James A. Donald

Researcher Publishes Never Before Seen Emails Between Satoshi Nakamoto and Hal Finney

28/11/2020 by Idelto Editor

Just recently three previously unpublished emails from Bitcoin’s inventor, Satoshi Nakamoto, have been made public. The emails reveal the correspondence between Satoshi and the early Bitcoin developer Hal Finney. The communications between Nakamoto and Finney stem from November 2008 and January 2009, the very month Bitcoin was launched.

On November 27, three emails that have never been seen before were made public in an editorial written by Michael Kaplikov, a professor at Pace University. According to Kaplikov, the emails derived from the New York Times contributor Nathaniel Popper. The NYT journalist also wrote the book “Digital Gold” and Hal Finney’s wife Fran Finney gave Popper the emails at this time. Kaplikov published the emails alongside his editorial after confirming that the emails were indeed legitimate, and stemmed from the now-deceased Hal Finney’s old computer.

Hal Finney was a well-known developer during Bitcoin’s earliest days and received the very first BTC transaction from Satoshi. Finney passed away on August 28, 2014, as a result of complications from Amyotrophic lateral sclerosis (ALS).

The first email is dated November 19, 2008, which was nineteen days after Bitcoin’s mysterious creator published the white paper. Kaplikov, who has been studying the Bitcoin origin story, said that before the email, Nakamoto shared an early version of the Bitcoin codebase with a few people including Hal Finney. The early release origin story is well known, as Ray Dillinger and James A. Donald also received pre-release copies. In the email, Finney asked Satoshi about the number of nodes and scaling the Bitcoin network.

“Some of the discussion and concern over performance may relate to the eventual size of the P2P network,” Finney wrote to Nakamoto. “How large do you envision it becoming? Tens of nodes. Thousands? Millions? And for clients, do you think this could scale to be usable for close to 100% of the world’s financial transactions? Or would you see it as mostly being used for some ‘core’ subset of transactions that have special requirements, with other transactions using a different payment system that perhaps is based on Bitcoin?”

The researcher from Pace University also highlighted that soon after this particular email, Bitcoin’s creator allowed Finney commit access to the Sourceforge repository. Then another email dated January 8, 2009, shortly after the network was launched, Satoshi wrote to Hal. “Thought you’d like to know, the Bitcoin v0.1 release with EXE and full sourcecode is up on Sourceforge,” Nakamoto wrote. The creator also detailed that release notes and screenshots were also uploaded to the web portal bitcoin.org. The very next day, Finney replied to Nakamoto’s release email.

“Hi, Satoshi, thanks very much for that information,” Finney said on January 9. “I should have a chance to look at that this weekend. I am looking forward to learning more about the code.”

Running bitcoin

— halfin (@halfin) January 11, 2009

The very next day, Hal Finney took to Twitter and told his followers he was “running bitcoin.” It seems Finney did get a chance to look at the code after his recent correspondence with Nakamoto. In addition to the three unpublished emails, Kaplikov also discussed the email correspondence between Finney and Nakamoto that was given to the Wall Street Journal back in 2014.

The reason for this is because Kaplikov discusses discrepancies with the email’s timestamps. Kaplikov stresses that the January 2009 emails appear to be roughly eight hours ahead of Greenwich Mean Time (GMT). Just recently, new research from The Chain Bulletin contributor Doncho Karaivanov tried to pinpoint Satoshi’s home location by leveraging all his activity and scatter charts of all the timestamps.

Karaivanov’s study assumes that Satoshi Nakamoto lived in London (GMT) when he/she or they created the Bitcoin project. However, studies from the past show that Nakamoto could have also resided in California on the west coast and some have asserted he lived on the eastern side of the United States. Moreover, it is also assumed in a few of the studies that Satoshi Nakamoto pulled a lot of ‘all-nighters’ and crammed his work before he left the project.

Finney passed away on August 28, 2014, after suffering from complications from Amyotrophic lateral sclerosis (ALS). Bitcoiners and crypto proponents everywhere think of Finney in the highest regard, as he once said that the computer could help liberate people.

“It seemed so obvious to me,” Finney explained before his death. “Here we are faced with the problems of loss of privacy, creeping computerization, massive databases, more centralization – and [David] Chaum offers a completely different direction to go in, one which puts power into the hands of individuals rather than governments and corporations. The computer can be used as a tool to liberate and protect people, rather than to control them.”

The recently published emails are interesting and give some new insight into the early relationship between Nakamoto and Finney. The emails and Finney’s post on Twitter on January 10, clearly show he was very excited about this project and specifically made time available to look at Bitcoin right away. The email timestamps simply add more to the Satoshi Nakamoto identity mystery, and the uncertainty of the inventor’s whereabouts during the cryptocurrency’s creation period.

What do you think about the email correspondence between Nakamoto and Finney? Let us know what you think about this subject in the comments section below.

The post Researcher Publishes Never Before Seen Emails Between Satoshi Nakamoto and Hal Finney appeared first on Bitcoin News.

Triple-Entry Bookkeeping: How Satoshi Nakamoto Solved the Byzantine Generals’ Problem

03/08/2020 by Idelto Editor

In 2008, Satoshi Nakamoto essentially solved the infamous computational issue called the “Byzantine generals’ problem” or the “Byzantine Fault.”

Throughout the history of man, people used ledgers to record economic transactions and property ownership. A ledger is often referred to as the “principal book,” and entries can be recorded in stone, parchment, wood, metal, and with software as well. Ledgers were used for centuries, but the shared ledger system became really popular in 1538 when the church kept records.

In Mesopotamia, which was about 5,000 years ago, scientists discovered Mesopotamians used single-entry accounting ledgers. Much of it was complex and these ledgers accounted for things like property and money. But with a single-entry ledger, all anyone has to do is remove one line of entry or a few lines, and the funds would be gone or disappear from the records.

During the Renaissance period, intelligent people discovered double-entry bookkeeping, which literally changed everything in the world of accounting. Our modern financial system is based on the double-entry system created more than six hundred years ago. Double-entry systems grew because trade swelled beyond borders, so people needed a way to maintain records that were far more trustworthy than the single-entry accounting ledgers. Leveraging single-entry accounting would not work well when dealing with people who are thousands of miles away.

The double-entry system was first documented centuries ago by Luca Pacioli (1446–1517), a mathematician and Franciscan friar. Towards the latter part of the 15th century, this system became extremely popular, as it was leveraged by merchants and traders everywhere. Now double-entry bookkeeping isn’t necessarily transparent and these types of books can be private or open. The system does a much better job than single-entry accounting when it comes to errors, fraud detection, and financial reality. But most mathematicians and economists understand that the double-entry system can be manipulated.

So the double-entry system allows an entity to record a total of what is owed and what is owned (Assets = Liabilities + Equity). Alongside this, double-entry accounting keeps a record of what the entity spent and earned. Traditionally this system has two corresponding and equal sides that people call “debit” and “credit.” Historically, people often use the left side for debit entries and the right for credit. One of the biggest issues with the double-entry system is trusting the human and fallible bookkeeper, messenger, or accountant. Moreover, in today’s world of monetary finance, double-entry systems are used regularly, but the world’s central banks are far from transparent or based on financial reality.

When computers came around, ledger systems became far more advanced and people tried to push the double-entry system to the next level. Triple-entry accounting was first conceived in the early eighties and the inventor of the Ricardian contract, Ian Grigg discussed the method well before it was solved. The problem with creating something more advanced than the double-entry accounting system was the notorious “Byzantine generals problem.”

Basically, when a distributed ledger is being shared among computing systems people cannot trust which system or server (node) is trustworthy, compromised, or functioning with a failure to detect. However, on October 31, 2008, an anonymous person(s) released a paper that solved the Byzantine Fault dilemma.

That Halloween, Nakamoto wrote an email to the Cryptography Mailing List which said:

I’ve been working on a new electronic cash system that’s fully peer-to-peer, with no trusted third party — The main properties: Double-spending is prevented with a peer-to-peer network. No mint or other trusted parties. Participants can be anonymous. New coins are made from Hashcash style proof-of-work. The proof-of-work for new coin generation also powers the network to prevent double-spending.

Basically Nakamoto invented the triple-entry accounting system or essentially gave the theory life. Triple-entry bookkeeping is far, far more advanced than the traditional double-entry systems we know of today. Essentially all the accounting entries are cryptographically validated by a third entry by hashing and a nonce.

“Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending,” Nakamoto’s infamous white paper says. With the triple-entry bookkeeping system, the entries (transactions) are both congruent, but the infrastructure also adds a third entry into the ledger’s validation process, which again is cryptographically sealed.

Fundamentally, hashing or cryptographic hash function (CHF) is a mathematical function of arbitrary size we call a “message.” A nonce is an arbitrary number that is used one time when the message is concealed in plain text. In the **Byzantine general tale, one army sends a message (CHF) over to the other general with a nonce. The other general then must decipher the CHF, with some partial knowledge cryptographers call a “hash target.” All the general has to do is hash the CHF and the nonce, as well as make sure everything corresponds with the hash target (partial knowledge). If everything is valid, the two generals have easily synchronized the timing of an attack, without having to doubt the message system or messengers.

Satoshi’s white paper also said:

Proof-of-work also solves the problem of determining representation in majority decision making. If the majority were based on one-IP-address-one-vote, it could be subverted by anyone able to allocate many IPs. Proof-of-work is essentially one-CPU-one-vote. The majority decision is represented by the longest chain, which has the greatest proof-of-work effort invested in it. If a majority of CPU power is controlled by honest nodes, the honest chain will grow the fastest and outpace any competing chains.

Nakamoto’s software leverages the Hashcash system, which bolsters the security of the underlying infrastructure by utilizing cryptographic hashes. Hashcash is used for Nakamoto’s proof-of-work (PoW) which is basically a blob of data that is difficult, expensive, and painstaking to produce. However, PoW is also undemanding when it comes to verifying and satisfying the agreement, as long as everyone follows the rules. There are a number of PoW schemes available like Quark, Scrypt, Blake-256, Cryptonight, and HEFTY1, but Nakamoto’s Bitcoin leverages SHA256.

It is “near” impossible or extremely hard to falsify, destroy or edit one or a few lines in the constant SHA256 ledger system. As the proof-of-work continues to build, it becomes extremely expensive and very time consuming to attack. There are other ways that networks can use to come to consensus, like the popular proof-of-stake consensus (PoS) systems. However, PoS has not proven itself as the most reliable system (security-wise) yet in order to come to consensus.

The advantages of triple-entry bookkeeping are huge, and the sky’s the limit when it comes to this relatively new technology. Triple-entry accounting offers a concept that is “near” trustless, if we remove trusting the autonomous system. Auditing, reconciliation, and transparency are all reconsidered notions when it comes to “trusting the books.” Satoshi told people on numerous occasions that he solved the Byzantine generals’ problem. “The proof-of-work chain is a solution to the Byzantine generals’ problem,” Nakamoto told James A. Donald on November 13, 2008.

Bitcoin’s inventor also stressed to Donald a few days earlier that the “proof-of-work chain is the solution to the synchronisation problem, and to knowing what the globally shared view is without having to trust anyone.”

Furthermore, the decentralized currency is pseudo-anonymous, meaning that a person can leverage as much anonymity or transparency as desired. Nakamoto explained the transparency and privacy foundations in the white paper quite well.

“The traditional banking model achieves a level of privacy by limiting access to information to the parties involved and the trusted third party,” the Bitcoin white paper details. “The necessity to announce all transactions publicly precludes this method, but privacy can still be maintained by breaking the flow of information in another place: by keeping public keys anonymous.”

Nakamoto concluded by saying:

The public can see that someone is sending an amount to someone else, but without information linking the transaction to anyone. This is similar to the level of information released by stock exchanges, where the time and size of individual trades, the “tape”, is made public, but without telling who the parties were.

The well known cryptocurrency expert, Andreas M. Antonopoulos does an excellent job explaining the tale of the Byzantine generals’ problem and how it applies to Bitcoin in the video below.

What do you think about Satoshi Nakamoto solving the Byzantine generals’ problem? Let us know what you think about this subject in the comments section below.

The post Triple-Entry Bookkeeping: How Satoshi Nakamoto Solved the Byzantine Generals’ Problem appeared first on Bitcoin News.

Wild Satoshi Theories: The Curious Case of Bitcoin Block 3654 from 2009

21/05/2020 by Idelto Editor

On Wednesday, 50 bitcoin mined on February 9, 2009, was moved from the original address to a new address. The movement of coins caused a great commotion throughout the cryptocurrency community, as some individuals assumed it may have been the mysterious Satoshi Nakamoto. However, skeptics believe that even though the coins stemmed from an address a touch over a month old from the time Nakamoto bootstrapped the Bitcoin network, it may have been someone else who mined alongside the creator.

The Incredible Fascination With Bitcoin Block 3,654

The creator of Bitcoin and early cryptocurrency mining, has been a topical conversation on Wednesday. The reason is because 50 BTC from February 9, 2009, was moved from the original block reward address to another address. This has made people break out their notes, analyze the blockchain, and become armchair sleuths hot on the trail for whoever the person might be. Various theories have come into play, as people have thought that maybe it was Hal Finney’s wife, one of the Kleimans, Craig Wright, Marti Malmi, someone who may have mined alongside Satoshi Nakamoto, or possibly even the creator.

One of the first issues at hand is how many people were mining bitcoin in 2009. Some people believe a few others had access to Satoshi’s software around that time. There are instances where Satoshi told the public that the software was given to others for peer review. A mailing list response to James A. Donald on Nov. 17, 2008, explains that Satoshi gave files to possibly a few people before the launch on January 3, 2009. A bitcointalk.org member dubbed “Cryddit” told the public he had access to early software. Prior to block 3,654, Satoshi Nakomoto also said he distributed the software to a few other people and thanked two people named “Dustin” and “Nicholas” for their feedback.

Sergio Demián Lerner’s Patoshi Pattern

Coin Metric’s executive, Nic Carter, also discussed the 50 BTC coins from 2009 moving on Wednesday. “Early non-Satoshi mined coins are periodically awakened, just not frequently,” Carter said. “Keep in mind it’s basically impossible to prove that Satoshi ‘didn’t’ mine these coins, but the best research we have suggests that Satoshi mined a specific set of blocks, of which this is not one.” At this point, Carter is discussing the research done by RSK Labs chief scientist Sergio Demián Lerner. “Here’s a visualization of the Patoshi pattern with the block that was just spent. The blocks believed to be Satoshi have a specific pattern in the nonce, which this block does not have,” Carter stressed on Twitter. Other bitcoin advocates came up with the same hypothesis using Sergio Demián Lerner’s “Patoshi” pattern research.

Wild Satoshi Theories: The Curious Case of Bitcoin Block 3654 from 2009 — Chart: Nic Carter, via Twitter

That particular research shows that there is strong evidence to suggest that a single miner or very small group of miners (5 CPUs) could have mined 22,000 blocks. One person asked software developer Jameson Lopp if he “thought the ‘Patoshi Pattern’ is an exhaustive list?”

“IIRC the pattern drops off after block 50,000 or so,” Lopp replied. “That’s all it is, though – a pattern. The list is exhaustive in that it’s what matches the pattern; the real Satoshi might have mined other blocks with another setup,” the developer added. The RSK Labs chief scientist wasn’t the only one who studied early patterns in Bitcoin history as another person in 2017 tried to unravel the clues.

A Single Intel CPU: 1 Miner, 5 Miners, Or 20?

Evidence suggests that back in the early days of bitcoin, around the same time block 3,654 was produced, there was only a small amount of hashpower pushing the chain forward. A blog post from eklitzke.org shows that between the birth of the Bitcoin network in January 2009 and the two months that followed, the hashrate was around 4-8 megahash per second (MH/s). We all know that an old Antminer S9 could blow that hashrate away, but back then Satoshi used a central processing unit.

“I find it reasonable to assume that most of the hashing power in the first year or so of Bitcoin’s existence came from Satoshi Nakamoto,” the blog post details. “If real users were actually joining and leaving Bitcoin, one would expect the hash rate to have varied a lot more, particularly in the first six months.”

The report also shows that the hashrate could have been kept up with a single computer. “The few months have a consistent hash rate of about 5 MH/s [and] would it have been feasible for Satoshi Nakamoto to have solo mined with 5 MH/s in 2009?” the researcher asked. The report’s author continued by adding:

The answer is yes, and in fact, it’s possible to achieve this hash rate using a single Intel CPU. The linked Bitcoin wiki page gives a 5.1 MH/s hash rate for the Core i5-650 CPU, which was released in January 2010 with a 3.2 GHz clock speed. The Intel CPUs available in 2008 when Satoshi Nakamoto created Bitcoin would have been slightly earlier generation Core 2 processors. Those would have been nearly as fast as a Core i5-650. In fact, the highest-end desktop processors available when Satoshi Nakamoto started mining Bitcoin would have been much faster than that. The wiki page shows that a Core 2 Quad Q6600 (released January 2007) would have been capable of achieving 11 MH/s. The numbers for AMD CPUs in this era are similar.

Malmi Denies Involvement and Links to the Kleiman v. Wright Case

The early Bitcoin developer, Marti Malmi, has explained on Twitter that it probably wasn’t him either, when he was recently mentioned in a Cointelegraph article. “Nope,” Malmi tweeted. “Bitcoin was announced on the cryptography mailing list in January 2009 and many people could have tested it. I found Bitcoin around April.”

Then there was also the Twitter conversation involving Craig Wright, the Australian native who claims to be Satoshi Nakamoto. “I followed some of the output of that transaction from the old wallet,” explained one sleuth on Twitter. “It led to this wallet, 966 pages back 100 BTC was transferred last fall (it has 4800 transactions in it). Not sure if you can tell anything from this or where that 100 came from.” Craig Wright’s friend Calvin Ayre responded by saying:

I think you will find this to not be Craigs, or at least not Craig doing it…who owns this is for the courts maybe.

“It traces back to block 9. This is definitely Craig’s address as he signed from it in 2015 and in 2017 on the @satoshi handle,” another person replied to the conversation with Ayre. Some speculate that one of the addresses used in the Kleiman v. Wright court case is somehow involved with the 50 BTC movement on Wednesday.

Twitter is now going crazy about the speculation that the coins may have been the very creator’s bitcoins. However, many people are already dismissing the movement by simply referring to onchain blockchain analysis and data. Despite the debunkings, cryptocurrency enthusiasts have always been fascinated with Satoshi Nakamoto’s lore and alleged treasures.

What do you think about the 50 bitcoin from 2009 moving? Let us know in the comments below.

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