December 27, 2008 — the concept of "bit gold" emerges. Nick Szabo looks at the process where the "customer puzzle function", "secure benchmark function" or "proof of work function” (POW) are involved

On this day, Nick Szabo, a cryptographer and expert in the field of digital currencies, introduced the concept of “bit gold” - a digital analogue of gold that has its properties.

Nick's concept of bit gold revolves around the idea of using digital tokens or "bits" as an alternative form of money. Szabo proposes that these digital tokens have properties similar to gold - limited supply and resistance to inflation.

Key ideas:

— Mining bit gold requires solving a cryptographic puzzle, which verifies the “work” done and prevents fraud.

— Like gold, this effectively limits the mining rate and total amount of bit-gold.

— Due to cryptography, bit gold cannot be counterfeited or transferred without the owner’s permission, which makes it a reliable means of storage and settlement.

— The transparency and anonymity of the system allows the use of bit gold as a “safe benchmark” (a standard against which the security and stability of other assets are compared).

Instead of relying on traditional financial instruments such as gold, Szabo suggests using digital tokens that can be easily transferred over the Internet. Bit gold must be limited in quantity to maintain its value and also ensure user trust.

#cryptocurrency #blockchain #finance #technology #investment #BTC #Bitcoin