We have been following the path that led to the creation of Bitcoin. We already know prof. David Chaum responsible for the first electronic money - **eCash **- and for feeding many young people on the issues of digital and online privacy; and Dr. Adam Back who created a system of “stamps for emails” to prevent spam - **Hashcash **- which was based on the Proof-Of-Work system, which would become the engine that Bitcoin and allows to issue of currency in a controlled and planned manner.
In this article we will meet Wei Dai, a Cypherpunk very dedicated to the cause of privacy that would create a system very similar to Bitcoin. It was initially inspired by one of the founders of the crypto-anarchy movement, Tim May, because, according to himself: “unlike the communities associated with the word 'anarchy', in a crypto-anarchy the government is not temporarily destroyed but permanently prohibited and permanently unnecessary. It is a community where the threat of violence is powerless because violence is impossible. And violence is impossible because the participants cannot be linked to their real names or physical locations. ”
Wei Dai is a believer in the ideal of privacy, in such a way that few personal details are known to him and he declares that all the photographs on the internet that are said to be of him are, in fact, of other people called Wei Dai. To compensate for the lack of personal details, we can consult and read his extensive work and abundant ideas. Created and maintains Crypto ++ a database for cryptographic algorithms in the C ++ programming language. Dai is a prolific publisher on forums like LessWrong, where he discusses topics such as artificial intelligence, ethics and others. He is recognized for the merit of his ideas and is a regular guest at conferences at MIRI - Research Institute on Artificial Intelligence.
But his interests in philosophy and politics date back to the 1990s when he discovered crypto-anarchy and joined the Cryptography Mailing List - the place where he would further develop his fight for privacy. In addition to this theme, his publications focused on topics such as digital reputation systems, Game Theory and anonymous electronic money systems.
His fascination with privacy led him to ponder how a crypto-anarchic community could operate. Dai defined community as the efficient cooperation of its participants. To achieve this, a means of exchange (money) and a way to ensure that the contracts were fulfilled were needed. Services that have traditionally been provided by a government or government agencies. Now, an anarchic community aims to eliminate the central government, so alternatives would be needed to provide these services. To contribute to the creation of such a Dai community, it created a protocol that made these essential services available by and to non-traceable entities.
B-money
In November 1998, Dai announced his protocol - what he called b-money - on the Cryptography Mailing List. In that presentation, he explained that his protocol required each participant to keep a copy of the same accounting ledger. Whenever there was a transaction, all stakeholders would update their copy. In order to maintain the privacy of users, these logbooks would keep not the real names but the public keys to which the amounts corresponding to each stakeholder would be associated.
This decentralized solution prevented any entity from blocking transactions as well as allowing users' privacy.
Public keys would serve as pseudonyms for all users to keep their identities private. Users would have a private-key / public-key pair that would function as the address and signature on the network, respectively. Through these public keys, users could address units of this money and sign them with private keys.
As you can see, this solution is very similar to Satoshi Nakamoto's proposal for Bitcoin.
B-money 2.0
In his proposal, Dai also described how to create money, transfer money and resolve contractual conflicts. However, he believed that his protocol was not possible to become a practical application, as it did not prevent the problem of double spending, and therefore presented a second version of his b-money protocol.
In this second version, there would be servers that were responsible for keeping the record books up to date. Users would have to check with the servers if the transactions were legitimate, if they were not able to reject them.
Anyone could create a server. It would be enough to make a deposit of a certain amount of money that would be used in a system of penalties or rewards. This system is also similar to what we now know as Proof-of-Stake, and which is used in several cryptography.
The Big Difference
However, the big difference between b-money and Bitcoin would be monetary policy. B-money's proposal was to create a currency with a fixed value. For example, 100 units of b-money would be associated with a basket of goods and the value of those 100 units would fluctuate according to the price of that set. This allowed b-money to have a stable value. Bitcoin as we well know has not achieved this stability and this is something that Dai thinks he could avoid.
Dai did not solve all the problems of b-money because he lost his charm with the crypto-anarchic cause - he thought that such a system would not go beyond some devout Cypherpunks. But his creation would not be forgotten and became the first reference in Satoshi's paper. The creator of Bitcoin contacted Dai to discuss his proposal, after Adam Back indicated the similarities of the projects. Dai never responded to Satoshi and considers that Bitcoin has failed in relation to its monetary policy, as it creates great price volatility, thus making it very difficult for its users to actually use it on a daily basis.
Dai believes he could have convinced Satoshi to change this “fixed money supply” policy, which he believes is dangerous for Bitcoin and the cryptocurrency space. Because it has become so dominant in this space, if Bitcoin fails it could mean the failure of all alternative cryptocurrencies. Dai commented in an article on the LessWrong forum: "Maybe this is partly my fault, because when Satoshi asked me for his opinion on the initial version of his paper, I never answered him."
