- Satoshi Nakamoto envisioned Bitcoin as a “peer-to-peer electronic cash system” for the world, but the narrative has changed over the years.
- Bitcoin has been adopted as digital gold, but some teams are trying to develop the network by embracing Layer 2 and DeFi.
- Bitcoin’s most toxic community member holds top crypto once again.
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What does Satoshi Nakamoto think about the Bitcoin community in 2022? Chris Williams addresses the elephant in the room.
Satoshi and Immaculate Inception
When Satoshi Nakamoto presented the whitepaper for what would become the world’s most important invention since the Internet, he presented the concept of a “peer-to-peer electronic cash system.” First teased to a group of cypherpunks on the Cryptography Mailing List in the wake of the Great Financial Crisis in October 2008, Bitcoin was Satoshi’s response to the failure of governments and central banks around the world.
Until his sudden disappearance in December 2010, Satoshi made no secret of his disdain for the traditional financial system. They pointed out the problem with the trusting banks on the Bitcointalk forum, pushing Bitcoin as the world’s first decentralized alternative. On the Genesis Bitcoin blockchain, they posted a message pulled from the front page of The Times newspaper on the same day. Read “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”
Bitcoin quickly grew into a small community of Internet geeks who believed in freedom and self-sovereignty. Many early Bitcoiners were Libertarians who shared Satoshi’s distrust of authority. Occupying a niche corner of the Internet for its early years, its first major use case was on Silk Road, a darknet marketplace that became the equivalent of eBay for illegal drugs.
Bitcoin grew because of the community of believers, but eventually it became clear that it had changed since Satoshi introduced it as a “peer-to-peer electronic cash system.” Where Bitcoin’s early adopters would happily spend dozens of coins on eight weeds on Silk Road, now they choose to “HODL,” crypto slang for sitting on your holdings and waiting for the price to rise.
Is The Bitcoin Narrative Dead?
The supply of Bitcoin is limited to 21 million coins. That makes it provably rare, unlike fiat money that banks can print on a whim. It is part of the reason Bitcoin has seen amazing growth over the past 13 years, rising from a fraction of a cent at launch to $69,000 at the end of 2021 (traded close to $23,000 today). As the price of Bitcoin has risen, it has been adopted as “digital gold.” The biggest proponents often point to limited supply in response to money printing and rising inflation rates, but fail to act as an inflation hedge when the Federal Reserve raises interest rates in 2022. Bitcoin and the crypto market currently trade in close correlation with stocks. and other global markets; when the Fed pivoted to hawkish to curb inflation, it suffered hard alongside every other asset class.
Some Bitcoiners have tried to help the top crypto develop beyond the digital gold thesis, but none of the developments have been incredibly successful. Blockstream, a company led by some of the most ardent supporters of Bitcoin, developed the Liquid sidechain to offer settlement times faster than the Bitcoin network’s 10-minute block times. No one uses it. The Layer 2 Lightning Network has been Bitcoin’s first real shot at creating the cash system that Satoshi envisioned, but it also failed to gain meaningful traction because it required people to spend the coins. There are also ways to get results in Bitcoin today, but usually you have to trust a custodian with your coins. Many of Bitcoin’s most prominent voices first approved a centralized custodial service like BlockFi, then deleted their tweets when BlockFi did erupt due to irresponsible corporate management. Few Bitcoin supporters are as big as Anthony Pompliano got behind the controversial CEO Terra Do Kwon when he committed to collect a billion dollars worth of Bitcoin to stabilize the UST stablecoin defect in early 2022; they became quiet after Terra crashed to zero and Kwon was facing multiple lawsuits on allegations of fraud and misleading investors.
Beyond HODLing coins without doing anything with them and encouraging others to push prices up by buying in, much of what Bitcoin is trying to improve itself already exists in a better format in a network of smart contracts like Ethereum. That’s partly why so many Bitcoiners hate Ethereum and its competitors. Smart contracts enable cases such as getting results and spending stablecoins pegged to dollars, while technologies like Zero-Knowledge Rollups, a new scale development based on proof of zero cryptographic knowledge, promise to offer quantum leaps in scale and low transaction costs. .
Ethereum, the second largest cryptocurrency after Bitcoin, has been a better investment than Bitcoin since its launch; one BTC costs around 1,500 ETH in 2014, while today one BTC is worth only 14 ETH. Bitcoin purists have issues with all crypto assets that threaten Bitcoin’s dominance, but Ethereum hates them the most. In May 2011, the recipient of the first Bitcoin transaction, Hal Finney, wrote message arguing that “any successful replacement of the Bitcoin block chain will forever undermine the credibility of any successor.” Bitcoin’s cult-like followers often point to these posts to justify toxic maximalism.
Ever since it became clear that DeFi would be more beneficial to the world than digital gold, some have sought to rebrand Bitcoin. One of them is Jack Dorsey, who TBD the current initiative is trying to build a “decentralized web platform” similar to the one launched on Ethereum five years ago. Dorsey has marketed his Bitcoin DeFi efforts as “Web5,” a direct take on the fast-growing Web3 ecosystem that Ethereum is synonymous with.
Another notable development in Bitcoin over the past year is the attention it has received from large companies and countries in the midst of a hot crypto market. Michael Saylor’s MicroStrategy famously collected 174,000 Bitcoins during the cycle, while El Salvador became the first country to adopt Bitcoin as its official currency. The president of the Latin American country Nayib Bukele has begun to spend millions of dollars to buy the top of Bitcoin for the government treasury, at times bragging that he bought a dip from his iPhone (El Salvador also forced businesses to accept Bitcoin when it was introduced as legal tender, raising questions about the support of ideals -idea based on crypto freedom). Although Bitcoin was created in pushback against the government and the move of El Salvador which led to nationwide protests, wealthy Bitcoin whales like Max Keizer, Stacy Herbert, and Samson Mow have decided that it is their duty to go up with Bukele to help El Salvador and other developing countries. buy into the “Hyperbitcoinization” thesis.
Maximalism is toxic
The Bitcoin community has become increasingly toxic in recent years, perhaps because the loudest thought leaders appear on social media apps like Twitter. There were many early adopters who withdrew as toxicity increased and new innovations emerged—people like Erik Voorhees, Meltem Demirors, and Nic Carter—and they are branded as “shitcoiners” by Bitcoin cultists.
Another big factor behind the surge in hate is the important developments that are happening in the ecosystem close to Bitcoin. Bitcoin will not only have to overcome weak price performance against almost all other crypto assets in the 2021 bull run-also lacking in terms of development against many of its predecessors. The most important of these developments is the upcoming Ethereum “Merge” event, which will see blockchain adopt a Proof-of-Work consensus mechanism similar to that used by Bitcoin for Proof-of-Stake. Critics of Ethereum Bitcoin say that Proof-of-Stake will make the network more centralized because whales will get more rewards by staking more ETH, ignoring the point that mining is a zero-sum game where small fish will be priced out by bigger players by bigger. mining rig.
Now that Ethereum is home straight to Proof-of-Stake, the market has decided to turn bullish, and Bitcoin purists have aimed more hate at it. Without a doubt, the most desperate move is the ongoing discussion of the Bitcoin community The security status is probably ETH. Saylor asserts that ETH is a security on many occasions, while Natalie Brunell, another Bitcoin-only HODLer who entered the space just two years ago, appeared on Fox Business on weekends to echo Saylor’s mantra.
The frequent call to regulate ETH goes back to the Ethereum Initial Coin Offering where the Ethereum Foundation raised $18 million in Bitcoin in an ETH crowdsale. Critics argue that ConsenSys, the Ethereum software company behind the Web3 wallet MetaMask, has made millions of dollars in ETH and now controls the token supply. After the Ethereum ICO, Gary Gensler recommended that ETH can be classified as a security in MIT college. In 2018, the SEC director of the Corporation William Hinman announced that Bitcoin or Ethereum are not securities, but Gensler revived the debate last month when he said that Bitcoin is only a crypto commodity. The SEC also labeled nine Ethereum-based tokens as securities in an insider trading case against former Coinbase employees (the SEC ie reportedly investigating exchange through listing). Some have pointed out that the appeal to the SEC chair to regulate ETH is about as anti-crypto as it gets, but that has not stopped the so-called “community” from doubling down on the phone to the US agency.
While Ethereum will undergo major changes, so far there is no evidence to suggest that it will be classified as an unlisted security post-Merge. Whatever the update brings, it is hard to escape from the problems that have been exposed in the oldest cryptocurrency community. Ready to attack competitors and run to government agencies to help preserve the supremacy of Bitcoin, society disappears and disappears into irrelevance in 2022. If Bitcoin is to develop, it believes that it must shun Bitcoin maximalism and support all genuine efforts to strengthen individuals’ sovereignty. Because in its current state, Bitcoin is starting to look like a community-led pet rock that even Satoshi would be ashamed of.
Disclosure: At the time of writing, the author of this piece owns ETH and several other cryptocurrencies.