This Crypto Was Created 11 Years Before Bitcoin, Here’s Why It Failed - YouTube

Bitcoin is generally thought to be the og cryptocurrency having been created way back

in 2009.

But, this is actually not true.

In fact, a computer scientist named Nick Szabo designed a cryptocurrency based on blockchain

technology 11 years earlier in 1998.

If you take a closer look at this cryptocurrency, you’ll see that it’s hauntingly similar

to Bitcoin.

It even has a very similar name having been called Bit Gold.

Considering these glaring similarities, many have speculated that Nick Szabo is actually

the anonymous creator of Bitcoin.

So, here’s the story of Bit Gold and some evidence that Nick Szabo may actually be the

creator of Bitcoin.

Nick Szabo was a highly educated man having earned both a computer science degree and

a law degree Aside from this, Nick was fairly well known within the academic community for

his research into digital contracts and digital currency.

He even received an honorary professorship from Universidad Francisco Marroquin for his

research.

Considering Nick’s background, it’s not surprising that he eventually tried to create

his own digital currency.

Similar to Bitcoin, Nick wanted to create a form a digital currency that was completely

decentralized.

You see, Nick was not impressed whatsoever by the traditional financial system as it

is not only inefficient but also quite vulnerable.

One of Nick’s main arguments against the traditional financial system is that there

is too much trust involved in just a handful of institutions.

Take loans for instance.

First, people depositing money into the bank have to trust that the bank will lend and

invest their money safely.

Next, when a bank is giving out a loan, they have to trust that the borrowers credit score

is accurately calculated.

Finally, the lender also has to trust that the borrower will pay back the loan.

Even if all of this goes smoothly, everyone has to trust that the currency itself has

value.

The significant amount of trust in a handful of institutions makes the entire system much

easier to manipulate.

For instance, a credit score institution could lie about a person’s credit score or a bank

could give out risky loans like during the subprime mortgage crisis or the federal reserve

could just start printing ludicrous amounts of money.

With a decentralized system, however, a single person or entity having too much power is

far less likely.

Nick’s proposal to accomplish this was leveraging the proof of work model.

Nick suggested that this model could be setup through a peer to peer network called a Byzantine

Fault Tolerant or BFT.

His plan consisted of individuals around the world using computing power to solve cryptographic

puzzles.

The first individual to solve the puzzle would end up validating a set of transactions and

they would receive a small amount of bit gold for their contribution.

This entire process is called the proof of work model and it’s one way to verify cryptocurrency

transactions.

For those of you who are familiar with bitcoin mining, this entire description likely sounded

eerily similar.

That’s because the proof of work model is used to this day to mine Bitcoin and Ethereum.

Most cryptocurrencies are switching over to a proof of stake model as it’s a much more

energy efficient method of verification.

But the simple fact that Bitcoin is still using the proof of work model shows how far

ahead Nick was thinking.

Despite this though, Nick would run into a major obstacle with Bit Gold which was the

threat of double spending.

As the name suggests, double spending is the threat that an individual could spend the

same digital currency twice.

For instance, a person could use some Bit Gold to buy some bread at a grocery store.

The person coud then turn around and replicate the code behind the Bit Gold that he just

spent and then spend the replicated Bit Gold to buy a taco at a restaurant.

This issue could easily be fixed by establishing a central authority that confirmed the validity

of each transaction, but that would be counterintuitive as the currency would no longer be decentralized.

Bitcoin would eventually fix this issue by leveraging block confirmations.

Block confirmations consist of simply writing each transaction onto the blockchain.

The more blocks that are mined and added to the blockchain, the more difficult it becomes

reverse a previously completed transaction and double spend.

Double spending wasn’t the only obstacle Nick faced though.

Bit Gold’s reliance on a Byzantine Fault Tolerant made the system vulnerable to Sybil

attacks.

A Sybil attack is simply when a user creates a boatload of fake accounts or profiles to

manipulate a network.

It’s kind of like the bots in the comment section that try to convince you that joining

Mary Jane’s whatsapp group made them a millionaire.

Anyway, in terms of a blockchain network, a Sybil attack is when a single user tries

to run multiple nodes on the blockchain in order to influence other nodes and prevent

data from being added to the network.

Bitcoin actually never really solved this issue, they just made it extremely expensive

to conduct a sybil attack.

A person’s influnce within the Bitcoin universe is limited by how much computing power they

have.

So, a person can’t just go out a create a bunch of nodes for free.

They would have to go out and buy a bunch of computing power.

If an individual or group is able to take control of 50% or more of a blockchain network’s

hash rate, then they could go ahead and carry out a 51% attack on the crypto.

Many smaller cryptos are extremely susceptible to this sort of attack and it’s actually

rather common.

Bitcoin could technically still be 51% attacked as well, but it would likely have to conducted

by someone like China as such an operation would likely cost tens of billions.

Anyway, Nick wasn’t able to fully solve the double spending problem at the time and

he knew that Sybil and 51% attacks were serious threats.

So, he would never end up releasing Bit Gold to the public.

But, Bit Gold isn’t Nick’s only contribution to the crypto space.

Nick’s other known contribution to the space is smart contracts.

Smart contracts are a way to enforce the terms of a contract through the blockchain network

and a code.

Generally, whenever a financial agreement is made, there is some sort of overseeing

authority.

For instance, with banking, the government oversees a bank’s activities.

The government sets minimum reserve limits and they insure credible financial institutions.

This is supposed to give depositors peace of mind and some sense of security.

In a decentralized system though, there is no overseeing authority.

Nick’s solution to this conundrum is making blockchain technology the overseeing authority.

With smart contracts, terms of a financial contract will be translated into code and

computers will ensure that the agreed upon terms are carried out.

A simple example of a potential usecase of a smart contract is life insurance.

When a life insurance policy is signed, the terms of the contract will be coded into the

blockchain.

After this, computers will automatically charge the policy holder the specified amount every

month.

And, when the policy holder dies and a death certificate is provided, the computer will

release the payment to the beneficiaries.

So, Bit Gold and smart contracts are the two primary known contributions from Nick.

But, the question remains, is Bitcoin an unrecognized contribution from Nick?

Well, there’s actually a decent amount of circumstantial evidence that suggests this

starting with of course Nick’s background.

Whoever created Bitcoin has to be extremely forward looking as they created Bitcoin way

back in 2009.

Given that Nick proposed smart contracts in 1997 and Bit Gold in 1998, he was definitely

capable of creating Bitcoin in 2009.

Bitcoin’s code also often praised for being extremely well developed meaning that Bitcoin

was either developed by several professionals or it took years to develop.

Maybe it took Nick 11 years to perfect Bitgold and turn it into Bitcoin.

The similarities between the name Bitgold and Bitcoin itself suggest that they may be

related.

What’s even more interesting though is the similarities between Nick’s name and the

alias name of Bitcoin’s quote on quote Japanese founder Satoshi Nakamoto.

This means that his initials are SN from a western perspective, but Japan actually follows

the Eastern name order where the last name is placed first when writing initials.

This means that Satoshi’s initials are actually NS. Satoshi even confirmed that these were

indeed his initials in an email he sent to Hal Finney.

In this email, Satoshi describes how his bitcoin address happened to start with his initials.

If we take a look at the respective bitcoin address, we’ll see that his intitals are

indeed NS.

If you haven’t noticed yet, that’s the same as Nick Szabo.

Not only are the initials the same, but the names even sound similar.

The first syllable of Nakamoto is Nak which is very similar to Nick.

Also, the first part of Satoshi is Sato which is very similar to Szabo.

Another notable coincidence is Satoshi’s birthday which is on April 5, 1975.

The significance of this date is that gold ownership was banned in the US on April 5,

1933 and it was removed in 1975.

So, the birthday is kind of a combination of the two dates.

But what’s interesting though is that Nick’s birthday is also on April 5.

That’s definitely quite a coincidence.

Moving on, we even have evidence of what seems like Nick covering up his tracks.

In 2005, Nick made a blog post that described the merits of Bit Gold and how an unforgeable

chain could be used to increase security.

At the top of the blog post though, you’ll see that the date of publication is December

27, 2008.

But this is actually not true, Nick actually made this post in 2005.

The URL still even says 2005.

So, why did Nick go back and change the date?

Well, maybe he changed the date in order to cover up the fact that he basically outlined

the entirety of bitcoin 3 years before Satoshi outlined the same things in 2008.

Something else that’s super suspicious is that Nick became extremely quite after Bitcoin

came out.

Before the release of Bitcoin, Nick generally made a blog post every other week.

After Bitcoin came out though, his posting dwindled to just a couple per year.

Perhaps, the most convincing piece of evidence though is a major Freudian Slip.

A Freudian slip is an unintentional error that’s reveals a person’s subconscious

thoughts.

In an interview with Tim Ferriss in 2017, Nick Szabo would accidentally say that he

designed bitcoin and then promptly correct it to Bit Gold.

Despite this correction though, Nick would continue to talk about Bitcoin instead of

Bit gold and he would even use the word “we”.

At the end of the day, Nick Szabo is a brilliant computer scientist who was developing digital

currencies and block chain technology way back in the 1990s.

His first known attempt at a cryptocurrency was with Bit Gold.

The official story is that he wasn’t able to solve the security risks and so the project

failed.

But did Bit Gold really fail?

Or did it just evolve into the most popular cryptocurrency in the world?

Let me know in the comments down below.

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