A proposed form of a decentralized digital currency that was presented by blockchain pioneer Nick Szabo in 1998. Though it didn’t see daylight, bit gold was considered the direct precursor to bitcoin. Bit gold was intended not to depend on a trusted central authority. It was an attempt to replicate the economic properties of gold while improving its security properties (physical gold lacks security and can be acquired by many illegal means including force). This new form of gold was meant to utilize advanced computing techniques (like encryption) to come up with a new, trustless financial system. It was claimed that the proposed decentralized network would offer individuals a degree of monetary sovereignty that physical gold could not.
In the words of its inventor, bit gold could have been produced by “… a protocol whereby unforgeably costly bits could be created online with minimal dependence on trusted third parties, and then securely stored, transferred, and assayed with similar minimal trust…”.
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