B-money Proposal Published

In November 1998, cryptographer Wei Dai published the proposal for b-money to the Cypherpunks mailing list. Unlike previous digital cash attempts like DigiCash, which relied on centralized servers, b-money proposed a decentralized system where the ledger was maintained collectively by a network of participants. Dai described two specific protocols. The first used a synchronous broadcast channel where every participant maintained a separate database of how much money belonged to whom—a concept strikingly similar to Bitcoin's distributed ledger (blockchain).

Crucially, Dai proposed that money could be created by solving computational problems, linking the creation of currency to the expenditure of real-world resources. He wrote: "Anyone can create money by broadcasting the solution to a previously unsolved computational problem." This is the first description of using Proof-of-Work for money issuance, a concept Bitcoin would later perfect. The proposal also included mechanisms for enforcing contracts through a network of arbitrators, anticipating modern smart contracts.

Although b-money was never implemented in code, it provided the theoretical blueprint for Bitcoin. Satoshi Nakamoto was unaware of b-money when he first designed Bitcoin but was pointed to it by Adam Back during the pre-release phase. Satoshi subsequently cited Wei Dai in the Bitcoin whitepaper (Citation #2) and reached out to him to verify the citation. The smallest subunit of Ether (the currency of Ethereum) is named the 'wei' in his honor. B-money provided the first detailed description of a decentralized cryptocurrency that did not rely on trusted third parties, serving as the primary conceptual bridge between the cryptographic primitives of the 1980s and the working system of Bitcoin.

Key Sources:
• Original b-money Proposal (1998)
• Nakamoto Institute: b-money
• Satoshi's Emails referencing Wei Dai