Who was Hal Finney? Bitcoin pioneer and creator of RPOW

Hal Finney was an American programmer who specialized in cryptography. He helped develop PGP, one of the first email encryption programs available to the general public, and in 2004 he created RPOW, a prototype of digital money based on proofs of work. In January 2009 he was one of the first people to run the Bitcoin software, and he received the network's first transaction: ten bitcoins that Satoshi Nakamoto sent him as a test.

Finney did not found Bitcoin or any company around it, but he had spent more than a decade working on the problems Bitcoin solved. That experience allowed him to understand the proposal while other cryptographers received it with doubts, and to help debug the program in its first weeks. He died in 2014 from amyotrophic lateral sclerosis (ALS), a disease that did not stop him from writing code almost until the end.

Education and early work

According to The New York Times obituary, Finney was born in 1956 in Coalinga, California, and graduated in engineering from the California Institute of Technology (Caltech) in 1979. He met his wife, Fran, there. His first jobs were at a company that developed video games, including Astroblast and Space Attack.

His interest in cryptography led him to the cypherpunks mailing list, a group of programmers and cryptographers who discussed in the 1990s how encryption could protect privacy on computer networks. In his account "Bitcoin and me", published in 2013, he said he ran the first cryptographically based anonymous remailer, a service that forwards messages after removing the sender's identity.

PGP: encryption for any user

From 1991, Finney volunteered on PGP (Pretty Good Privacy), the encryption program created by Phil Zimmermann, and became one of its lead developers. During those years the US government investigated Zimmermann. The investigation closed in 1996 without charges, and PGP became a company.

The New York Times obituary describes Finney as the first employee Zimmermann hired; Finney himself described his role as one of the first hires. Either way, he worked for PGP Corporation from his home in Santa Barbara until he retired in 2011.

RPOW: digital money before Bitcoin

On 15 August 2004, Finney announced RPOW (Reusable Proofs of Work). A proof of work is the result of a computation that is costly to produce and easy to check. Users generated one with hashcash, Adam Back's system, and handed it to the rpow.net server, which issued a signed token in return. Each token could be spent only once, but spending it produced a new one, so value could pass from person to person.

The server kept the record of valid tokens, which prevented double spending, that is, using the same token in two payments. So that users did not have to trust it blindly, it ran on an IBM 4758 secure coprocessor, which could sign a statement of the software it was running. Anyone could check that statement against the published source code. On the cryptography list, Finney presented RPOW as an implementation of Nick Szabo's bit gold concept.

RPOW never came to be used as money, and it depended on one server and specific hardware. Even so, it showed in software something that until then had mostly been discussed in essays: that a proof of work could become a transferable, verifiable unit. Bitcoin kept that idea and replaced the server with a network that agrees on the payment history through proof of work itself.

The first Bitcoin transaction

On 31 October 2008, Satoshi Nakamoto sent the Bitcoin white paper to the cryptography mailing list. Finney replied on 7 November with a message that began: "Bitcoin seems to be a very promising idea." He liked that the system's security rested on honest participants having more computing power than an attacker.

When Satoshi released the first version of the software in January 2009, Finney downloaded it the same day. In the following days he received the network's first transaction, ten bitcoins sent as a test; according to his wallet records, which his family showed to Forbes, the transfer arrived on 11 January. During that month he exchanged around fifteen emails with Satoshi: Finney reported bugs and Satoshi sent fixes.

He also mined blocks for a few days, until he stopped because the computer ran hot and the fan was too noisy. In late 2010 he found his coins in the old wallet and, as the price rose, moved them to an offline wallet for his heirs. His account of those days is one of the main sources on the network's early weeks, as the profile of Satoshi Nakamoto notes.

ALS and working to the end

In August 2009, shortly after reaching the best physical shape of his life through distance running, Finney was diagnosed with ALS, a neurodegenerative disease that progressively paralyzes the muscles. He retired in early 2011. By 2013 he explained that he was essentially paralyzed, fed through a tube and breathing with assistance.

He kept programming with an eye-tracking system, far more slowly than before. One of his last projects, bcflick, aimed to protect Bitcoin wallets with processor security features designed for so-called trusted computing, an idea suggested to him by developer Mike Hearn. In the same 2013 text he wrote that, overall, he considered himself lucky.

The Satoshi speculation

His work on RPOW, his role in Bitcoin's first weeks and his command of cryptography led some to ask whether Finney was Satoshi Nakamoto. In 2014, journalist Andy Greenberg found for Forbes that Finney had lived for almost a decade in Temple City, a few blocks from Dorian Nakamoto, the man Newsweek had named as Bitcoin's creator.

Finney denied it categorically. His family showed Forbes the emails he had received from Satoshi in January 2009, and a style analysis commissioned for the article concluded that those messages were closer to the Bitcoin white paper than to Finney's own writing. No public evidence attributes authorship to him, and his own account presents him as the project's first collaborator, not its creator.

Death and cryopreservation

Hal Finney died on 28 August 2014 in Phoenix, Arizona. As he had arranged, his body was prepared for cryopreservation at the Alcor Life Extension Foundation in Scottsdale. He and his wife had visited the foundation in 1992 to consider that option. Cryopreservation stores the body at very low temperatures in the hope that future technology might reverse death, something that has not been demonstrated.

Fran Finney keeps his memory alive through the Running Bitcoin Challenge, a charity event in which participants run or walk 21 kilometers between 1 and 10 January to raise funds for ALS research. The name comes from the "Running bitcoin" message Finney posted on Twitter on 10 January 2009, when his node started running.

Hal Finney's contribution

Finney holds a different place from the founders in this series. He did not design Bitcoin or run a company, but he had already built a digital money system based on proofs of work and understood its limits. That is why he could assess Satoshi's proposal when it barely had readers, and help the first software work.

That combination of prior experience and hands-on work was hard to replace. A new system needs people willing to run it, find its faults and explain them precisely, and in Bitcoin's first weeks Finney filled that role. The history of Bitcoin covers what came next; his name appears in the first chapter.