Trusted Third Parties (TTP’s)

Nick Szabo is a pioneer of digital cash and recognised the vulnerabilities of trusted third parties.

Hi Plebs,

The early days of the digital economy were marked by a growing realisation among Cypherpunks and cryptographers that the fundamental building blocks of the online world required rethinking. As electronic cash and e-commerce began to emerge in the early 1990s, pioneers like Nick Szabo recognised that the reliance on centralised, trusted third parties (TTPs) posed serious risks.

Szabo's experience working at the pioneering digital cash company DigiCash in Amsterdam crystallised his concerns. He witnessed first-hand how the CyberBucks electronic cash system was entirely dependent on the company itself, with no way to verify if DigiCash was adhering to its promises about limiting the total supply. Szabo realised that a centralised entity like DigiCash could easily manipulate the system, or that the whole system would collapse if the company's servers went down (and in DigiCash' case - it did.)

This led Szabo to more broadly examine the role of TTPs in the rapidly evolving online ecosystem. He observed that many cryptographic protocols and systems simply assumed the trustworthiness of central authorities, such as certificate authorities that provided public key registries. However, Szabo argued that these TTPs represented critical security vulnerabilities, as they could be targeted by attackers or compelled by authorities, with potentially devastating consequences.

Szabo's influential essay "Trusted Third Parties are Security Holes" laid out his perspective in detail. He contended that the costs and risks associated with relying on TTPs needed to be factored into protocol design. In his view, the ideal solution would be to eliminate the need for TTPs altogether through innovative distributed computing approaches.

This line of thinking aligned with the broader Cypherpunk and Extropian visions of creating a "Galt's Gulch in cyberspace" - a digital realm with strong property rights, enforceable contracts, and decentralized infrastructure. Szabo's insights helped spur efforts to develop decentralised alternatives to traditional electronic cash, public key infrastructures, and other core components of the emerging digital landscape.

Cheers, and onwards with Bitcoin