Satoshi was wrong
> Bitcoin: A Peer-to-Peer Electronic Cash System
9 years later, it didn’t become one. Satoshi’s paper offered a few of coupled together ideas, and most of them were broken.
- A cap at 21M. It made the currency deflationary by nature. Ask an economist, no one thinks it’s a good idea long term http://www.investopedia.com/articles/personal-finance/030915/why-deflation-bad-economy.asp
- He offered a system where the inputs/outputs blockchain is the state itself, and in order to prune your chain you need to store UTXO set. Vitalik Buterin fixed that insanity by creating a separate “state” structure which is the database and the blockchain which is the list of queries. Currently state in Ethereum <15Gb (now imagine how many ICO it suffered, and see how small the damage is yet), while both Bitcoin and Ethereum blockchains are well over 200Gb.
- He didn’t oversee the idea of Root of Trust, and made everyone waste bandwidth on downloading blockchain from scratch. Whenever you join any blockchain these days, you download the node software which downloads the blockchain for you. How do you know this node software wasn’t backdoored? The only way is to read it line by line.
Instead, you should contact 1 or more active and trusted participants of the blockchain to share root of trust with you: a cryptographic hash of current chain and node software, compare them visually and then download the latest state snapshot which is effectively giving you same security as downloading a full node daemon except you don’t need 200Gb chain to get on the same state as everyone else.
- He offered “new payment — new address” as a rule. Which bloated the blockchain, and never made the forensics any harder: as soon as you make a large payments all your previous UTXO are joined and one and the connection between them is crystal clear.
- He never defined clearly threat model of Bitcoin. Who’s the attacker? Random individual? Then I can run Bitcoin as a website on my own laptop. Powerful corporation? Then I’d need DDoS protection and expensive hosting, but still I would not need a blockchain that much. The one and only real attacker of a blockchain (an autonomous organization that prints its own money) is, you know, another organization that prints its own money: governments. And in order for a government to break Bitcoin all they need is either a lot of hashrate (if you’re not China) or control over existing miners (China).
Which might sound expensive to you as an individual, but when your military budget is half a trillion USD, be sure it won’t sound that hard.
Like seriously, who thought it’s a great idea to issue your own money secured with fully state owned and traceable electricity?
> New plan! In order to fight the Matrix and prevent Sybil attacks each of you must calculate a ton of sha256!
> WTF Morpheus?
6. Complete lack of governance was sold to us as a good thing. What we got now? There’s nothing Bitcoin can do that Ethereum can’t, there’s no clear strategy or way of resolution of conflicts when one side whats 2x of blocks and another wants to keep it 1 Mb.
7. Lack of vision what Bitcoin would do when transactions reach maximum of capacity. In fact Satoshi himself envisioned it as a constantly growing onchain without any second layers. It’s only now when people realized that increasing onchain further is ridiculously stupid idea since it’s already way too hard to be a full node. And utopian hot-patches with completely broken incentives models like Lightning Network are another proof Satoshi had no idea how to fit all people onchain.
The only truly great thing he offered was the blockchain itself, solution to Byzantine generals problem: when the swarm of computer nodes chooses the coordinator that packs all requests into a block and rotating the coordinators using some rule (such as anyone can be PoW or predefined as in PoS).
He created this:
- A blockchain is a micro government. Governments without governance are used for pump and dump and the key word here is dump. That will happen. Which means in new blockchains we need clear governance, where clear set of people decides what’s good for this blockchain and what’s not. They sign updates, and those updates are automatically installed. Lack of clear governance doesn’t mean magical autonomy, it means tribal wars.
- That’s also the only way that can stabilize the price, as the government controls it. Stable price is a pre-requisite to a currency, like it or not.
- The governments are one and only threat to blockchains, thus we need a new consensus algorithm that cannot be hijacked with just money. PoW or PoS are easily hijackable if you’re state power. And believe me, once they see you as a threat, you’re done. That will happen overnight. Coordinators must be chosen based on something money can’t buy.
- All Satoshi’s ideas except the blockchain itself (which is genius) are bad. Satoshi and his vision shouldn’t be used as an argument that you’re right. No man is right at everything. He failed at p2p cash, which turned into a sophisticated Ponzi scheme which is pretty expensive (yet completely doable) to stop.
- But like Wright brothers he made a proof of concept that we can fly without a central opaque authority. Let’s make a Boeing out of it.