Hal Finney’s Bitcoin Legacy is Secure.

(Last Updated on January 19, 2021)

Most people are pretty surprised that the creator of Bitcoin is.. completely unknown?

Yep – complete unsolved mystery.

So that would lead me to assume that all bitcoiners have some theory or opinion on who Satoshi Nakamoto might be.

There is one name that I have heard, over and over, by a lot of “crypto OG’s” when people ask who they think Satoshi might be.

Hal Finney is that name.

Why?

-> He was the first to speak with the young, Japanese crypto savant by email (some timestamp anomalies there)

-> First to download the Bitcoin core 0.1.0 code (before Sourceforge had the upload)

-> First to mine any blocks directly after Satoshi

-> The first ever Bitcoin transaction was Satoshi sending 10 Bitcoin to Hal as a ‘test’

He’s the basis for much of the interaction and communication we heard from Bitcoin’s creator outside of the whitepaper. Plus many are inspired by the fact that he had almost two decades of history involved in cryptography as a self-declared ‘cypherpunk’ and computer wizard himself.

There are plenty of reasons why many may think he is Satoshi but we can all be sure that he was a crucial component in the success of Bitcoin.

Let’s look back at what we know about Hal.

His website holds a small treasury of information on early cypherpunk and cryptography. Deeply involved in the cypherpunk scene, this kind of thinking was very rare, especially during the late 80’s and early 90’s. Few were aware of the internet or its possibilities, let alone the economic hope that a currency of the internet could bring to the masses. But Hal regularly enjoyed writing articles and proposing theories along these lines within his small email circles at the time. Some of the names involved became major economic and social though leaders today like Nick Szabo and others.

There was some involvement of his in the original “Cypherpunk” paper by Eric Hughes.

“Privacy is necessary for an open society in the electronic age. Privacy is not secrecy. A private matter is something one doesn’t want the whole world to know, but a secret matter is something one doesn’t want anybody to know. Privacy is the power to selectively reveal oneself to the world.”

– A Cypherpunk’s Manifesto

It is easy to see how deeply passionate Mr. Finney was about being a cypherpunk and doing what cypherpunks do.

Cypherpunks write code.

They write code to establish freedom.

They write code to design a future that respects their ideology.

Hal Finney was a highly skilled computer coding wizard that specialized in cryptography.

Hal realized the need for decentralization and financial privacy in the early 90’s

An excerpt from “Hal Finney Essays: Why Remailers” – November 15th, 1992

“It seemed so obvious to me. Here we are faced with the problems of loss of privacy, creeping computerization, massive databases, more centralization – and 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. Unlike the world of today, where people are more or less at the mercy of credit agencies, large corporations, and governments, Chaum’s approach balances power between individuals and organizations. Both kinds of groups are protected against fraud and mistreatment by the other.

Naturally, in today’s society, with power allocated so disproportionately, such ideas are a threat to large organizations. Balancing power would mean a net loss of power for them. So no institution is going to pick up and champion Chaum’s ideas. It’s going to have to be a grass-roots activity, one in which individuals first learn of how much power they can have, and then demand it.”

Hal Finney Essay: Why Remailers

Chaum who was developing “eCash” at the time was certainly heading in the right direction and this intrigued Finney. I think this was most likely a time in his life where he could see the evolution of the internet making massive changes in how the world will live day to day.

He was right..

Today, more than ever we need decentralized options to secure equality and freedoms for the individual – both in finance and lifestyle.

A lot of early cypherpunk literature echoes similar ideals of financial sovereignty, privacy rights, and freedom. Nice to have grand ideas but you need more than a pen and paper to write computer code.

You need skills and serious cryptography skills that weren’t exactly common at the time Bitcoin was released.

Hal had been working on cryptographic software since the early 90’s!

What was PGP or “Pretty Good Privacy”?

Encryption software to cryptographically secure data over internet communications through digital signatures on emails, text, files, and disks.

Pretty Good Privacy visual cryptographic representation

Hal worked with Philip Zimmermann and was one of the original programmers on Pretty Good Privacy version 2.0. The first PGP release was in 1991 and it was going strong through the mid 90’s into early 2000’s. Phil Zimmermann was the subject of U.S. investigations regarding national security and foreign counterparty risk liabilities that had no involvement with hal.

He continued coding additional software components and updates to add into the PGP crypto library online for years.

For the early 90’s this was some pretty serious software coding and the code did an excellent job of securing data through encryption. Hal was knee deep writing cryptography code for various digital communication platforms that utilize keys and signatures for digital security.

Sounds familiar doesn’t it?

PGP definitely showed he was working with the cryptography community and clearly excelling in his duties. But that doesn’t mean he was capable of writing such a well developed masterpiece as a complete cryptocurrency.

Not a lot of people know that Hal wrote RPOW – a “reusable proofs of work algorithm”

RPOW code is uniquely impressive in itself and certainly a close precursor to Bitcoin.

Hal invented the first “reusable proofs of work” cryptographic algorithm

The theory for a proof of work algorithm was documented in 1999 but Hal was the first to develop a working protocol utilizing computer code. His cryptographic algorithm was to target a digital gold and cash token of sorts. These early beginnings are clearly stamped by unique innovation and foresight that is looking decades at head for issues commonly seen with fiat currencies.

His first paragraph addresses the “double spend” problem which is one of the primary advantages of proof-of-work tokens utilized in Bitcoin today.

“The RPOW system provides for proof of work (POW) tokens to be reused. A POW token is something that takes a relatively long time to compute but which can be checked quickly. RPOW uses hashcash, which are values whose SHA-1 hashes have many high bits of zeros.

Normally POW tokens can’t be reused because that would allow them to be double-spent. But RPOW allows for a limited form of reuse: sequential reuse. This lets a POW token be used once, then exchanged for a new one, which can again be used once, then once more exchanged, etc. This approach makes POW tokens more practical for many purposes and allows the effective cost of a POW token to be raised while still allowing systems to use them effectively.”

-> RPOW addressing the “double spend” problem in the introductory paragraph

To establish a trustless network of public ledger blockchain transactions which will actually provide a higher level of privacy and empowerment for internet users. Hal was clearly seeing the need for a decentralized, trustless, “currency of the internet” type of protocol.

“This is useful functionality, but the unique feature of the RPOW system is its approach to security. RPOW is the first public implementation of a server designed to allow users throughout the world to verify its correctness and integrity in real time.

Allowing clients to dynamically validate the security of a server turns the concept of Trusted Computing on its head. Rather than a threat to individual privacy, the technology becomes a boon to privacy and an empowering force for end users on the net.”

-> RPOW utilizing POW to build a trustless network of computing validators (larger network = higher security)

Hal then proposes what “RPOW could potentially be used for as an application”

“Security researcher Nick Szabo has coined the term bit gold for information objects which are provably costly to create. He suggests that these could even serve as the foundation for a sort of payment system, playing the role in the informational world of gold in the physical world. RPOW would facilitate the use of POW tokens as a form of bit gold by allowing the tokens to be passed and exchanged from person to person.

POW tokens have been proposed as a form of pseudo-payment in several applications. One example is email. An email message containing a POW token would be relatively costly to send in terms of computing power. A POW token could then be a sign that the message was not spam.

Using RPOW tokens for email would have advantages, as people could then reuse tokens from incoming email in outgoing email. Spammers will have no such advantages since almost all of their email is outgoing. Reuse allows the cost of the POW token to be much higher since most people won’t have to generate them, making the system more effective as an anti spam measure.”

-> Possibly the most telling paragraph of what was to come.

Now the part where he meets Satoshi comes years after PGP and RPOW sometime in 2008.

For most, the only real history we have is hear-say and the own writings by the man himself left behind on a few websites and the original cryptocurrency forums.

-> Bitcointalk.org

The post below was my first introduction to Hal and what he had contributed to cryptography and to Bitcoin.

If you don’t know what the “Bitcointalk forums” are – please educate yourself on the humble beginnings and simple ideals of many nerds who were crucial in helping crypto grow to what it is today.

It was an amazing time and I wish I had participated a lot more on the forums than I did – my focus was always on geeking out with GPU mining and messing around with new crypto projects and alt-coins while investing in BTC.

Looking into his Bitcoin Talk forum posts we see the timeline of how he interacted with Satoshi and others in the community laid out. He talks about the early days emailing with Satoshi and then downloading the Bitcoin core and running it by CPU. Easily mining blocks per day as only himself and Satoshi were on the network with a difficulty of 1.

“For those who don’t know me, I’m Hal Finney. I got my start in crypto working on an early version of PGP, working closely with Phil Zimmermann. When Phil decided to start PGP Corporation, I was one of the first hires. I would work on PGP until my retirement. At the same time, I got involved with the Cypherpunks. I ran the first cryptographically based anonymous remailer, among other activities.

Fast forward to late 2008 and the announcement of Bitcoin. I’ve noticed that cryptographic graybeards (I was in my mid 50’s) tend to get cynical. I was more idealistic; I have always loved crypto, the mystery and the paradox of it.

When Satoshi announced Bitcoin on the cryptography mailing list, he got a skeptical reception at best. Cryptographers have seen too many grand schemes by clueless noobs. They tend to have a knee jerk reaction.

I was more positive. I had long been interested in cryptographic payment schemes. Plus I was lucky enough to meet and extensively correspond with both Wei Dai and Nick Szabo, generally acknowledged to have created ideas that would be realized with Bitcoin. I had made an attempt to create my own proof of work based currency, called RPOW. So I found Bitcoin fascinating.”

Hal’s own words in his 2013 post “Bitcoin and Me”

“When Satoshi announced the first release of the software, I grabbed it right away. I think I was the first person besides Satoshi to run bitcoin. I mined block 70-something, and I was the recipient of the first bitcoin transaction, when Satoshi sent ten coins to me as a test. I carried on an email conversation with Satoshi over the next few days, mostly me reporting bugs and him fixing them.

Today, Satoshi’s true identity has become a mystery. But at the time, I thought I was dealing with a young man of Japanese ancestry who was very smart and sincere. I’ve had the good fortune to know many brilliant people over the course of my life, so I recognize the signs.”

Hal was the liason of sorts for Bitcoin’s creator Satoshi Nakamoto – apparently meeting the Japanese Savant randomly through email. He mentions multiple times that he was impressed with Satoshi’s brilliance while never really giving any details beyond vague generalities such as the following.

A few iconic tweets by @halfin during this same time period

Not only was he the first to receive the Bitcoin core code, before it was uploaded to Sourceforge, but he also mined the first blocks after Satoshi mined the early genesis blocks. It’s hard to believe how sensational this story is in some ways – but is that only because we view this history through a lens knowing what Bitcoin has become today?

Many in the early cryptography community already knew of Hal’s work on early proof of work protocols and privacy systems.

And it isn’t surprising that he would have been in the right position to meet someone like Satoshi.

Looking back at his achievements with coding – you can see how he was a valuable reference and help to the early Bitcoin code implementation. Possibly he would have the best insight to see any flaws or obvious errors in the code as he was experienced enough to have already written a similar proof of work protocol in RPOW.

Could it be that the final evolution of the RPOW token was actually called ‘Bitcoin’?

RPOW was the first source code to actually represent the fundamentals of what a digital gold would be. His integration Nick Szabo’s “bit gold” theory shows how he was well aware of the economic requirements for this decentralized, “store of value” he was trying to create.

Currency of the internet – a digital gold of sorts.

A blend of the anti-inflationary and sovereign aspects of gold and silver but with lightning fast speeds and the portability of the world wide web.

RPOW is clearly solving the issues of trust through computer code while allowing for constant reuse and transmutability – exactly the goal of Bitcoin.

To then be released as a new cryptocurrency by an anonymous creator, “Satoshi Nakamoto”?

You think he wouldn’t understand the need for a completely anonymous actor to be the creator for Bitcoin?

There are a few inconsistencies in how the timestamps and possible “early delivery” of email to Hal’s personal email account which shows some possibility that he was running both email accounts.

Email timestamp inconsistencies between Hal and Satoshi found years ago by investigative author Nathanial Popper added more evidence to the case..

Nathanial Popper, author of “Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money” uncovered a few errors in timestamps of email correspondence providing more clues to a possibility that Hal was behind the Satoshi anonymous creator.

Hal was emailing back and forth with Satoshi from his Finney.org site.

See Coindesk for more on the email time stamp investigation

Popper’s investigation concludes that Hal’s personal email server may have received an email BEFORE it was sent off Satoshi’s “vistomail.com” account..

Could it be that he was pretending to release the code and work with himself from the “satoshi@vistomail.com” email account?

Who knows..

We may never be sure who the real creator of Bitcoin is.

But the Bitcoin community is certainly grateful and blessed by Hal’s contributions to crypto.

He well understood the need for a decentralized currency of the internet at the time he created RPOW. His contributions to the community became more and more valuable over time. The crypto community would not be at the stage we are today without the self-less efforts and investments from true believers and creators such as Hal.

Thank you Hal!

-> For your efforts and contributions toward establishing the first decentralized digital currency which could empower millions, possibly billions, of people’s financial freedoms.

-> For the cypherpunk philosophy you helped evolve – through both code and community.

-> For the inspiration you gave to many by honoring the belief that the internet and world wide communication can bring betterment to the world.

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