ILLUMINATION
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ILLUMINATION

Bitcoin’s Satoshi Problem

Photo by Jan Canty on Unsplash

After all these years, the first-movers — BTC and ETH — are still on top. I’ve made more than 25x my initial investment in Ethereum. Yet I’ve never invested in Bitcoin, and when I have bought it, it’s been purely transactional; buy BTC to pay someone, or receive it and quickly cash out before any major price fluctuations. I have plenty of friends who say the same.

What drove my hesitancy? At its core, Bitcoin is about money. This is something that Vitalik wrote about in the Ethereum whitepaper (a blockchain’s founding document in which the founders explain the purpose for creating it). Ether’s co-founder said that he wanted to take blockchain’s potential further, and use it for “more than just money.” Bitcoin is first and foremost about providing P2P financial transactions, banks and middlemen be damned.

But what no one wants to acknowledge is that if BTC were adopted as currency to any serious extent, it has a glaring issue: one person controls 5% of the supply. Using leverage and the plethora of speculative instruments available to 21st-century traders, Bitcoin’s founder, Satoshi Nakamoto, has the power to single-handedly plunge the entire market into total and utter chaos.

Of course, the icing on the cake is that Bitcoin’s whitepaper reflects deeply anarchist ideals. As it has grown mainstream, BTC has steadily shifted toward an increasingly mainstream fanbase. But in the early days of crypto, there was a much higher proportion of fiercely libertarian, anti-government, hands-off-my-money types. The main reason for this being that you had to have some level of technical expertise to use it and mine it — this was long before the existence of exchanges like Coinbase and Binance — and aside from a niche community of cryptography enthusiasts, no one else was willing to put in the effort. This was also around the time that Anonymous, the anarchist hacking group modeled after V from Vendetta, entered the public conscience (remember that?).

Photo by Shalom de León on Unsplash

Now, don’t get me wrong. I love crypto. I love the rate at which applications are being developed to create a better, freer, more decentralized world, and solve the most pressing issues of our time. But the question must be asked: no matter how benevolent his intentions may be, are we giving an anarchist-at-heart the power to effortlessly throw global financial markets into disarray?

It’s pretty indisputable that Satoshi wields truly unbridled power. Whenever a 9-year old address transfers a few coins from one wallet to another, it causes huge price swings under the mere suspicion that it could be Satoshi. Is it possible that he’s dead? Sure, but I doubt it. We’re only talking about 11 years here, and it was likely the real Satoshi who popped his head out in 2014 to post the message “I am not Dorian Nakamoto.”

The obvious argument for why he’s dead is that he cumulatively holds about $73 billion worth of currency, and if he’s still alive, who wouldn’t want to cash out, at least a little bit? Well, two reasons:

  • It’s possible, if not likely, that he created separate addresses — aside from the ones we know of — and used them to mine smaller amounts. After all, if you anticipated that there was even a possibility that Bitcoin would be adopted as a mainstream currency in the future — and no one understood the project’s potential as well as Satoshi — wouldn’t you want to set aside a nice retirement account for yourself?
  • He truly believes in the mission and ideals, and he knows that selling could destroy it. Moreover, like many of today’s ultra-rich founders — Jeff Bezos, Elon Musk, Mark Zuckerberg, etc. — to some extent, it’s not about the money. It’s about building something that affects change in the world around you.

Of course, there are other reasons to remain anonymous. Look at the relentless harassment and extortion attempts that Hal Finney was subjected to. Or consider the enormous tax bill Satoshi would have to pay.

But if it’s not about the money or the power and control that the money lends him, why can’t Nakamoto simply come out to the public, and donate all his coins to nonprofit organizations that support the project (eg. Bitcoin.org), or simply burn them? Wouldn’t that be an easy way to alleviate concern, and ensure lasting trust in the project? If Satoshi is indeed still alive, doesn’t the fact that he hasn’t done this indicate a reluctance to cede power and wealth?

Photo by Toby Elliott on Unsplash

Perhaps I’m being overly critical. But the prospect of Satoshi awakening from his dormancy is a possibility that deserves more consideration, given its potentially catastrophic effects. If Bitcoin were adopted as a major global currency, a rogue founder could cause more than a scathing worldwide recession — it would be a worldwide distrust in money. The rush back to fiat would create dictators and reshape our world. Like, we could be gearing up for one of the major events in modern history.

The most ardent supporters of Bitcoin tend to be the first ones to leap to Satoshi’s defense. But there lies an inescapable irony in the fact that the entire Bitcoin network — built upon the idea of trustless, P2P transactions — relies, to some extent, on everyone putting their trust in one person.

If Satoshi manages to wait long enough that we forget that he exists, he’ll have an extraordinary amount of power — it’s a possibility that must be considered when weighing BTC against the perils of fiat.

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