What a treat to glimpse into the real history of Bitcoin
WE'VE just been treated to a glimpse of crypto history by one of the people closely associated with the earliest days of Bitcoin.
On February 23, Finnish developer Martti Malmi released two years' worth of emails between himself and the pseudonymous creator of Bitcoin, Satoshi Nakamoto. These run from May 2009, four months after the creation of the genesis block, and offer a real insight into the early days of crypto and some of the challenges that we still face. You can read the original Bitcoin whitepaper here.
These are some of the highlights of the first few exchanges.
Planning for the future
On May 3 2009 Malmi suggests that private keys should be password protected. Satoshi sees this an essential feature once Bitcoins start to have value, allowing people to "lock [their] wealth up with strong encryption and back it up more securely than any physical safe”. However, this wasn't seen as an urgent task, as Bitcoins had no value.
The proposal to limit the issuance of Bitcoin to 21 million is also discussed. It's described as an "educated guess" somewhere in the middle of future possibilities.
"If Bitcoin remains a small niche, it'll be worth less per unit than existing currencies. If you imagine it being used for some fraction of world commerce, then there's only going to be 21 million coins for the whole world, so it would be worth much more per unit."
Dusting and airdrops
In a controversial discussion about spam, one comment stands out.
"One of the e-gold systems already has a form of spam called ‘dusting’. Spammers send a tiny amount of gold dust in order to put a spam message in the transaction's comment field."
The discussion is around agreeing to receive spam in exchange of payment, but it is a reminder that anyone can send a message to another wallet, whether they want it or not. Dusting seems to be a precursor of the unsolicited airdrops that plague the NFT space, spam transactions that may be anything from marketing to malware.
The longest chain
The Bitcoin blockchain and those that followed are designed with a mechanism for all the nodes on the distributed ledger to agree on the system state. This creates an agreed longest chain. However, blocks may be generated simultaneously while only one at a time is confirmed and adopted by the network as the next in the longest chain. In the original rendering of Bitcoin, unaccepted blocks were also visible, waiting for their turn. These emails document the decision to hide blocks until they have a confirmation from the network, reducing the noise for users.
The inherent delay to acceptance means that Bitcoin still has a wait time of around an hour to be sure that a transaction has been included in the longest chain, in other words has achieved finality. One of the potential uses of Bitcoin for micropayments online, for example subscribing to read a news article, relies therefore on an element of trust that whoever has sent the micropayment is not about to double-spend their money and defraud the merchant. As time ticks away the risk of fraud falls, because a malicious transaction would not be able to outpace the growth of the chain.
It's interesting to look at the subsequent development of Lightning Network for micropayments and the success of much faster blockchains to see that this problem is being solved. One day, as Satoshi intended, we'll be able to read paywalled articles without handing overall our data or subscribing for months at a time!
Energy use is already under fire
A very pertinent point is made by an anonymous contributor in the Q&A:
"The last thing we need is to deploy a system designed to burn all available cycles, consuming electricity and generating carbon dioxide, all over the Internet, in order to produce small amounts of bitbux."
Satoshi's response is simple - it was the only solution to make peer-to-peer electronic cash work without a trusted third party.
"It is fundamental to coordinating the network and preventing double-spending."
Earlier in the thread, Satoshi also claims that Bitcoin could scale beyond Visa's 15m daily transactions with the existing hardware, suggesting that "It never really hits a scale ceiling”.
There is talk of one day having 100,000 full nodes. It's estimated that at the height of 2021's bull run there were around 83,000, falling to under 50,000 thereafter and possibly as low as 13,000. Energy use charts produced by Digiconomist show this peak of energy use and subsequent fall.
"Ironic if we end up having to choose between economic liberty and conservation." says Satoshi. This is not, however, a binary choice. While proof-of-work is still arguably the most democratised mechanism, the rise of faster and more sustainable means of securing a blockchain offers a future where economic liberty can be sustainable.
Finally, a personal favourite
The final FAQ written for the new website was "Where can I get Bitcoins?" It's refreshing that there is no default male in this vison of the future.
"Find a Bitcoin owner and sell her something -MMORPG equipment, IT support, lawn mowing, dollars or whatever you can trade with her."
