Died2008

Digital money backed by physical gold. At its peak it moved billions of dollars a year across millions of accounts, a full decade before Bitcoin existed. For a while, it worked.

Cause of death

A vault to raid

Because e-gold held real bullion and ran through a real corporation, there was something physical for a warrant to point at. It was indicted in 2007, and in 2008 its operators pleaded guilty to running an unlicensed money transmitter and to money laundering. The reserves and the company were the weakness.

Why Bitcoin can't die this way

Bitcoin holds no reserves and has no headquarters. There is no vault to seize, because the ledger itself is the asset and everyone keeps their own copy of it.

Certified by: U.S. Department of Justice [2]

Certificate of deathReg. 03

Beenz & Flooz

The dot-com "internet currencies"

Worthless
Born1998
Died2001

The web's first spending money. Both raised fortunes to become the currency of online shopping, backed by celebrity ads and serious venture capital.

Cause of death

No reason to hold it

These were company loyalty points dressed up as money. When the dot-com bubble burst, their partners and funding evaporated, and both collapsed within days of each other in late August 2001. Flooz's end was hastened by a fraud ring that had bought its currency with stolen credit cards, freezing its cash. Points backed by one company are only ever worth that company's next quarter.

Why Bitcoin can't die this way

Bitcoin's supply is fixed at 21 million and its value leans on no single issuer staying solvent. Nothing expires when a company folds, because there is no company behind it.

Certified by: contemporaneous reporting, 2001 [4]

Certificate of deathReg. 04

Liberty Reserve

Centralized borderless digital currency, Costa Rica

Convicted
Born2006
Died2013

A borderless digital currency with more than a million users worldwide, moving money instantly across every border. It looked, for a moment, unstoppable.

Cause of death

A founder to jail

Liberty Reserve had a man in charge. In 2013 the United States shut it down and arrested founder Arthur Budovsky, its sole owner and operator. He was later sentenced to 20 years in prison for laundering hundreds of millions of dollars. Take the operator's freedom, and the currency dies with him.

Why Bitcoin can't die this way

Bitcoin has no owner and no operator to arrest, and no company holding your coins. Satoshi Nakamoto wrote the code, launched it, and vanished. You cannot jail a name that stopped answering years ago.

Certified by: U.S. Department of Justice, S.D.N.Y. [3]

The footnote nobody reads

And the chart you just read flatters itself.

The clean line of ancestors handing Satoshi a baton is partly a story told afterwards. Satoshi's first move in 2008 was to email Adam Back, who pointed him toward Wei Dai's b-money. Satoshi replied that he hadn't been aware of it, then added the citation to a paper he had already written. Wei Dai himself later said Satoshi "didn't even read my article before reinventing the idea." The whitepaper cites just eight sources in total.

It wasn't a relay race. It was convergence, on top of a graveyard full of lessons about what gets you shut down.

The branch they left off

The pieces were on the shelf by 1998. They waited ten years for a reason.

By the late 1990s the building blocks already existed. Adam Back proposed hashcash, the proof-of-work scheme Bitcoin would later borrow, in 1997. Nick Szabo proposed bit-gold around 1998. The primitives sat on the shelf for a decade and still nobody launched a working currency. Satoshi did add one genuinely new piece in 2008, a way for strangers to agree on a single ledger with nobody in charge. But the thing that had been missing for ten years was not more cryptography. It was motive. The chart is titled "research, development and demand," yet it is almost all research. The demand is the part that actually explains the timing, and Satoshi wrote it straight into the code.

Bitcoin genesis block · 3 January 2009

The Times 03/Jan/2009 Chancellor on brink of second bailout for banks

You can't kill what you can't find.

Everyone had built digital money before. Every version had a company, a vault, a founder, or an issuer, and the state simply reached in and removed it. Satoshi's real invention was never the cryptography. It was assembling the first money with nothing to seize, no one to arrest, and no reason to trust anyone. The state can still lean on the exchanges around it, but not on the ledger itself. That is why it is still standing while the rest of the tree is a graveyard. That is the whole point.

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Sources

Every death on this page is a matter of public record. Where possible these link to the primary source: the court, the prosecutor, or the filing itself.

  1. DigiCash Inc. filed for Chapter 11 bankruptcy in November 1998. David Chaum on the fatal chicken-and-egg problem, in Forbes, "Requiem for a Bright Idea" (1999); insider account mirrored at cryptome.org.
  2. U.S. Department of Justice, press release 08-635: e-gold and its three principal directors pleaded guilty on 21 July 2008 to money laundering and running an illegal money transmitting business (the indictment had been returned in 2007): Digital Currency Business E-Gold Pleads Guilty (DOJ, 2008).
  3. U.S. Department of Justice, S.D.N.Y.: Liberty Reserve founder Arthur Budovsky, its sole owner and operator, sentenced to 20 years in prison; Liberty Reserve was shut down in May 2013: DOJ press release (2016). (The separate $122M forfeiture money judgment comes from the court's forfeiture order, not this release.)
  4. Beenz and Flooz both collapsed in late August 2001. Flooz's cash crunch after a credit-card fraud ring: InternetNews (Aug 2001); background: Flooz.com, Beenz.com.
  5. The whitepaper's eight references: bitcoin.org/bitcoin.pdf. Satoshi's August 2008 emails with Adam Back (authenticated through UK court records in COPA v. Wright) and Wei Dai's own account are archived at the Satoshi Nakamoto Institute and Bitcoin Wiki: Wei Dai.
  6. The headline is embedded verbatim in the coinbase of Bitcoin's genesis block (block 0), mined 3 January 2009: Bitcoin Wiki: Genesis block.
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