I've developed a new open source P2P e-cash system called Bitcoin. It's completely decentralized, with no central server or trusted parties, because everything is based on crypto proof instead of trust. Give it a try, or take a look at the screenshots and design paper:
The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.
A generation ago, multi-user time-sharing computer systems had a similar problem. Before strong encryption, users had to rely on password protection to secure their files, placing trust in the system administrator to keep their information private. Privacy could always be overridden by the admin based on his judgment call weighing the principle of privacy against other concerns, or at the behest of his superiors. Then strong encryption became available to the masses, and trust was no longer required. Data could be secured in a way that was physically impossible for others to access, no matter for what reason, no matter how good the excuse, no matter what.
It's time we had the same thing for money. With e-currency based on cryptographic proof, without the need to trust a third party middleman, money can be secure and transactions effortless.
One of the fundamental building blocks for such a system is digital signatures. A digital coin contains the public key of its owner. To transfer it, the owner signs the coin together with the public key of the next owner. Anyone can check the signatures to verify the chain of ownership. It works well to secure ownership, but leaves one big problem unsolved: double-spending. Any owner could try to re-spend an already spent coin by signing it again to another owner. The usual solution is for a trusted company with a central database to check for double-spending, but that just gets back to the trust model. In its central position, the company can override the users, and the fees needed to support the company make micropayments impractical.
Bitcoin's solution is to use a peer-to-peer network to check for double-spending. In a nutshell, the network works like a distributed timestamp server, stamping the first transaction to spend a coin. It takes advantage of the nature of information being easy to spread but hard to stifle. For details on how it works, see the design paper at http://www.bitcoin.org/bitcoin.pdf
The result is a distributed system with no single point of failure. Users hold the crypto keys to their own money and transact directly with each other, with the help of the P2P network to check for double-spending.
Dear Mr. Nakamoto, may I just add a special thank you for your contributions to the Bitcoin protocol of the Internet and the future of money and financial information sharing.
Your concept of "a distributed decentralized public ledger," single-handily solving several critical previously unsolved, decades old computer science puzzles, like the "proof of work" with consensus that secures the distributed network making trust a non-factor and allowing for decentralization, while handling the double spend issue, was ingenious.
And, because of its beautifully crafted p2p open source programmable platform creative new features, application programming interfaces (APIs), new Apps, and various new developments are the norm. Ongoing issues and unforeseen concerns can also be addressed by consensus, keeping Bitcoin a long-term viable protocol and marvel of distributed, shared technology that delivers on the liberatory and stateless promises that the internet held from the very beginning.
In my humble opinion, Bitcoin is an intellectually elegant and eloquent solution to two key social problems: it simply costs too much to move money as banks and 3rd party intermediaries have made billions in various fees, and central banks overall have done a terrible job with monetary policy, especially since fiat currencies abandoned any precious metal standard and turned into a purely debt based instrument.
Bitcoin is not only a system for securely and verifiably transferring bitcoin within its own secure payment system, it's a unit of measure with a public ledger that can be used to represent any number of financial instruments. Most importantly, it delivers on the dream of “disintermediation,” of cutting out the middleman and the associated costs for all sorts of transactions and "decentralization," moving out from under the control of tyrannical central banks and domineering oppressive governments. Bitcoin is purposeful and useful because it lets people do things they couldn't otherwise do before.
Thanks to you the world can quite possibly be a much better, freer, and financially abundant place.
Mar 10, 2014
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After 13 years of decentralized payment systems evolution we came where we are now, the NFT epoch. You may find NFT of this post here: https://opensea.io/assets/0x495f947276749ce646f68ac8c248420045cb7b5...
Dec 24, 2021