Tag: Satoshi Nakamoto

Bitcoin heads towards its teen years

On By mehranmuslimiblogIn Bitcoin, cryptoLeave a comment

On the 31st October 2019 Satoshi Nakamoto’s baby turned 11 years old. It’s quite remarkable to think that in two years time the white paper that changed the world will be a teenager.

Of course more people are preoccupied with Halloween on this day, at least in Europe, and the UK delayed its Brexit as well for the second or third time (everyone is losing count), which grabbed the news headlines. However, it is somewhat sad to see that after 11 years, the mainstream media still ignores Bitcoin, and all the celebrations were left to the crypto-focused press.

The original white paper is only nine pages long and opens with a remarkably humble statement: “I’ve been working on a new electronic cash system that’s fully peer-to-peer, with no trusted third party.” Some might say that this is the understatement of the century, because the author makes it sound as if it is mundane, and yet 11 years on we know its potential to create billionaires, as well as spawning an entire crypto industry now filled with a host of altcoins, as well as goodness knows how many fintech startups related to cryptocurrency.

A groundbreaking white paper

We should never forget just how groundbreaking the bitcoin white paper was. For the first time somebody had delivered a blueprint for an anonymous, trustless, decentralised currency. Of course, it didn’t appear out of nowhere. Fore example, Nakamoto says in his white paper that the proof-of-work protocol was developed from Dai Wei’s B-money thereby ensuring a ‘one CPU one vote’ policy.

Another important aim was to be a deflationary currency. This was achieved by stating that a finite number of bitcoin would be available. In this case 21 million. Fiat currencies by contrast can be printed or minted whenever a central bank/government decides, and that is an inflationary move. Eventually you end up like Venezuela in a state of hyperinflation, if you keep printing money, but your national borrowing keeps growing and there’s nothing to repay it with. Then you see people with notes piled up in a shopping trolley just to buy a loaf of bread. This situation is alien to the bitcoin ecosystem.

Nakamoto had beef with fractional reserve banking

Satoshi Nakamoto was not a fan of the banks that run the global monetary system, precisely because of issues like hyperinflation. But his pet hate was fractional reserve banking. In this system a bank can accept deposits, make loans or investments, but it is only required to “hold reserves equal to only a fraction of its deposit liabilities,” as Martin Young explains at BTC News. The problem with this type of banking is that when the reserves don’t match the money deposited by customers, and there’s an event that creates a domino effect, then the bank collapses and the customers lose their money. Which is exactly what happened in 2008. Let’s not forget that Nakamoto published the white paper only six weeks after Lehmann Brothers spectacular crash.

Eleven years on, bitcoin has become iconic for its many supporters, and hated by a few. It is also true to say that the majority of people worldwide still don’t understand it, and are being fed all kinds of scary stories by the media, which doesn’t encourage them to understand the upside of cryptocurrency.

It may be true that we haven’t yet reached anywhere near the mass adoption figures that the first cypherpunks hoped for, but in another 11 years, I believe that celebrations of bitcoin’s birthday will be more widespread and that it will be more widely accepted. It may even be a lifebelt for many when the next global financial crisis hits us.

Do we need to know the identity of Satoshi Nakamoto?

On By mehranmuslimiblogIn Bitcoin, cryptoLeave a comment

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I’ve been thinking about this question over the last few weeks. I was prompted to do this by Craig Steven Wright and the battle between him and others, such as Hodlonaut, on Twitter. Then there was the announcement that Binance was delisting Bitcoin SV (BSV), a cryptocurrency that is connected to nChain, a Wright-affiliated blockchain and Coingeek run by Calvin Ayre.

The problem people have with Wright is that he claims to be Satoshi Nakamoto, or one of the people behind Satoshi and the creation of Bitcoin. Wright’s dramatic claim was backed by Gavin Andresen, former Bitcoin Core Lead Maintainer and executive director of the Bitcoin Foundation. However, Wright has never provided he is Satoshi, or one part of ‘him’, but that hasn’t stopped the claim.

Last week John McAfee also claimed to know the identity of Satoshi and boasted that it had been extremely easy to work out. But, for personal reasons, McAfee declined to reveal who it is. I use the present tense because McAfee claims to correspond with Satoshi, unless he talks to him via the services of a psychic medium. He certainly didn’t suggest it was Wright, but on the other hand he didn’t mention him at all, so perhaps, perhaps, perhaps?

Wright, like McAfee, is known for making big claims, and he has been called out on quite a few of them by big hitters in the crypto world, including Vitalik Buterin of Ethereum, Grag Maxwel of Blockstream and Changpeng Zhao, the CEO of Binance. Even Charles Sturt University (Wright’s alma mater) informed Forbes that Wright had never received a PhD from the university, although Wright claimed he had.

Wright, like McAfee, lives for publicity; It is his oxygen. And by hitting back when he claims he is Satoshi, the crypto community is feeding his addiction by talking about him and sending Google Search trends soaring with searches about him and BSV.

If we want the crypto industry to be taken seriously, we need to focus less on personalities like Wright and McAfee, who potentially discredit it with fiction, and ask ourselves, do we really need to know the identity of Satoshi Nakamoto. Is it not possible to admire the Bitocin network without knowing the identity of the person/s behind it? Does not knowing for sure the identity of the creator/s give the technology less legitimacy? Perhaps one of the Gods can give us an answer to that question.

How Satoshi changed world

On By mehranmuslimiblogIn BitcoinLeave a comment

As the global economy staggered, fell and got up again, an anonymous person, or group of people, named Satoshi Nakamoto came up with a surprising solution; a peer-to-peer electronic cash system, which became known as bitcoin. A small number of people saw its potential the minute they heard about it, but it has taken a much longer time to get the concept into the wider mainstream, and even now, there are as many doubters as believers, probably even more.

What some people have not grasped is that Satoshi created much more than a digital currency that could ‘protect’ the public from the greed of the big banking system that had brought much of the world to its knees — Satoshi solved a longstanding computing problem connected to data and networks, and that is just as important as whatever is happening to the bitcoin price.

Satoshi’s solution involved an infrastructure consisting of “blocks” of confirmed transactions, which when ordered chronologically formed a “chain.” And there we have it — the real Satoshi revolution — blockchain technology.

Bitcoin is just the first example of the use of blockchain, but it certainly hasn’t been the last. In the last two years, the number of blockchain-based projects, platforms and their accompanying digital assets, tokens or cryptocurrencies, call them what you will, have grown like daisies on a summer lawn. And the ecosystem is changing rapidly: one only has to look at what was happening in 2017 and compare it with 2018 to see that the blockchain world changes every month.

A change in crypto speak

As does the language used to describe it. The negative view of the mainstream media and the response of Facebook and Google to Initial Coin Offerings (ICOs) meant that marketers and writers started to avoid the use of the term “cryptocurrency,” and so “tokens”, “digital assets” and “digital currencies” became the preferred terms, so that the anti-crypto “police” wouldn’t spot what we were actually talking about. And now the term “blockchain” is apparently being dropped in favour of “distributed ledger technology” (DLT) because apparently blockchain has been over-hyped. It appears that some think that words have the power of a Cloak of Invisibility; only to find that there are more than a few people who can see right through it.

Project Crypto Fear

And even this language factor points to the importance of Satoshi’s revolutionary creation: things that are feared by the majority have to be presented in more palatable ways. The mainstream media has certainly pushed a Project Fear approach to crypto, and here is the reason: Satoshi’s blockchain takes away the power of a central authority. This is one of the reasons why the major financial institutions have been slow to get involved with it, and some governments have banned it, while others look at it with a raised eyebrow. But they can’t hold back the tide that is coming their way, which is why the World Economic Forum predicted even back in 2016 that 10% of global GDP would be stored on blockchains.

And in 2018 we have seen central banks, retail banks and financial regulators finally joining the blockchain sphere. They have to join the Satoshi revolution or face going the way of the dinosaurs.

Satoshi Nakamoto set in motion a world-changing technology, and bitcoin is only one small part of the story; it’s certainly not the entire revolution.