Bit gold, Nick Szabo's gold

Nick Szabo, a lawyer and computer scientist who passed through DigiCash, designs bit gold in the late 1990s and describes it publicly in 2005 on his blog Unenumerated. His starting point is economic: gold works as money because its scarcity depends on no trusted third party, but it is physically cumbersome to store and transport. Can one create a good that would have the scarcity of gold and the transmissibility of a bit?

The protocol chains proofs of work together: you start from a public string, compute a proof of work on it, the result is timestamped and published, and it serves as the starting point for the next puzzle. Titles of ownership are recorded in a distributed ledger kept by a quorum of servers. The kinship with the blockchain is obvious: each link depends on the previous one, and the entire history is public and verifiable.

Szabo is also the inventor of the smart contract concept (1996) and a theorist of the history of money (his essay "Shelling Out" is a reference). Bit gold was never implemented, in particular because the value of a proof of work there depended on the date of creation, which complicated fungibility, another problem Bitcoin will solve with its adjustable difficulty.

A curiosity that will fuel suspicion: the Bitcoin whitepaper cites b-money and Hashcash but does not cite bit gold, though it is the closest precursor. Some see this as clumsiness, others as a deliberate omission by an author who did not want to draw attention to himself. Szabo has always denied being Satoshi.

specialdollar — the name of this site — comes, incidentally, from that post. In its comments, in 2005, an anonymous user sketches out a currency: at birth, every human would receive "1 specialdollar" for their entire life, spendable on goods and services; a loaf of bread would cost, he writes, "0.00000648 specialdollar." Now that number has eight decimal places — exactly the precision Bitcoin will have, where the smallest unit, the satoshi, is worth 0.00000001 BTC. Three years before the whitepaper, beneath Szabo's text, an unknown person was already scribbling a personal digital currency accurate to the eighth digit. This site borrows its name from him.