Nick Szabo is a computer scientist and legal scholar who coined the term "smart contract" in the 1990s and designed bit gold, an early proposal for digital money. His essays also range over the history of money and law. Writers have named him as a possible Satoshi Nakamoto, and he has denied it.
Most of the work Nick Szabo is known for came before Bitcoin did. Of the 42 essays and papers the Satoshi Nakamoto Institute lists under Szabo's name, 39 are dated before the Bitcoin white paper of October 2008. Smart contracts and bit gold, the two ideas crypto readers know him for, both took shape in the 1990s.
Who Is Nick Szabo?
Nick Szabo is a computer scientist who also went to law school, and his best-known ideas come from where the two fields meet. In a 2017 interview with Tim Ferriss, he said his law degree was "in large part based on smart contracts and wanting to do a reality check of the stuff I'd thought of as a computer scientist."
His writing ties computer security to law and economic history. The smart contract came out of that mix in 1994. Bit gold, his design for scarce digital money, followed in 1998.
He made his case in essays, and the Satoshi Nakamoto Institute keeps many of them in its online library, where the oldest entry under his name dates from 1993.
What Did Nick Szabo Write About Smart Contracts?
Three of his texts from 1994 to 1997 set out the idea in his own words.
His 1994 essay "Smart Contracts" opens by defining the term as "a computerized transaction protocol that executes the terms of a contract." Put simply, it's software that carries out what two sides agreed. The essay names the goals as cutting fraud losses and the need for trusted middlemen.
In a 1996 paper on smart contracts as building blocks for digital markets, Szabo explained the name. He called them smart because they could do far more than their paper ancestors, and he stressed that the name implies no artificial intelligence. He offered the vending machine as a primitive ancestor, since its simple mechanism takes your coins and hands back the product and change.
In "The Idea of Smart Contracts", from 1997, he imagined a car that won't start unless its rightful owner completes a cryptographic check. If the car secures a loan, that lock would stop the lender from repossessing it, so he proposed a smart lien that hands the keys back to the bank when payments stop.
Blockchains later gave the idea a home. When you use a decentralized app, you rely on code that holds the terms and enforces them, which is how a smart contract works on a blockchain.
What Is Bit Gold?
Bit gold is Nick Szabo's design for digital money whose value wouldn't rest on trusting a bank or any other third party. In his proposal, which the Satoshi Nakamoto Institute dates to December 2005, he described the goal as "unforgeably costly bits" made online with little need for trusted third parties.
In the design, your computer does costly work on a public challenge string, and the result is a proof of work. It gets a timestamp and joins a shared registry of owners. Each new piece takes its challenge from the last, so the pieces form a chain. Whoever's signature leads a piece's chain owns it. Pieces would vary in value like collectibles, so dealers would bundle them into even units.
The dates come from Szabo himself. In a 2011 post on his blog, he wrote that he "came up with" bit gold in 1998 on the same private mailing list where Wei Dai was working on b-money. The ideas, he added, "were mostly not described in public until 2005."
By his own account, bit gold stayed a design. "I didn't get around to programming BitGold. So yeah, it was a design," he said in the 2017 Ferriss interview.
What Did Nick Szabo Write Before Bitcoin?
Nick Szabo wrote most of his catalogued work in the 1990s and early 2000s. The table sorts every entry on the Satoshi Nakamoto Institute's author page for him by the dates the library gives, with Bitcoin's white paper as the dividing line.
Satoshi Nakamoto announced that paper on a cryptography mailing list on 31 October 2008. If "white paper" is a new term for you, our glossary explains the document a crypto project publishes to set out its goals and design.
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Period, by the library's dates
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Works listed
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Examples
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1993-1994
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3
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Multinational Small Business (1993), Smart Contracts (1994)
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1995-1999
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20
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The Idea of Smart Contracts (1997), Quorum Systems (1998)
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2000-2004
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12
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Shelling Out (2002), Scarce Objects (2004)
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2005 to October 2008
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4
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Bit Gold (December 2005), Wet Code and Dry (November 2006)
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After October 2008
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3
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Bitcoin, what took ye so long? (May 2011)
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The 1990s were the busiest stretch, with 23 of the 42 works on that list. Only three carry dates after the white paper, and one of them is the 2011 blog post quoted above.
His blog leans the same way. It began in October 2005, three years before the white paper, yet about 78% of its 351 archived posts carry dates before it.
The library's list is a selection, and its dates are the library's own, so treat the split as a guide to when his ideas took shape. If you want to read Szabo yourself, start with the 1994 essay and the bit gold proposal, both short enough for one sitting.
Nick Szabo's Background in Digital Cash and Law
Two threads run through Nick Szabo's background, digital cash and law. In the Ferriss interview, he mentioned "a company I was working for called DigiCash with David Chaum" while describing trust-based notes that a central authority issues.
He took a basic lesson from law school, which he called Law School 101, that property and contract law are "the two fundamental building blocks of our commercial society." He wanted to know how to enforce them in cyberspace.
Shelling Out, his 2002 essay, asks what money is by going back before coins. It opens in colonial New England, where strings of shell beads called wampum served as money.
In October 2005 he started Unenumerated, a blog subtitled "An unending variety of topics." He reposted older essays there, Shelling Out among them.
Is Nick Szabo Satoshi Nakamoto?
No, by his own account. When the writer Dominic Frisby named him as Bitcoin's creator in a 2014 book, IBTimes UK reported that Szabo "has denied it to both Frisby privately and on Twitter publicly."
The outlet reproduced his July 2014 tweet, which reads "Not Satoshi, but thank you."
Three years later, Ferriss asked him who Satoshi is. Szabo's answer was "It's some unknown character out there that has disappeared, or group."
How to Trade Bitcoin Futures on Phemex
If Szabo's essays leave you wanting exposure to Bitcoin itself, Phemex runs a BTC/USDT futures market. It's a perpetual contract, a futures contract with no expiry date, so a position stays open until you close it or it's liquidated.
Futures use leverage, and a leveraged position is closed automatically if losses push its margin below a set minimum. When that happens it's called liquidation in crypto trading, and it can cost you the margin you put up.
Frequently Asked Questions
What is Nick Szabo doing now?
The most recent post on his blog, Unenumerated, dates from March 2018. Its title marks it as part one of an essay on the many traditions of non-governmental money.
What is Shelling Out?
Shelling Out is Nick Szabo's 2002 essay on where money came from. It argues that collectibles such as shell beads were the forerunners of money and helped early humans cooperate. You can read it free in the Satoshi Nakamoto Institute's online library.
What did Nick Szabo do at DigiCash?
He worked there, in his own words, but the 2017 interview gives no job title or years. He raised it while explaining money that depends on trusting an issuer, and he said he grew dissatisfied with that and wanted something closer to what he calls "trust minimized."
Disclaimer: This article is for informational purposes only and is not financial advice. Cryptocurrency trading involves substantial risk. Always do your own research before making investment decisions.
