The Blockchain Was Invented For NFTs, Not Currency

Jason Bailey: I often introduce the two of you as my good friends “who invented the blockchain.” I usually get a look of disbelief followed by, “No, Satoshi invented the blockchain,” even from people who have been into Bitcoin/crypto for many years. Can you help folks better understand your contributions and how those represent part of the foundation that Satoshi built upon?

Stuart Haber: Okay, let me tell the story by going back about three decades in history to discuss what, at least from my perspective, marked the beginning of the blockchain. This all happened in 1989 when Scott Stornetta and I were young scientists at Bellcore (Bell Communications Research). 

I worked as a cryptographer. Scott had just joined. He wanted to find a solution to ensure that the integrity of digital records could be proven, guaranteed, and maintained through certain procedures or algorithmic means. Scott strongly suspected that cryptography would play a role in this. So along with Dave Bayer, we wrote a couple of papers and created an architecture to address this problem.

Scott Stornetta: Stuart and I have developed a distinctive style of collaboration characterized by a yin-and-yang dynamic and a continuous exchange of ideas. I tend to get deeply absorbed in my thoughts on problems like this. The challenge was that I had no knowledge of the underlying mathematics or cryptography that could be applied to address it. I had a question but was clueless about how to find a solution. This knowledge gap has been a driving force behind our productive collaboration.

SH: For those familiar with such concepts, both digital signatures and cryptographic hash functions had been proposed, implemented, and well understood by the fall of ‘89. These tools suggested a relatively straightforward solution to the problem, which required a single trusted entity — whether a person, a piece of software, or hardware — to ensure the integrity of records within a specific domain. For many, this solution was deemed satisfactory. In our narrative, we sometimes refer to it as a "journeyman solution" to the challenge of ensuring record integrity. However, it was actually unsatisfactory to both Scott and me because we sought a solution that didn't necessitate trusting any party at all or trusting as few individuals, entities, and mathematical assumptions as possible.

We eventually developed a solution, and I can explain it using a single metaphor: that of a "digital fingerprint." In fact, every blockchain project worldwide depends on a cryptographic hash function, a mathematical algorithm, a process with inputs and outputs, that effectively generates the digital fingerprint of a file. When you apply this process multiple times to the same file, you consistently obtain the same fingerprint. It's an efficient process, even for large files, such as the one recording our current conversation, especially if we forget to turn it off and let it run.

Now, another crucial property of cryptographic hash functions, which I haven't mentioned yet, is that when you take two different files and compute their fingerprints, you get two distinct fingerprints. In fact, even if you make a tiny change to a single bit in a file, such as changing a zero to one or vice versa, the resulting fingerprints of these now two different files are significantly and unpredictably different. When it comes to financial records, for instance, a single-bit change can profoundly affect the meaning of the file. For instance, altering a leading zero to a one could be much more lucrative for one party than the other. Hence, the metaphor of fingerprinting is apt here, as well: Two different fingers have two different fingerprints.

One more essential property of a fingerprint is that my fingerprint does not reveal details about me. You cannot discern my height, my hair color, or even whether I have more than one finger from my fingerprint. Similarly, a fingerprint in the context of a cryptographic hash function is merely a string of bits, a sequence of numbers and letters that divulges nothing about the original file. However, if you possess a fingerprint and the file that claims to match that fingerprint, you can easily verify its authenticity by “taking its fingerprint” again. This capability of digital fingerprinting is known in the field as cryptographic hash functions. These concepts were well established even at that time.
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JB: Allow me to summarize to ensure I've grasped it correctly. Hashing or using fingerprints was a well-understood concept. Your team's goal was to prove the integrity of records without tampering. Were these hashes or fingerprints somewhat analogous to the blocks in a blockchain? Was your significant contribution finding a way to connect these fingerprints into a chain of blocks? Is that a reasonable assumption, or am I making a leap?

SS: You're right on target. As Stuart mentioned, we realized that hash values could not only represent documents more compactly, but also efficiently. The pivotal innovation was grouping them together into blocks (and building each block as a Merkle tree), and then chaining the blocks together, all using the same hash function. This approach, with the input of Dave Bayer, allowed us to link groups of records in such a way that each participant with their document became a holder of part of the record's proof, acting as an early kind of node. It meant that all records were uniquely joined and widely distributed, which encompassed many fundamental elements that Satoshi later built upon to create Bitcoin. We don't take anything away from Satoshi and his creation, but we view Bitcoin as an application built on top of the early blockchain. To Satoshi's credit, he ensured to cite all the publications related to the foundational work in which we participated. Our work accounts for three of the eight citations in the Bitcoin whitepaper, so we batted .375.

JB: Not a bad batting average! So for all the crypto enthusiasts out there who've come to idolize Satoshi as the originator of all things blockchain, how can we help them bridge the gap between your work in the late '80s and early '90s to today’s Bitcoin?

‍SH: When you mention to a general audience that you've made a contribution to blockchain, they often immediately associate it with Bitcoin, or cryptocurrencies in a broader sense.

Scott and I weren't attempting to invent electronic money. In fact, there was already ongoing work in the cryptographic community to create purely digital money, dating back to the '80s. Our focus was broader — we were genuinely concerned about the integrity of all records, including electronic records.‍

SS: This encompassed financial records, as well, but our scope extended to every significant record ever created, all of which we believed could be registered on the blockchain.

SH: And since it's impossible to predict what records will become significant years later, why not include every single record ever created?

JB: Essentially, you were more aligned with the concept of NFTs than cryptocurrency, correct? When we consider NFTs as a means to verify artworks, deeds, patents, and various applications, it seems to align with your original objectives.

SH: Exactly. We used the term "provenance" when discussing algorithmic methods for digital records. Our concerns extended to various record types. However, when Satoshi aimed to establish a digital money system and needed a method to ensure the integrity of financial transactions within the system, he directly adopted our solution. The data structure of Bitcoin transactions mirrors precisely the data structure of our timestamping system, which was implemented in experimental code starting in October, 1991, and made commercially available in January, 1995.

SS: I'd like to reiterate the point Stuart made. In essence, our vision of blockchain wasn't in competition with Satoshi's. Satoshi introduced an innovation in the realm of currency, but he required a robust record-keeping system immune to doubt. He seamlessly integrated this layer and proceeded to construct Bitcoin on top of it.

I want to emphasize that we don't diminish Satoshi's contributions. Instead, he built Bitcoin upon a chain of Merkle tree-connected blocks that were widely distributed, a concept he openly acknowledged had already been invented. He then employed the same cryptographic hash function or digital fingerprinting mechanism, which underpinned the record-keeping's integrity, to create the mining process directly.

One intriguing aspect lies in the recent popularity of ordinal inscriptions within Bitcoin. If people delve into the footnotes of the Bitcoin whitepaper, they'll discern that in our third joint paper, we hinted at the notion of utilizing blockchain inscriptions or ordinals to craft unique non-fungible records. These distinct positions within the blockchain could potentially fulfill the same purpose we now associate with NFTs.

Your observation about cryptocurrency versus NFTs precisely hits the mark. To some extent, we viewed NFTs as the more significant long-term realization of our initial goals. ‍‍

It suggests that everything of importance, not limited to various candid cartoon primate poses, may eventually require unique registration as an NFT on the blockchain. Perhaps we should delve into our most recent NFT collection?‍

JB: I'd love to hear more, especially now that we've clarified your contributions and their continuity with what followed from Satoshi. It's fascinating to think that your invention of the blockchain aimed more at NFTs rather than cryptocurrencies, which may surprise some. How did you decide on working with an artist to leverage illustrated news items as the art for your NFTs?

SS: In the early days, the main challenge was achieving universal consensus, a task made even more daunting given the absence of the World Wide Web or similar technologies. Our solution was to periodically create a snapshot, a kind of fingerprint, of the blockchain and distribute it widely to prevent manipulation. 

To achieve this, we chose to publish this snapshot in the national edition of The New York Times on a weekly basis. This edition is housed in libraries and archives worldwide, and unbeknownst to those institutions, we garnered their support in storing these weekly hash values. Imagine the Herculean effort required to tamper with a single element in the chain — it would be like infiltrating every library globally and altering their copies of The New York Times. 

This aligns with our approach to the NFT collection. We released an initial set of 12 NFTs, each representing one of 12 consecutive weeks of our New York Times publications. Collaborating with an artist, we curated events from each week, selecting something whimsical, historical, or noteworthy, and illustrated it. Thus, for each of the 30+ years of continuous blockchain existence, there exists a memento capturing an event from that historical week. This allows you to genuinely own a piece of history. 

Moreover, our plan involves releasing subsequent collections on various chains and protocols to promote greater cooperation and unity within the blockchain community. We've already received inquiries from different blockchains and artists interested in reserving a set of 12 consecutive blocks. Our intention is not to centralize everything on one widely used blockchain like Ethereum. Instead, we aim to demonstrate that various communities can possess a piece of blockchain history. 

Our goal is to gradually encourage greater interoperability and collaboration. We aim to provide a broad range of artists, including graphic artists, with the opportunity to interpret 12 weeks of history associated with the 12 values published in The New York Times during those weeks. This initiative serves as an invitation for creative artists and blockchain founders to join us in commemorating blockchain's history rather than simply promoting NFT sales. It's a call to collaborate and co-create as we memorialize blockchain's journey.

JB: That’s fascinating! I think some people might be puzzled when they hear that you used The New York Times for your blockchain because they typically associate blockchains with computer-driven technology, not analog media like a newspaper ad. However, the newspaper served as a means to ensure wide distribution in a tamper-proof manner, where no single individual could maliciously alter it without infiltrating every library globally...

SH: It's not tamper-proof; it's tamper-evident. I mean, I could certainly mess up this copy of our ad in The New York Times by scribbling all over it or something. But the crucial point is that if a challenge arises, you can locate your own copy of this record and verify it against another person's record. This initiative began as experimental code at Bellcore but eventually evolved into a company called Surety, whose primary objective was to secure digital records for clients.
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JB: Is there a fundamental aspect of your personality or your political leanings that influenced your invention of the blockchain?

SS: Yes. There was definitely a prevailing notion that we don’t need no stinkin’ central authority to dictate what's authentic or not. We used to humorously claim that our system was so inherently trust-distributed that even if the mafia were overseeing it, it would remain an honest system. However, we soon realized that this reference was not suitable, considering our location in New Jersey, so we stopped using it.

Personally, I strongly appreciate the inherent decentralized nature of the blockchain. While I acknowledge the existence of power concentrations, particularly in the context of Bitcoin, the underlying premise remains: Documents that are credible to everyone are those in which every participant collectively shares the trust responsibility. I find this concept to be profoundly valuable and believe it can serve as the basis for numerous institutions with a similar ethos. 

SH: In our design of what is now known as the blockchain, we were driven by the idea of ensuring the integrity of records without the need for central trust.

SH: It's worth noting that there are blockchain maximalists who claim that blockchains, particularly their own, will overthrow all forms of government and central entities. Personally, I find such claims to be simplistic and unrealistic. I might be more pessimistic than Scott about the transformative potential of blockchains. There are economic forces at play that lead to centralization in ostensibly decentralized systems, including Bitcoin and Ethereum.‍

SS: Indeed, Stuart and I have had many discussions on this topic. It's not so much that we agree to disagree; it's more about recognizing that blockchain technology represents a turning point, a form of creative destruction as described by Schumpeter. It introduces a healthy tension between the desire to decentralize for credibility and the need for operational efficiency through centralization. This tension is preferable to extreme centralization, as it allows for more balance and diversity.

JB: In the crypto community, people often exhibit strong maximalism for specific chains, almost to a religious degree. However, it's clear you support a multi-chain future. Can you share more about your perspective on this?

SH: Certainly. One aspect we haven't discussed yet is that we chose to launch our initial series of a dozen NFTs on the Kadena blockchain platform, a platform whose design we appreciate for various reasons. However, as we expand our NFT offerings, we will not only encourage but also require any other NFT offerings to be interoperable. We aim to promote interoperability between different blockchain networks, just as we are doing ourselves, albeit on a smaller scale. We support and encourage the diverse range of projects and work happening in the broader blockchain field. We want all of these projects to be able to communicate effectively with one another.

SS: To emphasize further, I envision a future where various blockchain networks can coexist and differentiate themselves based on factors like on-chain/off-chain capabilities. This diversity in features is a positive indicator of a thriving ecosystem. Stuart and I, in our own modest way, aim to facilitate interoperability and foster a sense of community among these blockchain networks. So if you represent a blockchain network that wishes to have a voice and is open to collaboration, please reach out to us. Perhaps the next collection, encapsulating 12 weeks of blockchain history, could be hosted on your blockchain platform. Additionally, if there are artists interested in interpreting 12 weeks of blockchain history or 12 weeks of global history embedded in a blockchain, please don't hesitate to contact us.