A closer look at Wei Dai’s proposed B-money, the vital Bitcoin predecessor
In the previous article in this series, we briefly discussed Wei Dai and some of the areas he was involved in, such as B-money, Crypto ++ library, VMAC Internet Draft and many more. We will dig a little deeper about B-Money, one of the important predecessors of Bitcoin.
What is B-Money?
B-money by Wei Dai was among the very first proposed cryptocurrencies before they actually appeared as we see them today. It should be an anonymous and widespread e-cash system, similar to the digital assets we know today.
While many people, especially those who know that Bitcoin is the first cryptocurrency ever or the first generation of digital coins, do not know that there were any prominent predecessors to the crowned cryptocurrency, B-money was among them. But it was never officially launched.
Wai Dei was motivated by the cryptoanarchy manifesto written by Tim May. It is a concept where authority is completely forbidden as it becomes useless here. Cryptoanarchy eliminates the physical chaos as people and their location remain anonymous here.
B-money uses the type of encryption used by military and other public services, a language that only they can interpret.
How should B-money be used?
We discussed a couple of protocols, one impractical and the other practical, in the previous article.
The impractical approach consisted of 5 sections – money creation, money transfer, execution of contracts, conclusion of these contracts and enforcement of them. Here, each individual owns a data set related to the total money that belongs to the pseudonymous account.
Wei Dai says that money creation is easy as it can be done by broadcasting solutions to previous calculation problems. The amount of data effort should be determined it will take to solve the previous problem, and this is the important element that if not done, it will also have no intellectual or practical value.
In the second protocol, the pseudonymous accounts were kept with servers instead of all. Validation of the messages is required here, which is done by server subsets (participants).
Option B money
Wei Dai proposed an alternative to b-money due to persistent problems in money creation. He suggested that there must be agreement among the account operators or participants on how much B-money should be created each time, where an auction will determine the costs of money creation.
His proposal is categorized into 4 stages – planning, bidding, calculation and money creation.
In the planning stage, account managers are required to discuss the total increase in the money supply for the coming period. And they do not have to be consensus, but they have to broadcast their thoughts or what numbers they think are correct.
In the tender phase, participants who wish to submit a bid must, and there must be a nominal cost that the participants must agree on.
In the calculation stage, bidders can broadcast solutions to the problems.
Finally, in the money creation stage, account holders select the highest bidder in terms of the nominal cost of each b-currency unit created and credit the bidders’ accounts correctly.
So here I end the article, and I hope it helps you understand the concept of B-money, as a solution that was offered by Wei Dai before Bitcoin that was never launched. In the next part I will discuss with you about some of his applications in cryptography such as Crypto ++, VMAC etc. We will see in the next article in this series folks.
Anubhav B has worked as the founding author of The Coin Republic since 2021. He enjoys training his curious muscles and researching deeply into a subject. Although he covers various aspects of the crypto industry, he is quite passionate about Web3, NFTs, Gaming and Metaverse, and sees them as the future of the (digital) economy. A reader and writer at heart, he calls himself an “average guitar player” and a fun football player.
