We remember Hal Finney on the 14th anniversary of the first Bitcoin Transaction


It’s been 14 years since the first bitcoin transaction was sent. On January 11, 2009, Satoshi Nakamoto, the pseudonymous creator of the Bitcoin system, sent 10 bitcoins (BTC) to renowned cryptographer and computer scientist Hal Finney. Sent before BTC was affordable, this test transaction was a precursor to many peer-to-peer transfers made possible by the world’s first cryptocurrency network.

Finny, who died in August 2014, was also the first person other than Satoshi to download and run Bitcoin software. He detailed his story in a 2013 BitcoinTalk forum post where he said he was another legendary slatepunk, Phil Zimmerman, who was hired to build the Pretty Good Privacy encryption solution for PGP Corporation.

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“When Satoshi announced the first release of the software, I immediately grabbed it,” Finney wrote. He was willing to show interest in a project that separates money from politics and gives users sovereignty over their wealth, experimenting with previous examples of “digital cash”. Others, Finney claimed, were more skeptical at first.

“Cryptographers have seen too many great schemes by the uninitiated. They tend to have a knee-jerk reaction,” Finney wrote. So he dug in a few coins, found a few bugs, and let the software run for a few days before determining that the protocol was stable, but that his computer was running low on CPU, so he shut it down.

In August 2009, a few months after he first downloaded, accepted, and walked away with bitcoin, Finney was diagnosed with Lou Gehrig’s disease (or amyotrophic lateral sclerosis)—a debilitating disease that attacks a person’s nervous system. ALS left him paralyzed for several years.

He eventually returned to Bitcoin, where he contributed after his illness forced him into early retirement. While he was writing his memoirs, Finny was making a new kind of wallet. “It’s very slow, probably 50 times slower than before. But I still love programming and it gives me goals,” he said.

Bitcoin was a project he could see growing very quickly. In a letter to Nakamoto, Finney was one of the first to put a price on the cryptocurrency. Assuming that some of the total global household wealth will seep into the project, each of the 21 million coins could one day be worth $10 million.

“Since we are all rich in bitcoins, or will be worth a million dollars as everyone expects, we should put some of this unearned wealth to good use,” he wrote in a separate 2011 Bitcoin Talk post. If it sounds loud, Finney was aware of the speculative side of the cryptoeconomy.

“The danger is that people buy bitcoin expecting the price to go up and the resulting increased demand causes the price to go up. This is the definition of a BUBBLE and as we all know, bubbles burst,” he wrote. His other economic predictions – such as the nature of the relationship between network growth and security – have more or less come true.

Finney is usually skeptical that he invented Bitcoin. Aside from the fact that coders are often their first users and business founders their first customers, Finney certainly managed to design something like Bitcoin that combines several pre-existing cryptographic and computational ideas in a new way.

See also: Creation Block: The First Bitcoin Block

For example, Finney created the first reusable proof-of-work system in 2004, based on the original proof-of-work algorithm developed by Adam Back (another Satoshi competitor), which allowed people to channel their computational energy to a useful purpose. Finney’s use case for RPoW was a digital token system.

If Satoshi’s “real” identity didn’t matter then, it doesn’t matter now. Finney wrote that in his correspondence with Satoshi, he thought he was dealing with a “very intelligent and sincere” man—a quality he learned to recognize over the years. But the most important thing was that the code worked and the idea was sound.

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.



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