Bitcoin: The Age Of Satoshi Nakamoto

Does the title resemble a movie? Yes, it does! It's entirely inspired by the second installation of the Avengers movie; however, Satoshi Nakamoto here refers to Vision instead of Ultron (IYKYK).

Prabhat Tiwari

Published in

Coinmonks

12 min readOct 17, 2021

“Evolution from Desperation.”

If you've watched the first marvel movie, by any chance [you definitely should], you might not forget the scene where Tony [aka Iron Man] takes the nuke to the hole in the sky and falls back out of it just in time. I particularly enjoyed that scene as it completely disagreed with the statement, "You're not the guy to make the sacrifice play to lay down on the wire and let the other guy crawl over you" [Yep, I'm from team Iron Man].

Now, moving forward to Avengers 2 [aka Avengers: Age of Ultron], Tony and Banner get their hands on Loki's sceptre or the mind stone and start building something for the better future. But then again, things go wrong, and Ultron is born whose aim was to wipe out Humanity.

Now, Ultron tries to get a new body himself and puts the mind stone into it; this time, in order to become better, Ultron tries to upload himself into his new body but is stopped by Cap, Widow, and Hawkeye. This is where Vision was born, a strong, honest, and one of a kind robot with control over the mind stone.

Tony was desperate to wrap armour around the globe and protected everyone, and Ultron was desperate to destroy every existing life form. Their desperation led to the creation of something none of them imagined. And that's why I believe that Satoshi did the same thing, he was desperate to find a way to tackle the present financial hindrances, and hence he was able to create Bitcoin, but did he succeed? Yes.

“There are decades when nothing happens and there are weeks when decades happen.”

That's one of the quotes by a maximalist Russian politician, Vladimir Ilyich Lenin. So why did I put it here? Because this is the journey of Bitcoin and the present financial system, which has been running for more than 600 years. Whereas Bitcoin has been here for just more than a decade, and now it poses a threat to the traditional financial system.

Bitcoin, the saviour of our assets, the revolution of the financial system, and the key to decentralization. We, the people, who believe in it, think of Satoshi as the ultimate savior. However, we often forget that it's not just Satoshi, you, and me who provide Bitcoin with its value. Therefore, it wouldn't be wrong if I call all of us Satoshis since we're, after all, playing a part in a bigger narrative. So let's start from where it all started!

The Beginning

Most of the articles similar to this one start from 2008, but let's start from the actual beginning, World War II. Over time, it has been evident that war drives evolution; the US was able to create nuclear weapons only because they needed to win the war. If it were not for that, the aftermath of Hiroshima and Nagasaki would have been different.

Anyways, let's not get into that and circle around the smaller picture. Alan Turing, a British Mathematician, Computer Scientist, and Cryptanalyst, was the first person to lay the foundations of what we know today as Cryptography. After that, in 1949, Claude Shanon published an article in a technical journal called "A mathematical theory of cryptography", which is believed to be the foundation of modern Cryptography.

Fast-forwarding 25 years, in 1974, Cerf and Kahn published a paper called "A Protocol for Packet Network Intercommunication". The paper presented a protocol that supports the sharing of resources that exist in different packet switching networks.

Fast-forwarding another 34 years to Satoshi, he created digital peer-to-peer cash with a limited quantity of 21 Million with the help of Cryptography. Moreover, users of this electronic cash will be able to send payments to one another without any third party. This digital cash is Bitcoin.

We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they’ll generate the longest chain and outpace attackers.

Satoshi Nakamto, Bitcoin Whitepaper

What da f*ck did it have to do with the money?

I wrote two articles before this one on "what is money?" and "will bank perish or adapt." So summing them up here, I'd say you're definitely doomed if you believe that owning FIAT is the best way to save for retirement. Cause what are you going to do if the money you stored in your bank account loses its value by 10% every year?

Moreover, the origin of bitcoin was not because it was a revolutionary technology, but rather because it was a proposed solution to our financial system. Moreover, its success was also only because people thought the present financial system was incompetent and accepted it as the best alternative ever to be created.

What is Proof of Work?

“The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work.”
Satoshi Nakamoto, Bitcoin Whitepaper

What the hell does that mean? Well, to be brief (like four words brief), "Bitcoin Cannot Be Corrupted."

There are nodes that Bitcoin miners operate, and each node keeps an eye on the other to make sure everything is functioning correctly. Further, these nodes also compete among themselves to solve complex mathematical puzzles, after which the network rewards them with Bitcoin.

When things started, a miner was rewarded BTC by calculating the electrical power needed to solve the mathematical puzzle. However, as its demand increased, the market value increased [still rising, as I write this].

"The proof-of-work involves scanning for a value that when hashed, such as with SHA-256, the hash begins with a number of zero bits."

Proof-of-work solves the process of decision making as each CPU has one vote, and anyone invested with a high CPU power will have a significant say in the decision making. Further, most likely, no dishonest node can tamper with the timestamp. As the one who is trying to tamper with things has to change the data of the block and all the blocks after it. Further, it needs to exceed in computational power than the honest nodes. Which is highly unlikely unless someone with significant control over things steps in (A government?).

Finally, the network automatically tackles the level of puzzles provided to the miners. If the puzzles are too easy and new blocks are mined in no time, it increases the difficulty level. And if miners take too much time to mine a new block, the network reduces the difficulty.

The Economics Behind

Ten years ago, 10,000 bitcoins might have bought you 2 Pizzas, and as of 2021, you can buy [$ 640 Million] almost everything with that amount. So it's no use regretting having a pizza date with your girlfriend back then rather than buying bitcoins. Because come on, let's be honest, the better part of the world came to know about bitcoin only after it was too costly for them to own one whole bitcoin.

Ever imagined flying 100 Million tonnes of Gold from the Antarctic to Artic? Is it possible, maybe? But is it feasible? I guess not. Okay, let's say you wish to send $5 Million from America to Australia; what is going to happen? Too much time consumed? A decent charge for wire transfer? Relying on third-party? And most important, conversion of USD to AUD.

The biggest problem we humans always had was transferring value over time and space. Therefore, Satoshi's brainchild, bitcoin solves this problem among others in an instant. You can transfer Bitcoin anywhere around the world in an instant [through a lightning network].

The Problems Solved

Anyone who accumulated large amounts of wealth while remaining independent of military-political command structures faced the problem of safeguarding what he had gained. Unless a merchant could count on the protection of some formidable man of power, there was nothing to restrain local potentates from seizing his property any time his goods came within reach. To gain effective protection was likely to be costly — so costly as to inhibit large-scale accumulation of private capital.

William McNeill

Many people don't know that, but wars drive innovation and the economy. Or I'd say someones crave to stay alive determines how quickly they can adapt and advance. It is funny because humans lie around their houses for entire weeks and do nothing, but when it's war, they can build nuclear weapons that can destroy whole cities in the blink of an eye.

But that's not the point here; the point is if you're rich or you're inside the system, then most probably nobody is going to take away from you what you already have.

Government Printing Money — Credits: The Cartoonist Group

However, if you belong to that class who can protect what they own, it wouldn't make sense to store a kilo of Gold in your house and suffer through sleepless nights. Because come on, anyone can shoot you in the head and take it away.

But this is not the case with bitcoin; once you hide your private keys or memorize them and destroy any possible physical evidence of their existence, nobody apart from you can access your Bitcoins.

No government can take it away from you; they can't say it is no more valid, as come on, don't you remember what happened in North Korea? The government announced that the WON you have outside your bank would no longer be valid, and you can only exchange upto 11,000 WON. Traumatizing for someone who stores his life's saving outside the bank and in WON.

Evolution is prominent when we need something to work better or we need to solve a problem. Hence, I believe Bitcoin is going to bring us evolution. Miners need faster processing; someone will create it, they will adopt it. Someone creates a way to mine BTC with lesser energy consumption; Miners will adopt it. Anything that keeps running Bitcoin will be assumed. This is a boon in itself as things such as climate change that continue to question the existence of bitcoin will eventually push innovators to come up with a better plan.

The Problems Remaining

People with no information bash bitcoin with statements. It consumes a lot of energy and is slowly being a digital thing, charges a lot to transfer even smaller amounts. They tend to forget that many bitcoin miners rely on renewable energy sources, such as hydropower, natural gas leaks, etc. Recently, President Nayib Bukele started mining bitcoin using volcanic energy.

Bitcoin is the best store of value, and blockchain is the future. However, Blockchain payments are not feasible any time in the near future until we come up with a better version. Since we need to pay a very high fee even on smaller transactions further, a single transaction can take hours to be processed.

The number of transactions by Visa hit a high of 24,000 transactions per second. In contrast, bitcoin can only handle 7 transactions per second [>300x]. Moreover, if we accepted bitcoin as a replacement globally, it would fall, as nobody would want to stand in a queue for a couple of hours just because they can't pay for snacks they just bought. [Imagine you want to have s*x with someone, and you bought a condom, you're horny, and now you have to wait for 5 hours in the shop because your payment is not being processed. Damn.]

This is where The Bitcoin Lightning Network comes in.

The Lightning Network

Now the issue of scalability can be solved using small micropayment channels. For example, suppose you buy a lemon from a vendor, now you need to pay them then obviously, the whole world doesn't need to know that you purchased a lemon from so and so vendor. Hence by creating a small channel between you and the vendor you can complete the transaction. This significantly increases the speed of a normal transaction between two people.

"By creating a network of these two-party ledger entries, it is possible to find a path across the network similar to routing packets on the internet. The nodes along the path are not trusted, as the payment is enforced using a script which enforces the atomicity (either the entire payment succeeds or fails) via decrementing time-locks."

Further, the lightning network can provide us with capabilities to process billions of transactions in a day. So now, you wouldn't have to stand in a queue for that condom you just bought.

Is Satoshi Ultron or Vision?

It doesn't matter whether Bitcoin resembles Ultron or Vision because when their time came, both of them fell. Bitcoin is here to stay because it is not only stronger, harder and safer, rather it is also antifragile.

I'd be back with another article next weekend. Till then, hit the follow button to keep reading from me, and if you did have a decent read, show some support by clapping!

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Everything written in this article is what I believe and it is highly likely that your thoughts differ from mine (obviously we’re two different people). Further, nothing in this article is a piece of financial advice and everything that’s written contains only my beliefs.

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