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Bitcoin is not even "v1," it is just an attempt by cryptoanarchists to create a currency without any central authority. Chaum, Okamoto, and many other research

Bitcoin is not even "v1," it is just an attempt by cryptoanarchists to create a currency without any central authority. Chaum, Okamoto, and many other researchers published a large volume of work on digital cash, creating systems that supported various notions of secure and anonymous electronic payments. Unlike Bitcoin, the security of many of these designs can be proved by reductions to hard problems, much like the security of public-key cryptosystems like ElGamal. In the typical "hack it out and pay no attention to previous work" style of the Bitcoin community, none of that research was cited or even hinted at in the original Bitcoin paper. The fact that the article presents this as a choice between something like Bitcoin and something like Paypal is telling. The reason Chaum's digital cash startup failed is complicated, but it boils down to this: digital cash is poorly understood, banks have few compelling reasons to deploy it (their existing fraud mitigation measures keep them well within the realm of profitability), and the US government continues to work against the deployment of good cryptography.

kiba 14y ago
The approach of Satoshi Nakamoto is not the way typical cryptographers would create cryptocurrencies. See gwern's article Bitcoin is Worse Is Better http://www.gwern.net/Bitcoin%20is%20Worse%20is%20Better http://www.gwern.net/Bitcoin%20is%20Worse%20is%20Better Satoshi's genius is the ability to combine several well known technologies and figure out the right kind of tradeoffs that would make bitcoin works. Yes, bitcoin sucks in many way such as not being able to do anonymous trade offline, being forced to store a blockchain, needing enough computation power to counter evil miners, needing the social cooperation of miners and users, and so on. But you have to admit, it works.
nullc 14y ago
Chaum's system was centralized. A chaum token bank may be blinded but is still a great big single central point of failure and control— they can still inflate the currency— they can still selectively deny access. The centralization created a huge operating risk and would make any such effort untrustworthy just from the perspective of political exposure. The whole point of Bitcoin (http://p2pfoundation.ning.com/forum/topics/bitcoin-open-source http://p2pfoundation.ning.com/forum/topics/bitcoin-open-sour... was to build a zero trust decentralized system. Chaum's system provides some properties "perfectly" but they aren't the properties such a system needed to have in order to exist, much less be successful.
- betterunix 14y ago
  "A chaum token bank may be blinded but is still a great big single central point of failure and control...they can still selectively deny access." That is not really true when there is an offline transaction protocol; the bank can only deny access initially (e.g. the bank can refuse to let you open an account), but once you are in the system you can spend money or be paid without the bank's permission. It is also possible to create threshold systems where there is no single bank, so that there is no single point of failure. "Chaum's system provides some properties "perfectly" but they aren't the properties such a system needed to have in order to exist, much less be successful." I think protection against double spending is a pretty fundamental property for a digital cash system to be successful. People would not use Bitcoin if they did not believe that it protects them from double spending. My only real point in all of this is that Bitcoin does not provide that protection according to the standard used by cryptographers; in practice, nobody has pulled off a double spending attack yet, but everyone knows how to do it and it is not impractical by any stretch of the imagination.
jacquesm 14y ago
The reason Chaum's ecash failed was Chaum.

kiba 14y ago

The approach of Satoshi Nakamoto is not the way typical cryptographers would create cryptocurrencies. See gwern's article Bitcoin is Worse Is Better http://www.gwern.net/Bitcoin%20is%20Worse%20is%20Better http://www.gwern.net/Bitcoin%20is%20Worse%20is%20Better Satoshi's genius is the ability to combine several well known technologies and figure out the right kind of tradeoffs that would make bitcoin works. Yes, bitcoin sucks in many way such as not being able to do anonymous trade offline, being forced to store a blockchain, needing enough computation power to counter evil miners, needing the social cooperation of miners and users, and so on. But you have to admit, it works.

nullc 14y ago

Chaum's system was centralized. A chaum token bank may be blinded but is still a great big single central point of failure and control— they can still inflate the currency— they can still selectively deny access. The centralization created a huge operating risk and would make any such effort untrustworthy just from the perspective of political exposure. The whole point of Bitcoin (http://p2pfoundation.ning.com/forum/topics/bitcoin-open-source http://p2pfoundation.ning.com/forum/topics/bitcoin-open-sour... was to build a zero trust decentralized system. Chaum's system provides some properties "perfectly" but they aren't the properties such a system needed to have in order to exist, much less be successful.

betterunix 14y ago
"A chaum token bank may be blinded but is still a great big single central point of failure and control...they can still selectively deny access." That is not really true when there is an offline transaction protocol; the bank can only deny access initially (e.g. the bank can refuse to let you open an account), but once you are in the system you can spend money or be paid without the bank's permission. It is also possible to create threshold systems where there is no single bank, so that there is no single point of failure. "Chaum's system provides some properties "perfectly" but they aren't the properties such a system needed to have in order to exist, much less be successful." I think protection against double spending is a pretty fundamental property for a digital cash system to be successful. People would not use Bitcoin if they did not believe that it protects them from double spending. My only real point in all of this is that Bitcoin does not provide that protection according to the standard used by cryptographers; in practice, nobody has pulled off a double spending attack yet, but everyone knows how to do it and it is not impractical by any stretch of the imagination.

jacquesm 14y ago

The reason Chaum's ecash failed was Chaum.