Satoshi Nakamoto’s Identity
I feel very torn writing this blog post, and thought hard about deleting it a couple times. But, in the end, I’ll just put it out in the ether… because this blog is little more than me thinking out loud, and this is what I’m been thinking about for most of the day.
Satoshi Nakamoto’s (Creator of Bitcoin) identity has been revealed in an article by Newsweek. The article feels very voyeuristic, as the reader takes on the role of the author, stalking Satoshi and trying to piece together circumstantial evidence in a painful, stretched way. Despite no clear proof that the author has correctly identified Satoshi… it feels quite conclusive when you look at all the small pieces and connections through a holistic lens.
I’m not linking to the article in this post because, in the end, I don’t like the ethical lines the author crossed. She acquired Satoshi’s email address through social hacking a model railroad retailer. She stalked Satoshi to the point he had to call the police. She seemingly mislead friends and family in interviews. Worst of all, as a result of this piece, I’m certain both Satoshi and the Newsweek author will need 24-hour protection (Satoshi needing protection from weirdo Bitcoin criminals that want access to his $400MM in private keys… and the author needing protection from libertarian Anonymous-esque weirdos that hate the methodology of her exposure of Satoshi… or just hate that the mystery is over).
But all that crap didn’t stop me from reading the article with perversely piqued interested. Cue self-loathing.
The real story here that has been rattling around my brain the most is the story of innovation at the fringes beyond normalcy. Chris Dixon said when he made the investment in Coinbase that Bitcoin, “is one of the 5 best computer science ideas from the last forty years.” I agree. And, the idea that this brilliance came largely from one guy, acting in isolation, motivated largely by paranoia and distaste for existing financial infrastructure, is just wild. In this light the profile of Satoshi is the profile of an artist, or better yet, a maker. And like all makers, he is quirky, weird, one of the crazy ones.
More so than any of the circumstantial facts provided by the author, this is what makes the Satoshi identification story so believable. He looks and feels like other edge people that have made dents in the universe. Watching the ripples from a sole savant’s splash build into global tidal waves is mesmerizing.
Blogging into the Blockchain
They say, “The Internet Never Forgets.” Meaning: when you post something online, it will be there forever.
But it’s not really true.
Digital data rot is a real issue. I removed 2.5 years of blog posts from the web when I moved from Wordpress.org to Tumblr for blogging, and they are all pretty much lost for good (a deliberate decision on my part). I still have the Wordpress SQL table backed up, but I doubt I’ll ever open it.
Recently I’ve been exploring whether or not it would be possible to blog into the Bitcoin blockchain. There is a comments field in a transaction that can be used to write a note. These notes are most easily explored via blockchain.info. So essentially blockchain.info would become the blog host, but the underlying database would be the blockchain itself.
The more data a given transaction contains (measured in bits) the higher the fee required to process the transaction. This is a deliberate design decision to discourage people from junking up the blockchain with miscellaneous crap or overly lengthy transactions that involve too many transactions. So, blogging via the blockchain could get expensive. But perhaps the fees are worth the permanence…
It feels like the digital equivalent of writing in wet cement.
Bitcoin Cap and Endless Divisibility
There will only ever be 21 Million Bitcoins created, the currency is systematically capped.
But, a Bitcoin is infinitely subdividable. Meaning the decimal places to describe the fraction of a Bitcoin are limitless. (Technically, the decimal places are limited by the size of the memory block chosen to store Bitcoins, but if we need more decimal places in the future to subdivide further, we can always choose a bigger memory block size.)
Bitcoin being both limited and limitless makes my mind spin.
Merchants and consumers intimidated by the cost of a single Bitcoin could collectively agree tomorrow that all Bitcoins are best measured in mBTC denomination. 1 mBTC = .001 BTC (it’s a millibitcoin). So now there would be 21 Billion mBTC in circulation. What’s the difference? Bitcoin is not asset backed and has no intrinsic value, so why not just shift the decimal place?
If people knew there will only ever be 21 Billion mBTC in circulation instead of 21 million, would the exuberance for stockpiling Bitcoin diminish? 21 Billion widgets sounds less scare than 21 Million widgets.
Not compelled by my argument? Well, what if we move a couple thousand decimal places…? A million? When there is 21 Googol xBTC, is that enough to convey limitlessness?
And if there are infinity Bitcoins available, how much would you pay for one? This is the question a non-early adopter would need to ask self-reflectively when first buying into Bitcoin.
I know, I know. I can already hear the naysayers reading this post. They’ll say: “Andrew, you’re making a 4th grade math mistake. If we just change the decimal place, then I now own my same portion of Bitcoins that I did before. My 2 Bitcoins becomes 2,000 or 2 million, etc… So infinite subdividability is meaningless and the number of Bitcoins are still fixed at 21 Million.”
In the context of early adopters, this feedback is correct and I agree. But if Bitcoin is only ever relevant to early adopters, it will fail. It’s disruptive power is perfectly correlated with Metcalfe’s Law. What good is a currency that is only accepted by a small fraction of the world.
In the context of mainstream participants in the global ecosystem (non-early adopters who do not benefit from the near term Bitcoin inflation because they do not own any coins), I think my argument that, practically (not theoretically), there are limitless Bitcoins is more persuasive. And the value of a single Bitcoin will only be measured in its purchasing power with merchants that accept Bitcoin, or the work you’re willing to do to be paid in Bitcoin. Without that counter-party context, Bitcoin is limitless and inherently worthless to the non-early adopter.
Oh, the Bitcoin mind games…
Bitcoin: the Company? or the Currency?
If you believe in the Bitcoin ecosystem with enough conviction to make an investment right now, are you better off investing in a startup making a business in the space or simply taking your capital and buying the currency itself?
Given the deflationary nature of the currency, can any single company build value faster than the current itself will appreciate if the whole system takes off?
Bitcoin Needs a Leader
Bitcoin is quite a remarkable, audacious project. I’m rooting for Bitcoin and all the startups building in that ecosystem. But I can’t help but wonder if the Bitcoin movement would be better served if it had a clear, well-known creator. Every non-commercial movement needs a cheerleading parent:
Wikipedia has Jimmy Wales…
The world wide web has Tim Berners-Lee…
Linux (and also Git) has Linus Torvalds…
These charismatic creators can get up on stage and really motivate people to jump into the parade they are leading. It’s an amazing sight to watch (I’ve had the wonderful pleasure of seeing Jimmy speak, and it’s incredibly motivating).
Bitcoin, like any major project, does have a creator, but that creator(s) chose to hide behind a pseudonym: Satoshi Nakamoto. The myth of Satoshi and his true identity certainly adds to the mystique of Bitcoin. It also generated some nice PR with two investigative journalism efforts to unearthing his/her identity via the New Yorker (warning: paywall on that NYer link :/ ) and Fast Company.
But, I don’t think a couple of news articles makes up for the loss of a charismatic creator. No one can tell the story of a movement like a Founder can. I hope that a thought leader emerges in the Bitcoin movement that can fill in the gaping hole left by Satoshi Nakamoto’s absence.