The idea of designing a digital currency was nothing new, but there was one challenge that needed to be overcome: The Double-spend problem*. In 1998, 10 years before the first cryptocurrency, computer engineer Wei Dai conceptualized the idea of a peer-to-peer currency that could be transferred peer-to-peer through the use of aliases.
*The double spend problem is when a user is able to send coins or pay for a transaction twice, by manipulating the ledger. This is solved in in modern cryptocurrencies with “consensus”, basically 51% or more the mining hashing power agrees that once a transaction is added to the ledger, it is “law” and can’t be used again. That’s why it is so important to have plenty of diverse miners/stakers to ensure that 51% will never be achieved by one entity.
B-Money aimed to provide many of the services and features of today’s crypto, describing it as “a scheme for a group of untraceable digital pseudonyms to pay each other with money and to enforce contracts amongst themselves without outside help.”
The idea never really materialized beyond a published essay, but its important to note that this essay references concepts in use today such as the concept of proof-of-work, verification, and rewarding workers.
He was also the first to suggest the use of keys or ledgers for enforcement and authentication of contracts!
Fun fact: The smallest unit of ether is called a ‘wei’ as a means to honor Dai and his work.