On November 1, 2008, eleven years ago, Satoshi Nakamoto published on the Cryptography Mailing List a message announcing the publication of a document describing a new concept of peer-to-peer electronic money:
" I worked on a new fully peer-to-peer electronic payment system without a trusted third party. The document is available here: http://www.bitcoin.org/bitcoin.pdf.
Main characteristics :
The double expense is avoided thanks to a peer-to-peer network.
No central authority or other trusted third parties.
Participants may be anonymous.
Currency creation requires proof of Hashcash style work.
The proof of work generating the new currency also allows the network to avoid double spending.
Summary. A fully peer-to-peer electronic money system would make online payments directly from one individual to another without going through a financial institution. Digital signatures offer such a solution, but lose their interest when a trusted third party is required to prevent double payment. We propose a solution to this problem by using a peer-to-peer network. The network timestamps transactions using a hash function that translates them into a continuous chain of proofs of work (fingerprints), forming a record that can not be changed without re-performing the proof of work. The longest chain (fingerprints) serves not only as proof of the progress of the events observed, but also of proof that it comes from the largest grouping of computing power. As long as the majority of the computing power (CPU) is controlled by nodes that do not cooperate to attack the network, they will generate the longest string and surpass the attackers. The network itself only requires a reduced structure. The messages are broadcast at best, and the nodes can leave or join the network at will, accepting the longest proof of work as evidence of what happened during their absence.
The full document: http://www.bitcoin.org/bitcoin.pdf
Satoshi Nakamoto »
Sat, 01 Nov 2008 16:16:33 -0700
"I've been working on a new electronic cash system that's fully peer-to-peer, with no trusted third party.
The paper is available at: http://www.bitcoin.org/bitcoin.pdf
The main properties:
Double-spending is prevented with a peer-to-peer network.
No mint or other trusted parties.
Participants can be anonymous.
New coins are made from Hashcash style proof-of-work.
The proof-of-work for new coin generation also powers the network to prevent double-spending.
Bitcoin: A Peer-to-Peer Electronic Cash System
Abstract. A purely peer-to-peer version of electronic cash would be made to pay directly to a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, which is a record that can not be changed without proof-of-work. The longest chain of events is not proof of this, but it seems to be the largest pool of CPU power. As long as they have the most CPU power on the network, they can generate the longest chain and outpace any attackers. The network itself requires minimal structure. Posts are broadcasted on a best effort basis, and can not leave the network at will, accepting the longest proof-of-work as proof of what happened while they were gone.
Full paper at: http://www.bitcoin.org/bitcoin.pdf
Satoshi Nakamoto »
See also: Bitcoin explained by its inventor (translation of the Bitcoin white paper)