Conceived in 1998 and publicly described in 2005, bit gold joined costly computation to transferable titles. It was a proposal, not a launched currency, and it lacked Bitcoin’s unified block production, difficulty rule and Nakamoto consensus.
Szabo began from the weakness of money that depends on a trusted issuer: trust creates costs and makes the monetary rules vulnerable. He sought digital scarcity whose ownership could be verified without one central mint. [Nick Szabo — Bit gold] [Satoshi Nakamoto Institute — Bit Gold archive]
A participant computed a proof-of-work string from public challenge bits with a costly benchmark function. The result was easy for others to verify even though producing it required measurable computation. [Nick Szabo — Bit gold] [Satoshi Nakamoto Institute — Bit Gold archive]
The newly created string supplied challenge bits for the next attempt. This linked successive proofs, so a later item depended on the published history rather than being an isolated token. [Nick Szabo — Bit gold] [Satoshi Nakamoto Institute — Bit Gold archive]
Several timestamp services published the challenge and proof. Szabo relied on a distributed set of services so that no single timestamp operator had to be trusted to order creation honestly. [Nick Szabo — Bit gold] [Haber and Stornetta — How to Time-Stamp a Digital Document]
The timestamped proof and its challenge entered a distributed property-title registry. Byzantine-resilient replication was supposed to preserve a public record of which key controlled each string. [Nick Szabo — Bit gold] [Satoshi Nakamoto Institute — Bit Gold archive]
Ownership was demonstrated through an unforgeable chain of titles in the registry. A transfer changed the registered title; it did not require recomputing the underlying proof of work. [Nick Szabo — Bit gold] [Satoshi Nakamoto Institute — Bit Gold archive]
Proofs produced at different times or on different machines would not have equal cost. Szabo therefore proposed trusted or distributed assayers and markets that could value and combine strings into more fungible units. [Nick Szabo — Bit gold] [Nick Szabo — Bit gold markets]
Bit gold aimed for costly, publicly auditable scarcity, but computation cost alone did not guarantee stable market value. Hardware improvements and differing benchmark costs created a valuation problem the proposal explicitly recognized. [Nick Szabo — Bit gold] [Nick Szabo — Bit gold markets]
Satoshi later described Bitcoin as an implementation of ideas from both b-money and Bitgold. The family resemblance is real—proof of work, timestamped history and distributed records—but Bitcoin supplied a different integrated consensus system. [Satoshi Nakamoto — Bitcointalk post on b-money and Bitgold] [Bitcoin whitepaper]
Bit gold was not deployed software, a blockchain with blocks, or a currency with a fixed 21-million schedule. It had no Bitcoin-style miners selecting a most-work valid chain and no demonstrated live network. [Nick Szabo — Bit gold] [Satoshi Nakamoto — Bitcointalk post on b-money and Bitgold] [Bitcoin whitepaper]
For the clearest picture, read this entry together with Nick Szabo, Proof of Work, b-money, Hashcash, Reusable Proofs of Work, Bitcoin. The reverse links also lead from Nick Szabo, The Genesis Book.