Who is Wei Dai?
There are no pictures of him on the internet, The New York Times described him as “intensely private,” and there is little to no information about him available. Although next to nothing is known about Wei Dai, the Chinese computer engineer who graduated from the University of Washington, his contributions to the world of computer science may have played a significant role in shaping today’s blockchain and cryptocurrency industry.
Bitcoin is believed to be one of the first implementations of the concepts Dai introduced to the world in his 1998 essay B-Money. B-Money is an essay written by Dai that was published in the Cypherpunk mailing list; Cypherpunks are a group that believes in the use of cryptography and privacy enhancement to change the worlds social and political landscapes. In 1992 the Cypherpunk mailing list went live and individuals whose beliefs and interests aligned with this group would attend meetings and communicate via a mailing list to discuss software that supported the group’s bottom line. Shortly after Adam Black proposed an idea called HashCash in 1997–a proof of work algorithm used to combat email spam and DDoS Attacks–Dai responded in the email thread relating to possible applications of HashCash with his B-Money proposal.
B-Money: The Two Protocols
B-Money is a concept for an “anonymous distributed electronic cash system” where the government is forbidden and not necessary for the economy to operate; also, violence is impossible because a B-money user’s name and location would be untraceable. Dai hoped that B-money would be able to accomplish these goals via two protocols.
Dai’s first protocol proposed a Proof-of-Work function that would be used to mint money into the economy–a function that came to fruition on the Bitcoin network. Dai’s essay reads,
“ The creation of money. Anyone can create money by broadcasting the solution to a previously unsolved computational problem. The only conditions are that it must be easy to determine how much computing effort it took to solve the problem and the solution must otherwise have no value, either practical or intellectual.”
On the Bitcoin network, the Proof-of-Work consensus is nearly–if not–identical to Dai’s first protocol.
Dai’s second protocol for B-Money proposes that a group of servers–that serve a similar function to miners and full nodes on the Bitcoin network–are responsible for keeping tabs on the current state of the network regarding who owns what. His essay reads,
“the accounts of who has how much money is kept by a subset of the participants (called servers from now on) instead of everyone. These servers are linked by a Usenet-style broadcast channel. The format of transaction messages broadcasted on this channel remains the same as in the first protocol, but the affected participants of each transaction should verify that the message has been received and successfully processed by a randomly selected subset of the servers.”
On the Bitcoin network, the combination of miners and full nodes practically serve the same function as the “servers’ Dai proposed in protocol two.
Although B-money never materialized, it’s two protocols are apparent in the Bitcoin protocol which seems to have drawn influence from Dai–so much so that his essay is the first citation in the Bitcoin Whitepaper. However, Dai insists that Satoshi Nakamoto came up with the idea for Bitcoin before he or she had come across the B-money paper, and reached out to Dai.
But Dai’s contributions to the world of computer science run deeper than the potential impact that they may have had on the Bitcoin protocol; Dai has worked for several notable companies in the tech industry. After graduating from the University of Washington with a degree in computer science, he worked as a programmer for TerraSciences before moving on to Microsoft, where he was a member of their cryptography research group. After leaving Microsoft, Dai co-founded Bitvise–a company that creates remote access software for windows.
And not only has Dai been a part of successful companies in the tech industry, he has also created revolutionary software and identified major bugs and errors within systems. Dai is the creator of crypto++ a library of cryptographic algorithms written in C++, has identified significant vulnerabilities in SSH2, and detected the browser exploit against SSL/TLS better known as BEAST (Browser Exploit Against SSL/TLS).
Wei Dai’s contributions to the world of computer science and the potential influence he may have had on Bitcoin are significant–so much so, that the smallest unit of the cryptocurrency Ether has been named after him.
Wei Dai is clearly talented, and a mind like his is bound to have more successes in the future, so his new project Mercatoria is most likely worth taking a look at. Not much is known about this project yet, but its website is live, states that Wei Dai is the co-founder, and that,
“Mercatoria uses pseudorandom assignment and locality of state to achieve arbitrary scalability and true decentralization for its payment processing and smart contracts.”
Does this mean we are getting a new blockchain network, or that Dai has created a layer two solution that will be implemented over an existing blockchain? We don’t know, but regardless, you should be on the lookout for Dai’s new project sometime in the future.
One reason for this project may be because Dai believes that Bitcoin has failed in a sense. In a LessWrong post, Dai says,
“I would consider Bitcoin to have failed with regard to its monetary policy (because the policy causes high price volatility which imposes a heavy cost on its users, who have to either take undesirable risks or engage in costly hedging in order to use the currency). (This may have been partially my fault because when Satoshi wrote to me asking for comments on his draft paper, I never got back to him. Otherwise, perhaps I could have dissuaded him (or them) from the “fixed supply of money” idea.) I don’t know if it’s too late at this point to change the monetary policy that is built into the Bitcoin protocol or for an alternative cryptocurrency to overtake Bitcoin, but if it is, then Bitcoin is similar to self-improving AI in that it may be critical to get the first one right and it offers evidence on how hard it is for an individual or small group working outside the mainstream to do that.”
Dai believes that in a sense, Bitcoin has failed. The severe fluctuates in Bitcoin’s value make it difficult for users to transact with the cryptocurrency; the fact that it is a scarce resource (fixed money supply) encourages mantra’s like HODL. However, if nobody is using their Bitcoin in exchange for goods and services, but instead, are merely speculating on its price, is the cryptocurrency living up to its goal of being a peer-to-peer electronic cash system?
It will be interesting to see if Dai can fix the problems that he believes exist in Bitcoin in his new project Mercatoria–a word that means Merchant Law in Latin. But as mysterious as Dai is, who knows when the next time we will get more information on that project will be.