Mysterious Bitcoin creator Satoshi Nakamoto is also credited with creating the distributed ledger technology known as blockchain that underpins Bitcoin and most other cryptocurrencies on the market. However, the first instance of blockchain has been discovered in the pages of the New York Times, predating Nakamoto’s creation by 13 years.
The Blockchain Before Bitcoin
Blockchain is defined as a growing list of permanent records, called blocks, which contain a cryptographic hash of the previous block, transaction data, and a timestamp. The technology was designed to be permanently verifiable and impossible to alter, creating a trustless system for things like financial transactions.
Blockchain is viewed by many industries as a way to improve data security and transparency, all while reducing operating costs.
Due to the great potential blockchain offers, the technology is now being considered to track transactions beyond payments. Supply chain management, or device-to-device communication across the Internet of Things (IoT) are just two examples of common use cases being considered.
Blockchain’s biggest benefit for businesses is around its chronological chain of hashed data it records. It’s this method of timestamping data that early cryptographers Stuart Haber and Scott Stornetta first invented in 1991, reports Motherboard. However, Haber and Stornetta at the time saw the tech as a way to timestamp digital documents to prove authenticity.
In the physical world, timestamping and verification is a lot easier. There are notaries to verify documents, and even something as simple as sealing an envelope can potentially prove a document arrived without any alteration. For digital documents, however, its far more difficult to verify data hasn’t been altered in some way.
The two developers set out to solve the need for digital document verification. They knew data would have to be timestamped to ensure any changes to a document would be noticeable, and they understood that same timestamp needed to be impossible to change to ensure authenticity.
Together, Haber and Stornetta landed on using a cryptographic hashing algorithm to generate a unique ID for each document. The ID would change each time the document was altered. The duo eventually launched their own timestamping service called Surety.
Surety’s main product AbsoluteProof serves as the best example of blockchain before Bitcoin. AbsoluteProof was designed to be a cryptographically generated seal for digital documents. The software is used to generate a cryptographic hash of a digital document that is later sent to Surety to create a timestamp seal. The seal acts as the unique ID verifying authenticity.
A copy of the seal is then sent to what Surety called a “universal registry database” composed of hashed customer seals, creating an immutable ledger of all of Surety’s customers seals ever created. The design makes it impossible for anyone outside of Surety to alter the seal.
The way Bitcoin’s blockchain and Surety’s AbsoluteProof differ is that Bitcoin’s blockchain is decentralized, adding a layer of trustlessness to the technology first invented by Haber and Stornetta.
As further “absolute” proof of Surety’s verification process, the company would publish newly added hash values each week to the New York Times in a small ad in the classified section. It’s that record published in the New York Times, dating back as far as 1995, that serves as the first-ever instance of blockchain technology, and would inspire Bitcoin creator Satoshi Nakamoto to create Bitcoin in the wake of the 2008 global financial crisis.
In Bitcoin’s whitepaper, Nakamoto actually referenced three separate papers written by Haber and Stornetta out of eight papers cited in the text. It’s clear Nakamoto used Surety’s AbsoluteProof system as inspiration for Bitcoin’s blockchain, perfecting what Haber and Stornetta originally set out to accomplish.