To understand the Bitcoin White Paper, I must first put myself in the author’s shoes. I start by trying to understand the author’s perspective and what they are hoping to communicate. I also try to understand the author’s background and experience in what they are writing about. I want to understand voice, point of view, and motive as much as possible. Humans are complicated, and understanding their thoughts is no easy feat.
By the title, Bitcoin: A Peer-to-Peer Electronic Cash System, I could tell right away this was a scientific answer to a problem. The group behind Satoshi Nakamoto wanted to solve the problem of electronic cash on the internet. I say group because “we” is used over a dozen times in the paper introducing the idea, including the abstract and conclusion. Satoshi’s answer, Bitcoin, would allow humans to trust one another online without needing a third party to transfer money. It was the holy grail of the internet at the time.
The internet commerce of 2008 existed with the payment systems of the 1970s. This made it impossible for small transactions to be a revenue source because of the processing fees charged by the middlemen, or as Satoshi phrased it, financial institutions. Because of this limitation, Google could not charge me 0.00010 cents per search. Instead, Google had to find another way to monetize, collect and sell my data for unlimited free searches. It also had to build its business around advertising revenue, ultimately bending to their will and not mine, the actual customer. Given the option, I would have gladly paid the 0.00010 if that meant no more pop-up ads.
The creators of Bitcoin, and the pseudonym Satoshi, wanted to separate humans from the idea. They didn’t want us to judge Satoshi as a person but rather examine the white paper and the network they designed and built. For years, all discussion revolved around Bitcoin and technical responses to questions about the network and the idea.
The message boards Satoshi communicated on revolved around protecting the network, answering questions, and suggesting improvements to the code. Satoshi provided answers with real-life examples and did his best to explain himself and his vision on multiple occasions. Satoshi spent years on these boards before ultimately disappearing in 2010.
I think Satoshi did himself and humanity a favor. If Satoshi were around today, what would be our expectations of him? Would we judge his actions and decision or cancel him when he steps out of line? Would we place extra burdens on him, turning him into a hero or God-like figure? Would Bitcoin have become a global phenomenon if the media painted Satoshi as a cult leader? Would Satoshi’s fate have been similar to J. K. Rowling’s?
By removing the author, Satoshi allowed us to focus on the idea of Bitcoin. Creating a peer-to-peer electronic cash system with the perfect incentive to keep all participants honest. Satoshi understood that humans behave as expected when incentivized correctly, so the network rewards the honest nodes, in this case, honest people.
Removing himself was not the only human Satoshi would separate from Bitcoin.
Satoshi discovered that taking the proven digital money system, and adding a peer-to-peer proof of work network on top of it, solved the human problem of trust. No longer was there a need for financial institutions, or as I like to call them, middlemen. Thank you, Visa, MasterCard, and Citibank; you are no longer needed. But not only had Satoshi solved trust for transactions, but they had also solved trust issues in money creation, knowingly or not.
The decisions in Washington D.C. affect the farmer in Bolivia, the carpenter in Italy, and the waiter in Hong Kong because the dollar moves the world. As the reserve currency, the world’s energy moves on the dollar. The dollar and digital technology have connected humans to the most significant monetary network in human history.
However, the world is at the mercy of the Federal Reserve as they announced the latest changes to US Dollar monetary policy. My financial future hangs in the balance of these humans, who have their flaws, ambitions, and motives. Humans I have never met, voted for, or have any way to hold accountable. What makes these humans so special to have power over my money?
Satoshi solved the trust issue of money creation and monetary policy. This might not have been their objective, as the paper strictly mentions removing financial institutions and solving for trust. Satoshi’s cap on creating bitcoins probably had more to do with getting all the math to add up than solving the money creation trust issue. They knew 21 million would serve them better than infinity.
Satoshi also developed a distribution system for bitcoins, incentivizing the growth and security of the network. They aimed to solve the double-spend issue, not the money issuance issue. There is no evidence at all to point to that they had considered the trust factor of money issuance in the white paper. On the contrary, the paper ends with, “Any needed rules and incentives can be enforced with this consensus mechanism,” meaning they welcomed the rule of law and order.
Call it an unintended consequence, but Satoshi offered me better money to trust. I can trust Bitcoin not to change, to remain 21 million coins, to have a predictable issuance schedule, and to have the same rules for everyone on the network. Bitcoin separated money from humans and money from power. There is no Jerome Powell to bribe, threaten, or kill to make things go my way in Bitcoin. There is no more waiting for the next Federal Reserve meeting to know what the fate of my financial future will be.
Satoshi may not have intended this to be Bitcoin’s value, but it is for me and many worldwide. In a world where it seems humans mess everything up, it is nice to know they can’t mess with my money, and Bitcoin is my money. Satoshi resolved my trust issues.