The Foundation for Peer to Peer Alternatives
Bitcoin open source implementation of P2P currency
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:
Download Bitcoin v0.1 at http://www.bitcoin.org
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.
Satoshi Nakamoto
http://www.bitcoin.org
Download Bitcoin v0.1 at http://www.bitcoin.org
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.
Satoshi Nakamoto
http://www.bitcoin.org
Views: 838724
Replies to This Discussion
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Permalink Reply by Russ Nelson on
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No, nothing like LETS at all. LETS is book entry for one, and for another the total amount of currency is always zero. When you issue a credit to someone else because they've done something for you, you receive a debit. The trouble with a LETS is that you can walk away from an account which is in debit. That functions to inflate the currency -- more people have credits who want something than there are people to do or sel something for the credits.
LETS was invented by somebody who doesn't understand money, and promulgated by more people who don't understand money.
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Permalink Reply by Michel Bauwens on
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Dear Satoshi,
Could you propose a text for our regular p2p blog, with eventual responses to the main questions here? Our regular blog has a lot more readers (about 10x) than our Ning community blog,
Michel
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I am not Dorian Nakamoto.
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.... or as RAH says ... "Poor bastard..."
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Permalink Reply by Kevin Parcell on
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I am not Satoshi Nakamoto
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Permalink Reply by Dan Roseman on
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This just became the most interesting story of the year. I hope they never find you, Satoshi!
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I know!
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Permalink Reply by Haans Thrice the Great on
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Confirmed.
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Thank you for putting this into the world. It was needed. Hopefully it will help drive the spread of a decentralized, open-source society. Were you acquainted with J Orlin Grabbe by any chance?
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Permalink Reply by Josef Davies-Coates on
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@Satoshi
This post has caused quite a stir!
Someone has suggested ( https://twitter.com/couttsphotog/status/441872742497804289 ) you could post your public PGP keys here to 'prove' that this is the 'real' you.
Are you able to do that? :)
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I think the poor man just wants to be left alone. The fire that was in him when he created bitcoin is not there now. Whether that fire just burned out or was extinguished by outside forces, we may never know, but the end result is the same. It's best for everyone if we just leave him be.
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