Cryptographers had been trying to come up with a private, peer-to-peer digital currency since at least the 1980s. Computer scientist David Chaum saw how the advent of electronic payments could threaten privacy and focused his research on ways to prevent that. He devised the “blind signatures” system, which enabled digital payments without having to disclose personal information, and used that technology to create eCash in 1983, an anonymous digital currency.
In 1997, Eric S. Raymond published the essay “The Cathedral and the Bazaar,” comparing two software development models: the cathedral, where code development is restricted to an exclusive group of developers, and the bazaar, where code is public and developed over the internet.
In 1998, computer scientists Wei Dai came up with B-money and Nick Szabo invented Bit Gold. They both proposed schemes that allowed a network of users to transact with digital money without the need of intermediaries, but these were never implemented as they didn’t fully solve the double-spend and Sybil attack problems.
Cypherpunks had continued incrementally improving past work until the major breakthrough came in October 2008, when an anonymous person or persons going by the name Satoshi Nakamoto emailed the group. “I’ve been working on a new electronic cash system that’s fully peer-to-peer, with no trusted third party,” the email began, and linked to a nine-page PDF that underlined how the system worked. He said he proposed solving the double-spend problem by using a “peer-to-peer network which timestamps transactions by linking them into an ongoing chain of hash-based proof-of-work.”
Satoshi Nakamoto left a message in the first Bitcoin block ever mined, which read: The Times 3 January 2009 Chancellor on brink of second bailout for banks. The text was referring to the headline on the cover of the Times of London that day. It was proof that the first block was mined on or after that date, but it also provided a clue as to what inspired this peer-to-peer digital cash in the first place. It was an act of rebellion against what cypherpunks viewed as a deeply flawed system.
It was the beginning of August and he had been living in Calafou for about two months when Vitalik emailed the university to say he wanted to take a break for one year to work on cryptocurrency projects, earnestly thinking he would go back.
Nick Szabo, the cryptographer who in 1998 invented the digital currency “Bit Gold,” coined the term “smart contract” in the early 1990s. In a 1997 paper, he said smart contracts “combine protocols with user interfaces to formalize and secure relationships over computer networks.”
By the time he was seven, Vitalik still wasn’t very good at expressing himself in complex sentences, but he wrote a thirty- to forty-page document in Microsoft Word that he called “The Encyclopedia of Bunnies.” It was very technical and structured like a scientific paper, with a table of contents and charts throughout. It listed the chemical elements you would find and the math that explained how things work. Dmitry recalls it as his son’s first white paper.
That day, the world was thinking about debris recently found in the Indian Ocean and whether it could be linked to a Malaysian Airlines plane that disappeared on its way to Beijing. Others were outraged about an American dentist who killed a lion called Cecil in Zimbabwe. India hanged the man responsible for the 1993 bombings in Mumbai while Rio handled reports of contaminated waters ahead of the Olympics to be held the following year. Hardly anyone was thinking about Ethereum.
The standard was later known as ERC20, because it was the twentieth issue being discussed.
The very next day the Geth team released code to undo the changes that went into the “DAO Wars” soft-fork release. In keeping with the Star Wars/DAO Wars theme, the new software release was called “The Network Strikes Back.” That’s what happens when computer geeks are running the show.
Emin strongly believed there was no reason to let the ether thief get away with it. He didn’t buy the whole “code is law” argument. “Code is not law,” he said. “The law is the law. We are not going to tear down an entire financial system and build a new one only to be enslaved by the algorithms that we have come up with. Monetary systems have to serve the people and if they don’t serve the people, people will find a way to replace them.”
“Like, fuck, where does this thing actually work? Like, where are the use cases? There doesn’t seem to be any freaking use case right now!”
Code can be made to run in a specific way, but that will always clash with humans, who don’t necessarily act predictably.
Developers learned the world can’t be crammed into smart contracts, and that smart contracts will only be as smart as the people who wrote them—and those who tried to break them for nefarious or hubristic reasons.
Jackson Palmer, the founder of the digital currency Dogecoin, posted a YouTube video around the time of the Status sale saying, “The real reason the [ether] price has been going up something like a hundred dollars per week for the past month is really just greed: Greed from developers, greed from investors [and] greed from everybody in this speculative market.” The coin he created is a joke based on an internet meme, but he was one of the few crypto personalities strongly voicing rationality.
Technological developments were bringing forth a new system that couldn’t be measured by the standards of the old one. This idea came to be known as the “New Economy” in the 1990s.
The logical step from there was that they’d make collectible cats. They would call them CryptoKitties, and the first version would be built at the Ethereum hackathon in Waterloo.
About 90 percent of cryptocurrency trading in 2017 was for speculation, Lilita Infante, a member of the FBI’s Cyber Investigative Task Force, told me for a Bloomberg News interview. Very few people were making payments and sending cross-border transfers with Bitcoin, and even fewer were using tokens on decentralized applications built on Ethereum.
Preston Van Loon, one of the developers working on one of the most advanced Ethereum 2.0 implementation at Prysmatic Labs, tweeted out at the end of 2018 that his team’s biggest distraction was that they had to have other full-time jobs—Preston was a programmer at Google. Vitalik unexpectedly dropped into the conversation and tweeted, “Just sent 1000 eth. Yolo,” with a link to the transaction.