Nick Szabo  🔑

@NickSzabo4 writes a lot about free banking, tagging him if he wants to add anything.

Free banking history helped inspire my design of bit gold, but mostly as "what people really wanted at the end of the day was the gold, the bank note [today could be digital cash] was merely an IOU for gold. So how do I make the actual money, the gold, in digital form?

From that POV, the basic problem with free banking is that for various reasons banks convinced people to swap their trust-minimized silver and gold for trust-based gold IOUs. Fractional reserve and modern fiat are both consequences of that misplaced trust.

So I set myself the challenge of using my computer science knowledge to design a trust-minimized form of digital money, and the result was bit gold.

I hoped such money would be convenient enough that economies would return to vulnerability-minimized money. We still see the trust-the-convenient-exchange vs. hold-your-own debate today, but Bitcoin gives us a better chance to minimize the vulnerability of money than gold did.

What was the reason for Bitgold's failure? I never saw a write-up on this, if there was one.

I'm no expert, but Bit gold used network addresses instead of hash power (like Bitcoin) to solve the double-spend problem, which makes it much more vulnerable to sybil attacks. Satoshi was inspired by bit gold and other and solved this problem.