Five Things That Satoshi Nakamoto Prophesied Correctly About the Bitcoin

Five Things That Satoshi Nakamoto Prophesied Correctly About the Bitcoin

Messages exchanged between Satoshi Nakamoto and his first recognized partner, Martti Malmi, were made public during a legal case in the United Kingdom concerning the real identity of Bitcoin’s anonymous founder. For specific individuals, the records offer a fresh opportunity for researchers aiming to uncover Satoshi’s true identity ultimately. For some, the 120 pages of emails (also shared on Github) provide new perspectives on the character and personality of the departed developer.

According to Bitcoin expert Pete Rizzo, the emails mostly align with and validate the existing knowledge about Satoshi, who was actively engaged in online forums such as BitcoinTalk and the Cryptography mailing list from 2009 to 2011. He documented his ideas in a detailed white paper.

Recently, fresh details have emerged from the document release, revealing Satoshi’s efforts to assist early Bitcoin creators, his concerns about establishing a Bitcoin application, and his foresight in predicting critical discussions that have shaped Bitcoin’s progress, such as block size and energy usage.

These are five predictions made by Satoshi Nakamoto regarding Bitcoin prior to disengaging from the project.

Debates Require a Large Expenditure of Energy

The algorithm supporting Bitcoin, known as proof-of-work, is inherently inefficient by its very nature. Since the time of Satoshi, individuals understood that for Bitcoin to thrive, the amount of computational power dedicated to safeguarding the network would be substantial. Satoshi predicted this discussion and addressed critics by stating, “It would be ironic if we have to decide between economic freedom and preservation.”

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In his communication with Malmi, Satoshi highlights that Bitcoin’s peer-to-peer nature is only possible “without a trusted third party,” distinguishing it from previous centralized electronic currency endeavors. “If it expanded to use a substantial amount of energy, I believe it would still be more efficient than the labor and resource-intensive traditional banking operations it would substitute,” he stated.

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Indeed, a report by Galaxy Research revealed that the worldwide banking system consumes 263 terawatt hours annually, which is double the energy used by the Bitcoin network.

Is Not Quite So Anonymous

Just like that, privacy champion Satoshi recognized at an early stage that Bitcoin did not offer true anonymity despite his attempts to make it so. Satoshi mentioned that Bitcoin has the potential to provide pseudonymity as long as individuals follow necessary measures, such as refraining from reusing key pairs and avoiding connecting Bitcoin transactions to their actual identities. He also expressed concern that it gave Bitcoin a negative reputation.

Currently, as the majority of individuals obtain Bitcoin through exchanges that must follow know-your-customer protocols to verify users, it can be challenging to maintain anonymity when using Bitcoin. It is uncertain whether Satoshi anticipated this — mainly since Bitcoin was created to eliminate the necessity for intermediaries such as exchanges — but he was contemplating labeling Bitcoin as confidential to avoid confusing users and fostering skepticism about the project.

He suggested downplaying the anonymous aspect to Malmi, who had mentioned in a FAQ that Bitcoin could be concealed, a point Satoshi commended for being “thoughtfully” phrased. “I believe those who desire anonymity will find a way to achieve it without us promoting it loudly.”

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The Supremacy of Law

Currently, bitcoin stands as the sole cryptocurrency acknowledged by U.S. financial regulators as undoubtedly a commodity, owing to the network’s decentralized structure and absence of a distinct stakeholder. During its inception, Satoshi was likely very conscious of the influence of the U.S. Securities and Exchange Commission and the reach of U.S. law.

Perhaps this is the reason why Satoshi was careful when talking about Bitcoin as an investment, even though he did mention once, “It might be a good idea to acquire some just in case it becomes popular.” Satoshi informed Malmi that he felt uneasy about the wording used on Bitcoin’s sourceforge, advising individuals to view it as an investment. He mentioned that it was acceptable if individuals reached an understanding independently but cautioned against actively promoting it.

Any Examples of Use Cases?

Satoshi and Malmi often talked about possible applications of Bitcoin, understanding that the network required a groundbreaking use case to encourage adoption. Satoshi highlighted the timestamping capabilities of the blockchain, which could be utilized to verify events in the physical world.

However, Satoshi also considered Bitcoin’s role in the realm of digital transactions, envisioning its potential to enhance the liquidity of established digital currencies such as Liberty Reserve (which is no longer operational). He foresaw a scenario where individuals seeking enhanced privacy could transition between different forms of currency, such as Bitcoin, Liberty Reserve, dollars, gold, or PayPal. This was due to the simplicity of generating BTC through mining at that time.

Satoshi accurately foresaw that Bitcoin would be valuable for purchasing gift cards (referred to as “paysafecards”), a popular application of Bitcoin today.

The Patronage of Developers

Rizzo pointed out that the emails provide a glimpse into one of the initial financial supporters of Bitcoin. This project was entirely self-funded by Satoshi and did not receive any venture capital. Through a series of exchanges spanning several months, Satoshi discloses that he has connected with an unidentified benefactor willing to contribute a sum ranging from $2,000 to $3,600 to aid in the advancement of Bitcoin. After a period of waiting, the enigmatic and unidentified donor eventually mailed the funds to Malmi. The funds were then used to cover expenses related to website hosting and miscellaneous items.

Although not a significant monetary gain, obtaining funds to cover the expenses of volunteer work by developers indicates that Satoshi understood the difficulties of supporting open-source development.

“It could be a while before we receive another contribution of that magnitude, so we should consider saving a significant portion of it,” he penned. Malmi was instructed to allocate $1,000 from the donation to contribute to an exchange he was working on, potentially aiding the BTC-USD exchange rate (valued at only a few cents at the time).

This foreshadows the present condition of Bitcoin development support, which remains spontaneous and debatably inadequate. As companies such as Block and MicroStrategy increasingly support Bitcoin developers, several contributors have decided to step back from the expensive work they once dedicated themselves to.

Satoshi mentions multiple times that due to work commitments, he is unable to dedicate the amount of time and focus necessary to Bitcoin. He appreciates that developers such as Malmi and Satoshi’s chosen successor, Gavin Andresen, were available to continue the project.

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