Wei Dai

Wei Dai is a computer engineer and member of the cypherpunk movement who proposed B-money in 1998, a theoretical protocol for an anonymous, distributed electronic cash system. Though never implemented, B-money introduced several concepts that became fundamental to cryptocurrency design and was explicitly cited in the Bitcoin whitepaper.

B-money Proposal

By the late 1990s, various proposals for electronic money had been advanced, but none had achieved an optimal balance of security, anonymity, and decentralization. Dai's B-money proposal addressed these challenges by introducing a system where computational "work" equaled money creation, establishing a direct link between resource expenditure and currency generation.

In the B-money protocol, participants would compete to solve computational problems, and the solutions would be broadcast to the network. The work performed to solve these problems would be verified by other network participants, and successful solvers would be credited with new units of currency. This concept of creating money through verified computational work became a cornerstone of Bitcoin's mining mechanism.

Distributed Ledger Concept

One of B-money's most significant innovations was the introduction of a distributed ledger maintained by all network participants. In this system, every participant would keep a separate database recording the amount of money belonging to each user. When a transaction occurred, all participants would update their databases simultaneously, creating redundancy and eliminating the need for a central authority.

This decentralized record-keeping system addressed the double-spending problem that had plagued earlier digital currency proposals. By requiring consensus among network participants about the state of account balances, B-money prevented users from spending the same digital token multiple times.

Dai also proposed a second, more complex protocol variant involving a subset of network participants who would maintain the ledger in exchange for transaction fees. This concept anticipated the role of miners in modern cryptocurrencies and introduced ideas about incentive structures in decentralized networks.

Legacy and Influence

Although B-money remained a theoretical proposal and was never implemented as working software, it had profound influence on subsequent cryptocurrency development. The protocol introduced concepts that have become central to blockchain technology, including distributed ledgers, consensus mechanisms, and the relationship between computational work and money creation.

B-money also proposed self-executing contracts that would be enforced by the network, an idea that became a cornerstone of platforms like Ethereum. The concept of decentralized autonomous organizations, which are organizations run by rules encoded as computer programs on a blockchain, has its roots in the decentralized, automated systems proposed by B-money.

The smallest unit of Ethereum's native cryptocurrency, the wei, is named in honor of Dai's contributions to cryptocurrency theory. This recognition reflects B-money's lasting impact on the field, despite never being implemented. Dai's work demonstrated that decentralized digital currency was theoretically possible and outlined many of the mechanisms that would be necessary to make such systems practical.