Blockchain Before Bitcoin: A History

Blockchain Begins

The birth of blockchain is generally considered to be the release of Satoshi Nakamoto’s Bitcoin paper in 2008 and the subsequent release of the Bitcoin software in 2009. The invention of Bitcoin clearly was an important piece of work and provided ground-breaking advances in peer-to-peer computing. However, like many innovations, Bitcoin built on earlier work, which is often overlooked. Distributed computing did not start in 2008 and many concepts we now routinely use in blockchain technology are the result of much earlier research. In this upcoming series of articles, we will look at some of the building blocks that have made modern blockchain technology possible. Let’s start with the main idea of linking blocks of data cryptographically.

In 1991, Stuart Haber and W. Scott Stornetta invented the blockchain. Yes, 17 years before the release of the Bitcoin paper, the main idea behind cryptographically linking blocks in an append-only data structure was published in an academic paper. The work focused on timestamping documents, a popular use case for blockchain technology, even today. Many businesses use a public blockchain system to notarize documents. By storing hash values in a timestamped block on the blockchain, one can prove that a document existed at a certain time in a certain version. This has many applications, ranging from registering intellectual property rights to contract arbitration.

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Know your history. Image credit: Missmarettaphotography/Wikimedia Commons

Haber and Stornetta’s paper proposed calculating hash values of documents and saving them with a timestamp. The records are linked up in a data structure by including hashes of previous records’ certificates.

Apart from the use of hashes to verify the integrity of data, the timestamping protocol also makes use of private key signatures to signs submitted data. Does this sound familiar? Yes, it’s exactly how Bitcoin and subsequent blockchains sign transactions and append records to the chain.

Whilst Haber and Stornetta talk about a “timestamping server”, their solution also includes a form a distributed consensus. Data-submitters can ask other participants to verify and sign their request. As in Bitcoin, a number of signers would have to collude, in order to falsify the ledger.

Building on Existing Work

Whoever wrote the original Bitcoin paper did not “steal” this idea. In fact, Haber and Stornetta are cited three times in the Bitcoin paper. This indicates some knowledge of common academic practice of the author.

Building on existing knowledge is generally considered the best way to innovation. Satoshi Nakamoto was clearly a knowledgeable expert in his field, being aware of relevant previous work and building expertly upon it. Bitcoins adds an incentive layer and proof of work consensus to the blockchain data-structure. These additions have made the blockchain truly decentralized and have solved the double-spending problem, giving rise to cryptocurrencies.

However, if you compare Haber and Storneta’s work to some implementations of distributed ledgers that do not require cryptocurrencies for private enterprise blockchains, you will not find many conceptual differences.

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Dr. Stefan Beyer is editor-at-large at BlockTelegraph and a Blockchain consultant and smart contract auditor. He graduated from the University of Manchester in 2001 with a degree in Computer Science and obtained a Ph.D. in 2004 from the same university with the title “Dynamic Configuration of Embedded Operating Systems”. Since then he has worked in computer science research in distributed systems, fault tolerance, ubiquitous computing and cyber security. He is currently working as head of research and development for a medium-sized cyber security company in Spain.

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