Cryptography, the foundations

It all begins in 1976, when Whitfield Diffie and Martin Hellman publish "New Directions in Cryptography." For the first time, two people can establish a shared secret over a public channel, without ever having met. A year later, Rivest, Shamir and Adleman formalize RSA: everyone now holds a public key, which everyone knows, and a private key, which no one sees. Signing a message becomes possible without any central authority.

The second building block is hash functions. A function like SHA-256 turns any data into a fixed-size fingerprint, impossible to reverse and extremely sensitive: change one input bit and the fingerprint changes entirely. It is the glue that will later make it possible to chain blocks together, each block containing the fingerprint of the previous one.

The third building block is electronic money itself. As early as 1982, David Chaum publishes "Blind Signatures for Untraceable Payments" and later founds DigiCash. His eCash works, and banks experiment with it in the 1990s, but the system remains centralized: a single entity issues the money and can therefore censor it, freeze it, or vanish. DigiCash goes bankrupt in 1998.

The remaining problem is known as double spending: how do you stop someone from spending the same digital token twice, without a central server keeping the ledger? The entire prehistory of Bitcoin, from Hashcash to b-money and bit gold, is a series of attempts to solve exactly this question.