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I first learned about Bitcoin back when the Block Height was around 225k. It was around this block range that Bitcoin was making big news and starting to go mainstream. Most folk were too caught up the price action to care about the details of your clever little blockchain invention and the media was mostly repeating the same tired sound bites about how Bitcoin’s only legitimate use was its illegitimate use in the darknet markets.
I remember reading these words in your paper:
In this paper, we propose a solution to the double-spending problem using a peer-to-peer distributed timestamp server to generate computational proof of the chronological order of transactions. The system is secure as long as honest nodes collectively control more CPU power than any cooperating group of attacker nodes.
And with those words, you introduced blockchain to the world. I remember being struck because you had already accounted for the two obvious flaws in previous attempts to create digital money; the double-spending problem and node collusion. It was clear from your references to Adam Back’s Hashcash and Wei Dai that you had given these challenges some thought.
Remember the days of “one-CPU-one-vote”? Man, those were the good days. One CPU, one vote. It was poetic in that the success of your proposal hinged on the assumption that there are more “good people” (honest nodes) than “bad people” (attacker nodes) in the world. It’s a beautiful expression of your faith in humanity to generate the longest chain.
As I write this, there are just under 10k full nodes on the Bitcoin blockchain, with little chance of that number increasing anytime soon. Turns out you were right when you predicted that there will never be more than 100k nodes, as mining would inevitably reach an equilibrium point where it no longer makes economic sense for new participants to enter.
There are currently six mining pools comprising about 80% of the global Bitcoin hash rate — not bad, but not great. It doesn’t seem that long ago when Miners fled Ghash.io en masse in fear of a 51% attack. We’ve come a long way since then, yet things haven’t changed that much.
Of course, back then there was only one Bitcoin. Now, there are three well-known forks: Bitcoin, Bitcoin Cash, and Bitcoin Gold. Bitcoin Gold suffered a 51% attack a couple weeks ago. It was bad. The attacker controlled so much hash power that they reverted twenty-two blocks! And it’s not just Bitcoin Gold; Monacoin, Zencash, Verge, and Litecoin Cash have all been hit.
I often wonder how you might feel about the current state of affairs. Smart Contracts, ICOs, scaling issues — what is the real purpose of this grand experiment which continues to consume a significant amount of the world’s energy at a steadily increasing rate? You built a compelling case in your paper:
Completely non-reversible transactions are not really possible, since financial institutions cannot avoid mediating disputes. The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for non-reversible services. With the possibility of reversal, the need for trust spreads. Merchants must be wary of their customers, hassling them for more information than they would otherwise need.
You later elaborated in a forum post:
Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.
Your concern about companies collecting more personal information than would otherwise be necessary to process payments was prophetic — there have been over two hundred significant data breaches since you wrote that.
I know that things were never quite the same between you and Gavin after he gave that talk at the CIA. Things got weird with Gavin when he flew to London for a private meeting where Craig Wright supposedly signed a message using the private key from the Genesis Block. Convinced, Gavin went on to publicly say that he believed “beyond a reasonable doubt” that you were Craig Wright. Fortunately, he was quick to admit that mistake.
There are lots of theories about your identity. From Dorian Nakamoto (which you debunked), Elon Musk, a combination of telecom companies, to an AI . Not that it matters much now, but I’m glad you were able to exit Bitcoin with your anonymity intact. You gave the world an idea which spun out of control and rather than fighting for control, you gracefully bowed out and allowed the project to take on a life of its own.
Thank you for seeing this wonderful experiment through to a point where it could thrive on its own. Thank you for the open source code and for your guidance along the way. Thank you for your brilliance and your humility.
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