The hosts discuss early electronic cash proposals, including B-Money and Arpow, and their influence on Bitcoin's design. They explore the challenges of preventing double spending, decentralized networks, and stable purchasing power. They also cover concepts like invalidation, issuance, remote attestation, and running the same software on multiple computers.
B-Money introduced the concept of consensus-based balance tracking and the idea of digital cash, foreshadowing aspects used in Bitcoin.
ARPow was a centralized cash system with transparent code, utilizing proof of work assignments and remote attestation, but its inflationary supply and centralized nature limited its adoption compared to Bitcoin.
Deep dives
Overview of the Podcast Episode
In this podcast episode, the hosts discuss two electronic cash proposals that predated Bitcoin: B-Money and ARPow. They explore the similarities and differences between these proposals and highlight the main ideas behind each. B-Money, proposed by Wei Dai, was a rough sketch of a digital cash system that aimed to prevent double spending by having participants keep track of the ledger. Although not implemented, B-Money introduced the concept of consensus-based balance tracking. ARPow, implemented by Hal Finney, was a centralized system with transparent code. Users could connect to the server, perform proof of work, and receive coins. Remote attestation was used to verify the code running on the server. The hosts also discuss how ARPow had an inflationary supply and why it did not gain much traction compared to Bitcoin.
B-Money: A Rough Sketch of a Digital Cash System
B-Money, proposed by Wei Dai, was an early digital cash system sketched out in a rough proposal. Similar to other proposals like BitGold, B-Money aimed to prevent double spending by having participants keep track of the ledger. B-Money introduced the idea of balance tracking through consensus, where everyone would maintain the state of the ledger. Although B-Money was not implemented and had unsolved problems, it foreshadowed aspects that are now used in Bitcoin, such as consensus-based balance tracking and the concept of digital cash.
ARPow: A Centralized Transparent Cash System
ARPow, implemented by Hal Finney, was a centralized cash system with transparent code. Users would connect to the server, receive a proof of work assignment, perform the proof of work, and receive coins in return. The server issued coins either for proof of work or in exchange for other valid coins. Remote attestation was used to assure users that the code running on the server was the free and open-source software. The inflationary supply and centralized nature of ARPow limited its adoption compared to Bitcoin, but it exemplified the idea of reusable proof of work and the use of transparent code.
Differences and Challenges
Although both B-Money and ARPow explored ideas related to digital cash, they had notable differences. B-Money was a rough sketch with unsolved problems, while ARPow had code and remote attestation for transparency. B-Money focused on balance tracking through consensus, while ARPow utilized proof of work assignments to issue coins. Both proposals faced challenges, such as the risk of shutdown for ARPow due to its centralized nature and the lack of economic incentive for users to adopt B-Money due to its inflationary supply. These challenges and distinctions likely contributed to the limited adoption of B-Money and ARPow compared to Bitcoin.
In this episode of Bitcoin, Explained, Aaron and Sjors discuss two more electronic cash projects that predate Bitcoin: Wei Dai’s b-money and Hal Finney’s RPOW. As detailed in Aaron’s new book, The Genesis Book, these systems introduced design elements that were later utilized by Satoshi Nakamoto. Aaron and Sjors explain what these elements are, and how the inspired Bitcoin’s design.
