History of Bitcoin Mining (Part 1): The Story Begins in the CPU Era

1.1 Prehistoric Apocalypse

For thousands of years, how to value wealth in the most scientific way and trade it in the most economical way has been a historical problem.

In the view of Nobel Prize winner in Economics Friedman, the way residents of the small Pacific island of Yap (601099) use markings on stone coins to trade is essentially no different from the Federal Reserve moving gold reserve bills from one drawer to another.

For this purpose, he came up with a great inspiration: computer technology (mathematics) can be used to establish a monetary system that is more reliable than national credit.

Friedman conceived an automated device that could issue currency on a programmatic basis, thereby preventing central banks from running their printing presses indefinitely.

But how can we realize this idea? How can we create currency that cannot be counterfeited?

In the 1980s, a group of talented programmers discussed this problem in a cryptography mailing list.

In 1982, David Chaum proposed an untraceable cryptographic network payment system. Eight years later, he expanded this idea into a cryptographic anonymous cash system, Ecash.

In 1998, Wei Dai's paper described an anonymous, distributed electronic cash system: b-money.

At the same time, Nick Szabo invented Bitgold and proposed a proof-of-work mechanism, in which users competitively solve difficult mathematical problems, and then string the results of the solutions together using encryption algorithms and publish them publicly to build a property rights certification system.

Hal Finney perfected the mechanism into a "reusable proof of work".

On November 1, 2008, an unknown netizen who called himself Satoshi Nakamoto published "Bitcoin: A Peer-to-Peer Cash Payment System" in the cryptography mailing group of metzdowd.com, expounding his new conception of electronic currency.

1.3 The First Miner

At the time, the best response to Satoshi’s idea was skeptical acceptance. Cryptography researchers had seen too many grand schemes from low-level novices. Their instinctive reaction was to doubt.

However, the email caught the attention of one man, Hal Finney.

Hal Finney is a well-known figure in the cryptography circle and one of the authors of PGP encryption. Hal Finney had long conceived of a currency based on cryptography. He even tried to create a currency based on computational workload, called RPOW.

In fact, one of the core technologies used in Bitcoin is based on the “reusable proof-of-work mechanism” he proposed that year.

Satoshi Nakamoto was a hard-working programmer who not only came up with ideas, but also wrote code.

On January 3, 2009, he released the first version of the bitcoin client. (Off topic, I recommend an article "All I Need Is a Programmer")

In the next few days, Hal Finney reported a lot of bugs to Satoshi Nakamoto via email, and then Satoshi Nakamoto fixed them one by one.

Soon, the Bitcoin software was running very stably. So Hal Finney let it run by itself. At that time, the difficulty of mining was only 1, and blocks could be easily obtained by CPU, without GPU at all. In the next few weeks, Hal Finney mined thousands of Bitcoins.

Later, Hal Finney felt that running the bitcoin client caused his computer to become very hot, and the fan noise also bothered him, so he turned off the software.

Perhaps, he did not realize that he would leave his name in history.

As people will always remember, when Bell invented the telephone, his first words were to shout to his assistant:

"Watson, come here quickly, I want to see you."